<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 27, 1995
REGISTRATION STATEMENT NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
PAXSON COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
---------------------
<TABLE>
<S> <C> <C>
DELAWARE 4832 59-3212788
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
---------------------
SEE TABLE OF ADDITIONAL REGISTRANTS
---------------------
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401
(407) 659-4122
(Address, including zip code, and telephone number, including area code,
of registrants' principal executive offices)
ANTHONY L. MORRISON, ESQ.
SECRETARY, VICE PRESIDENT AND GENERAL COUNSEL
PAXSON COMMUNICATIONS CORPORATION
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401
(407) 659-4122
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
MICHAEL L. JAMIESON, ESQ.
HOLLAND & KNIGHT
400 NORTH ASHLEY DRIVE, SUITE 2300
TAMPA, FLORIDA 33602
(813) 227-8500
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SECURITY(1) PRICE(1) FEE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11 5/8% Senior Subordinated
Notes due 2002............. $230,000,000 100% $230,000,000 $79,311
- ---------------------------------------------------------------------------------------------------
Guarantees of Senior Subordi-
nated Note due 2002........ -- -- -- --(2)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated pursuant to Rule 457 solely for the purposes of calculating the
registration fee.
(2) Pursuant to Rule 457 (n) no registration fee is payable with respect to the
Guarantees.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
STATE OR PRIMARY
OTHER STANDARD I.R.S.
JURISDICTION OF INDUSTRIAL EMPLOYER
INCORPORATION/ CLASSIFICATION IDENTIFICATION
NAME ORGANIZATION NUMBER NUMBER
- ------------------------------------------------------------------------- --------------- -------------- --------------
<S> <C> <C> <C>
PAXSON COMMUNICATIONS OF FLORIDA, INC.................................... Florida 4832.1 59-3212231
PAXSON COMMUNICATIONS LP, INC............................................ Florida 4832.1 59-3212236
PAXSON COMMUNICATIONS MANAGEMENT COMPANY................................. Florida 4832.1 59-3212233
PAXSON COMMUNICATIONS MARKETING, INC..................................... Florida 4832.1 59-3212234
PAXSON COMMUNICATIONS NETWORKS, INC...................................... Florida 4832.1 59-3212235
EXCEL MARKETING ENTERPRISES, INC......................................... Florida 7313 59-2907133
PAXSON OUTDOOR, INC...................................................... Florida 7312 59-3202387
PAXSON NETWORKS, INC..................................................... Florida 4832.1 59-3212238
PAXSON COMMUNICATIONS TELEVISION, INC.................................... Florida 4832.1 59-3283729
PAXSON BROADCASTING OF JACKSONVILLE, LIMITED
PARTNERSHIP............................................................ Florida 4832 59-3075827
PAXSON BROADCASTING OF MIAMI, LIMITED PARTNERSHIP........................ Florida 4832 59-3095656
PAXSON BROADCASTING OF ORLANDO, LIMITED PARTNERSHIP...................... Florida 4832 59-3095659
PAXSON BROADCASTING OF TAMPA, LIMITED PARTNERSHIP........................ Florida 4832 59-3075825
PAXSON TAMPA LICENSE LIMITED PARTNERSHIP................................. Florida 4832 59-3291861
PAXSON JACKSONVILLE LICENSE LIMITED PARTNERSHIP.......................... Florida 4832 59-3291869
PAXSON MIAMI LICENSE LIMITED PARTNERSHIP................................. Florida 4832 59-3291871
PAXSON ORLANDO LICENSE LIMITED PARTNERSHIP............................... Florida 4832 59-3291865
PAXSON COMMUNICATIONS OF ATLANTA-14, INC................................. Florida 4833 59-3235962
PAXSON ATLANTA LICENSE, INC.............................................. Florida 4833 59-3291854
PAXSON COMMUNICATIONS OF BOSTON-60, INC.................................. Florida 4833 59-3283737
PAXSON BOSTON LICENSE, INC............................................... Florida 4833 59-3283741
PAXSON COMMUNICATIONS OF DALLAS-68, INC.................................. Florida 4833 59-3283742
PAXSON DALLAS LICENSE, INC............................................... Florida 4833 59-3283743
PAXSON COMMUNICATIONS OF NEW LONDON-26, INC.............................. Florida 4833 59-3283739
PAXSON NEW LONDON LICENSE, INC........................................... Florida 4833 59-3283736
PAXSON COMMUNICATIONS OF PHILADELPHIA-61, INC............................ Florida 4833 59-3283731
PAXSON PHILADELPHIA LICENSE, INC......................................... Florida 4833 59-3283730
PAXSON COMMUNICATIONS OF MIAMI-35, INC................................... Florida 4833 65-0471066
PAXSON COMMUNICATIONS OF SAN JOSE-65, INC................................ Florida 4833 59-3283735
PAXSON SAN JOSE LICENSE, INC............................................. Florida 4833 59-3283733
PAXSON COMMUNICATIONS OF TAMPA-66, INC................................... Florida 4833 59-3227558
PAXSON COMMUNICATIONS OF WEST PALM BEACH-25, INC......................... Florida 4833 59-3236008
PAXSON WEST PALM BEACH LICENSE, INC...................................... Florida 4833 59-3291836
PAXSON COMMUNICATIONS OF LOS ANGELES-30, INC............................. Florida 4833 59-3295991
PAXSON LOS ANGELES LICENSE, INC.......................................... Florida 4833 59-3295992
PAXSON COMMUNICATIONS OF MINNEAPOLIS-41, INC............................. Florida 4833 59-3295983
PAXSON COMMUNICATIONS OF ST. LOUIS, INC.................................. Florida 4833 *
PAXSON MINNEAPOLIS LICENSE, INC.......................................... Florida 4833 59-3295988
PAXSON COMMUNICATIONS OF COOKEVILLE, INC................................. Florida 4833 62-1593701
PAXSON COOKEVILLE LICENSE, INC........................................... Florida 4833 *
PAXSON COMMUNICATIONS OF FT. PIERCE-34, INC.............................. Florida 4833 65-0587768
PAXSON COMMUNICATIONS OF ORLANDO-56, INC................................. Florida 4833 59-3297996
PAXSON COMMUNICATIONS OF HOUSTON-49, INC................................. Florida 4833 76-0461679
PAXSON HOUSTON LICENSE, INC.............................................. Florida 4833 76-0461475
INFOMALL TV NETWORK, INC................................................. Delaware 4833 59-3298735
PAXSON ST. LOUIS LICENSE, INC............................................ Florida 4833 *
INFOMALL CABLE NETWORK, INC.............................................. Delaware 4841 59-3319718
PAXSON COMMUNICATIONS OF CLEVELAND-67, INC............................... Florida 4833 59-3319725
PAXSON COMMUNICATIONS OF WASHINGTON-60, INC.............................. Florida 4833 59-3319720
PAXSON WASHINGTON LICENSE, INC........................................... Florida 4833 59-3319719
PAXSON COMMUNICATIONS OF PHOENIX-13, INC................................. Florida 4833 *
PAXSON PHOENIX LICENSE, INC.............................................. Florida 4833 *
INFOMALL LOS ANGELES, INC................................................ Florida 4833 *
PAXSON COMMUNICATIONS OF MILWAUKEE-55, INC............................... Florida 4833 *
PAXSON COMMUNICATIONS OF DENVER-59, INC.................................. Florida 4833 59-650603895
PAXSON COMMUNICATIONS OF NEW YORK-43, INC................................ Florida 4833 *
PAXSON NEW YORK LICENSE, INC............................................. Florida 4833 *
PAXSON COMMUNICATIONS OF AKRON-23, INC................................... Florida 4833 *
PAXSON AKRON LICENSE, INC................................................ Florida 4833 *
PAXSON COMMUNICATIONS OF DAYTON-26, INC.................................. Florida 4833 59-311446001
</TABLE>
- ---------------
* Applied for.
<PAGE> 3
PAXSON COMMUNICATIONS CORPORATION
AND
ADDITIONAL REGISTRANTS
---------------------
CROSS REFERENCE SHEET SHOWING LOCATION IN THE PROSPECTUS OF INFORMATION
REQUIRED BY ITEMS OF FORM S-4
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION
---------------------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and Outside Front
Cover Page of Prospectus................................. Forepart of the Registration
Statement and Outside Front
Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus............................................... Inside Front Cover Page;
Available Information;
Outside Back Cover Page
3. Risk Factors, Ratio of Earnings to Fixed Charges and
Other Information........................................ Prospectus Summary; Risk
Factors; The Company's
Selected Historical and Pro
Forma Financial Data
4. Terms of the Transaction................................. Prospectus Summary; The
Exchange Offer; Description
of the Notes; Certain Federal
Income Tax Considerations
5. Pro Forma Financial Information.......................... Selected Historical and Pro
Forma Financial Data
6. Material Contracts With the Company Being Acquired....... N/A
7. Additional Information Required for Reoffering by Persons
and Parties Deemed to be Underwriters.................... Plan of Distribution
8. Interests of Named Experts and Counsel................... Legal Opinions; Experts
9. Disclosure of Commission Position on Indemnification of
Securities Act Liabilities............................... N/A
10. Information with Respect to S-3 Registrants.............. N/A
11. Incorporation of Certain Information by Reference........ N/A
12. Information with Respect to S-2 or S-3 Registrant........ N/A
13. Incorporation of Certain Information by Reference........ N/A
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION
---------------------------------------------------------
<C> <S> <C>
14. Information with Respect to Registrants other than S-3 or
S-2 Registrants.......................................... Outside Front Cover Page;
Available Information;
Prospectus Summary; Risk
Factors; The Company;
Capitalization; Pro Forma
Financial Information;
Selected Historical and Pro
Forma Financial Data;
Management's Discussion and
Analysis of Financial
Condition and Results of
Operations; Business;
Management; Certain
Transactions
15. Information with Respect to S-3 Companies................ N/A
16. Information with Respect to S-2 or S-3 Companies......... N/A
17. Information with Respect to Companies Other than S-2 or
S-3 Companies............................................ N/A
18. Information if Proxies, Consents or Authorizations are to
be Solicited............................................. N/A
19. Information if Proxies, Consents or Authorizations are
not to be Solicited, or in an Exchange Offer............. Prospectus Summary;
Management; Certain
Transactions
</TABLE>
<PAGE> 5
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED OCTOBER , 1995
PROSPECTUS
PAXSON COMMUNICATIONS CORPORATION
OFFER TO EXCHANGE ITS 11 5/8% SENIOR SUBORDINATED NOTES DUE 2002,
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, FOR ANY AND ALL OF ITS
OUTSTANDING 11 5/8% SENIOR SUBORDINATED NOTES DUE 2002
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME
ON , 1995, UNLESS EXTENDED
---------------------
Paxson Communications Corporation, a Delaware corporation (the "Company"),
hereby offers to exchange (the "Exchange Offer") up to $230,000,000 in aggregate
principal amount of the Company's new 11 5/8% Senior Subordinated Notes due 2002
(the "New Notes"), for $230,000,000 in aggregate principal amount of the
Company's outstanding 11 5/8% Senior Subordinated Notes due 2002 (the "Original
Notes"). The Original Notes and the New Notes are sometimes referred to herein
collectively as the "Notes."
The terms of the New Notes are substantially identical in all respects
(including principal amount, interest rate and maturity) to the terms of the
Original Notes for which they may be exchanged pursuant to this Exchange Offer,
except that the New Notes will be freely transferable by holders thereof (other
than as provided in the next paragraph) and issued free of any covenant
restricting transfer absent registration. The New Notes will evidence the same
debt as the Original Notes and contain terms which are substantially identical
to the terms of the Original Notes for which they are to be exchanged. For a
complete description of the terms of the New Notes, see "Description of the
Notes". There will be no cash proceeds to the Company from the Exchange Offer.
The Original Notes were sold on September 28, 1995, in a transaction not
registered under the Securities Act of 1933, as amended (the "Securities Act"),
in reliance upon an exemption provided in the Securities Act. Accordingly, the
Original Notes may not be offered, resold or otherwise pledged, hypothecated or
transferred in the United States unless registered under the Securities Act or
unless an exemption from the registration requirements of the Securities Act is
available. The New Notes are being offered to satisfy the obligations of the
Company under the Registration Rights Agreement relating to the Original Notes.
See "The Exchange Offer -- Purpose and Effect of the Exchange Offer." Each
holder receiving New Notes, other than a broker-dealer, will represent that the
holder is not engaging in or intending to engage in a distribution of such New
Notes. New Notes issued pursuant to the Exchange Offer in exchange for the
Original Notes may be offered for resale, resold or otherwise transferred by the
holders thereof (other than any holder that is an affiliate of the Company
within the meaning of Rule 405 under the Securities Act), without compliance
with the registration and prospectus delivery requirements of the Securities
Act, provided that such New Notes are acquired in the ordinary course of such
holders' business and such holders have no arrangement with any person to
participate in the distribution of such New Notes. Each broker-dealer that
receives New Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
Such New Notes. The Letter of Transmittal states that by acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. See "The Exchange
Offer -- Purpose and Effect of the Exchange Offer" and "Plan of Distribution."
Broker-dealers may use this Prospectus, as amended or supplemented, in
connection with resales of the New Notes received in exchange for the Original
Notes where such Original Notes were acquired by such broker-dealer as a result
of market making activities or other such trading.
The Notes constitute securities for which there is no established trading
market. Any Original Notes not tendered and accepted in the Exchange Offer will
remain outstanding. The Company intends, to the extent practicable, to list the
New Notes on a securities exchange. To the extent that any original Notes are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Original Notes could be adversely affected. No assurances can be
given as to the liquidity of the trading market for either the Original Notes or
the New Notes.
The Exchange Offer is not conditioned on any minimum aggregate principal
amount of Original Notes being tendered for exchange. The Exchange Offer will
expire at 5:00 P.M., New York time, on , 1995, unless extended (the
"Expiration Date"). The date of acceptance for exchange of the Original Notes
will be the first business day following the Expiration Date. Original Notes
tendered pursuant to the Exchange Offer may be withdrawn at any time prior to
the Expiration Date, otherwise, such tenders are irrevocable. The Company will
pay all expenses incident to the Exchange Offer.
Interest on the New Notes shall accrue from the last April 1 or October 1
(an "Interest Payment Date") on which interest was paid on the Original Notes so
surrendered, or, if no interest has been paid on such original Notes, from
September 28, 1995. If a Change of Control (as defined under "Description of the
Notes -- Certain Definitions") occurs, there can be no assurance that the
Company will have, or will have access to, sufficient funds to enable it to
repurchase the Notes. See "Description of the Notes -- Change of Control Offer."
HOLDERS OF ORIGINAL NOTES SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH
UNDER "RISK FACTORS."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE
---------------------
THE DATE OF THIS PROSPECTUS IS , 1995
<PAGE> 6
CERTAIN DEFINITIONS AND MARKET AND INDUSTRY DATA
The terms "EBITDA," "broadcast cash flow" and "Adjusted EBITDA" are
referred to in various places in this Prospectus. EBITDA is defined as net
income (loss) before (i) extraordinary item and cumulative effect of a change in
accounting principle, (ii) benefit (provision) for income taxes, (iii) other
income (expenses), net, (iv) interest expense, net, (v) depreciation and
amortization, (vi) option plan compensation, and (vii) non-recurring items
including terminated operations; less scheduled broadcast rights payments.
Broadcast cash flow is defined as income (loss) from operations plus non-cash
expenses and non-broadcasting operating results, less scheduled broadcast rights
payments and non-cash revenues. Although EBITDA and broadcast cash flow are not
measures of performance under generally accepted accounting principles ("GAAP"),
the terms are widely used in the broadcast industry as a measure of a
broadcasting company's ability to service or incur debt. Neither EBITDA nor
broadcast cash flow should be considered in isolation or as a substitute for net
income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP, or as a measure of
profitability or liquidity. "Adjusted EBITDA" is defined as EBITDA for the
period less (i) operating profit for the Infomall TV Network segment for such
period plus (ii) four times such segment's operating profit for the most
recently completed quarter prior to the measuring date and thus annualizes
certain aspects of the Company's operating results. Adjusted EBITDA is not a
measure of performance under GAAP and should not be considered in isolation. It
is being shown to provide an understanding of calculations required under
certain covenants contained in the indenture governing the Notes.
The term "time brokerage agreement" (also known in the broadcast industry
as a "local marketing agreement"), generally refers to an agreement under which
a radio or television programmer agrees to purchase from a broadcast station
licensee substantially all of the broadcast time on a station, provides
programming and sells advertising during the purchased time, receives all the
revenue derived from advertising, pays the expenses, and performs other
functions, with the licensee retaining responsibility for ultimate control of
the station in accordance with FCC policies. Time brokerage agreements are more
fully described in "Business -- Federal Regulation of Broadcasting." The term
"joint sales agreement" refers to an agreement under which a broadcast station
agrees to provide the sales and marketing services for another broadcast station
while the owner of such broadcast station provides the programming for such
other broadcast station.
Unless otherwise indicated herein, all markets, audience ratings and
audience rankings have been derived for the indicated radio station or group of
radio stations from surveys of the indicated demographic group listening
Monday-Sunday, 6:00 a.m. to 12:00 midnight, as reported by Arbitron, Radio
Market Report, The Arbitron Company ("Arbitron"). Unless otherwise indicated,
audience share data is expressed as the "local" average quarter-hour share for
each indicated radio station. A radio station's "local" audience share is
derived by comparing the radio station's average quarter-hour share to the total
average quarter-hour share for all radio stations listed as inside the Metro
Survey Area by Arbitron. Average quarter-hour share is a percentage of the
estimated number of persons who listen to a given radio station for a minimum of
five minutes within a quarter-hour compared to the total number of persons who
listen to radio in the market within such quarter-hour. The most recent Arbitron
survey utilized in this Prospectus is Summer 1995.
Market radio advertising revenue, revenue share data and revenue rankings
for radio stations have been obtained from Miller, Kaplan Market Revenue Report,
a monthly publication of Miller, Kaplan, Arase & Co., Certified Public
Accountants ("Miller Kaplan"); provided, however, that market radio advertising
revenue, revenue sharing data, and revenue rankings for the Company's radio
stations in the Cookeville, Tennessee area have been estimated by the Company
without the benefit of any independent investigation or confirmation, as no
published data on that survey area is available from Miller Kaplan. Arbitron and
Miller Kaplan both compile their audience share, revenue share, revenue ranking
and other statistical data under procedures and methodologies that are
described, and that have the limitations provided, in their respective reports
or guides. All such information provided herein is subject to those limitations.
This Prospectus reflects the most recent published data from Arbitron and Miller
Kaplan unless otherwise indicated. The Company does not assume responsibility
for the accuracy or completeness of such published data.
All television station audience rating data in this Prospectus has been
obtained from the Nielsen Station Index Viewers and Profile for May 1995. All
market rank and television household data has been obtained from U.S. Television
Household Estimates for January 1995, as prepared by A.C. Nielsen Co.
("Nielsen") for each designated market area ("DMA"). In addition, revenue data
for the West Palm Beach television market has been obtained from the local
office of Ernst & Young LLP. The Company does not assume responsibility for the
accuracy or completeness of such published data.
i
<PAGE> 7
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 with respect to the New Notes
being offered hereby (including all exhibits and amendments thereto, the
"Registration Statement"). This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which have been omitted pursuant to the rules and regulations of the
Commission. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement and
to the exhibits filed therewith. Statements made in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and where applicable reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement is qualified by such reference.
The Company is currently subject to the periodic reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith is required to file reports and other information with the
Commission. Such reports, the Registration Statement and other information may
be inspected and copied, at prescribed rates, at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, at the regional offices of the Commission located
at Seven World Trade Center, New York, New York 10048, and at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.
Furthermore, so long as the Notes are outstanding, during any period in
which the Company is not subject to Section 13 or 15(d) of the Exchange Act, the
Company has agreed to (i) file with the Commission to the extent permitted, and
distribute to holders of the Notes, reports, information and documents specified
in Section 13 and 15(d) of the Exchange Act and (ii) make available, upon
request, to any holder of the Notes, the information required pursuant to Rule
144A(d)(4) under the Exchange Act. Any such request should be directed to the
Secretary of the Company at 601 Clearwater Park Road, West Palm Beach, FL 33401
(telephone number: (407) 659-4122).
ii
<PAGE> 8
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements contained elsewhere in this Prospectus. Except as otherwise indicated
by the context, references in this Prospectus to the "Company" include Paxson
Communications Corporation and its direct and indirect wholly-owned
subsidiaries. Capitalized terms used without definition in the following summary
are defined elsewhere in this Prospectus.
THE COMPANY
Paxson Communications Corporation ("Paxson Communications" or the
"Company") is a publicly-held, diversified media company that operates in the
radio broadcasting, radio network and network-affiliated television broadcasting
businesses. In addition, in January 1995, the Company introduced its Infomall TV
Network ("IN TV"), a national network of owned, operated and affiliated
television stations dedicated to infomercial programming. The Company was
founded in 1991 by Lowell W. "Bud" Paxson, the creator, co-founder and president
emeritus of Home Shopping Network, Inc. The Company's principal executive
offices are located at 601 Clearwater Park Road, West Palm Beach, Florida 33401
and its telephone number is (407) 659-4122.
RADIO BROADCASTING AND NETWORKS
Paxson Communications owns and operates 18 radio stations (9 FM and 9 AM
stations), with more radio stations in Florida than any other broadcaster. The
Company operates FM and AM duopolies serving Florida's four most populous cities
(Miami, Tampa, Orlando and Jacksonville) as well as an AM/FM combination in
Cookeville, Tennessee. The Company also has joint sales agreements with an FM
station in Jacksonville and an AM station in Miami. The Company's radio stations
employ broadly diversified programming formats, including News, Talk, Sports,
Country, Soft Adult Contemporary, Smooth Jazz, Album Oriented Rock, Modern Rock
and Alternative Rock. The Company also operates eight radio networks, primarily
in the southeastern United States, that provide daily statewide news segments,
sports programming, and satellite distribution of play-by-play broadcasts of
professional and collegiate sports teams to more than 400 affiliated radio
stations. In addition, the Company controls 65 billboard locations in the Tampa
and Orlando markets that support the Company's radio station operations. The
Company's radio stations, radio networks and billboard properties are
collectively referred to herein as "Paxson Radio."
The Company's radio broadcasting strategy is to improve the operating
results of its existing and newly acquired stations by employing the extensive
operating experience of the Company's management team. The Company believes that
the geographic proximity of its FM and AM duopolies throughout Florida permits
it to realize synergistic revenue opportunities and significant cost
efficiencies. The Company paid an aggregate purchase price of approximately
$65.1 million for its 16 Florida radio stations. The Company believes that its
radio properties are well positioned in attractive markets, and the Company
hopes to continue to improve cash flow through the integration of recent duopoly
acquisitions and enhanced station performance.
NETWORK-AFFILIATED TELEVISION
Paxson Communications owns and operates an ABC-TV affiliate, WPBF-TV, in
the West Palm Beach market. In August 1995, the Company entered into a time
brokerage agreement under which it provides programming and markets commercial
time for a second television station, WTVX-TV (a combined United Paramount
network and Warner Brothers network affiliate), also in the West Palm Beach
market. The Company's two network-affiliated television stations collectively
comprise "Paxson Television."
The Company acquired WPBF-TV in July 1994 for approximately $32.5 million.
Shortly thereafter, the Company installed its management team, began the
implementation of cost rationalization measures and revamped the station's
programming (including the improvement of its local news coverage). The Company
believes that by operating two stations within a market, it will be able to
centralize certain aspects of their operations, thereby eliminating duplicative
operating and marketing functions and expenses, in addition to realizing
increased revenue opportunities.
1
<PAGE> 9
INFOMALL TV NETWORK
In January 1995, Paxson Communications established its infomercial
television network, the Infomall TV Network. The Company has assembled 13 owned
or operated stations dedicated to IN TV programming and has entered into
agreements with respect to eight additional television stations to be owned or
operated by the Company as IN TV stations. The Company also has affiliation
agreements with three independently owned and operated television stations.
After giving effect to the Acquisitions (as defined herein), the Company
estimates that its owned, operated or affiliated IN TV stations will reach
approximately 11.6 million cable households in 18 of the 30 largest U.S.
television markets. The Company believes that it will also reach a significant
number of additional broadcast households that do not receive cable. The Company
believes that the Infomall TV Network contains the only group of television
stations in the United States that currently offers infomercial advertisers both
significant national and regional distribution capability and inventory
availability during popular morning, daytime and prime time viewing hours.
An infomercial is an advertisement, usually one half-hour in length and
often produced in an entertainment format, that is paid for by the advertiser on
the basis of air-time and the approximate number of households receiving the
broadcast signal or cable system feed. The Company believes that the infomercial
industry has grown rapidly during the past several years and currently accounts
for total media spending in excess of $1 billion. The Company believes
infomercial advertising revenue will continue to increase as more advertisers
realize the benefits and effectiveness associated with long-form paid
programming. Infomercials allow consumer product and service companies to
provide specific product information, present a product demonstration, build
brand awareness and entertain existing and prospective customers in a
cost-effective manner. Moreover, as infomercial scheduling information and
promotional support (through radio, television and print advertising as well as
other media) become more available, the Company believes that the viewing
population will further increase.
The stations acquired by the Company and converted to IN TV stations were
typically non-network-affiliated stations in or near major markets with marginal
operating results that could be acquired at a relatively low cost compared to
more profitable network-affiliated stations. Certain of the Company's stations
are licensed to communities on the "fringe" (or outside the center) of major
television markets, but within such markets' designated market areas ("DMA").
These stations extend their broadcast reach to a significant part of such
metropolitan areas' cable systems via "must carry" requirements. Once a station
is owned or operated by the Company, the Company replaces the previous
programming with infomercial programming. The Company's infomercial programming
format allows it to substantially reduce operating expenses through standardized
engineering and operating systems, resulting in lower costs when compared to
traditional television broadcasters. Furthermore, the Company has entered into
one year agreements with several leading infomercial advertising agencies,
stipulating a predetermined rate per half-hour per 100,000 cable households
reached. To date, the Company's owned or operated IN TV stations have
contributed to broadcast cash flow shortly after the commencement of operations
by the Company.
The Company has paid an aggregate of $83.4 million (including capital
expenditures through the date hereof) for its owned or operated IN TV stations,
with an additional $85.0 million committed for the acquisition of proposed IN TV
stations and capital expenditures relating to those and the Recent Acquisitions
(as defined herein). The Company intends to continue to evaluate the acquisition
of, or affiliation with, independent television stations to further extend its
broadcast and "must carry" cable reach, a strategy that it believes will
increase its national distribution system for infomercial programming. The
Company also intends to implement a targeted marketing program that will
demonstrate to advertisers the benefits and effectiveness of the infomercial
format. The Company believes that its captive and affiliated stations represent
a national infomercial distribution infrastructure that would be difficult and
expensive to replicate due to the significantly increased demand and prices for
the limited number of non-network affiliated stations in major television
markets (i.e., top 30 in size).
2
<PAGE> 10
MARKET OVERVIEW
PAXSON RADIO
<TABLE>
<CAPTION>
COMMENCEMENT
NATIONAL RADIO OF
RADIO MARKET MARKET RANK STATION FORMAT OPERATIONS OWNERSHIP
- ---------------------------- -------------- --------- ----------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Miami, FL................... 11 WLVE-FM Smooth Jazz 4/93 Owned
WZTA-FM AOR 4/92 Owned
WINZ-AM News/Sports 4/92 Owned
WFTL-AM Talk/Sports 6/95 Owned
Tampa, FL................... 21 WHPT-FM Rock AC 11/91 Owned
WSJT-FM Smooth Jazz 7/95 Owned
WHNZ-AM News/Sports 11/91 Owned
WNZE-AM Sports 8/94 Owned
Orlando, FL................. 35 WMGF-FM Soft AC 6/92 Owned
WJRR-FM Modern Rock 7/92 Owned
WWNZ-AM News 4/92 Owned
WWZN-AM Sports 12/94 Owned
Jacksonville, FL............ 50 WROO-FM Young Country 9/91 Owned
WPLA-FM Alternative Rock 6/92 Owned
WNZS-AM Sports 5/93 Owned
WZNZ-AM News 6/92 Owned
Cookeville, TN.............. -- WGSQ-FM Country 4/94 Owned
WPTN-AM Talk 4/94 Owned
</TABLE>
<TABLE>
<CAPTION>
COMMENCEMENT
AFFILIATE OF
RADIO NETWORK STATIONS FORMAT OPERATIONS OWNERSHIP
- -------------------------------------------- --------- ----------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Alabama Radio Network....................... 74 News 1/95 Owned
Florida Radio Network....................... 57 News 3/93 Owned
South Carolina Radio Network................ 44 News 4/94 Owned
Tennessee Radio Network..................... 79 News 4/94 Owned
University of Florida Sports Network........ 55 Sports 4/94 Owned
Miami Sports Network........................ 22 Sports 4/95 Owned
Penn State Sports Network................... 52 Sports 4/94 Owned
Virginia Tech Sports Network................ 50 Sports 4/94 Owned
</TABLE>
<TABLE>
<CAPTION>
COMMENCEMENT
PAXSON TELEVISION NATIONAL TV NETWORK OF
TV MARKET MARKET RANK STATION AFFILIATION OPERATIONS OWNERSHIP
- ---------------------------- -------------- --------- ----------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
West Palm Beach, FL......... 45 WPBF-TV ABC 7/94 Owned
WTVX-TV Warner/UPN 8/95 Time Brokerage
</TABLE>
<TABLE>
<CAPTION>
COMMENCEMENT
INFOMALL TV NETWORK NATIONAL TV CABLE OF
TV MARKET MARKET RANK STATION HOMES (000'S) OPERATIONS OWNERSHIP
- ---------------------------- -------------- --------- ----------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Owned or Operated
Los Angeles, CA............. 2 KZKI-TV 1,771 5/95 Owned
Philadelphia, PA............ 4 WTGI-TV 1,383 2/95 Owned
San Francisco, CA........... 5 KLXV-TV 708 6/95 Owned
Boston, MA.................. 6 WGOT-TV 815 5/95 Owned
Washington, D.C. ........... 7 WYVN-TV -- 4/96 Owned
Atlanta, GA................. 10 WTLK-TV 888 4/94 Owned
Houston, TX................. 11 KTFH-TV 758 3/95 Owned
Tampa, FL................... 15 WFCT-TV 782 8/94 Time Brokerage
Miami, FL................... 16 WCTD-TV 866 4/94 Time Brokerage
Denver, CO.................. 18 KUBD-TV 430 8/95 Time Brokerage
Orlando, FL................. 22 WIRB-TV 486 12/94 Time Brokerage
Hartford, CT................ 26 WTWS-TV 720 3/95 Owned
Dayton, OH.................. 53 WTJC-TV 310 10/95 Time Brokerage
The Proposed Acquisitions
New York, NY................ 1 WHAI-TV 384 1/96 Owned
Dallas, TX.................. 8 Channel -- 12/96 Owned
68
Atlanta, GA................. 10 WNGM-TV 47 4/96 Time Brokerage
Cleveland, OH............... 13 WOAC-TV 331 10/95 Time Brokerage
Phoenix, AZ................. 19 KWBF-TV 13 3/96 Time Brokerage
St. Louis, MO............... 20 WCEE-TV 23 1/96 Time Brokerage
Milwaukee, WI............... 29 WHKE-TV 235 12/95 Time Brokerage
Akron, OH................... -- WAKC-TV IN TV 1/96 Owned
Affiliates
Sacramento, CA.............. 21 KCMY-TV 629 7/95 Affiliate
Norfolk, VA................. 40 WJCB-TV 344 8/95 Affiliate
Fresno, CA.................. 57 KGMC-TV 243 12/95 Affiliate
</TABLE>
3
<PAGE> 11
CERTAIN EVENTS
On September 28, 1995, the Company completed the sale (the "Private
Offering") of the Original Notes. The Private Offering was a component of the
Transactions (as defined herein) that includes the consummation of the
Acquisitions (as defined herein), and the replacement of the Company's
previously existing credit facilities with the "New Credit Facility" (as defined
herein). The gross proceeds of approximately $227.3 million from the sale of the
Original Notes were or will be used to retire the three credit facilities of the
Company outstanding at the time of the Private Offering, fund a part of the cost
of the Acquisitions and expected capital expenditures related thereto and pay
the fees and expenses of the Private Offering and the New Credit Facility.
The Company has entered into agreements and time brokerage arrangements
pursuant to which it will own or operate eight additional television stations as
IN TV stations (the "Proposed Acquisitions"). Since August 15, 1995 the Company
has completed transactions resulting in it owning or operating four additional
television station acquisitions (one of which, WIRB-TV, was previously operated
by the Company under a time brokerage agreement) (the "Recent Acquisitions" and
with the Proposed Acquisitions collectively, the "Acquisitions"). A list of the
Acquisitions is set forth below. See "The Acquisitions."
<TABLE>
<CAPTION>
ANTICIPATED PRICE
MARKET(A) CLOSING STATION AFFILIATION ($000'S)(B)
- --------------------------------------------------- ----------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Proposed Acquisitions
New York, NY....................................... 1/96 WHAI-TV IN TV $24,000
Channel
Dallas, TX(c)...................................... 12/96 68 IN TV 4,000
Atlanta, GA........................................ 4/96 WNGM-TV IN TV 12,500
Cleveland, OH...................................... 10/95 WOAC-TV IN TV 8,000
Phoenix, AZ........................................ 3/96 KWBF-TV IN TV 3,400
St. Louis, MO...................................... 1/96 WCEE-TV IN TV 4,000
Milwaukee, WI...................................... 12/95 WHKE-TV IN TV 4,300
Akron, OH.......................................... 1/96 WAKC-TV IN TV 19,000
-----------
$79,200
===========
Recent Acquisitions
Washington, D.C.(d)................................ 10/95 WYVN-TV IN TV $ 2,950
Denver, CO......................................... 8/95 KUBO-TV IN TV 7,500
Orlando, FL........................................ 8/95 WIRB-TV IN TV 5,000
Dayton, OH......................................... 10/95 WTJC-TV IN TV 6,000
-----------
$21,450
===========
</TABLE>
- ---------------
(a) Each station is licensed by the FCC to serve a specific community within the
listed DMA, which may differ from the listed market.
(b) Acquisition costs include expected capital expenditures.
(c) Pending construction.
(d) Station not currently on air.
The Company is making the Acquisitions primarily to further expand the
reach of its Infomall TV Network and to enhance its national presence. The
Company financed the Denver and Orlando acquisitions with borrowings under one
of the Company's credit facilities that existed prior to the Private Offering.
The Company financed the Dayton and Washington D.C. acquisitions with proceeds
from the Private Offering. In connection with the Company's business strategy,
the Company used proceeds of the Private Offering to pay off its then existing
credit facilities, which it intends to replace with a new $100 million credit
facility (the "New Credit Facility"). The consummation of the Private Offering,
the Acquisitions and borrowings under the New Credit Facility are collectively
referred to herein as the "Transactions."
The Company will selectively consider future radio and network-affiliated
television acquisition and disposition opportunities. In addition, the Company
intends to continue to evaluate transactions with independent television
stations that may further expand the Infomall TV Network.
4
<PAGE> 12
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 Channel 62 in Boston and has a 49% interest in KZJL Channel 61 in
Houston, with an option to acquire the remaining interest. 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 $34.7 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, but is considering the issuance of the Company's Class A Common
Stock together with either proceeds of the Private Offering, proceeds from the
New 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 and become a Restricted Subsidiary. 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.
OWNERSHIP AND MANAGEMENT
Mr. Paxson, the Company's principal stockholder, has been involved in the
broadcasting industry for over 40 years and has been associated with over 125
FCC licenses. He has been at the forefront of several innovative broadcasting
concepts over the last decade, including his leadership role in the creation and
early growth of electronic retailing as the creator and co-founder of Home
Shopping Network, Inc. and Silver King Communications, Inc. Under Mr. Paxson's
direction, the Company was one of the first radio broadcasters to capitalize on
changes in federal regulations permitting radio market duopolies. As the Company
has grown, Mr. Paxson has assembled an experienced team of seasoned radio and
television executives to implement the Company's operating strategies and to
expand the Infomall TV Network, including several former owner/ operators of
radio and television properties. Mr. Paxson has made equity investments in the
Company totaling approximately $37 million. In November 1994, the Company's
Class A Common Stock became publicly-held through its merger with The American
Network Group, Inc. ("ANG") and is currently listed on the American Stock
Exchange under the ticker symbol PXN.
THE EXCHANGE OFFER
Purpose of the Exchange
Offer......................... $230,000,000 of the Original Notes were sold in
the Private Offering by the Company on
September 28, 1995 to Wood Gundy Inc. and Smith
Barney Inc. (the "Initial Purchasers"). The
holders of Original Notes and New Notes are
collectively referred to herein as the
"Holders." In connection therewith, the Company
executed and delivered, for the benefit of the
Holders of the Original Notes, an Exchange
Offer Registration Rights Agreement dated
September 28, 1995 (the "Registration Rights
Agreement"), which is filed as an exhibit to
the Registration Statement of which this
Prospectus is a part, providing for, among
other
5
<PAGE> 13
things, the Exchange Offer so that the New
Notes will be freely transferable by the
Holders thereof without registration or any
prospectus delivery requirements under the
Securities Act, except that a "dealer" or any
of its "affiliates" as such terms are defined
under the Securities Act, who exchanges
Original Notes held for its own account ( a
"Restricted Holder") will be required to
deliver copies of this Prospectus in connection
with any resale of the New Notes issued in
exchange for such Original Notes (the
"Prospectus Delivery Requirement"). See "The
Exchange Offer -- Purpose and Effect of the
Exchange Offer" and "Plan of Distribution."
The Exchange Offer............ The Company is offering to exchange pursuant to
the Exchange Offer up to $230,000,000 aggregate
principal amount of the New Notes for up to
$230,000,000 aggregate principal amount of the
Original Notes. The Original Notes and the New
Notes are collectively referred to herein as
the "Notes." The terms of the New Notes are
substantially identical in all respects
(including principal amount, interest rate and
maturity) to the terms of the Original Notes
for which they may be exchanged pursuant to the
Exchange Offer, except that the New Notes are
freely transferable by Holders thereof (other
than as provided herein), and are not subject
to any covenant restricting transfer absent
registration under the Securities Act. See "The
Exchange Offer -- Terms of the Exchange" and
"The Exchange Offer -- Procedures for
Tendering."
The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Original
Notes being tendered for exchange.
Expiration Date............... The Exchange Offer will expire at 5:00 p.m.,
New York City time on , 1995,
unless extended (the "Expiration Date").
Conditions of the Exchange
Offer......................... The Company's obligations to consummate the
Exchange Offer are subject to certain
conditions. See "The Exchange
Offer -- Conditions to the Exchange Offer." The
Company reserves the right to terminate or
amend the Exchange Offer at any time prior to
the Expiration Date upon the occurrence of any
such conditions.
Withdrawal Rights............. Tenders may be withdrawn at any time prior to
the Expiration Date; otherwise, all tenders
will be irrevocable.
Procedures for Tendering
Notes......................... See "The Exchange Offer -- Procedures for
Tendering."
Federal Income Tax
Consequences.................. The exchange of Original Notes for New Notes
should not be a taxable exchange for federal
income tax purposes. See "Certain Federal
Income Tax Considerations."
Effect on Holders of the
Original Notes................ As a result of the making of, and upon
acceptance for exchange of all validly tendered
Original Notes pursuant to the terms of this
Exchange Offer, the Company will have fulfilled
its obligations contained in the Registration
Rights Agreement and, accordingly, there will
be no increase in the interest rate on the
Original Notes
6
<PAGE> 14
pursuant to the applicable terms of the
Registration Rights Agreement due to the
Exchange Offer. Holders of the Original Notes
who do not tender their Original Notes will be
entitled to all the rights and limitations
applicable thereto under the Indenture, dated
as of September 28, 1995, among the Company and
The Bank of New York, as trustee (the
"Trustee"), relating to the Original Notes and
the New Notes (the "Indenture"), except for any
rights under the Indenture or the Registration
Rights Agreement, which by their terms,
terminate or cease to have further effect as a
result of the making of, and the acceptance for
exchange of all validly tendered Original Notes
pursuant to, the Exchange Offer. All untendered
Original Notes will continue to be subject to
the restrictions on transfer provided for in
the Original Notes and in the Indenture. To the
extent that Original Notes are tendered and
accepted in the Exchange Offer, the trading
market for untendered Original Notes could be
adversely affected.
Use of Proceeds............... There will be no cash proceeds to the Company
from the exchange pursuant to the Exchange
Offer.
THE NEW NOTES
The Exchange Offer applies to the $230,000,000 principal amount of the
Original Notes outstanding as of the date hereof. The form and the terms of the
New Notes will be identical in all material respects to the form and the terms
of the Original Notes except that the New Notes will have been registered under
the Securities Act and, therefore, will not contain legends restricting the
transfer thereof. The New Notes evidence the same debt as the Original Notes
exchanged for the New Notes and will be entitled to the benefits of the same
Indenture under which the Original Notes were issued. See "Description of the
Notes." Certain capitalized terms listed below are defined under the caption
"Description of the Notes -- Certain Definitions."
Issuer........................ Paxson Communications Corporation.
Securities Offered............ $230,000,000 principal amount of 11 5/8% Senior
Subordinated Notes due 2002 (the "Notes").
Maturity Date................. October 1, 2002.
Interest Rate................. The Notes will bear interest at a rate of
11 5/8% per annum.
Interest Payment Dates........ Interest will accrue from the last April 1 to
October 1 on which interest was paid on the
Original Notes, or if no interest has been paid
on such Original Notes, from September 28,
1995.
Ranking....................... The Notes will be general unsecured obligations
of the Company subordinate in right of payment
to all existing and future Senior Indebtedness
of the Company and senior in right of payment
to all subordinated indebtedness of the
Company. At June 30, 1995 after giving pro
forma effect to the Transactions, the Company
and the Guarantors would have had approximately
$41.9 million of Senior Indebtedness
outstanding.
Guarantees.................... The Notes will be unconditionally guaranteed,
on a senior subordinated basis as to the
payment of principal, premium, if any, and
interest, jointly and severally (the
"Guarantees"), by all of the direct and
indirect subsidiaries of the Company (the
"Guarantors"). The Guarantees will be
subordinated to all Senior Indebtedness of the
respective Guarantors.
7
<PAGE> 15
Mandatory Redemption.......... There will be no mandatory redemption
requirements with respect to the Notes.
Optional Redemption........... The Notes will be redeemable at the option of
the Company, in whole or in part, at any time
on or after October 1, 1999 at the redemption
prices set forth herein, together with accrued
and unpaid interest to the redemption date. In
addition, the Company, at its option, may
redeem in the aggregate up to 25% of the
original principal amount of Notes at any time
prior to October 1, 1998, at a redemption price
equal to 110% of the principal amount thereof
plus accrued interest to the redemption date
with the Net Proceeds of one or more Public
Equity Offerings or Major Asset Sales;
provided, however, that at least $172,500,000
aggregate principal amount of Notes remains
outstanding and that such redemption occurs
within 90 days following the closing of any
such Public Equity Offering or Major Asset
Sale.
Change of Control............. In the event of a Change of Control, the
Company will be required to make an offer to
purchase all outstanding Notes at a price equal
to 101% of the principal amount thereof plus
accrued and unpaid interest to the date of
repurchase. See "Description of the Notes --
Change of Control Offer." There can be no
assurance that the Company will have sufficient
funds or will be contractually permitted by
outstanding Senior Indebtedness to pay the
required purchase price for all Notes tendered
by holders upon a Change of Control.
Certain Covenants............. The Indenture will contain covenants for the
benefit of the holders of the Notes that, among
other things, restrict the ability of the
Company and its Restricted Subsidiaries (as
defined herein) to: (i) incur additional
Indebtedness; (ii) pay dividends and make
distributions; (iii) issue stock of
subsidiaries; (iv) make certain investments;
(v) repurchase stock; (vi) create liens; (vii)
enter into transactions with affiliates; (viii)
enter into sale and leaseback transactions;
(ix) merge or consolidate the Company or the
Guarantors; and (x) transfer and sell assets.
These covenants are subject to a number of
important exceptions. See "Description of the
Notes -- Certain Covenants."
RISK FACTORS
Prospective purchasers of the Notes should consider carefully the
information set forth under the caption "Risk Factors," and all other
information set forth in this Prospectus, in evaluating the Company, the New
Notes and exchanging the Original Notes for the New Notes.
8
<PAGE> 16
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following summary historical and pro forma financial data, insofar as
it relates to each of the four years ended December 31, 1994, has been derived
from Company prepared financial information and should be read in conjunction
with the audited financial statements, including the consolidated balance sheets
at December 31, 1993 and 1994 and the related consolidated statements of
operations for each of the years in the three year period ended December 31,
1994 and the notes thereto appearing elsewhere in this Prospectus. The summary
historical and pro forma financial data as of and for the six months ended June
30, 1994 and 1995 has been derived from unaudited financial statements also
appearing herein but which, in the opinion of management, include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results for the unaudited interim periods. Results for
the six months ended June 30, 1995 are not necessarily indicative of results
that may be expected for the entire year. The summary financial information
should be read in conjunction with the information contained in the Company's
consolidated financial statements and the notes thereto, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," "Pro
Forma Financial Information" and "Selected Historical and Pro Forma Financial
Data" included elsewhere herein.
The following unaudited summary pro forma statement of operations data and
other data give effect to, among other things, the Transactions, as if they had
occurred on January 1, 1994. The following unaudited summary pro forma balance
sheet data give effect to, among other things, the Transactions, as if they had
occurred on June 30, 1995. The Transactions and certain management assumptions
and adjustments are described in the accompanying notes hereto. The pro forma
information should be read in conjunction with the Company's consolidated
financial statements and the notes thereto, as of December 31, 1994 and for the
three years then ended, appearing elsewhere in this Prospectus. This pro forma
information is not necessarily indicative of the Company's actual or future
operating results or financial position.
9
<PAGE> 17
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
---------------------------------------------------- -------------------------------
PRO FORMA PRO FORMA
1991 1992 1993 1994 1994(A) 1994 1995 1995(A)
------- -------- -------- -------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total gross revenue............... $ 830 $ 17,062 $ 32,062 $ 62,067 $ 92,588 $ 21,514 $ 44,356 $ 52,683
Operating expenses, excluding
depreciation, amortization and
option plan compensation........ 1,719 17,922 28,872 51,225 77,590 18,593 37,645 42,781
Option plan compensation(b)....... -- -- -- -- -- -- 9,404 9,404
Depreciation and amortization..... 497 5,977 9,351 12,404 31,580 5,266 8,054 15,790
------- -------- -------- -------- --------- -------- -------- ---------
Loss from operations.............. (1,386) (6,837) (6,161) (1,562) (16,582 ) (2,345) (10,747) (15,292 )
Interest expense, net(c).......... (52) (1,262) (2,052) (4,875) (30,769 ) (1,391) (4,309) (15,385 )
Other income (expense), net....... 10 134 221 (5) (62 ) 223 (14) (38 )
Benefit (provision) for income
taxes........................... -- -- (2,960) 1,680 1,680 1,396 640 640
Extraordinary item and cumulative
effect of a change in accounting
principle(d).................... -- 110 (457) -- -- --
------- -------- -------- -------- -------- --------
Net loss.......................... (1,428) (7,855) (11,409) (4,762) (2,117) (14,430)
Dividends and accretion on
preferred stock and common stock
warrants(e)..................... -- -- (151) (3,386) (1,587) (5,864)
------- -------- -------- -------- -------- --------
Net loss attributable to common
stock and common stock
equivalents..................... $(1,428) $ (7,855) $(11,560) $ (8,148) $ (3,704) $(20,294)
======= ======== ======== ======== ======== ========
OTHER DATA:
EBITDA(f)......................... $ (796) $ (162) $ 4,522 $ 11,644 $ 15,930 $ 3,224 $ 8,155 $ 10,266
Capital expenditures(g)........... 60 1,273 1,963 5,917 5,917 1,485 9,589 9,589
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
TWELVE MONTHS
ENDED JUNE 30,
1995(A)
--------------
<S> <C>
Adjusted EBITDA(h)................................................................................. $ 27,946
Ratio of Adjusted EBITDA to interest expense, net.................................................. 0.91x
Ratio of total debt to Adjusted EBITDA............................................................. 9.63
Ratio of net debt to Adjusted EBITDA(i)............................................................ 9.33
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1995
-----------------------
ACTUAL PRO FORMA(A)
-------- ------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................................................................. $ 8,409 $ 8,409
Net working capital........................................................................ 7,847 19,243
Total assets............................................................................... 194,963 321,130
Total debt................................................................................. 132,278 269,178
Redeemable preferred stock and Class A and B common stock warrants......................... 49,743 49,743
</TABLE>
(see footnotes on the following page)
10
<PAGE> 18
NOTES TO SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
(a) Pro forma statement of operations and other data for the year ended
December 31, 1994 and the six and twelve months ended June 30, 1995 give effect
to: (i) the consummation of the Offering; (ii) the execution of the New Credit
Facility; (iii) the 1994/1995 Acquisitions (as defined in "The Acquisitions")
using the prior operators' unaudited financial information except for the year
ended December 31, 1994 for the Boston, Philadelphia, Houston and Los Angeles IN
TV stations which are derived from audited financial statements included
elsewhere herein; (iv) the Acquisitions; and (v) the elimination of certain
terminated operations, as if such events included in (i) through (v) had
occurred on January 1, 1994. For purposes of the statement of operations and
other data, the results of operations of the San Francisco, Washington, D.C.,
Dallas, Atlanta (WNGM-TV) or Phoenix IN TV stations were not included because
the prior operators' financial information is not available, and the results of
the New York and Akron television stations to be acquired were not included
because the prior operators' financial information is not relevant to the future
operations of such stations by the Company. However, depreciation and
amortization expense has been increased for each period to reflect preliminary
purchase price allocations for all stations included in the Acquisitions. The
pro forma balance sheet data give effect to, among other things, the
Transactions as if the Transactions had occurred on June 30, 1995.
(b) Option plan compensation represents a non-cash charge associated with
the granting of common stock options to employees under the Company's Stock
Incentive Plan. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Results of Operations" and "Management -- Stock
Incentive Plan."
(c) Interest expense, net is equal to total interest expense less interest
income.
(d) Extraordinary item and cumulative effect of a change in accounting
principle reflects a gain of $109,540 in 1992 as a result of a change in the
method of calculating depreciation and an extraordinary loss of $457,147 in 1993
associated with the write-off of capitalized financing costs on debt retired in
conjunction with the Company's reorganization on December 15, 1993. The pro
forma income statement data for the year ended December 31, 1994 and the six
months ended June 30, 1995 do not reflect an extraordinary loss on the write-off
of previously capitalized financing costs of $6.3 million and $11.0 million,
respectively.
(e) Dividends and accretion on preferred stock and common stock warrants
represent the Senior Preferred Stock (15% dividend rate), redeemable Class A and
B common stock warrants and Junior Preferred Stock (12% dividend rate). Such
capital stock is mandatorily redeemable and certain issues have accretion
provisions. See "Description of the Capital Stock."
(f) EBITDA is defined as net income (loss) before (i) extraordinary item and
cumulative effect of a change in accounting principle, (ii) benefit (provision)
for income taxes, (iii) other income (expense), net, (iv) interest expense, net,
(v) depreciation and amortization, (vi) option plan compensation and (vii)
non-recurring items including terminated operations; less scheduled broadcast
rights payments.
(g) Includes all capital expenditures including expenditures associated with
the upgrade and conversion of acquired television stations to the IN TV format.
Pro forma capital expenditures exclude $19.3 million associated with the
Acquisitions which will be funded from the proceeds of the Offering and
borrowings under the New Credit Facility.
(h) Adjusted EBITDA for the pro forma twelve months ended June 30, 1995 is
defined as EBITDA for such period less (i) segment operating profit for the
Infomall TV Network for such period plus (ii) four times segment operating
profit for the Infomall TV Network for the quarter ended June 30, 1995. For
purposes of this calculation, the results of operations of the San Francisco,
Washington D.C., Dallas, Atlanta (WNGM-TV) or Phoenix IN TV stations were not
included because the prior operators' financial information is not available,
and the results of the New York and Akron television stations to be acquired
were not included because the prior operators' financial information is not
relevant to the future operations of such stations by the Company. Adjusted
EBITDA is calculated on a basis consistent with calculations under the
Indenture.
(i) Net debt is total debt less cash and cash equivalents.
11
<PAGE> 19
RISK FACTORS
Prospective investors should consider carefully the following risk factors
in addition to the other information set forth in this Prospectus before making
an investment in the Notes.
HIGH LEVEL OF INDEBTEDNESS; ABILITY TO SERVICE INDEBTEDNESS, NET LOSSES
After giving effect to the Transactions, the Company will be highly
leveraged. At June 30, 1995, on a pro forma basis, after giving effect to the
Transactions, the Company would have had $269.2 million of total debt in
addition to $49.7 million of redeemable preferred stock and common stock
warrants. In addition, subject to the restrictions in the Indenture and the New
Credit Facility, the Company may incur additional indebtedness from time to time
to finance acquisitions or capital expenditures or for other purposes. The
Company has incurred net losses in each of its fiscal years since inception. Net
losses for the fiscal years ended December 31, 1992, December 31, 1993, and
December 31, 1994 were $7.9 million, $11.4 million, $4.8 million, respectively,
and for the six-month period ended June 30, 1995 was $14.4 million. Earnings
were inadequate to cover fixed charges by approximately $1.4 million, $8.0
million, $8.0 million, $6.4 million, $3.5 million and $15.1 million, for the
years ended December 31, 1991, December 31, 1992, December 31, 1993, December
31, 1994 and for the six-month periods ended June 30, 1994 and June 30, 1995,
respectively. On a pro forma basis after giving effect to the Transactions,
earnings would have been inadequate to cover fixed charges by $47.4 million and
$30.7 million for the year ended December 31, 1994 and the six-month period
ended June 30, 1995, respectively. There can be no assurance that the Company
will not continue to generate net losses in the future. Continued net losses
could have an adverse effect on the market value and marketability of the Notes.
The level of the Company's indebtedness could have important consequences
to holders of the Notes, including: (i) a substantial part of the Company's cash
flow from operations must be dedicated to debt service and will not be available
for other purposes; (ii) the Company's ability to obtain needed additional
financing in the future may be limited; (iii) the Company's leveraged position
and covenants contained in the Indenture and the New Credit Facility (or any
replacement thereof) could limit its ability to expand and make capital
improvements and acquisitions; and (iv) the Company's level of indebtedness
could make it more vulnerable to economic downturns, limit its ability to
withstand competitive pressures, and limit its flexibility in reacting to
changes in its industry and economic conditions generally. Certain of the
Company's competitors currently operate on a less leveraged basis and have
significantly greater operating and financing flexibility than the Company.
The Company's ability to pay interest on the Notes and to satisfy its other
debt obligations will depend upon its future operating performance, which will
be affected by prevailing economic conditions and financial, business and other
factors, many of which are beyond its control. The Indenture will permit the
redemption of the Company's Senior Preferred Stock and certain dividend payments
on the Junior Preferred Stock prior to the maturity of the Notes. The Company
expects that its operating cash flow will be sufficient to meet its operating
expenses and to service its debt and preferred stock requirements as they become
due. However, if the Company is unable to service its indebtedness or make
payments with respect to its preferred stock, it will be forced to adopt an
alternative strategy that may include actions such as reducing or delaying
capital expenditures, selling assets, restructuring or refinancing its
indebtedness or seeking additional equity capital. There can be no assurance
that any of these strategies could be effected on satisfactory terms, if at all.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
DEPENDENCE ON KEY PERSONNEL
The Company's business depends upon the efforts, abilities and expertise of
its executive officers and other key employees, including Lowell W. Paxson. If
certain of these executive officers were to leave the Company, the Company's
operating results could be adversely affected. The Company has no long-term
employment contracts with any of its executive officers, other than Lowell W.
Paxson, whose agreement expires on December 31, 1999, unless terminated sooner
as permitted therein. See "Management."
12
<PAGE> 20
MUST CARRY REGULATIONS
The Company believes that its growth and success depends upon access to
households served by cable television systems. Pursuant to the Cable Act of 1992
(the "1992 Cable Act"), each broadcaster was required to elect to exercise
either certain "must-carry" or "retransmission consent" rights in connection
with carriage of their signals by cable systems in their local market. By
electing the must-carry rights, a broadcaster can demand carriage on a specified
channel on cable systems within its DMA. These must-carry rights are not
absolute, and their exercise is dependent on variables such as (i) the number of
activated channels on a cable system, (ii) the location and size of a cable
system, and (iii) the amount of duplicative programming on a broadcast station.
Therefore, under certain circumstances, a cable system can decline to carry a
given station. Alternatively, if a broadcaster chooses to exercise
retransmission consent rights, it can prohibit cable systems from carrying its
signal or grant the appropriate cable system the authority to retransmit the
broadcast signal for a fee or other consideration. The Company's television
stations have, with few exceptions, elected the must-carry alternative. The
Company's elections of retransmission or must-carry status will continue until
the next required election date of October 1, 1996.
The must-carry rules have been subject to judicial scrutiny. In April 1993,
the United States District Court for the District of Columbia upheld the
constitutionality of the must-carry provisions. In June 1994, the Supreme Court
ruled that the must-carry provisions were "content-neutral" and, thus, not
subject to strict scrutiny; however, the Supreme Court remanded the case to the
lower federal court with instructions to hold further proceedings with respect
to evidence that lack of the must-carry requirements would harm local
broadcasting. Hearings were recently held by the District Court and the matter
is pending before the District Court. Management cannot predict the final
outcome of the Supreme Court case or the extent to which, in the absence of any
must-carry obligation, its television stations might lose viewers because of the
deletion or repositioning of its signal on cable television systems. See
"Business -- Federal Regulation of Broadcasting."
GOVERNMENT REGULATION
Each of the Company's radio and television stations operates pursuant to
one or more licenses issued by the Federal Communications Commission (the "FCC")
that expire at different times, commencing February 1996. The Company may apply
to renew those licenses, and third parties may challenge those applications or
file competing applications. Although the Company has no reason to believe that
its licenses will not be renewed in the ordinary course, there can be no
assurance that the licenses will be renewed.
The radio and television broadcasting industries are subject to extensive
and changing regulation. Among other things, the Communications Act of 1934, as
amended (the "Communications Act"), and FCC rules and policies require FCC
consent to assignments of FCC licenses and transfers of control of FCC
licensees. Congress and the FCC currently have under consideration and may in
the future adopt new laws and regulations and policies regarding a wide variety
of matters which could, directly or indirectly, adversely affect the ownership
and operation of the Company's broadcast properties, as well as the Company's
business strategies. For example, changes in the rule for attributing the
ownership of media interests for purposes of the FCC's multiple ownership and
cross-ownership rules could require that the Company restructure or divest
itself of some existing broadcast interests. Changes in the rules to treat
television time brokerage agreements as attributable interests could require the
renegotiation of all or some of the Company's existing time brokerage
arrangements with television licensees. Relaxation of the existing multiple
ownership and cross-ownership rules and policies by the FCC or through new
legislation such as that now pending in Congress could give the Company greater
freedom in structuring future acquisitions and programming arrangements, but
also may remove the restrictions that now restrain larger media, entertainment
and telecommunication companies, with greater access to capital and resources
than the Company, from competing with the Company for the acquisition of media
properties and the negotiation of programming arrangements. The adoption of
measures such as elimination of restrictions on the offering of multiple network
services by the existing major television networks, the removal of restrictions
on the participation by the regional Bell holding companies in cable television
and other direct-to-home video technologies, and the removal of restrictions on
nationwide broadcast ownership could accelerate the existing trend toward
vertical integration in the media and home
13
<PAGE> 21
entertainment industries and cause the Company to face more formidable
competition in the future. See "Business -- Federal Regulation of Broadcasting."
MULTIPLE OWNERSHIP RULES AND EFFECT ON TIME BROKERAGE AGREEMENTS
On a national level, FCC rules and regulations generally prevent an entity
or individual from having an attributable interest in more than 12 television
stations, with an additional limit on nationwide reach under which UHF stations
are credited with only 50% of the television households in their markets. On a
local level, the "duopoly" rules prohibit such interests in two or more
television stations with overlapping service areas. The FCC generally applies
its ownership limits to "attributable" interests held by an individual,
corporation, partnership or other entity. In the case of corporations holding
broadcast licenses, the interests of officers, directors and those who directly
or indirectly have the right to vote 5% or more of the corporation's voting
stock (or 10% or more of such stock in the case of insurance companies, certain
regulated investment companies and bank trust departments) are generally deemed
to be attributable, as are positions as an officer or director of a corporate
parent of a broadcast licensee.
The FCC has initiated rule making proceedings to consider proposals to
modify its television ownership restrictions, including ones that may permit
ownership, in some circumstances, of two television stations with overlapping
service areas. The FCC also is considering in these proceedings whether to adopt
restrictions on television time brokerage agreements. The "duopoly" rules for
television currently prevent the Company from acquiring the FCC licenses of
television stations with which it has time brokerage agreements in those markets
where the Company owns a station. In addition, if the FCC were to decide that
the provider of programming services under time brokerage agreements should be
treated as having an attributable ownership in the television station it
programs, and if it did not relax the duopoly rules, or if the FCC were to adopt
restrictions on time brokerage agreements without grandfathering existing time
brokerage agreements, the Company could be required to modify or terminate
certain of its time brokerage agreements. In such an event, the Company could be
required to pay termination penalties under certain of its time brokerage
agreements. Furthermore, if the FCC were to find that the licensees of the
stations with which the Company has time brokerage agreements failed to maintain
control over their operations as required by FCC rules and policies, the
licensee of the time brokerage agreements and/or the Company could be fined or
could be set for hearing, the outcome of which could be a fine or, under certain
circumstances, loss of the applicable FCC license. The Company is unable to
predict the ultimate outcome of possible changes to these FCC rules and the
impact such FCC rules may have on its broadcasting operations. See
"Business -- Federal Regulation of Broadcasting."
CHANGE OF CONTROL
In the event of a Change of Control, the Company will be required to offer
to repurchase all of the outstanding Notes at 101% of the principal amount
thereof plus any accrued and unpaid interest thereon to the date of the
purchase. A Change of Control under the Indenture will result in a default under
the New Credit Facility. The exercise by the holders of the Notes of their right
to require the Company to repurchase the Notes upon a Change of Control could
also cause a default under other indebtedness of the Company, even if the Change
of Control itself does not, because of the financial effect of such repurchase
on the Company. The Company's ability to pay cash to the holders of the Notes
upon a repurchase may be limited by the Company's then existing financial
resources. In addition, holders of the Senior Preferred Stock (as defined
herein) will have the right to require the Company to redeem the Senior
Preferred Stock in the event of a change of control (as defined with respect
thereto) and cause a significant increase in the dividend rate of the Junior
Preferred Stock (as defined herein) unless it is redeemed. There can be no
assurance that in the event of a Change of Control, the Company will have, or
will have access to, sufficient funds or will be contractually permitted under
the terms of outstanding indebtedness to pay the required purchase price for all
Notes tendered by holders upon a Change of Control or redeem Senior Preferred
Stock or Junior Preferred Stock. See "Description of the Notes -- Change of
Control," "Description of New Credit Facility" and "Description of Capital
Stock -- Senior Preferred Stock" and "-- Junior Preferred Stock."
14
<PAGE> 22
NEW INDUSTRY
The business in which IN TV operates is a relatively new industry with no
significant operating history. Potential investors should be aware of the
difficulties and uncertainty that are normally associated with new industries,
including a lack of consumer and advertiser acceptance, difficulty in obtaining
financing, increasing competition, advances in technology, and changes in law
and regulations. There can be no assurance that this new industry will develop
and continue as a viable industry. Such development could require the Company to
sell its IN TV dedicated television stations or convert them to other uses that
are less profitable than expected. Growth in revenue from the Company's IN TV
business depends on increasing consumer awareness and acceptance of infomercial
programming and growing demand by infomercial advertisers. See "Business --
Infomall TV Network."
ABILITY TO MANAGE GROWTH
Since inception, the Company has experienced rapid growth, primarily
through acquisitions. Rapidly growing businesses frequently encounter unforeseen
expenses and delays in completing acquisitions, as well as difficulties and
complications in integrating acquired operations without disruption to overall
operations. In addition, such rapid growth may adversely affect the Company's
operating results because of many factors, including capital requirements,
transitional management and operating adjustments, and interest costs associated
with acquisition debt. There can be no assurance that the Company will
successfully integrate recently acquired and future acquired operations or
successfully manage the costs often associated with rapid growth. The Company
continuously evaluates the acquisition of additional television and radio
stations.
TIME BROKERAGE AGREEMENTS -- RIGHTS OF PREEMPTION AND TERMINATION
A significant number of the television stations the Company operates or
intends to acquire will be operated pursuant to time brokerage agreements and
will not be owned by the Company. The Company has options to purchase all but
two of the stations it operates under time brokerage agreements, which options
may be exercised only when permitted by applicable law. All of the Company's
time brokerage agreements allow, in accordance with FCC rules, regulations and
policies, preemption of the Company's programming by the FCC licensee of each
station with which the Company has a time brokerage agreement. In addition, each
time brokerage agreement provides that under certain limited circumstances it
may be terminated by the FCC licensee. Accordingly, the Company cannot be
assured that it will be able to air all the programming expected to be aired on
those stations with which it has a time brokerage agreement or that the Company
will receive the expected advertising revenue from the sale of advertising in
such programming. Although the Company believes that the terms and conditions of
each of its time brokerage agreements should enable the Company to air and
utilize the programming and other non-broadcast license assets of the respective
stations, there can be no assurance that early terminations of the time
brokerage agreements or unexpected preemptions of all or a significant part of
the programming by the FCC licensee of such stations will not occur. An early
termination of one of the Company's time brokerage agreements, or repeated and
material preemptions of programming could adversely affect the Company's
operations. In addition, the Company's time brokerage agreements have expiration
dates. The WTJC-TV time brokerage agreement, effective October 6, 1995, is for a
term of 10 years, subject to renewal upon the mutual agreement of the parties.
The KUBD-TV time brokerage agreement, effective August 31, 1995, is for a term
of 10 years, subject to renewal upon the mutual agreement of the parties. The
WIRB-TV time brokerage agreement, effective August 31, 1995, is for a term of 10
years, subject to renewal upon the mutual agreement of the parties. The WTVX-TV
time brokerage agreement, effective August 4, 1995, is for a term of seven
years, subject to renewal as mutually agreed upon by the parties. The WCTD-TV
time brokerage agreement, effective April 1994, is for a term of five years,
renewable by the Company for an additional five years. Finally, the WFCT-TV time
brokerage agreement, which commenced in August 1, 1994, is for an initial term
of 30 months, renewable for an additional 18 months. The Company anticipates
that its future time brokerage agreements will be for terms of not more than 10
years. There can be no assurance that the Company will be able to negotiate
extensions of its time brokerage agreements, after such additional renewal
periods, on terms satisfactory to the Company.
15
<PAGE> 23
INDUSTRY AND ECONOMIC CONDITIONS; SEASONALITY
The profitability of the Company's radio and television stations is subject
to various factors that influence the radio and television broadcasting
industries as a whole. The Company's radio and television stations may be
affected by numerous factors, including changes in audience tastes, priorities
of advertisers, new laws and governmental regulations and policies, changes in
broadcast technical requirements, technological changes, proposals to eliminate
the tax deductibility of expenses incurred by advertisers and changes in the
willingness of financial institutions and other lenders to finance radio and
television station acquisitions and operations. The Company cannot predict
which, if any, of these or other factors might have a significant impact on the
radio and television broadcasting industry in the future, nor can it predict
what impact, if any, the occurrence of these or other events might have on the
Company's operations. Generally, advertising tends to decline during economic
recession or downturn. Consequently, the Company's broadcasting revenue is
likely to be adversely affected by a recession or downturn in the United States
economy or other events or circumstances that adversely affect advertising
activity. In addition, the Company's operating results in individual geographic
markets could be adversely affected by local regional economic downturns,
particularly in Florida. Seasonal revenue fluctuations are common in the radio
and television broadcasting industry and result primarily from fluctuation in
advertising expenditures by local retailers. Paxson Radio and Paxson Television
generally experience their lowest revenue for the year in the first quarter,
whereas their highest revenue generally occurs in the fourth fiscal quarter.
Because of the short operating history of IN TV, the Company cannot adequately
assess the effects of seasonality on IN TV.
COMPETITION; NEW TECHNOLOGY
The Company's television and radio stations are located in highly
competitive markets. The financial success of each of the Company's radio and
television markets stations depends, to a significant degree, upon its audience
ratings, its share of the overall radio and television, as applicable, sales
within its geographic market, the economic health of the market and the
popularity of its programming. The audience ratings and advertising of such
individual stations are subject to change and any adverse change in a particular
market could have a material adverse effect on the revenue and cash flows of the
Company. The Company's radio stations compete for audience share and advertising
revenue directly with other FM and AM radio stations and with other media within
their respective markets. Although the Company competes with other radio
stations with comparable programming formats in most of its markets, if another
station in the market were to convert its programming format to a format similar
to one of the Company's radio station's, if a new radio station were to adopt a
competitive format or if an existing competitor were to strengthen its
operations, the Company's stations could suffer a reduction in ratings or
advertising revenue and could require increased promotional and other expenses.
Paxson Television stations face similar competitive forces. In addition, to the
extent that certain of the Company's competitors have or may, in the future,
obtain greater resources than the Company, its ability to compete successfully
in its broadcasting markets may be impeded. There can be no assurance that the
Company will be able to maintain or increase its current audience ratings and
advertising revenue. See "Business -- Competition."
Radio and television broadcasting are also subject to competition with new
media technologies that are being developed or have been introduced, such as,
for radio, the delivery of audio programming through cable television, telephone
or electrical wires or the introduction of digital audio broadcasting ("DAB")
and, for television, direct satellite-to-home video programming and so-called
"video dialtone" in which telephone or other companies provide broad-band wire
links for delivery of video programming to homes by independent program
suppliers. DAB may provide a medium for the delivery by satellite or terrestrial
means of multiple audio programming formats to local and national audiences. The
Company cannot predict the effect, if any, that these or other new technologies
may have on the radio broadcast industry or on the Company. See
"Business -- Federal Regulation of Broadcasting."
The Company's IN TV stations face significant competition from various
broadcasting stations and broadcasting and cable networks that air both
traditional and long-form paid programming in varied amounts, as well as local
cable operators that sell blocks of time to long-form advertisers and could
encounter competition from developments in technology that may be subsequently
commercialized. To the extent that
16
<PAGE> 24
the Infomall TV Network is successful, it is likely that the Company will face
additional competition from new market entrants. See "Business -- Competition."
DEPENDENCE ON CASH FLOW FROM SUBSIDIARIES
The Company's operations are conducted through its direct and indirect
wholly-owned subsidiaries, which will guarantee the Notes, jointly and
severally, on a senior subordinated unsecured basis. The Company does not have
significant assets other than its equity in its subsidiaries, and it depends
upon the cash flow of its subsidiaries to meet its own obligations. Accordingly,
the Company's ability to make interest and principal payments when due to
holders of the Notes and its ability to purchase the Notes upon a Change of
Control depend upon the receipt of sufficient funds from its subsidiaries, which
may be restricted by the terms of future Senior Indebtedness of such
subsidiaries. As a result, the Notes and the subsidiary Guarantees effectively
will be subordinated to all existing and future Senior Indebtedness and other
liabilities and commitments of the subsidiaries.
SUBORDINATION OF THE NOTES
The Notes will be subordinated in right of payment to all Senior
Indebtedness of the Company. In the event of bankruptcy, liquidation or
reorganization of the Company, the assets of the Company will be available to
pay obligations on the Notes only after all Senior Indebtedness has been paid in
full, and there may not be sufficient assets remaining to pay amounts due on any
or all of the Notes then outstanding. Similarly, the Guarantees will be
subordinated in right of payment to all Senior Indebtedness of the respective
Guarantors. In certain circumstances, provisions of Senior Indebtedness could
prohibit payments of amounts due to holders of the Notes. Immediately after
giving pro forma effect to the Offering, the Company would have Senior
Indebtedness in an aggregate amount of approximately $41.9 million.
Additionally, Senior Indebtedness may be incurred by the Company from time to
time, subject to certain restrictions. See "Description of the Notes -- Certain
Covenants -- Limitation on Additional Indebtedness."
RESTRICTIVE DEBT COVENANTS
It is expected that the New Credit Facility will contain certain
restrictive covenants that, among other things, limit the Company's ability to
incur additional indebtedness, create liens, and make investments and capital
expenditures. The New Credit Facility also may require the Company to comply
with certain financial ratios and tests, under which the Company will be
required to achieve certain financial and operating results. The Company's
ability to meet these financial ratios and tests may be affected by events
beyond its control, and there can be no assurance that they will be met. In the
event of such a default under the New Credit Facility, the lenders thereunder
may terminate their lending commitments and declare the indebtedness under the
New Credit Facility immediately due and payable which would result in a default
under the Notes. As a result of the priority and security afforded the New
Credit Facility, there can be no assurance that the Company would have
sufficient assets to pay indebtedness then outstanding under the New Credit
Facility and the Notes. See "Description of New Credit Facility." Any
refinancing of the New Credit Facility is likely to contain similar restrictive
covenants.
FRAUDULENT CONVEYANCE CONSIDERATIONS
The Notes are obligations of the Company and will be guaranteed by the
Guarantors. Substantially all the assets of the Company, other than stock of the
Guarantors, are held by the Guarantors and all of the Company's operating
revenue is derived from operations of the Guarantors. Accordingly, the Company's
ability to make interest and principal payments when due to holders of the Notes
depends upon the receipt of sufficient funds from the Guarantors. To the extent
that a court were to find that (i) a Guarantee was incurred by a Guarantor with
intent to hinder, delay or defraud any current or future creditor or the
Guarantor contemplated insolvency with a design to prefer one or more creditors
to the exclusion in whole or in part of other creditors or (ii) such Guarantor
did not receive fair consideration or reasonably equivalent value for issuing
its Guarantee and such Guarantor (a) was insolvent, (b) was rendered insolvent
by reason of the issuance of such Guarantee, (c) was engaged in or about to
engage in a business or transaction for which its
17
<PAGE> 25
remaining assets constituted unreasonably small capital to carry on its business
or (d) intended to incur, or believed, or reasonably should have believed, that
it would incur debts beyond its ability to pay such debts as they matured, the
court could avoid or subordinate such Guarantee in favor of the Guarantor's
other creditors or take other action detrimental to the holders of Notes. Among
other matters, a legal challenge of a Guarantee on fraudulent conveyance grounds
may focus on the benefits, if any, realized by the Guarantor as a result of the
issuance by the Company of the Notes. To the extent any Guarantees were voided
as fraudulent conveyances or held to be unenforceable for any other reason,
holders of the Notes would cease to have any claim in respect of such Guarantor
and would be creditors solely of the Company and any Guarantor whose Guarantee
was not voided or held unenforceable.
Based upon financial and other information currently available to it, the
Company believes that the Guarantees are being issued without the intent to
hinder, delay, or defraud any current or future creditors of the Guarantors and
that immediately following the consummation of the Transactions, including the
consummation of the Offering, the Company and each Guarantor will be solvent,
have sufficient capital for carrying on its business and be able to pay its
debts and other obligations as they mature. There can be no assurance, however,
that a court would reach the same conclusion. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and "Description of the Notes -- Guarantees."
LACK OF PUBLIC MARKET FOR THE NOTES
The New Notes are being offered to the Holders of the Original Notes. The
Original Notes were offered and sold to the Initial Purchasers who offered and
resold them to a small number of accredited institutional investors and are
eligible for trading in the Private Offerings, Resale and Trading through
Automatic Linkages (PORTAL) Market. Prior to the Exchange Offer, there has been
no market for the New Notes. The Company intends, to the extent practicable, to
apply for listing or quotation of the New Notes on a securities exchange or
stock market. However, there can be no assurance given that such listing or
quotation shall occur. Future trading prices of the New Notes will depend upon
many factors, including prevailing interest rates, the Company's operating
results and the market for similar securities.
CONSEQUENCE OF FAILURE TO EXCHANGE
Holders of Original Notes who do not exchange their Original Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Original Notes as set forth in the legend
thereon as a consequence of the offer or sale of the Original Notes pursuant to
an exemption from or in a transaction not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Original Notes may not be offered or sold, unless registered under
the Securities Act, except pursuant to an exemption from, or in a transaction
not subject to, the Securities Act or applicable state securities laws. The
Company does not currently expect that it will register the Original Notes under
the Securities Act. Based on interpretations by the staff of the Commission
issued in no-action letters to third parties, the Company believes that the New
Notes issued pursuant to the Exchange Offer in exchange for Original Notes may
be offered for resale, resold or otherwise transferred by the Holder thereof
(other than any such Holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act), provided that such New Notes are
acquired in the ordinary course of such Holder's business and such Holder has no
arrangement with any person to participate in the distribution of such New
Notes. Such no-action letters are not binding interpretations of the law. Any
Holder of Original Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the New Notes would not be acting
consistently with such interpretation by the staff of the Commission and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Thus, any New Notes
acquired by such Holder will not be freely transferable except in compliance
with the Securities Act. Each Restricted Holder that receives New Notes for its
own account in exchange for the Original Notes, where such Original Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. See "Plan of Distribution."
18
<PAGE> 26
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Original Notes were sold by the Company on September 28, 1995 to the
Initial Purchasers who resold them to certain accredited institutions in the
Private Offering. In connection with the Private Offering, the Company entered
into the Registration Rights Agreement, which requires that within thirty days
following the issuance of the Original Notes, the Company file with the
Commission a registration statement under the Securities Act with respect to an
issue of New Notes of the Company identical in all material respects to the
Original Notes, use its best efforts to cause such registration statement to
become effective under the Securities Act within 150 days following the issuance
of the Original Notes, and upon the effectiveness of that registration
statement, offer to the Holders of the Original Notes the opportunity to
exchange their Original Notes for a like principal amount of such New Notes,
which will be issued without a restrictive legend. The purpose of the Exchange
Offer is to fulfill the Company's obligations under the Registration Rights
Agreement. The Original Notes were initially represented by two global Notes in
registered form, each in the principal amount of $115,000,000 registered in the
name of Cede & Co., a nominee of The Depository Trust Company, New York, New
York ("DTC"), as depositary.
Based on no-action letters issued by the Staff of the Commission to third
parties, the Company believes that the New Notes issued pursuant to the Exchange
Offer in exchange for the Original Notes may be offered for resale, resold and
otherwise transferred by any Holder of such New Notes without compliance with
the registration and prospectus delivery provisions of the Securities Act (other
than "affiliates" of the Company within the meaning of Rule 405 under the
Securities Act), provided that such New Notes are acquired in the ordinary
course of such Holder's business and such Holder has no arrangement or
understanding with any person to participate in the distribution of such New
Notes. Such no-action letters are not binding interpretations of the law. Any
Holder of Original Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the New Notes would not be acting
consistently with such interpretation by the Staff of the Commission and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. Thus, any New Notes
acquired by such Holder will not be freely transferable except in compliance
with the Securities Act. Each Restricted Holder that receives New Notes for its
own account in exchange for the Original Notes, where such Original Notes were
acquired by such Restricted Holder as a result of market-making activities or
other trading activities, must acknowledge that it will deliver a prospectus in
connection with a resale of such New Notes. See "Plan of Distribution."
Upon consummation of the Exchange Offer, the Company's obligation to
increase the annual rate of interest payable with respect to the Original Notes
will be terminated.
As described above, the Original Notes were sold to the Initial Purchasers
and resold by the Initial Purchasers to a small number of institutional
investors on September 28, 1995, and there is currently a limited private
trading market for them. To the extent Original Notes are tendered and accepted
in the Exchange Offer, the principal amount of outstanding Original Notes will
decrease. Following the consummation of the Exchange Offer, Holders of Original
Notes will continue to be subject to certain restrictions on transfer.
Accordingly, the liquidity of the market of the Original Notes could be
adversely affected. See "Risk Factors -- Consequence of Failure to Exchange."
TERMS OF THE EXCHANGE
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal (which together constitute the "Exchange
Offer"), the Company will accept any and all Original Notes validly tendered,
and not theretofore withdrawn, prior to 5:00 p.m., New York City time, on the
Expiration Date. The Company will issue $1,000 principal amount of New Notes in
exchange for each $1,000 principal amount of outstanding Original Notes accepted
in the Exchange Offer, as promptly as practicable after the Expiration Date.
Holders may tender some or all of their Original Notes pursuant to the Exchange
Offer, provided, however, that Original Notes may be tendered only in integral
multiples of $1,000. The Exchange
19
<PAGE> 27
Offer is not conditioned upon any minimum aggregate principal amount of Original
Notes being tendered for exchange.
The form and terms of the New Notes are identical in all material respects
to the form and terms of the Original Notes except that the New Notes will have
been registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof. The New Notes will not represent additional
indebtedness of the Company and will be entitled to the benefits of the
Indenture, which is the same Indenture as the one under which the Original Notes
were issued.
Interest on New Notes will accrue from the most recent date to which
interest has been paid on the Original Notes or, if no interest has been paid,
from September 28, 1995.
Holders of Original Notes do not have any appraisal or dissenters' rights
under the Delaware General Corporation Law or the Indenture in connection with
the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange and exchanged Original Notes validly tendered for exchange
when, as and if the Company gives oral or written notice to the Exchange Agent
of acceptance of the tenders of such Original Notes for exchange. Exchange of
Original Notes accepted for exchange pursuant to the Exchange Offer will be made
by deposit of tendered Original Notes with the Exchange Agent, which will act as
agent for the tendering Holders for the purpose of receiving New Notes from the
Company and transmitting such New Notes to tendering Holders. In all cases, any
exchange of New Notes for Original Notes accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
certificates for such Original Notes (or of a confirmation of a book-entry
transfer of such Original Notes in the Exchange Agent's account at the Book-
Entry Transfer Facility (as defined in "-- Procedures for Tendering" below)), a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other required documents. For a description of the procedures
for tendering Original Notes pursuant to the Exchange Offer, see "-- Procedures
for Tendering."
If any tendered Original Notes are not accepted for exchange because of an
invalid tender, or due to the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Original Notes will be
returned without expense to the tendering Holders thereof (or in the case of
Original Notes tendered by book-entry transfer, such Original Notes will be
credited to the account of such Holder maintained at the Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of the
Exchange Offer.
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of a Letter of Transmittal (or facsimile
thereof), waive any right to receive notice of acceptance of their Original
Notes for exchange.
Holders who tender Original Notes in the Exchange Offer will not be
required to pay brokerage commission or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of
Original Notes pursuant to the Exchange Offer. The Company will pay all charges
and expenses, other than certain applicable taxes, in connection with the
Exchange Offer. See "-- Fees and Expenses."
This Prospectus, together with the Letter of Transmittal, is being sent to
registered Holders of Original Notes as of , 1995.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Expiration Date shall be 5:00 p.m. New York City time on
, 1995, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the Expiration Date shall be the latest date and time to
which the Exchange Offer is extended.
20
<PAGE> 28
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral (promptly confirmed in writing) or written notice
and will make a public announcement thereof, each prior to 9:00 a.m. New York
City time, of the next business day after the previously scheduled expiration
date of the Exchange Offer.
The Company reserves the right, at any time and from time to time, in its
sole discretion (subject to its obligations under the Registration Rights
Agreement) (i) to delay accepting any Original Notes or to delay the issuance
and exchange of New Notes for Original Notes, (ii) to extend the Exchange Offer
or, if any of the conditions set forth below under "-- Conditions to the
Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer
by giving oral or written notice of such delay, extension or termination to the
Exchange Agent, or (iii) to amend the terms of the Exchange Offer in any manner.
If the Company extends the period of time during which the Exchange Offer
is open, or if it is delayed in accepting for exchange of, or in issuing and
exchanging the New Notes for, any Original Notes, or is unable to accept for
exchange of, or issue New Notes for, any Original Notes pursuant to the Exchange
Offer for any reason, then, without prejudice to the Company's rights under the
Exchange Offer, the Exchange Agent may, on behalf of the Company, retain all
Original Notes tendered, and such Original Notes may not be withdrawn except as
otherwise provided below in "-- Withdrawal of Tenders." The adoption by the
Company of the right to delay acceptance for exchange of, or the issuance and
the exchange of the New Notes, for any Original Notes is subject to applicable
law, including Rule 14e-1(c) under the Exchange Act, which requires that the
Company pay the consideration offered or return the Original Notes deposited by
or on behalf of the Holders thereof promptly after the termination or withdrawal
of the Exchange Offer.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by a public announcement thereof. If the
Exchange Offer is amended in a manner determined by the Company to constitute a
material change, the Company will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered Holders, and
the Company will extend the Exchange Offer for a period of five to ten business
days, depending upon the significance of the amendment and the manner of
disclosure to the registered Holders, if the Exchange Offer would otherwise
expire during such five to ten business day period. The term "business day"
shall mean any day other than Saturday, Sunday or a federal holiday and shall
consist of the time period from 12:01 a.m. through 12:00 midnight, New York City
time.
Without limiting the manner in which the Company may choose to make a
public announcement of any delay, extension, termination or amendment of the
Exchange Offer, the Company shall have no obligation to make public, advertise,
or otherwise communicate any such public announcement, other than by making a
timely release to the Dow Jones News Service. Any such announcement of an
extension of the Exchange Offer shall be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date of the Exchange Offer.
PROCEDURES FOR TENDERING
Only a Holder of Original Notes may tender such Original Notes in the
Exchange Offer. To tender in the Exchange Offer, the Holder must complete, sign
and date the Letter of Transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the Letter of Transmittal, and mail or
otherwise deliver such Letter of Transmittal, or such facsimile, together with
any other required documents, to the Exchange Agent so that delivery is received
prior to 5:00 p.m., New York City time, on the Expiration Date. To be tendered
effectively, the Letter of Transmittal and other required documents must be
received by the Exchange Agent at the address set forth below under "-- Exchange
Agent" prior to 5:00 p.m., New York City time, on the Expiration Date. In
addition, either (i) the certificates for the tendered Original Notes must be
received by the Exchange Agent along with the Letter of Transmittal, or such
Original Notes must be tendered pursuant to the procedures for book-entry
transfer described below and a confirmation of receipt of such tendered Original
Notes must be received by the Exchange Agent, in each case, prior to 5:00 p.m.,
New York City time, on the Expiration Date, or (ii) the tendering Holder must
comply with the guaranteed delivery procedures described below.
21
<PAGE> 29
NO LETTERS OF TRANSMITTAL, CERTIFICATES REPRESENTING ORIGINAL NOTES OR ANY
OTHER REQUIRED DOCUMENTATION SHOULD BE SENT TO THE COMPANY. SUCH DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT.
The tender by a Holder of Original Notes made pursuant to any method of
delivery set forth in the Letter of Transmittal will constitute a binding
agreement between such tendering Holder and the Company in accordance with the
terms and subject to the conditions of the Exchange Offer.
The method of delivery of Original Notes and the Letter of Transmittal and
all other required documents to the Exchange Agent is at the election and risk
of the Holder. Instead of delivery by mail, it is recommended that Holders use
an overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure delivery to the Exchange Agent before the Expiration Date.
Holders may request their respective brokers, dealers, commercial banks, trust
companies or nominees to effect the above transaction for such Holders or for
assistance concerning the Exchange Offer.
Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's own behalf, such owner must,
prior to completing and executing the Letter of Transmittal and delivery of such
owner's Original Notes, either make appropriate arrangements to register
ownership of the Original Notes in such owner's name or obtain a properly
completed bond power from the registered Holder. The transfer of registered
ownership may take considerable time.
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Original Notes (which term includes any participants in
DTC whose name appears on a security position listing as the owner of the
Original Notes) or if delivery of the Original Notes is to be made to a person
other than the registered Holder, such Original Notes must be endorsed or
accompanied by a properly completed bond power, in either case signed by such
registered Holder as such registered Holder's name appears on such Original
Notes with the signature on the Original Notes or the bond power guaranteed by
an Eligible Institution (as defined below).
If the Letter of Transmittal or any Original Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorney-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by the
Company, must submit with the Letter of Transmittal evidence satisfactory to the
Company of their authority to so act.
Signature on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed by an Eligible Institution unless the Original Notes
tendered pursuant thereto are (i) by a registered Holder who has not completed
the box entitled "Special Registration Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal, (ii) for the account of an Eligible
Institution, or (iii) for the account of DTC. See Instruction 4 in the Letter of
Transmittal. In the event that a signature on a Letter of Transmittal or a
notice of withdrawal, as the case may be, is required to be guaranteed, such
guarantee must be by a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (any of which is referred to herein as an "Eligible Institution").
The Exchange Agent will establish an account with respect to the Original
Notes at DTC (the "Book-Entry Transfer Facility") for the purpose of the
Exchange Offer promptly after the date of this Prospectus, and any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make delivery of the Original Notes by causing the Book-Entry Transfer
Facility to transfer such Original Notes into the Exchange Agent's Notes account
in accordance with the Book-Entry Transfer Facility's procedure for such
transfer. ALTHOUGH DELIVERY OF ORIGINAL NOTES MAY BE EFFECTED THROUGH BOOK-ENTRY
TRANSFER IN THE EXCHANGE AGENT'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY,
THE LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) WITH ALL REQUIRED SIGNATURE
GUARANTEES AND ANY OTHER REQUIRED DOCUMENTS
22
<PAGE> 30
MUST, IN ANY CASE, BE TRANSMITTED TO AND RECEIVED AND CONFIRMED BY THE EXCHANGE
AGENT AT ITS ADDRESS SET FORTH BELOW PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON
THE EXPIRATION DATE, EXCEPT AS OTHERWISE PROVIDED BELOW UNDER THE CAPTION
"-- GUARANTEED DELIVERY PROCEDURES." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE EXCHANGE AGENT.
All questions as to the validity, form (including time of receipt),
acceptance and withdrawal of tendered Original Notes will be determined by the
Company in its sole discretion, which determination will be final and binding.
The Company reserves the absolute right to reject any and all Original Notes
determined by the Company not to be validly tendered or any Original Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the absolute right to waive any defects,
irregularities or conditions of tender as to particular Original Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived by the Company in its sole discretion, any
defects or irregularities in connection with tenders of Original Notes will
render such tenders invalid unless such defects or irregularities are cured
within such time as the Company shall determine. Although the Company intends to
notify Holders of defects or irregularities with respect to tenders of Original
Notes, neither the Company, the Exchange Agent nor any other person shall incur
any liability for failure to give such notification. Any Original Notes received
by the Exchange Agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived, as provided for herein, will be
returned by the Exchange Agent to the tendering Holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Original Notes that remain outstanding
subsequent to the Expiration Date, or, as set forth herein, to terminate the
Exchange Offer and, to the extent permitted by applicable law, purchase Original
Notes in the open market, privately negotiated transactions or otherwise. The
terms of any such purchases or offers could differ from the terms of the
Exchange Offer.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available, or (ii) who cannot deliver their Original
Notes (or complete the procedures for book-entry transfer), the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, may nevertheless effect a tender of Original Notes if all of
the following conditions are met:
(a) the tender is made by or through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail, hand delivery or
overnight courier) setting forth the name and address of the Holder, any
certificate number(s) of such Original Notes and the principal amount of
Original Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with the certificate(s) representing the Original Notes (or a
confirmation of a book-entry transfer of such Original Notes in the
Exchange Agent's account at the Book-Entry Transfer Facility) and any other
documents required by the Letter of Transmittal will be deposited into the
Exchange Agent's account at the Book-Entry Transfer Facility) and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof) as well as the certificate(s) representing all tendered
Original Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Original Notes into the Exchange Agent's Notes account at
the Book-Entry Transfer Facility) and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within five New
York Stock Exchange trading days after the Expiration Date.
23
<PAGE> 31
A Notice of Guaranteed Delivery is being sent to Holders along with the
Prospectus and the Letter of Transmittal.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to 5:00 p.m. New York City time, on the Expiration
Date, as such term is defined above under the caption "-- Expiration Date;
Extensions; Amendments; Termination." If the Company extends the period of time
during which the Exchange Offer is open, or if it is delayed in accepting for
exchange of, or in issuing and exchanging the New Notes for, any Original Notes
or if it is unable to accept for exchange of, or issue and exchange the New
Notes for, any Original Notes pursuant to the Exchange Offer for any reason,
then without prejudice to the Company's rights under the Exchange Offer, the
Exchange Agent may, on behalf of the Company, retain all Original Notes
tendered, and such Original Notes may not be withdrawn except as otherwise
provided herein, subject to Rule 14e-1(c) under the Exchange Act, which provides
that the person making an issuer tender offer shall either pay the consideration
offered or return tendered securities, promptly after the termination or
withdrawal of the offer.
To withdraw a tender of Original Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its offices as set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date. Any such notice of withdrawal must (i) specify the name
of the person having deposited the Original Notes to be withdrawn (the
"Depositor"), (ii) specify the serial numbers on the particular certificates
evidencing the Original Notes to be withdrawn and the name of the registered
Holder thereof (if certificates have been delivered or otherwise identified to
the Exchange Agent) or the name and number of the account at DTC to be credited
with withdrawal of the Original Notes (if the Original Notes have been tendered
pursuant to the procedures for book-entry transfer), (iii) be signed by the
Holders in the same manner as the original signature on the Letter of
Transmittal by which Original Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the registrar (the "Registrar") with respect to the Original Notes register
the transfer of such Original Notes into the name of the person withdrawing the
tender and (iv) specify the name in which any such Original Notes are to be
registered, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company in its sole discretion, which determination shall
be final and binding on all parties. Any Original Notes so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer, and
no New Notes will be issued with respect thereto unless the Original Notes so
withdrawn are validly retendered. Properly withdrawn Original Notes may be
retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer and without prejudice
to the Company's other rights under the Exchange Offer, the Company shall not be
required to accept for exchange, or exchange New Notes for any Original Notes,
and may amend or terminate the Exchange Offer as provided herein before the
acceptance of such Original Notes, if, among other things:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which might materially impair the ability of the Company to proceed with
the Exchange Offer or materially impair the contemplated benefits of the
Exchange Offer to the Company, or any material adverse development has
occurred in any existing action or proceeding with respect to the Company
or any of its subsidiaries; or
(b) any change, or any development involving a prospective change, in
the business or financial affairs of the Company or any of its subsidiaries
has occurred which might materially impair the ability of the Company to
proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
24
<PAGE> 32
(c) any law, statute, rule or regulation is proposed, adopted or
enacted, that might materially impair the ability of the Company to proceed
with the Exchange Offer or materially impair the contemplated benefits of
the Exchange Offer to the Company; or
(d) the New Notes to be received by Holders of Original Notes in the
Exchange Offer, upon receipt, will not be transferable by such Holders
(other than as "affiliates" of the Company) without restriction under the
Securities Act and Exchange Act and without material restriction under the
blue sky laws of substantially all of the states of the United States
(subject, in the case of Restricted Holders, to any requirements that such
persons comply with the Prospectus Delivery Requirements).
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may, subject to its obligations under the
Registration Rights Agreement to use its best efforts to consummate the Exchange
Offer, (i) terminate the Exchange Offer and return all tendered Original Notes
to tendering Holders, (ii) extend the Exchange Offer and, subject to withdrawal
rights as set forth in "-- Withdrawal of Tenders" above, retain all such
Original Notes until the expiration of the Exchange Offer as so extended, (iii)
waive such condition and, subject to any requirement to extend the period of
time during which the Exchange Offer is open, exchange all Original Notes
validly tendered for exchange by the Expiration Date and not withdrawn or (iv)
delay acceptance or exchange of, or delay the issuance and exchange of New Notes
for, any Original Notes until satisfaction or waiver of such conditions to the
Exchange Offer even though the Exchange Offer has expired. The Company's right
to delay acceptance for exchange of, or delay the issuance and exchange of New
Notes for, Original Notes tendered for exchange pursuant to the Exchange Offer
is subject to provisions of applicable law, including, to the extent applicable,
Rule 14e-1(c) promulgated under the Exchange Act, which requires that the
Company pay the consideration offered or return the Original Notes deposited by
or on behalf of Holders of Original Notes promptly after the termination or
withdrawal of the Exchange Offer. For a description of the Company's right to
extend the period of time during which the Exchange Offer is open and to amend,
delay or terminate the Exchange Offer, see "-- Expiration Date; Extensions;
Amendments; Termination" above. If such waiver constitutes a material change to
the Exchange Offer, the Company will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the registered Holders, and
the Company will extend the Exchange Offer for a period of five to ten business
days, depending upon the significance of the waiver and the manner of disclosure
to the registered Holders, if the Exchange Offer would otherwise expire during
such five to ten business day period.
25
<PAGE> 33
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance with respect to completing the
Letter of Transmittal or a Notice of Guaranteed Delivery, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
By Registered or Certified Mail
The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: Arwen Gibbons, Corporate Trust Operations, Floor 7E
By Overnight Courier or By Hand
The Bank of New York
101 Barclay Street
New York, New York 10286
Attn: Arwen Gibbons, Corporate Trust Operations, Floor 7E
By Facsimile
(212) 571-3083
Confirm by Telephone
(212) 815-6333
FEES AND EXPENSES
The expense of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail, however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager or other soliciting agent
in connection with the Exchange Offer and will not make any payments to brokers,
dealers or others soliciting acceptance of the Exchange Offer. The Company,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$250,000.00. Such expenses include fees and expenses of the Exchange Agent,
Trustee, Paying Agent and Registrar, accounting and legal fees and printing
costs, among others.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Original Notes pursuant to the Exchange Offer. If, however, certificates
representing New Notes, or Original Notes for principal amounts not tendered or
acceptable for exchange, are to be delivered to, or are to be issued in the name
of, any person other than the registered Holders of the Original Notes tendered,
or if tendered Original Notes are registered in the name of any person other
than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Original Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered Holder or any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed directly to such tendering Holder.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Original
Notes as reflected in the Company's accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized. The expenses of the Exchange Offer will be amortized over the term
of the New Notes.
26
<PAGE> 34
THE COMPANY
The Company was organized in December 1993, as the successor to businesses
formed in 1991 primarily for the purpose of owning and operating radio and
television broadcasting stations and networks. The Company's principal executive
offices are located at 601 Clearwater Park Road, West Palm Beach, Florida 33401
and its telephone number is (407) 659-4122.
THE GUARANTORS
Upon the consummation of the Offering, the Notes will be unconditionally
guaranteed, on an unsecured senior subordinated basis, as to payment of
principal, premium, if any, and interest, jointly and severally, by the
Guarantors each of which is a direct or indirect wholly-owned subsidiary
corporation or partnership. The Indenture will provide that certain future
Restricted Subsidiaries (as defined herein), if any, of the Company and the
Guarantors will also become Guarantors of the Notes. The Guarantees will be
subordinated to all Senior Indebtedness of the Guarantors.
THE ACQUISITIONS
From January 1994 to August 15, 1995, the Company has acquired five radio
stations and seven radio networks and acquired or entered into time brokerage
arrangements to operate 12 television stations (collectively, the "1994/1995
Acquisitions"). Since August 15, 1995 the Company has acquired or entered into
time brokerage agreements for four additional television stations by closing the
Recent Acquisitions. The Company currently has agreements, subject to various
conditions including the receipt of regulatory approvals, to purchase the assets
of or, as indicated below, to enter into time brokerage arrangements with
respect to the following television stations (dollars in thousands):
<TABLE>
<CAPTION>
EXPECTED CAPITAL TOTAL EXPECTED
MARKET(A) STATION PURCHASE PRICE EXPENDITURES COST
- --------------------- ------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
New York, NY WHAI-TV $ 22,000 $ 2,000 $ 24,000
Dallas, TX(b) Channel 68 2,000 2,000 4,000
Atlanta, GA(c) WNGM-TV 10,000 2,500 12,500
Cleveland, OH(d) WOAC-TV 6,600 1,400 8,000
Phoenix, AZ(e) KWBF-TV 1,400 2,000 3,400
St. Louis, MO(e) WCEE-TV 3,200 800 4,000
Milwaukee, WI(e) WHKE-TV 2,500 1,800 4,300
Akron, OH(f) WAKC-TV 18,000 1,000 19,000
-------------- -------- --------------
$ 65,700 $ 13,500 $ 79,200
============ ============== ============
</TABLE>
- ---------------
(a) Each station is licensed by the FCC to serve a specific community within the
listed DMA, which may differ from the market listed.
(b) Pending construction.
(c) The station license will be held by an affiliate of Whitehead Media, Inc.,
an entity that is not owned by the Company. The Company plans to enter into
a time brokerage agreement with, and acquire certain assets of, this
station.
(d) The station license will be held by a partnership in which an affiliate of
Whitehead Media, Inc., an entity that is not owned by the Company, has
majority voting control and the Company has a majority economic interest.
(e) Station licenses will be held by subsidiaries of The Christian Network, Inc.
The Company plans to enter into time brokerage agreements with, and to
acquire certain assets of, these stations.
(f) WAKC-TV is licensed within the Cleveland DMA, and currently serves as the
Akron network-affiliated ABC station. The Company intends to operate it as
an IN TV station.
27
<PAGE> 35
In an effort to continue to expand the number of television markets in
which the Company has a presence, while remaining in compliance with FCC
regulations concerning aggregate station ownership limitations, the Company has
entered into time brokerage arrangements with third parties pursuant to which
the Company enjoys many, but not all, of the benefits of operating a television
station while not owning such station. Currently, the Company operates
television stations WCTD-TV, WFCT-TV, WTVX-TV, WIRB-TV, KUBD-TV and WTJC-TV,
pursuant to time brokerage agreements and, upon consummation of all of the
Transactions, the Company will also operate television stations WHKE-TV,
WCEE-TV, WOAC-TV, WNGM-TV and KWBF-TV pursuant to time brokerage agreements. The
Company has and may in the future enter into other time brokerage agreements to
operate stations prior to their acquisition.
After giving effect to the consummation of the five agreements involving
time-brokered stations, seven of the Company's eleven time-brokered stations
will be operated pursuant to time brokerage arrangements with subsidiaries of
The Christian Network, Inc. ("CNI"), three stations (WTVX-TV, WOAC-TV and
WNGM-TV) will be operated pursuant to time brokerage arrangements with Whitehead
Media Inc. ("Whitehead Media") or its affiliates, and one station (WFCT-TV) will
be operated by the Company and a CNI subsidiary pursuant to a time brokerage
agreement with Bradenton Broadcast Television Company, Ltd. ("BBTC"). CNI is a
sec.501(c)(3) non-profit corporation to which Mr. Paxson has been a substantial
financial contributor and of which he is a former director. Since December 1993,
Mr. Paxson and the Company have engaged in a number of transactions related to
time brokerage arrangements with CNI or its subsidiaries, as well as made loans
to them to assist them in meeting their operating expenses and for capital
improvements. As of the date hereof, CNI is indebted to the Company in the
amount of $893,000. See "Certain Transactions." In addition to the time
brokerage arrangements with subsidiaries of CNI, Whitehead Media and BBTC (or
any of their affiliates) referred to above, the Company may, to the extent
attractive opportunities arise in the future, enter into additional time
brokerage arrangements with subsidiaries of CNI, Whitehead Media or other third
parties to enable the Company to operate additional television stations that it
might not otherwise be able to own itself under current FCC multiple station
ownership restrictions.
With certain limited exceptions, the time brokerage arrangements of the
Company involve a basic transaction structure. The Company (i) finances the
acquisition by the third party of some or all of the assets of the brokered
stations and secures such financing by encumbering such assets including, to the
extent permitted under FCC rules and regulations, the FCC license and all of the
capital stock of the acquiring company; and (ii) enters into a time brokerage
agreement with such third party which allows the Company to operate the brokered
station, in accordance with FCC guidelines. Payments made to the FCC licensee
under the time brokerage agreement are established, and renegotiated from time
to time, based upon increases in expenses for which the FCC licensee must, in
accordance with FCC regulations, remain primarily liable, including servicing
the indebtedness owed by such FCC licensee to the Company. In certain
circumstances, the Company may acquire certain tangible assets useful in the
construction or operation of the brokered station and lease such assets to the
brokered station. In addition, unless prohibited by FCC rules and regulations,
the FCC licensee also grants to the Company an option to purchase the station
for a nominal amount payable in cash together with the forgiveness of all
outstanding indebtedness. Upon the consummation of the Acquisitions, the Company
will have options to purchase each such station other than WTVX-TV, WIRB-TV and
WNGM-TV.
In connection with the Company's potential acquisition of or interest in
Shop At Home, the Company may enter into a time brokerage agreement with respect
to Shop At Home's television stations pending FCC approval of the proposed
acquisition. See "Summary -- Certain Events."
28
<PAGE> 36
USE OF PROCEEDS
The Company will receive no proceeds from the exchange of the New Notes for
the Original Notes.
The gross proceeds from the sale by the Company of the Original Notes was
approximately $227.3 million. Such proceeds together with borrowings in the
amount of $38.6 million under the New Credit Facility were or will be used to:
(i) retire the outstanding senior debt under the Paxson Communications of
Florida, Inc., the Paxson Communications Television, Inc. and Paxson Outdoor,
Inc. credit facilities (the "Existing Senior Indebtedness"); (ii) fund the
Acquisitions and expected capital expenditures related thereto; and (iii) pay
the fees and expenses of the Private Offering and the New Credit Facility.
The following table illustrates the estimated sources and uses of proceeds
on a pro forma basis as if the Acquisitions, the Private Offering and borrowings
under the New Credit Facility were consummated on August 15, 1995, (dollars in
thousands):
<TABLE>
<S> <C>
Sources of proceeds:
Sale of Original Notes(a)............................................... $227,309
New Credit Facility..................................................... 38,591
--------
Total sources of proceeds............................................ $265,900
========
Uses of proceeds:
Retirement of Existing Senior Indebtedness(b)........................... $156,750
The Recent Acquisitions, the Proposed Acquisitions and the capital
expenditures relating to the Acquisitions............................ 100,650
Estimated fees and expenses............................................. 8,500
--------
Total uses of proceeds............................................... $265,900
========
</TABLE>
- ---------------
(a) Net of discount of $2.7 million upon issuance.
(b) See Note 9 to the Company's consolidated financial statements for a
description of such Existing Senior Indebtedness including the maturities
and interest rates thereof.
29
<PAGE> 37
CAPITALIZATION
The following table sets forth the actual capitalization of the Company (i)
as of June 30, 1995, (ii) as adjusted to give effect to a time brokerage
arrangement for WTVX-TV (West Palm Beach), and the acquisition of KTFH-TV
(Houston) and certain billboard properties, all of which occurred after June 30,
1995, and (iii) the pro forma capitalization after giving effect to the
Transactions, as if the Transactions had occurred on June 30, 1995. This table
should be read in conjunction with the information contained in "Pro Forma
Financial Information" and the Company's consolidated financial statements and
notes thereto appearing elsewhere herein.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1995
---------------------------------------
ACTUAL ADJUSTED PRO FORMA
-------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash(a)...................................... $ 8,409 $ 8,409 $ 8,409
======== ======== ========
Long-term debt (including current maturities)
Existing Senior Indebtedness(b)............ $129,000 $156,750 $ 0
New Credit Facility........................ 0 0 38,591
Notes offered hereby(c).................... 0 0 227,309
Other debt................................. 3,278 3,278 3,278
-------- -------- ---------
132,278 160,028 269,178
Senior Preferred Stock(d).................... 17,079 17,079 17,079
Redeemable class A and B common stock
warrants................................... 3,498 3,498 3,498
Junior Preferred Stock(d).................... 29,166 29,166 29,166
Other equity(e).............................. 7,330 7,330 (3,703)
-------- -------- ---------
Total capitalization.................... $189,351 $217,101 $ 315,218
======== ======== ========
</TABLE>
- ---------------
(a) The Company has agreed to set aside $4.75 million to fund certain corporate
overhead costs in connection with the New Credit Facility.
(b) Adjusted Existing Senior Indebtedness gives effect to the borrowing of $17.0
million relating to a time brokerage arrangement for WTVX-TV, $8.5 million
relating to the acquisition of KTFH-TV and $2.3 million relating to the
acquisition of certain billboard properties.
(c) Net of discount of $2.7 million upon issuance.
(d) See "Description of the Capital Stock."
(e) Other equity is comprised of common stock, class C common stock warrants,
stock subscription notes receivable, additional paid-in capital, deferred
option plan compensation and accumulated deficit.
30
<PAGE> 38
PRO FORMA FINANCIAL INFORMATION
The unaudited pro forma statement of operations and other data for the year
ended December 31, 1994 and the six months ended June 30, 1995 give effect to:
(i) the consummation of the Offering; (ii) the execution of the New Credit
Facility; (iii) the 1994/1995 Acquisitions using the prior operators' unaudited
financial information except for the year ended December 31, 1994 for the
Philadelphia, Houston, Los Angeles and Boston IN TV stations which are derived
from audited financial statements included elsewhere herein; (iv) the
Acquisitions; and (v) the elimination of certain terminated operations, as if
such events included in (i) through (v) had occurred on January 1, 1994.
Terminated operations include revenue and expenses associated with (i) the
winding down of ancillary businesses in May 1995, (ii) the decision not to renew
a contract for the Georgia Sports Network after March 1995 and (iii) the removal
of certain corporate positions in August 1995. The elimination of the terminated
operations results in a total pro forma EBITDA savings to the Company of
approximately $415,000 and $776,000 for the year ended December 31, 1994 and the
six months ended June 30, 1995, respectively. For purposes of the statement of
operations data, for each period the results of operations of the San Francisco,
Washington, D.C., Dallas, Atlanta (WNGM-TV) or Phoenix IN TV station
acquisitions were not included because the prior operators' financial
information is not available, and the results of the New York and Akron
television stations to be acquired were not included because the prior operators
financial information is not relevant to the future operations of such stations
by the Company. However, depreciation and amortization expense has been
increased for each period to reflect preliminary purchase price allocations for
all stations included in the Acquisitions. The pro forma balance sheet at June
30, 1995 presents the balance sheet of the Company as if, among other things,
the Transactions had occurred on June 30, 1995.
The Acquisitions will be accounted for using the purchase method of
accounting. The total cost of the Acquisitions will be allocated to the tangible
and intangible assets acquired and liabilities assumed based upon their
respective fair values. The allocation of the respective purchase prices
included in the pro forma financial information is preliminary. The Company does
not expect that the final allocation of the purchase prices will materially
differ from the preliminary allocation.
The pro forma adjustments are based upon available information and certain
assumptions that the Company believes are reasonable under the circumstances.
The pro forma consolidated financial information should be read in conjunction
with the Company's consolidated financial statements and notes thereto,
appearing elsewhere in this Prospectus. The unaudited pro forma statement of
operations data are not necessarily indicative of the results that would have
occurred if the Transactions had occurred on the dates indicated, nor are they
indicative of the Company's future results of operations. There can be no
assurance whether or when all of the Acquisitions will be consummated.
31
<PAGE> 39
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1994
-------------------------------------------------------------------------------------------
THE LOS 1994/1995
COMPANY MERGER(A) PHILADELPHIA HOUSTON ANGELES BOSTON ACQUISITIONS
------- --------- ------------ ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total gross revenue... $62,067 $ 9,539 $3,111 $2,665 $1,712 $ 1,222 $8,467
Operating expenses,
excluding
depreciation and
amortization........ 51,225 9,197 2,721 2,221 1,041 1,946 7,291
Depreciation and
amortization........ 12,404 1,288 391 225 743 203 593
------- ------ ---- ---- ------ ----- ------
Income (loss) from
operations.......... (1,562 ) (946 ) (1) 219 (72 ) (927) 583
Interest income
(expense), net...... (4,875 ) 258 (461) (106 ) (856 ) (332) (3)
Other income
(expense), net...... (5 ) -- (505) 442 -- (51) 12
Benefit (provision)
for income taxes.... 1,680 -- -- -- -- -- --
------- ------ ---- ---- ------ ----- ------
Net income (loss)
before extraordinary
item................ $(4,762) $ (688 ) $ (967) $ 555 $ (928 ) $(1,310) $ 592
======= ====== ==== ==== ====== ===== ======
<CAPTION>
THE PRO FORMA PRO
ACQUISITIONS ADJUSTMENTS FORMA
------------ ----------- --------
<S> <C> <C> <C>
Total gross revenue... $6,846 $ (3,041)(b) $ 92,588
Operating expenses,
excluding
depreciation and
amortization........ 6,774 (4,826)(c) 77,590
Depreciation and
amortization........ 645 15,088 (d) 31,580
------ -------- --------
Income (loss) from
operations.......... (573) (13,303) (16,582)
Interest income
(expense), net...... (132) (24,262)(e) (30,769)
Other income
(expense), net...... 46 (1)(f) (62)
Benefit (provision)
for income taxes.... (11) 11 (g) 1,680
------ -------- --------
Net income (loss)
before extraordinary
item................ $ (670) $ (37,555) $(45,733)
====== ======== ========
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1995
-------------------------------------------------------------------------------
LOS 1994/1995
COMPANY PHILADELPHIA HOUSTON ANGELES BOSTON ACQUISITIONS
--------- ------------ ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Total gross revenue.............. $ 44,356 $ 370 $ 648 $1,019 $ 600 $3,207
Operating expenses excluding
depreciation, amortization and
option plan compensation....... 37,645 273 413 351 609 2,751
Option plan compensation(h)...... 9,404 -- -- -- -- --
Depreciation and amortization.... 8,054 33 92 279 102 268
---- ---- ------ ----- ------ ------
Income (loss) from operations.... (10,747 ) 64 143 389 (111) 188
Interest expense, net............ (4,309 ) (45) (46 ) (271 ) (174) --
Other income (expense), net...... (14 ) (31) -- -- (10) 3
Benefit (provision) for income
taxes.......................... 640 -- -- -- -- --
---- ---- ------ ----- ------ ------
Net income (loss) before
extraordinary item............. $(14,430 ) $ (12) $ 97 $ 118 $ (295) $ 191
==== ==== ====== ===== ====== ======
<CAPTION>
THE PRO FORMA PRO
ACQUISITIONS ADJUSTMENTS FORMA
------------ ----------- --------
<S> <C> <C> <C>
Total gross revenue... $3,178 $ (695)(b) $ 52,683
Operating expenses exc
depreciation, amorti
option plan compensa 2,815 (2,076)(c) 42,781
Option plan compensati -- -- 9,404
Depreciation and amort 191 6,771 (d) 15,790
-------- --------
Income (loss) from ope 172 (5,390) (15,292)
Interest expense, net. (58) (10,482)(e) (15,385)
Other income (expense) (5) 19 (f) (38)
Benefit (provision) fo
taxes............... (11) 11 (g) 640
-------- --------
Net income (loss) befo
extraordinary item.. $ 98 $ (15,842) $(30,075)
======== ========
</TABLE>
(see footnotes on the following page)
32
<PAGE> 40
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
(a) Reflects the inclusion of the results of operations of ANG, WPBF-TV and
WTLK-TV, in the period prior to their respective acquisitions and consolidation
with the Company.
(b) To reflect the elimination of time brokerage revenue of $135 (WTLK-TV)
and $184 (KTFH-TV) recorded in the prior operators' financial information, the
elimination of revenue from terminated operations of $2,906 and $800 for the
year ended December 31, 1994, and the six months ended June 30, 1995,
respectively, and the increase in revenues of $289 (KZKI) for the month of
January 1995 to reflect a full six months of revenues for the period ended June
30, 1995 as KZKI's fiscal year is February 1 to January 31.
(c) To reflect the elimination of $1,437 and $372 of general and
administrative costs which represent redundant facilities and staff for
operations acquired, $152 and $0 of general and administrative expenses which
represent legal and investment banking expenses related to the sale of the
station to the Company in a prior operator's financial information, $3,321 and
$1,577 which represent terminated operations and $186 and $287 which represented
time brokerage fees paid to prior operators, the increase in time brokerage
expense of $270 and $100 for additional fees to be paid to operators for the
year ended December 31, 1994 and the six months ended June 30, 1995,
respectively, and the increase in operating expense of $60 (KZKI) for the month
of January 1995 to reflect a full six months of expenses for the period ended
June 30, 1995 as KZKI's fiscal year is February 1 to January 31.
(d) To reflect the increase in depreciation and amortization expense for
purchase accounting allocations made for the Acquisitions and the decrease in
amortization expense for the write-off of previously deferred financing costs of
$11,033 and the net financing costs associated with the Offering and the New
Credit Facility of $8,500 as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1994 1995
------------ --------
<S> <C> <C>
Pro forma depreciation.................................................. $ 18,660 $ 9,330
Pro forma amortization, net of deferred financing costs................. 11,500 5,750
Deferred financing costs for the Offering and the New Credit Facility... 1,420 710
------------ --------
Total pro forma depreciation and amortization....................... $ 31,580 $ 15,790
Less prior operators' depreciation and amortization and Company's prior
deferred financing cost amortization.................................. (16,492) (9,019)
------------ --------
$ 15,088 $ 6,771
============ =========
</TABLE>
The pro forma statement of operations does not reflect an extraordinary loss
of approximately $11,033 to be recorded by the Company to reflect the write-off
of deferred financing costs of debt retired as a result of the Transactions.
(e) Adjustment necessary to reflect interest expense associated with the
Notes and borrowings under the New Credit Facility.
(f) To reflect the elimination of (i) $186 and $319 of non-recurring
expenses relating to reorganization expenses and management fees for the year
ended December 31, 1994, respectively, at the Philadelphia station; (ii) $512 of
reorganization income of Houston for the year ended December 31, 1994; and (iii)
$6 and $19 of other expense related to terminated operations for the year ended
December 31, 1994 and the six months ended June 30, 1995, respectively.
(g) To reflect the elimination of income tax expense from certain of the
stations to be acquired based upon the federal income tax rate for the
consolidated group.
(h) Option plan compensation represents a non-cash charge associated with
the granting of common stock options to employees under the Company's Stock
Incentive Plan. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Results of Operations" and "Management -- Stock
Incentive Plan."
33
<PAGE> 41
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, 1995
-----------------------------------------------------------------------
1994/1995 PRO FORMA
COMPANY HOUSTON ACQUISITIONS ADJUSTMENTS(A) PRO FORMA(A)
-------- ------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents....... $ 8,409 $ 326 $ -- $ (326)(b) $ 8,409
Accounts receivable, net........ 13,011 115 -- (115)(b) 13,011
Other current assets............ 2,832 13 -- (13)(b) 2,832
-------- ------ -------- --------- --------
Total current assets......... 24,252 454 -- (454) 24,252
Property and equipment, net....... 66,648 1,196 2,250 (c) 31,454 (d) 101,548
Intangible assets, net............ 81,572 642 -- 64,058 (d) 146,272
Other assets, net................. 20,241 -- (700)(e) (2,533)(d) 17,008
Investment in broadcast
properties...................... -- -- 18,000 (e) 11,800 (f) 29,800
Related party notes receivable.... 2,250 -- -- -- 2,250
-------- ------ -------- --------- --------
Total assets............ $194,963 $2,292 $ 19,550 $ 104,325 $321,130
======== ====== ======== ========= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable and accrued
liabilities.................. $ 4,428 $2,420 $ 300 (e) $ (2,420)(b) $ 4,728
Current portion of long-term
debt......................... 11,977 500 2,250 (c) (14,446)(g) 281
-------- ------ -------- --------- --------
Total current liabilities.... 16,405 2,920 2,550 (16,866) 5,009
Long-term debt.................... 120,301 -- 17,000 (e) (95,713)(g) 41,588
Notes offered hereby(h)........... -- -- -- 227,309 (g) 227,309
Other long-term liabilities....... 1,184 -- -- -- 1,184
Senior Preferred Stock(i)......... 17,079 -- -- -- 17,079
Redeemable Class A and B common
stock warrants.................. 3,498 -- -- -- 3,498
Junior Preferred Stock(i)......... 29,166 -- -- -- 29,166
Other equity(j)................... 7,330 (628 ) -- (10,405)(k) (3,703)
-------- ------ -------- --------- --------
Total liabilities and
stockholders'
equity................ $194,963 $2,292 $ 19,550 $ 104,325 $321,130
======== ====== ======== ========= ========
</TABLE>
(see footnotes on the following page)
34
<PAGE> 42
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET DATA
(DOLLARS IN THOUSANDS)
(a) Pro forma balance sheet data as of June 30, 1995 give effect to: (i) the
consummation of the Offering; (ii) the execution of the New Credit Facility;
(iii) the elimination of prior operators' results and the preliminary purchase
price allocation for the acquisition of the Houston IN TV station in July 1995;
and (iv) the Acquisitions as if such events included in (i) through (iv) had
occurred at June 30, 1995.
(b) To reflect the effects of purchase accounting adjustments for the
Houston IN TV station for assets and liabilities of the prior operator which
were not purchased by the Company.
(c) Gives effect to the acquisition of billboard properties.
(d) To reflect the increase in fixed and intangible assets for purchase
price allocation made for the Acquisitions and the decrease in other assets for
the write-off of previously deferred financing costs of $11,033 and the deferral
of financing costs associated with this Offering of $8,500 as follows:
<TABLE>
<CAPTION>
PROPERTY AND INTANGIBLE OTHER
EQUIPMENT ASSETS ASSETS
------------ ---------- -------
<S> <C> <C> <C>
Houston IN TV station........................................... $ 2,800 $ 5,700 --
The Acquisitions................................................ 29,850 59,000 --
Deferred financing costs........................................ -- -- $ 8,500
Elimination of prior operator data and deferred financing
costs......................................................... (1,196) (642) (11,033)
------------ ---------- -------
$ 31,454 $ 64,058 $(2,533)
=========== ========= ========
</TABLE>
(e) Gives effect to the execution of a loan agreement related to the time
brokerage agreement for WTVX-TV in which the Company loaned $18 million for the
acquisition of the brokered station by a third party through its existing credit
facility, use of previously deposited escrow funds and accrued liabilities for
payment of transaction costs.
(f) Reflects investments in broadcast properties in which the Company
financed the acquisition of brokered stations by third parties.
(g) To reflect the consummation of the Offerings and borrowings under the
New Credit Facility and the repayment of the Existing Senior Indebtedness as
follows:
<TABLE>
<CAPTION>
CURRENT
PORTION OF NOTES OFFERED
LONG-TERM DEBT LONG-TERM DEBT HEREBY
--------------- -------------- -------------
<S> <C> <C> <C>
Houston acquisition.................................. -- $ 8,500 --
Repayment of the Existing Senior Indebtedness........ $ (13,946) (142,804) $ 156,750
The Acquisitions..................................... -- 38,591 62,059
Deferred financing costs............................. -- -- 8,500
Elimination of prior operator results................ (500) --
--------------- -------------- -------------
$ (14,446) $ (95,713) $ 227,309
============== ============== ============
</TABLE>
(h) Net of discount of $2.7 million upon issuance.
(i) See "Description of the Capital Stock."
(j) Other equity is comprised of common stock, class C common stock
warrants, stock subscription notes receivable, additional paid-in capital,
deferred option plan compensation and accumulated deficit.
(k) To reflect (i) the purchase accounting adjustment for the elimination of
deficit for the Houston acquisition; and (ii) the effect of the write-off of
deferred financing costs as a result of the Transactions of $11,033.
35
<PAGE> 43
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following selected historical and pro forma financial data, insofar as
it relates to each of the four years ended December 31, 1994, has been derived
from Company prepared financial information and should be read in conjunction
with the audited financial statements, including the consolidated balance sheets
at December 31, 1993 and 1994 and the related consolidated statements of
operations for each of the years for the three year period ended December 31,
1994 and the notes thereto appearing elsewhere in this Prospectus. The selected
historical and pro forma financial data as of and for the six months ended June
30, 1994 and 1995 has been derived from unaudited financial statements also
appearing herein and which, in the opinion of management, include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results for the unaudited interim periods. Results for
the six months ended June 30, 1995 are not necessarily indicative of results
that may be expected for the entire year. The summary financial information
should be read in conjunction with the information contained in the Company's
consolidated financial statements and the notes thereto, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Pro Forma Financial Information" included elsewhere herein.
The following unaudited selected pro forma statement of operations data and
other data give effect to, among other things, the Transactions, as if they had
occurred on January 1, 1994. The following unaudited selected pro forma balance
sheet data give effect to, among other things, the Transactions, as if they had
occurred on June 30, 1995. The Transactions and certain management assumptions
and adjustments are described in the accompanying notes hereto. The pro forma
information should be read in conjunction with the Company's consolidated
financial statements and notes thereto, as of December 31, 1994 and the three
years then ended, appearing elsewhere in this Prospectus. This pro forma
information is not necessarily indicative of actual or future operating results
or financial position.
36
<PAGE> 44
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
--------------------------------------------------------- -----------------------------------
PRO FORMA PRO FORMA
1991 1992 1993 1994 1994(A) 1994 1995 1995(A)
------- -------- ---------- ----------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total gross revenue........... $ 830 $ 17,062 $ 32,062 $ 62,067 $ 92,588 $ 21,514 $ 44,356 $52,683
Operating expenses, excluding
depreciation, amortization
and option plan
compensation................ 1,719 17,922 28,872 51,225 77,590 18,593 37,645 42,781
Option plan compensation(b)... -- -- -- -- -- -- 9,404 9,404
Depreciation and
amortization................ 497 5,977 9,351 12,404 31,580 5,266 8,054 15,790
------- -------- ---------- ----------- -------- ---------- ---------- -------
Loss from operations.......... (1,386) (6,837) (6,161) (1,562) (6,582 ) (2,345) (10,747) (15,292)
Interest expense, net(c)...... (52) (1,262) (2,052) (4,875) (30,769 ) (1,391) (4,309) (15,385)
Other income (expense), net... 10 134 221 (5) (62 ) 223 (14) (38)
Benefit (provision) for income
taxes....................... -- -- (2,960) 1,680 1,680 1,396 640 640
Extraordinary item and
cumulative effect of a
change in accounting
principle(d)................ -- 110 (457) -- -- --
------- -------- ---------- ----------- ---------- ----------
Net loss...................... (1,428) (7,855) (11,409) (4,762) (2,117) (14,430)
Dividends and accretion on
preferred stock and common
stock warrants(e)........... -- -- (151) (3,386) (1,587) (5,864)
------- -------- ---------- ----------- ---------- ----------
Net loss attributable to
common stock and common
stock equivalents........... $(1,428) $ (7,855) $ (11,560) $ (8,148) $ (3,704) $ (20,294)
======= ======== ========== =========== ========== ==========
Loss per share data:(f)
Net loss.................... -- -- $ (0.36) $ (0.14) $ (0.06) $ (0.42)
Net loss attributable to
common stock and common
stock equivalents......... -- -- (0.37) (0.24) (0.11) (0.59)
Weighted average shares
outstanding -- primary and
fully diluted(g).......... -- -- 31,581,948 33,430,116 32,506,032 34,401,282
OTHER DATA:
EBITDA(h)..................... $ (796) $ (162) $ 4,522 $ 11,644 $ 15,930 $ 3,224 $ 8,155 $10,266
Capital expenditures(i)....... 60 1,273 1,963 5,917 5,917 1,485 9,589 9,589
Ratio of earnings to fixed
charges(j).................. -- -- -- -- -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
TWELVE MONTHS
ENDED
JUNE 30, 1995(A)
-----------------
<S> <C>
Adjusted EBITDA(k)........................................................................................... $27,946
Ratio of Adjusted EBITDA to interest expense, net............................................................ .91x
Ratio of total debt to Adjusted EBITDA....................................................................... 9.63
Ratio of net debt to Adjusted EBITDA(l)...................................................................... 9.33
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1995
-------------------------------
BALANCE SHEET DATA: ACTUAL PRO FORMA(A)
------------ ------------
<S> <C> <C>
Cash and cash equivalents..................................................................... $ 8,409 $ 8,409
Net working capital........................................................................... 7,847 19,243
Total assets.................................................................................. 194,963 321,130
Total debt.................................................................................... 132,278 269,178
Redeemable preferred stock and Class A and B common stock warrants............................ 49,743 49,743
</TABLE>
(see footnotes on the following page)
37
<PAGE> 45
NOTES TO SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(a) Pro forma statement of operations and other data for the year ended
December 31, 1994 and the six and twelve months ended June 30, 1995 give effect
to: (i) the consummation of the Offering; (ii) the execution of the New Credit
Facility; (iii) the 1994/1995 Acquisitions using the prior operators' unaudited
financial information except for the year ended December 31, 1994 for the
Boston, Philadelphia, Houston and Los Angeles IN TV stations which are derived
from audited financial statements included elsewhere herein; (iv) the
Acquisitions; and (v) the elimination of certain terminated operations, as if
such events included in (i) through (v) had occurred on January 1, 1994. For
purposes of the statement of operations data the results of operations of the
San Francisco, Washington, D.C., Dallas, Atlanta (WGNM-TV) or Phoenix IN TV
stations were not included because the prior operators' financial information is
not available, and the results of the New York and Akron television stations to
be acquired were not included because the prior operators' financial information
is not relevant to the future operations of such stations by the Company.
However, depreciation and amortization expense has been increased for each
period to reflect preliminary purchase price allocations for all stations
acquired in the Acquisition. The pro forma balance sheet data give effect to,
among other things, the Transactions as if the Transactions had occurred on June
30, 1995.
(b) Option plan compensation represents a non-cash charge associated with
the granting of common stock options to employees under the Company's Stock
Incentive Plan. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Results of Operations" and "Management -- Stock
Incentive Plan."
(c) Interest expense, net is equal to total interest expense less interest
income.
(d) Extraordinary item and cumulative effect of a change in accounting
principle reflects a gain of $109,540 in 1992 as a result of a change in the
method of calculating depreciation and an extraordinary loss of $457,147 in 1993
associated with the write-off of capitalized financing costs on debt retired in
conjunction with the Company's reorganization on December 15, 1993. The pro
forma income statement data for the year ended December 31, 1994 and the six
months ended June 30, 1995 do not reflect an extraordinary loss on the write-off
of previously capitalized financing costs of $6.3 million and $11.0 million,
respectively.
(e) Dividends and accretion on preferred stock and common stock warrants
represent the Senior Preferred Stock (15% dividend rate), redeemable Class A and
B common stock warrants and Junior Preferred Stock (12% dividend rate). Such
capital stock is mandatorily redeemable and certain issues have accretion
provisions. See "Description of the Capital Stock."
(f) Loss per share data for the historical years ended December 31, 1993 and
1994, and for the six months ended June 30, 1995 give a pro forma effect to (i)
the Company's amended capital structure related to the merger with ANG on April
14, 1994; and (ii) a stock dividend on common shares outstanding on January 1,
1995. Loss per share data for the historical six months ended June 30, 1994 give
pro forma effect to a stock dividend on common shares outstanding on January 1,
1995.
(g) Weighted average shares outstanding for the years ended December 31,
1993 and 1994 give a pro forma effect to (i) the Company's amended capital
structure related to the merger with ANG on April 14, 1994 of 21,054,632 and
22,286,744 shares, respectively; and (ii) a stock dividend on common shares
outstanding on January 1, 1995 of 11,143,372 and 10,527,316 shares,
respectively. Weighted average shares outstanding -- primary and fully diluted
for the six months ended June 30, 1994 give pro forma effect to a stock dividend
on common shares outstanding on January 1, 1995 of 10,989,358.
(h) EBITDA is defined as net income (loss) before (i) extraordinary item and
cumulative effect of a change in accounting principle, (ii) benefit (provision)
for income taxes, (iii) other income (expenses), net, (iv) interest expense,
net, (v) depreciation and amortization, (vi) option plan compensation and (vii)
non-recurring items including terminated operations; less scheduled broadcast
rights payments.
(i) Includes all capital expenditures including expenditures associated with
the upgrade and conversion of acquired television stations to the IN TV format.
Pro forma capital expenditures exclude $19.3 million associated with the
Acquisitions which will be funded from the proceeds of the Offering and
borrowings under the New Credit Facility.
(j) For purposes of this computation, earnings are defined as earnings or
loss before extraordinary items and fixed charges. Fixed charges are the sum of
(i) interest costs (including the cash and non-cash interest portion of
operating leases) and (ii) amortization of deferred financing costs. Earnings
were inadequate to cover fixed charges by approximately $1.4 million, $8.0
million, $8.0 million, $ 6.4 million, $3.5 million and $15.1 million, for the
years ended December 31, 1991, December 31, 1992, December 31, 1993, December
31, 1994 and for the six-month periods ended June 30, 1994 and June 30, 1995,
respectively. On a pro forma basis, earnings were insufficient to cover fixed
charges by approximately $47.4 million and $30.7 million for the year ended
December 31, 1994 and the six-month period ended June 30, 1995.
(k) Adjusted EBITDA for the latest twelve months ended June 30, 1995 is
defined as EBITDA for such period less (i) the segment operating profit for the
Infomall TV Network for such period plus (ii) four times segment operating
profit for the Infomall TV Network for the quarter ended June 30, 1995. For
purposes of this calculation, the results of operations of the San Francisco,
Washington D.C., Dallas, Atlanta (WGNM-TV) or Phoenix IN TV stations were not
included because the prior operators' financial information is not available,
and the results of the New York and Akron television stations to be acquired
were not included because the prior operators' financial information is not
relevant to the future operations of such stations by the Company. Adjusted
EBITDA is calculated on a basis consistent with calculations required under the
Indenture.
(l) Net debt is total debt less cash and cash equivalents.
38
<PAGE> 46
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 based
upon the acquisition of or management of radio stations, television stations,
and radio networks, as well as the subsequent improvement of those operations.
The pace and magnitude of the Company's acquisitions hinder meaningful
period-to-period comparisons of results. The following table sets forth certain
information concerning stations acquired by the Company or operated by the
Company pursuant to time brokerage agreements as of June 30, 1995:
<TABLE>
<CAPTION>
DATE OF COMMENCEMENT DATE OF
STATION TYPE MARKET ACQUISITION TIME BROKERAGE AGREEMENT
- ----- ----- --------------------- ------------------ ------------------------
<S> <C> <C> <C> <C>
WROO FM Jacksonville September 1991
WNZS AM Jacksonville May 1993(a)
WHPT FM Tampa/St. Petersburg November 1991
WHNZ AM Tampa/St. Petersburg November 1991
WZTA FM Miami/Ft. Lauderdale April 1992
WINZ AM Miami/Ft. Lauderdale April 1992
WWNZ AM Orlando April 1992
WMGF FM Orlando May 1993 June 1992
WJRR FM Orlando May 1993 July 1992
WWZN AM Orlando December 1994(b)
WPLA FM Jacksonville May 1993 June 1992
WZNZ AM Jacksonville May 1993 June 1992
WLVE FM Miami/Ft. Lauderdale April 1993
WGSQ FM Cookeville April 1994(c)
WPTN AM Cookeville April 1994(c)
WTLK TV Atlanta July 1994 April 1994
WCTD TV Miami/Ft. Lauderdale Option April 1994
WFCT TV Tampa/St. Petersburg Option August 1994
WPBF TV West Palm Beach July 1994
WIRB TV Orlando -- December 1994
WTGI TV Philadelphia February 1995
WNZE AM Tampa/St. Petersburg February 1995 August 1994
WTWS TV Hartford/New Haven March 1995
WSJT FM Tampa/St. Petersburg March 1995(d)
KZKI TV Los Angeles May 1995
WGOT TV Boston May 1995
KLXV TV San Francisco June 1995
WFTL AM Miami/Ft. Lauderdale June 1995
KTFH TV Houston July 1995 March 1995
</TABLE>
- ---------------
(a) Results of operations since October 1991 have been included in the Company's
results of operations pursuant to certain agreements the Company had entered
into as of that date.
(b) Call letters changed from WGTO-AM. Former WWZN-AM sold for $0.3 million in
November 1994.
(c) Acquired through ANG merger.
(d) Station acquired March 1995, and began broadcasting in July 1995.
The Company also acquired the Florida Radio Network effective March 1993,
and in connection with the ANG merger, the Company began operating news radio
networks in April 1994 in Tennessee and South Carolina and radio sports networks
for the men's football and basketball programs of the University of Florida,
Pennsylvania State University and Virginia Polytechnic Institute. In January
1995, the Company began operating the Alabama Radio Network and acquired the
right to broadcast football, basketball and baseball games of the University of
Miami.
39
<PAGE> 47
RESULTS OF OPERATIONS
Six Months Ended June 30, 1995 and 1994
Consolidated revenue for the six months ended June 30, 1995 increased 107%
(or $22.9 million) to $44.4 million from $21.5 million for the six months ended
June 30, 1994. The increase was primarily due to the acquisitions of WPBF-TV,
WTLK-TV, WTGI-TV, WTWS-TV, and the time brokerages of WIRB-TV, that commenced in
December 1994, and KTFH-TV, that commenced in March 1995.
Operating expenses for the six months ended June 30, 1995 increased 131%
(or $31.2 million) to $55.1 million from $23.9 million for the six months ended
June 30, 1994. The increase was primarily due to the cost of operating newly
acquired stations, direct expenses such as commissions which rise in proportion
to revenue, higher corporate overhead, specifically option plan compensation,
and higher depreciation and amortization related to assets acquired. The Company
expects to recognize additional option plan compensation expense with respect to
granted options over the next five years in the aggregate amount of
approximately $2.6 million.
Broadcast cash flow for the six months ended June 30, 1995 increased 150%
(or $6.6 million) to $11.0 million from $4.4 million for the six months ended
June 30, 1994. The increase in broadcast cash flow was a direct result of
acquisitions and improved performance of existing properties.
Net interest expense for the six months ended June 30, 1995 increased to
$4.3 million from $1.4 million for the six months ended June 30, 1994, an
increase of 207%, primarily due to the greater level of long-term debt
throughout the period and higher borrowing rates. As a result of acquisitions,
at June 30, 1995, long-term debt was $132.3 million, or 61% higher than the
$82.4 million outstanding June 30, 1994.
The Company recognized $640,000 of income tax benefit during the six months
ended June 30, 1995 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.
Years Ended December 31, 1994 and 1993
Consolidated revenue in 1994 increased 93% (or $30 million) to $62.1
million from $32.1 million in 1993. This increase was primarily due to the
acquisition of WPBF-TV on July 1, 1994, revenue received under the time
brokerage agreement for WTLK-TV beginning April 4, 1994 and the subsequent
purchase thereof on July 13, 1994, the consolidation of the ANG operations
beginning April 14, 1994, and improved market conditions and better sales
management within the Company's existing properties. In addition, revenue
increased because of the time brokerages of WCTD-TV beginning April 1, 1994 and
WFCT-TV beginning August 1, 1994.
Operating expenses in 1994 increased 66% (or $25.4 million) to $63.6
million from $38.2 million in 1993. The increase was primarily due to the costs
of operating WPBF-TV and WTLK-TV, direct expenses such as commissions which rise
in proportion to revenue, the consolidation of ANG, and higher depreciation and
amortization related to assets acquired. In addition, operating expenses
increased because of the time brokerages of WCTD-TV and WFCT-TV and related
fees. Somewhat offsetting these increases was the elimination of time brokerage
fees for stations acquired during May 1993 and the sale of WWNZ-AM in 1993.
Broadcast cash flow for 1994 increased 112% (or $7.6 million) to $14.4
million, from $6.8 million in 1993. The increase in broadcast cash flow was a
direct result of acquisitions, revenue growth and continued expense controls.
Net interest expense increased to $4.9 million from $2.1 million, an
increase of 133%, primarily due to a greater level of long-term debt throughout
the year and higher borrowing rates. As a result of acquisitions, at December
31, 1994, long-term debt was $82.4 million, or 153% higher than the $32.6
million outstanding a year prior.
The Company recognized $1.7 million of income tax benefit which resulted
primarily from the 1994 net loss and related reversal of deferred taxes
associated with the 1993 tax provision.
40
<PAGE> 48
Years Ended December 31, 1993 and 1992
Consolidated revenue in 1993 increased 88% (or $15.0 million) to $32.1
million from $17.1 million in 1992. This increase was primarily due to the
acquisition of WLVE-FM in April 1993 and the effect of a full year of operations
in 1993 of WZTA-FM, WINZ-AM, WMGF-FM, WJRR-FM, WWNZ-AM, WWZN-AM, WPLA-FM and
WZNZ-AM, all of which were acquired or commenced operation under time brokerage
agreements during April to July 1992. In addition, the increase in revenue was
the result of stronger market conditions and improved sales management, offset
somewhat by the divestiture of WWNZ-FM, which was operated for approximately
eight months in 1992. Revenue generated apart from the Company's radio stations
increased due to the acquisition of Florida Radio Network and the development of
merchandising and direct marketing activities.
Operating expenses in 1993 increased 60% (or $14.3 million) to $38.2
million from $23.9 million in 1992. This increase was primarily due to the
acquisition of WLVE-FM in April 1993 and the effect of a full year of operations
in 1993 of WZTA-FM, WINZ-AM, WMGF-FM, WJRR-FM, WWNZ-AM, WWZN-AM, WPLA-FM and
WZNZ-AM, all of which were acquired or commenced operation under time brokerage
agreements during April to July 1992. This increase was offset somewhat by
savings from the consolidation of the operations of three to four radio stations
in each of the markets of Miami/Ft. Lauderdale, Orlando and Jacksonville,
particularly with regard to sales and general and administrative costs as
redundant personnel and office space were eliminated. In addition, the Company
realized decreases in promotional expenses through economies of scale for
stations owned or operated during similar periods in each year. The divestiture
of WWNZ-FM in early 1993 reduced expenses in comparison to 1992 when the station
was operated for eight months.
Broadcast cash flow for 1993 increased 94% (or $3.3 million) to $6.8
million from $3.0 million in 1992. The increase in broadcast cash flow was a
direct result of acquisitions, revenue growth and continued expense controls.
Net interest expense increased to $2.1 million from $1.3 million, an
increase of 62%, primarily due to a greater level of long-term debt throughout
the year. At December 31, 1993, long-term debt was $32.6 million, or 52% higher
than the $21.5 million outstanding a year prior.
The sale of WWNZ-FM resulted in a gain of approximately $427,000 in 1993.
In 1993 the Company provided for $3.0 million of income taxes which
resulted from the December 15, 1993 reorganization and consolidation. Prior to
December 15, 1993 the Company operated in the form of partnerships and S
corporations for federal and state income tax purposes. Therefore, all income
and loss for the periods prior to December 15, 1993 were taxed at the partner
and stockholder level and no provision for income taxes was recorded. The 1993
extraordinary loss relates to the write-off of deferred financing costs upon
extinguishment of the existing Company senior debt in March 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at June 30, 1995 and December 31, 1994 was
$7.8 million and $26.4 million, respectively, and the ratio of current assets to
current liabilities was 1.48:1 and 3.11:1, on such dates respectively. Working
capital decreased primarily due to the acquisitions described above, which was
partially offset by an increase in the current portion of long-term debt and the
reclassification of related party notes receivable to long-term assets. This
reclassification was made in anticipation of pending revisions of certain
station ownership regulation restrictions that could allow the Company's
subsequent acquisition of the underlying stations.
Cash used in operations for the six months ended June 30, 1995 of $0.2
million reflects 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 of WTGI-TV, WTWS-TV, WGOT-TV, KZKI-TV, KLXV-TV,
WSJT-FM, WFTL-AM and purchases of equipment for these and existing properties.
Cash provided by financing activities reflects the proceeds from
41
<PAGE> 49
borrowings of long-term debt. In addition, the Company advanced $500,000 to CNI
during the second quarter under a demand note bearing interest at a prime rate.
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.
The Company was initially funded primarily by Mr. Paxson, who has made
equity investments in the Company since its inception totaling approximately $37
million. Beginning in 1992, the Company has also utilized senior long-term debt
provided to its principal operating subsidiaries by consortiums of financial
institutions. A credit facility of $32 million was established in March 1993.
This facility was subsequently increased to $40 million in December 1993 and
$150 million in July 1994. The credit terms require amortization of principal
over a seven-year period with the first payment due September 30, 1995, and
interest payable quarterly at a floating rate (initially LIBOR plus 2.75%). As
of June 30, 1995, $90 million has been drawn under this facility. A separate
senior revolving credit facility of $75 million was established in May 1995. The
credit terms under such additional facility require interest payable quarterly
at a floating rate (initially LIBOR plus 3.5%, and changing to LIBOR plus 2.5%
three months later). At June 30, 1995, $39 million had been drawn under this
facility. Substantially contemporaneously with the consummation of the Offering,
the Company will enter into the New Credit Facility (see "Description of New
Credit Facility"). Proceeds from the Private Offering were used to retire the
Existing Senior Indebtedness. The Company has or will fund the cash payments
required for the Acquisitions primarily from a combination of borrowings under
the Existing Credit Facilities, prior to the Offering, and from the proceeds of
the Private Offering and borrowings under the New Credit Facility thereafter. As
a result, the Company expects to write off approximately $11.0 million of loan
origination costs associated with its two Existing Credit Facilities.
Following completion of the Transactions, the Company's principal capital
requirements will be interest and principal payments on indebtedness. The Notes
will require semi-annual interest payments at a fixed rate. Borrowings under the
New Credit Facility will bear interest at floating rates and are anticipated to
require interest payments on varying dates depending on the interest rate option
selected by the Company. The New Credit Facility is expected to mature in
approximately six years and will require interim amortization payments. In
addition to debt service, the Company's principal cash requirements will be for
capital expenditures and, if appropriate opportunities arise, the acquisition of
additional broadcasting stations or assets.
The Company believes that the proceeds from the Private Offering together
with the cash flow from operations and borrowings under the New Credit Facility
will be sufficient to consummate the Acquisitions (including the expected
capital expenditures associated therewith) and to meet working capital
requirements for existing properties. To the extent that the Company pursues
future acquisitions, including Shop At Home, the Company may be required to
obtain additional financing. There can be no assurance that it will be able to
obtain such financing on terms acceptable to it.
42
<PAGE> 50
BUSINESS
GENERAL
Paxson Communications is a publicly-held, diversified media company that
operates in the radio broadcasting, radio network and television broadcasting
businesses. In addition, in January 1995, the Company introduced its Infomall TV
Network, a national network of owned, operated, and affiliated television
stations dedicated to infomercial programming. The Company also recently entered
into a letter of intent, subject to various conditions, to acquire a majority
interest in Shop at Home, a home shopping and telemarketing company, which also
has interests in television stations in the Boston and Houston markets. The
Company was founded in 1991 by Lowell W. "Bud" Paxson, the creator, co-founder
and president emeritus of Home Shopping Network, Inc.
PAXSON RADIO
Paxson Communications owns and operates 18 radio stations (9 FM and 9 AM
stations), with more radio stations in Florida than any other broadcaster. The
Company operates FM and AM duopolies in Miami, Tampa, Orlando and Jacksonville,
as well as an AM/FM combination in Cookeville, Tennessee. The Company also has
joint sales agreements with an additional FM station in Jacksonville and an AM
station in Miami. The Company's radio stations employ broadly diversified
programming formats, including News, Talk, Sports, Country, Soft Adult
Contemporary, Smooth Jazz, Album Oriented Rock, Modern Rock and Alternative
Rock. The Company also operates eight radio networks, primarily in the
southeastern United States, that provide daily statewide news segments, sports
programming and satellite distribution of play-by-play broadcasts of
professional and collegiate sports teams for more than 400 affiliated stations.
In addition, the Company controls 65 billboard locations in the Tampa and
Orlando markets that support the Company's radio station operations.
Radio Broadcasting
The Company was one of the first radio broadcasters to capitalize on
changes in federal regulations permitting radio market duopolies, and has
subsequently assembled eight duopolies serving Florida's four most populous
cities. Beginning with the acquisition of an AM/FM combination in the Tampa
market and a Jacksonville FM station in 1991, the Company has made acquisitions
of, or has entered into time brokerage agreements with, radio stations in
selected Florida markets. The Company has pursued a strategy of entering into
time brokerage agreements with, and concurrently obtaining an option to
purchase, stations in markets in which the Company already owns a station in the
same radio service (AM or FM). Following changes in the FCC's rules regarding
multiple ownership of radio stations in September 1992, the Company was able to
exercise such purchase options. By June 1995 the Company had assembled both FM
and AM duopolies in the Miami, Tampa, Orlando and Jacksonville markets (for a
total cost of $65.1 million), in addition to an AM/FM combination in Cookeville,
Tennessee. The Company will continue to consider radio acquisition and
disposition opportunities.
Operating Strategy
The Company believes that its radio properties are well positioned in
attractive markets, and the Company hopes to continue to improve cash flow
growth through the integration of recent duopoly acquisitions and enhanced
station performance. The principal elements of the Company's operating strategy
include:
Benefits of Geographic Proximity. The Company believes that the
geographic proximity of its FM and AM duopolies throughout Florida give it
the ability to realize synergistic revenue and promotional opportunities as
well as significant cost efficiencies. The Company's group of Florida
stations enables an advertiser to cover an entire geographic region, while
effectively reaching targeted demographic groups. Various cross-market
promotional opportunities exist, such as the ability to provide listeners
with tickets to another market's sporting events or local entertainment
attractions. Personnel and technical costs can be minimized by virtue of
the ability to service each market in close proximity. Finally, the
stations' geographic concentration allows management to more easily and
rapidly respond to market issues.
43
<PAGE> 51
Skilled Local Staff and Management. The Company believes that its
experienced management team is one of its strongest assets. Local managers
are responsible for the day-to-day operations of their respective stations.
The Company believes that the autonomy of its station management and its
incentive-based compensation enable it to attract and retain skilled and
experienced managers capable of implementing the Company's aggressive
marketing and promotion strategy. Local managers have incentive
compensation and equity arrangements linked to the station's broadcast cash
flow performance, increases in the value of the station or stations for
which such manager is responsible and increases in the value of the
Company.
Corporate management is responsible for long-range planning,
establishment of primary policies and procedures, resource allocation,
accounting and auditing, regulatory and legal compliance, license renewals
and the evaluation of potential acquisitions. Corporate management reviews
sales pacing reports from each station on a daily basis. In addition,
members of senior management visit the Company's stations on a regular
basis to review performance and to assist local management with its
programming, sales and recruiting efforts, as well as to develop overall
station operating and marketing strategies.
Targeted Programming/Extensive Market Research. The Company provides
programming designed to appeal to targeted demographic groups, and seeks to
convert its rating shares into disproportionately large shares of each
market's advertising dollars. The Company believes that effective
programming is a key element in sustaining and improving audience shares
within its targeted demographic groups, and uses extensive ongoing research
to refine each station's programming. For example, the Company decided to
operate News and Sports formats in all four of its Florida markets
following extensive research demonstrating the popularity of each format
with an upscale male audience. Similarly, Tampa's WSJT-FM began
broadcasting a Smooth Jazz format, designed to appeal to adults aged 25-54
(a demographic group attractive to advertisers), in July 1995 following
programming research. The Company will continue to identify and refine
programming to enhance its stations' audience and advertiser appeal.
Aggressive Marketing and Promotion. The Company believes that
effective marketing and promotion play a significant role in maximizing
each station's performance. The Company utilizes local television, print
media, telemarketing and billboards to promote its stations. In the Orlando
and Tampa markets, the Company's billboard locations are used to promote
its stations. The Company also believes that community involvement is
particularly important in creating public awareness and its stations
participate in numerous community programs and activities.
Strict Cost Controls. Management believes that it is critical to
maintain the lowest possible cost structure compatible with its operating
strategy. Strict financial reporting standards and cost control measures
are implemented to ensure a focus on improvements in operating results
throughout the organization. Management regularly receives operating
reports that track station performance, thereby enabling better monitoring
by management and establishing greater accountability throughout the
station group. In addition, since local management incentive programs are
tied to increasing station value, local managers are focused on minimizing
costs and exceeding budgeted cash flow results.
44
<PAGE> 52
Radio Properties
The following table sets forth certain information about the Company's
current radio stations:
<TABLE>
<CAPTION>
% OF AUDIENCE
NATIONAL RADIO STATION POWER AUDIENCE SHARE
MARKET(A) MARKET RANK(B) STATION FORMAT FREQUENCY (WATTS) SHARE(C) RANK(C)
- --------------- --------------- ------- ------------ --------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Miami/ 11 WLVE-FM Smooth Jazz 93.9 100,000 4.0 9 of 38
Ft. Lauderdale
WZTA-FM
Album 94.9 100,000 4.0 9 of 38
Oriented
Rock
WINZ-AM
News and 940 50,000 1.7 19 of 38
Sports
WFTL-AM
Talk and 1400 1,000 0.3 34 of 38
Sports
Tampa/ 21 WHPT-FM Rock Adult 102.5 100,000 6.1 7 of 29
St. Petersburg Contemporary
WSJT-FM
Smooth Jazz 94.1 100,000 5.6 9 of 29
WHNZ-AM
News and 570 5,000(day) 1.2 17 of 29
Sports 10,000 night)
WNZE-AM
Sports 820 50,000(day) n/a n/a
1,000 night)
Orlando 35 WMGF-FM Soft Adult 107.9 100,000 9.3 2 of 24
Contemporary
WJRR-FM
Modern Rock 101.1 100,000 3.3 14 of 24
WWNZ-AM
News 740 50,000 1.4 15 of 24
WWZN-AM
Sports 540 50,000 0.8 17 of 24
Jacksonville 50 WROO-FM Young 107.3 100,000 7.5 4 of 23
Country
WPLA-FM
Alternative 93.3 50,000 2.7 12 of 23
Rock
WNZS-AM
Sports 930 5,000 1.6 15 of 23
WZNZ-AM
News 1460 5,000 0.3 22 of 23
Cookeville n/c WGSQ-FM Country 94.7 100,000 n/c n/c
WPTN-AM
Talk 780 1,000 n/c n/c
</TABLE>
- ---------------
(a) Each station is licensed by the FCC to serve a specific community within the
market, which may differ from the listed market.
(b) Source: Miller Kaplan.
(c) Adults 25-54 Monday-Sunday 6 AM-Midnight in radio market per Summer 1995
Arbitron Radio Market Reports.
n/a Insignificant share.
n/c Market not covered by Arbitron; revenue not independently reported.
Market Overviews
Miami/Ft. Lauderdale, FL. The Company owns and operates radio stations
WLVE-FM, WZTA-FM, WINZ-AM and WFTL-AM in the Miami/Ft. Lauderdale radio market,
the 11th largest radio market in the United States. The Company also provides
certain sales and marketing services to WACC-AM through a joint sales agreement,
and has an option to acquire a 49% interest in such station. The Miami/Ft.
Lauderdale radio market had advertising revenue of $124.3 million in 1994, an
8.4% increase over 1993. The Company's Miami/Ft. Lauderdale radio stations had a
10.8% combined audience share in the Miami/Ft. Lauderdale 25-54 year old
demographic category, according to the Summer 1995 Arbitron ratings survey.
WLVE-FM is programmed in a Smooth Jazz format, playing a blend of
contemporary jazz and vocals, targeting the upscale 25-54 year old audience.
WLVE-FM does not have a direct competitor within the format category. WZTA-FM
became the only Album Oriented Rock station in the Miami market when its former
competitor changed formats to Alternative Rock in May 1995. WINZ-AM is the only
station in the Miami market with an All News format throughout the daytime
hours. After 7:00 p.m. WINZ-AM carries sports programming with broadcast rights
to the Miami Heat NBA basketball team and the University of Miami
45
<PAGE> 53
football games. WFTL-AM located in Broward County has a talk radio format and
through a simulcast with WINZ-AM increases the Company's broadcast reach of the
Miami Heat.
Tampa/St. Petersburg, FL. The Company owns and operates radio stations
WHPT-FM, WSJT-FM, WHNZ-AM and WNZE-AM in the Tampa/St. Petersburg radio market,
the 21st largest radio market in the United States. The Tampa/St. Petersburg
radio market had advertising revenue of $70.5 million in 1994, a 13.7% increase
over 1993. The Company's Tampa/St. Petersburg stations had a 12.9% combined
audience share in the Summer 1995 Arbitron ratings survey, including WSJT-FM
which commenced broadcasting in July 1995.
WHPT-FM is formatted with a distinctive blend of music categorized as Rock
Adult Contemporary targeted toward white-collar, adult listeners. The Company
purchased WEZY-FM in Lakeland, Florida in March 1995 and subsequently moved the
station to the Tampa market. The Company reformatted the station as WSJT-FM, a
Smooth Jazz station targeted to adults in the 25-54 year old demographic
category. WHPT-FM and WSJT-FM have two of the strongest signals in the State of
Florida. WHNZ-AM is the only radio station in the Tampa market with an All News
format throughout the daytime hours. After 7:00 p.m. the station carries sports
talk and play-by-play sports programming, including University of Florida
football and basketball games. WNZE-AM is one of two AM radio stations in the
Tampa market that provides an All Sports format, including play-by-play coverage
of the Florida State football and basketball games. WNZE-AM achieves economies
by utilizing satellite programming.
Orlando, FL. The Company owns and operates radio stations WMGF-FM,
WJRR-FM, WWNZ-AM and WWZN-AM in Orlando, the 35th largest radio market in the
United States. The Orlando radio market had advertising revenue of $57.4 million
in 1994, a 15.5% increase over 1993. The Company's Orlando radio stations had a
14.8% combined audience share in the Orlando 25-54 year old demographic
category, according to the Summer 1995 Arbitron ratings survey.
WMGF-FM is a Soft Adult Contemporary format appealing to the 35-54
audience. WJRR-FM, a Modern Rock station, complements WMGF-FM by appealing
primarily to the 18-49 year old male audience. WWNZ-AM is the only station in
the market with an All News format, and experienced increased Arbitron ratings
due to its extensive coverage of the O.J. Simpson trial. WWZN-AM is the only All
Sports radio station in the Orlando market, and includes play-by-play
programming and sports talk shows. Cost savings are obtained through the
utilization of satellite programming, which is used to augment the station's
sports-talk programming.
Jacksonville, FL. The Company owns and operates radio stations WROO-FM,
WPLA-FM, WNZS-AM and WZNZ-AM in Jacksonville, the 50th largest radio market in
the United States. The Company also provides certain sales and marketing
services to WFSJ-FM under a joint sales agreement. The Jacksonville radio market
had advertising revenue of $32.0 million in 1994, a 14.2% increase over 1993.
The Company's radio stations had a 12.1% combined audience share in the 25-54
year old demographic category, according to the Summer 1995 Arbitron ratings
survey.
WROO-FM broadcasts a Young Country format that appeals to the 18-49-year
old demographic category. WPLA-FM was recently reformatted as an Alternative
Rock radio station, designed to appeal to a younger 18-34 target audience.
WNZS-AM broadcasts an All Sports format, including the leading sports talk show
in the market, and carries live play-by-play sports broadcasts, including
Florida State University mens' football and basketball games. WZNZ-AM has an all
News format consisting of satellite-delivered CNN "Headline News" programming.
Cookeville, TN. The Company owns and operates WGSQ-FM and WPTN-AM in the
Cookeville, Tennessee radio market, serving the Upper Cumberland region between
Nashville and Knoxville (ranked the 45th and 70th largest markets, respectively
). The Company's stations are first on a combined basis within its market in all
categories of listenership. Radio station WGSQ-FM broadcasts a country format.
WPTN-AM programs an All Talk format featuring various local and
nationally-syndicated personalities, including Rush Limbaugh. The stations have
a combined 30% share of the 12+ demographic group in Arbitron's most recent
county-by-county survey.
46
<PAGE> 54
Radio Networks
The Company operates eight radio networks that serve in excess of 400
affiliates. The programs produced and distributed by the Company's radio
networks include news broadcasts, sports and sports talk shows, and business and
agricultural news and information. In addition to providing radio programming,
the Company also offers its affiliates printed script for news, sports and
weather information, that the Company either generates internally or
consolidates from wire services and other sources. The Company believes radio
networks are attractive to advertisers because they provide an opportunity to
advertise simultaneously on multiple stations. In addition, the Company's
networks provide certain programming to the Company's radio broadcast stations.
In December 1992, the Company purchased the Florida Radio Network in order
to build statewide advertising sales. The network produces daily news segments
for 57 affiliated stations in Florida, thereby giving the Company a presence in
almost every market in Florida. On November 4, 1994, the Company merged with ANG
significantly expanding the Company's radio network holdings. As a result of the
merger, the Company owns and operates radio networks in Tennessee and South
Carolina, as well as several collegiate sports radio networks. Such radio
networks currently produce and distribute news, sports and other programs,
giving the Company 79 affiliated radio stations in Tennessee and 44 in South
Carolina. In January 1995, the Company acquired the Alabama Radio Network, which
produces and distributes news, sports and other programs to 74 affiliates in
Alabama. The Company has the exclusive rights to produce and broadcast the men's
football and basketball games and weekly coaches' radio shows of the University
of Florida through 55 affiliates, the University of Miami through 22 affiliates,
Pennsylvania State University through 52 affiliates, and Virginia Polytechnic
Institute and State University through 50 affiliates. The broadcasts are
distributed to radio stations that have subscribed for them pursuant to
affiliate agreements. Certain affiliates of the Company's sports networks are
also affiliates of its state radio networks.
The Company is currently upgrading the technical facilities at its radio
networks with digital sound programming. During 1995, the Company completed the
upgrade of its Florida radio network. The Company expects to complete the
upgrade of all of its networks in the near future, and believes such quality
improvements will enable it to obtain more affiliates, including FM stations
that did not previously carry the Company's networks.
Billboard Properties
The Company currently owns 65 billboard locations, including 53 billboards
with 107 faces in the Tampa market, and 12 billboard locations at which the
Company will have 48 faces in the Orlando market. While the Company will sell
the use of the billboards to a broad group of potential advertisers, the Company
takes advantage of the relationships it has with its radio advertisers to
broaden its billboard client base, as well as expand the Company's shares of the
advertiser's media purchases within a market. In addition, as broadcasters are
major users of billboard advertising campaigns, the Company can control its own
billboard promotional expenditures through the use of its billboards, as well as
assure full use of all its owned billboards. As opportunities are presented to
the Company, it will consider the acquisition of additional billboards in
markets in which it owns broadcasting properties.
PAXSON TELEVISION
Paxson Communications owns and operates an ABC-TV affiliate, WPBF-TV, and
recently entered into a time brokerage agreement under which it programs and
markets commercial time for a second television station, WTVX-TV (a combined
United Paramount network and Warner Brothers network affiliate), both in the
West Palm Beach market, the 45th largest DMA. The West Palm Beach DMA had
television revenue of approximately $85.5 million in 1994, a 17.6% increase over
1993. The Company acquired WPBF-TV for approximately $32.5 million in July 1994.
In July 1995, in connection with entering into the WTVX-TV time brokerage
agreement, the Company loaned $18.0 million to Whitehead Media which acquired
the FCC license and assets of such station. All such acquired assets, including,
to the extent permitted by the FCC rules, the FCC license, are pledged to the
Company to secure repayment of such loan.
47
<PAGE> 55
WPBF-TV (channel 25) is the ABC-TV affiliate in the West Palm Beach,
Florida market. The station achieved a 10 share of household audience in the May
1995 Nielsen ratings survey, tied for third place in the market. WPBF-TV airs
ninety minutes of local news each weekday and an hour each Saturday and Sunday.
In addition, the station's fall schedule includes the following syndicated
programs: Hard Copy, Current Affair, Day and Date, America's Most Wanted, Jerry
Springer and Sally Jessy Raphael. The latter two programs are also broadcast on
WTVX-TV, channel 34, as part of a four-hour morning talk show block which
includes Geraldo!, Charles Perez and Carnie. WTVX-TV is a leading provider of
children's programming in the West Palm Beach market with the following
syndicated programs: Teenage Mutant Ninja Turtles, Goof Troop, Aladdin and
Animaniacs. The station also airs off-network and original syndicated
family-oriented programming such as Family Matters, Step by Step, Baywatch,
Highlander, Kung Fu, Land's End, High Tide, Renegade and the new Flipper.
WTVX-TV achieved a four share of household audience in the May 1995 Nielsen
ratings, ranking fifth in the market. WPBF-TV and WTVX-TV will combine this fall
to carry SEC and ACC college football games featuring among others the
University of Florida Gators and the Florida State Seminoles.
The Company's television broadcasting strategy is to supply desirable
programming in its markets and aggressively sell advertising time. The Company
plans to capitalize on new selling and cost saving opportunities through its
recent time brokerage agreement with WTVX-TV. The Company's strategy for its
network-affiliated television business has focused on the acquisition of
underperforming network-affiliated television properties and improving
management in an effort to realize improved operational and financial
performance. The Company believes that by operating two stations within a
market, the Company expects to centralize certain aspects of such stations
operations thereby eliminating duplicative operating and marketing functions and
expenses, in addition to realizing enhanced revenue opportunities.
In connection with the Acquisitions, the Company has entered into an
agreement to purchase WAKC-TV an ABC affiliate in Akron, Ohio (located in the
Cleveland DMA). The Company purchased WAKC-TV in tandem with the New York IN TV
station. The Company intends to terminate WAKC-TV's ABC network affiliation and
replace it with IN TV programming. The Company is currently considering
alternative means of capitalizing on such ABC affiliation. The Company will
continue to evaluate purchases of network-affiliated properties that it can
acquire for an appropriate price and improve results through enhanced sale
strategies and streamlining of operations.
INFOMALL TV NETWORK
In January 1995, Paxson Communications established its infomercial
television network, the Infomall TV Network. The Company has assembled 13 owned
or operated stations dedicated to IN TV programming and has entered into
agreements with respect to eight additional television stations to be owned or
operated by the Company as IN TV stations. The Company also has affiliation
agreements with three independently owned and operated television stations.
After giving effect to the Acquisitions, the Company estimates that its owned,
operated or affiliated IN TV stations will reach approximately 11.6 million
cable households in 18 of the 30 largest U.S. television markets. In addition,
the Company believes that it will also reach a significant additional number of
broadcast households that do not receive cable. The Company believes that the
Infomall TV Network contains the only group of television stations in the United
States that currently offers infomercial advertisers both significant national
and regional distribution capability, and inventory availability during popular
morning, daytime and prime time hours.
Industry Background
During recent years, advertisers have evaluated the benefits of television
and cable advertising, with many sophisticated consumer product and service
advertisers now recognizing the effectiveness and reasonable cost of long-form
programming, or "infomercials." An infomercial is an advertisement, usually one
half-hour in length, that is paid for by the advertiser on the basis of air-time
and the approximate number of households receiving the broadcast signal on the
cable system feed. Regardless of the presentation format, the viewer is provided
information that can be used to make informed purchasing decisions from the
comfort of their home without the pressure of a salesperson or a crowded
shopping mall.
48
<PAGE> 56
Increasingly, advertisers are recognizing the benefits of infomercials as a
powerful marketing tool. Infomercials provide advertisers with a cost-effective
medium through which to deliver sales messages, product introduction or
demonstration to an interested target audience. Advertisers are recognizing that
infomercials can increase a company's or product's brand awareness and loyalty
while educating uninformed potential new customers. An infomercial can be used
to support an advertiser's current sales efforts. The viewer or potential
consumer is provided information that can be used to make informed purchasing
decisions.
The Company believes that the infomercial industry has grown rapidly during
the past several years and currently accounts for total media spending in excess
of $1 billion. Originally, and to a large extent today, long-form informational
programming occupied time slots that were otherwise unprofitable for
broadcasters. Increasingly, infomercials are being placed in more expensive and
attractive time slots. In addition, the quality of the infomercial advertiser
has improved. Today, infomercials are being produced by major companies,
including:
<TABLE>
<S> <C> <C>
American Express Fidelity Investments Motorola
Apple Computers Ford Philips Consumer Electronics
Avon Products General Motors Procter & Gamble
Bank of America GTE Sears Roebuck
Bell Atlanta Lexus Sega of America
Black & Decker Magnavox Toyota
Braun Mastercard Visa
Coca Cola Mattel Volvo
Compaq Mercedes Benz Warner Music
Estee Lauder Microsoft
</TABLE>
The production quality of infomercial programming by these major
advertisers has also brought increased credibility to the infomercial industry.
The Company believes that as the benefits of infomercial programming become more
widely understood, the number of advertisers and the volume of infomercial
programming will continue to grow.
Operating Strategy
By purchasing independent television stations, in addition to signing
affiliate stations, and extending their broadcast reach on cable via
"must-carry" requirements, the Company has created a television network
dedicated to providing long-form, paid entertainment and information
programming. Expansion of the Infomall TV Network continues through the
purchase, operation or affiliation with independent television stations in major
United States television markets. By concentrating on larger national markets,
the Company believes that IN TV will reach in excess of 11.6 million cable
households after giving effect to the Acquisitions.
By eliminating programming costs and removing non-essential operating costs
related to a station's prior format and owners, the Company is able to improve
each station's cost structure. Because infomercial programming is paid for by
the advertiser, the Company is able to realize cash flow from each of its owned
or operated IN TV stations shortly after its acquisition.
IN TV programming time is sold on a local, national and network basis.
Local programming time is sold by each station's local sales force and is
offered to merchants and businesses operating within a station's local market,
including medical clinics, automobile dealers and groups of related-product
merchants. National and network programming time is sold by national advertising
placement agencies and the Company's own in-house national and network sales
force. National and network programming times appeal to advertisers who desire
to reach viewers in targeted IN TV markets and all IN TV markets. Currently, the
Company maintains national sales offices in the Company's headquarters in West
Palm Beach, New York, Chicago and Los Angeles. All network sales operations are
based at the Company's headquarters. Support and administration of the Infomall
TV Network is also centralized at the Company's West Palm Beach headquarters,
including most accounting and personnel functions as well as administration of
the IN TV programming traffic systems.
49
<PAGE> 57
The potential of the Infomall TV Network is being realized as IN TV makes
accessible popular viewing advertising slots, previously unavailable to
advertisers at reasonable rates through other broadcasters. Attractive rates and
further growth of IN TV's audience reach should continue to attract a greater
breadth of advertising clients. Schedules in television guides, newspapers,
radio and on-air programming guides will allow the viewer or potential consumer
to seek out and watch or record desired programming.
Expansion Strategy
The Company has created its Infomall TV Network through the acquisition of
independent television stations, certain of which are licensed to communities on
the "fringe" (or outside the center) of major markets, but within such market's
DMA. The Company has used the broadcast signal of these stations to reach a part
of the major television market's broadcast homes and extended their broadcast
reach to a significant part of the metropolitan area's home cable system via
"must carry" requirements. The Company had paid an aggregate of $83.4 million
(including capital expenditures through the date hereof) for its owned or
operated IN TV stations, with an additional $85.0 million committed for IN TV
Stations included in the Proposed Acquisitions and capital expenditures related
to the Acquisitions. The Company intends to continue to evaluate the acquisition
of or affiliation with independent television stations to further extend the
national distribution system for its Infomall TV Network.
Infomall Properties
The stations included in the Company's Infomall TV Network are either (i)
owned by the Company, (ii) operated by the Company pursuant to time brokerage
agreements entered into with the FCC licensee, or (iii) owned by independent
television station operators that enter into affiliation agreements with the
Company. The time brokerage agreements with respect to WCTD-TV, WFCT-TV,
WIRB-TV, KUBD-TV and WTJC-TV are with subsidiaries of CNI or BBTC, the FCC
licensees and owners of certain assets of the stations. Lowell W. Paxson is a
substantial contributor to and former director of CNI. See "Certain
Transactions." In connection with the stations owned by subsidiaries of CNI and
operated by the Company pursuant to time brokerage agreements (the "CNI
Stations"), the Company often acquires and leases to each of the CNI Stations
certain assets used in connection with the operation of each of the CNI
Stations. Pursuant to time brokerage agreements, CNI has priority over the
Company's programming to air religious programming on the CNI Stations over
night at no cost to CNI. The Company has options to purchase the broadcasting
license of WCTD-TV, WFCT-TV, KUBD-TV and WTJC-TV for consideration of
approximately $915,000, $191,000, $100,000 and $100,000, respectively, subject
to the receipt of certain regulatory approvals and waivers of the FCC's
broadcast ownership rules. After giving effect to the Acquisitions, the Company
will own and/or operate pursuant to a time brokerage agreement 21 stations, and
have affiliation agreements with three independently owned and operated stations
that are currently dedicated to IN TV.
The following table lists those Infomall properties that the Company owns,
operates or is affiliated with:
<TABLE>
<CAPTION>
MARKET FORM OF COMMENCEMENT
STATION MARKET RANK CHANNEL OPERATION DATE
- -------- ------------------------------------------- ------- ------- -------------- --------------
<S> <C> <C> <C> <C> <C>
WTLK-TV Atlanta 10 14 Owned April 1994
WCTD-TV Miami/Ft. Lauderdale 16 35 Time brokerage April 1994
WFCT-TV Tampa/St. Petersburg 15 66 Time brokerage August 1994
WIRB-TV Orlando 22 56 Time brokerage January 1995
WTGI-TV Philadelphia 4 61 Owned February 1995
KTFH-TV Houston 11 49 Owned March 1995
WTWS-TV Hartford/New Haven 26 26 Owned March 1995
WGOT-TV Boston 6 60 Owned May 1995
KZKI-TV Los Angeles 2 30 Owned May 1995
KLXV-TV San Francisco 5 65 Owned June 1995
KUBD-TV Denver 18 59 Time Brokerage August 1995
WTJC-TV Dayton 53 26 Time Brokerage October 1995
WYVN-TV Washington, D.C. 7 60 Owned April 1996
KCMY-TV Sacramento 21 29 Affiliate July 1995
WJCB-TV Norfolk 40 49 Affiliate August 1995
KGMC-TV Fresno 57 43 Affiliate December 1995
</TABLE>
50
<PAGE> 58
ADVERTISING
Virtually all the Company's broadcasting revenue is derived from local,
regional and national advertising. Advertising rates charged by radio and
network television stations are based on a station's ability to attract
audiences in the demographic groups that advertisers wish to reach, and the
number of stations competing in the market area. A station's audience is
reflected in rating surveys of the number of listeners tuned to the station and
the time spent listening. The Company believes that its presence in Florida's
largest markets and its targeted demographic groups in those markets make it
attractive to national, regional and local radio and television advertisers. The
Company strives to maximize radio revenue by constantly managing the number of
commercials available and all broadcast revenue by adjusting prices based upon
demand by advertisers to reach the Company's stations' target demographic
groups. In addition to the sales of advertising time for cash, stations
typically exchange advertising time for goods or services that can be used by
the station in its business operations, including radio, television and
billboard advertising and such items as travel and entertainment services. The
Company generally confines the use of such "trade" transactions to promotional
items or services for which the Company would otherwise have paid cash. In
addition, it is the Company's general policy not to preempt advertising spots
paid for in cash with advertising spots paid for in trade.
IN TV advertising rates are based on the number of households reached, the
effectiveness of infomercials and ultimately the demand for available
infomercial time. The Company attempts to maximize revenue by increasing the
number of cable homes reached providing advertisers with increased viewership.
The Company increases the number of cable households reached both by increasing
the reach of each of its stations through "must carry" regulations and by
acquiring broadcast stations in additional markets. In addition, advertisers can
measure the success of an infomercial program almost immediately after a show is
broadcast. The Company believes the success of infomercials with viewers
continues to drive advertisers to use infomercials. As such, the demand for
infomercials continues to increase.
COMPETITION
The Company's radio and television stations compete with the other radio
and television broadcasting stations in their respective market areas, as well
as with other advertising media, including newspapers, television, magazines,
outdoor advertising, transit advertising and direct mail marketing. Competition
within the radio and television broadcasting industries occurs primarily in
individual market areas, so a station in one market does not generally compete
with stations in other market areas. In each of its markets, the Company's radio
and television stations face competition from other stations with substantial
financial resources, including stations whose programming is directed to the
same demographic groups. In addition to management experience, factors that are
material to competitive positions include a station's rank in its market,
authorized power, assigned frequency or station (as applicable), audience
characteristics, local program acceptance and the programming characteristics of
other stations in the market area. The Company attempts to improve its radio
station's competitive position with extensive research and promotional campaigns
aimed at the demographic groups targeted by its stations, and through sales
efforts designed to attract advertisers, including those who have done little or
no radio advertising, by emphasizing the effectiveness of radio advertising in
increasing the advertisers' revenue. Recent changes in the FCC's policies and
rules permit increased joint ownership and joint operation of local radio
stations. Stations, such as the Company, taking advantage of these joint
arrangements may in certain instances have lower operating costs and may be able
to offer advertisers more attractive rates and services. The Company attempts to
improve its television stations' competitive positions with local tie-in
promotions and strong local news segments. Although the Company believes that
each of the Company's radio and television stations can compete effectively in
its market, there can be no assurance that any of the Company's radio or
television stations will be able to maintain or increase its current audience
rating or advertising revenue market share.
Although the radio and television broadcasting industries are highly
competitive, some barriers to entry exist. The operation of a radio or
television broadcasting station requires a license from the FCC, and the number
of radio and television stations that can operate in a given market is limited
by the availability of the FM and AM radio frequencies or stations (as
applicable) that the FCC will license in that market. The radio and television
broadcasting industries historically have grown in terms of total revenue,
despite the introduction of new technologies for the delivery of entertainment
and information, such as cable, audio tapes
51
<PAGE> 59
and compact discs. The Company believes that radio's portability makes it less
vulnerable than other media to competition from new methods of distribution or
other technological advances. There can be no assurance, however, that the
involvement or introduction in the future of any new media technology will not
have an adverse effect on the radio or television broadcasting industries.
The Company's development of IN TV and success in the creation of a
national long-form paid programming distribution system is a relatively new
concept, and there can be no assurance of its success. The concept is subject to
competition from several sources and other contingencies and uncertainties. The
Company's IN TV stations face significant competition from established
broadcasting stations and cable television in varied amounts. Various television
networks carry blocks of infomercials and local cable operators also sell blocks
of time to long-form advertisers. To the extent that the Infomall TV Network is
successful, it is likely that the Company will face competition from new market
entrants, some of which could have significantly greater financial resources
than the Company. In addition, the Company could encounter competition as a
result of the technological developments that are commercialized. However, the
Company believes it competes on a favorable basis because it contains the only
group of television stations in the United States that currently offers
infomercial advertisers both significant national and regional distribution
capabilities and inventory availability during popular morning, daytime and
prime time hours.
FEDERAL REGULATION OF BROADCASTING
The FCC regulates radio and television broadcast stations pursuant to the
Communications Act. The Communications Act permits the operation of radio and
television broadcast stations only in accordance with a license issued by the
FCC upon a finding that the grant of such license would serve the public
interest, convenience and necessity. The Communications Act provides for the FCC
to exercise its licensing authority to provide a fair, efficient and equitable
distribution of broadcast service throughout the United States.
The Communications Act empowers the FCC, among other things, to determine
the frequencies, location, and power of broadcast stations; to issue, modify,
renew, and revoke station licenses; to approve the assignment or transfer of
control of broadcast licenses; to regulate the equipment used by stations; to
impose fees for processing applications; to adopt regulations to implement the
provisions of the Communications Act; and to impose penalties for violations of
the Communications Act or FCC regulations. The FCC may revoke licenses for,
among other things, false statements made to the FCC or willful or repeated
violations of the Communications Act or of FCC rules. Legislation has been
introduced from time to time to amend the Communications Act in various respects
and the FCC from time to time considers new regulations or amendments to its
existing regulations. The Company cannot predict whether Congress will enact any
such legislation, whether the FCC will adopt new or amended regulations, or what
the effect of such actions would be on the Company.
The following is a brief summary of certain provisions of the
Communications Act and the rules of the FCC. Reference should be made to the
Communications Act and the rules, orders, decisions and published policies of
the FCC for further information on FCC regulation of television and radio
broadcast stations.
License Renewal. The Communications Act provides that a broadcast station
license may be granted to an applicant if the public interest, convenience and
necessity will be served thereby, subject to certain limitations. In making
licensing determinations, the FCC considers an applicant's legal, technical,
financial and other qualifications. Broadcast station licenses are granted for
specific, limited periods, and, upon application, are renewable for additional
terms. Under the Communications Act, radio station licenses may be granted for a
maximum term of seven years, and television station licenses may be granted for
a maximum
52
<PAGE> 60
term of five years. The Company's current licenses, and the licenses of stations
with which the Company has time brokerage agreements expire on the following
dates:
<TABLE>
<CAPTION>
LICENSE
RADIO STATIONS MARKETS(A) EXPIRATION
- ------------------------- --------------------- ----------------
<S> <C> <C>
WLVE-FM Miami/Ft. Lauderdale February 1, 1996
WZTA-FM Miami/Ft. Lauderdale February 1, 1996
WINZ-AM Miami/Ft. Lauderdale February 1, 1996
WFTL-AM Miami/Ft. Lauderdale February 1, 1996
WHPT-FM Tampa/St. Petersburg February 1, 1996
WSJT-FM Tampa/St. Petersburg February 1, 1996
WHNZ-AM Tampa/St. Petersburg February 1, 1996
WNZE-AM Tampa/St. Petersburg February 1, 1996
WJRR-FM Orlando February 1, 1996
WMGF-FM Orlando February 1, 1996
WWNZ-AM Orlando February 1, 1996
WWZN-AM Orlando February 1, 1996
WPLA-FM Jacksonville February 1, 1996
WROO-AM Jacksonville February 1, 1996
WNZS-AM Jacksonville February 1, 1996
WZNZ-AM Jacksonville February 1, 1996
WPTN-AM Cookeville August 1, 1996
WGSQ-FM Cookeville August 1, 1996
</TABLE>
<TABLE>
<CAPTION>
LICENSE
OWNED TELEVISION STATIONS MARKETS(A) EXPIRATION
- ------------------------- --------------------- ----------------
<S> <C> <C>
KZKI Los Angeles December 1, 1998
WTGI Philadelphia August 1, 1999
KLXV San Francisco December 1, 1998
WGOT Boston April 1, 1999
WTLK Atlanta April 1, 1997
KTFH Houston August 1, 1998
WTWS Hartford/New Haven April 1, 1999
WPBF West Palm Beach February 1, 1997
WYVN Washington, D.C. October 1, 1997
</TABLE>
<TABLE>
<CAPTION>
TIME BROKERAGE LICENSE
TELEVISION STATIONS MARKETS(A) EXPIRATION
- ------------------------- --------------------- ----------------
<S> <C> <C>
WFCT Tampa/St. Petersburg February 1, 1997
WCTD Miami/Ft. Lauderdale February 1, 1997
WTVX West Palm Beach February 1, 1997
WIRB Orlando February 1, 1997
KUBD Denver April 1, 1998
WTJC Dayton October 1, 1997
</TABLE>
- ---------------
(a) Each station is licensed by the FCC to serve a specific community within the
market, which may differ from the listed market.
Generally, the FCC renews licenses without a hearing. The Communications
Act authorizes the filing of petitions to deny and of competing applications
against license renewal applications during specified periods after the renewal
applications have been filed. Interested parties, including members of the
public, may file petitions to deny as a means to raise issues concerning the
renewal applicant's qualifications.
If a substantial and material question of fact concerning a renewal or
other application is raised by the FCC or other interested parties, or if for
any reason the FCC cannot determine whether an applicant would serve the public
interest, convenience and necessity, the FCC will hold an evidentiary hearing on
the application. In a comparative hearing with a competing applicant, the
incumbent licensee may be entitled to a "renewal expectancy" to support
retention of its license, depending upon the nature of the incumbent's
53
<PAGE> 61
operation of the station during the prior license term. In recent years, there
have been a number of petitions to deny and competing applications filed with
respect to broadcast license renewal applications, but in the vast majority of
cases, the FCC has renewed incumbent operators' station licenses.
Ownership Matters. The Communications Act requires the prior approval of
the FCC for the assignment of a broadcast license or the transfer of control of
a corporation or other entity holding a license. In determining whether to
approve an assignment of a broadcast license or a transfer of control of a
broadcast licensee, the FCC considers, among other things, the financial and
legal qualifications of the prospective assignee or transferee, including
compliance with FCC restrictions on alien ownership and control, compliance with
rules limiting the common ownership of certain "attributable" interests in
broadcast, cable and newspaper properties, and the "character" qualifications of
the transferee or assignee and the individuals or entities holding
"attributable" interests in them.
The FCC generally applies its ownership limits to "attributable" interests
held by an individual, corporation, partnership, or other association or entity.
In the case of corporations holding broadcast licenses, the interests of
officers, directors, and those who, directly or indirectly, have the right to
vote five percent or more of the corporation's stock are generally attributable,
as are positions of an officer or director of a corporate parent of a broadcast
licensee. The FCC treats all partnership interests as attributable, except for
those limited partnership interests that are "insulated" under FCC policies. For
insurance companies, certain regulated investment companies and bank trust
departments, that hold stock for investment purposes only, such interests become
attributable with the ownership of ten percent or more of the stock of the
corporation holding broadcast licenses. The FCC's rules specify exceptions to
the general principles for attribution. For example, in a corporation with a
single majority shareholder, such as the Company, no other shareholder is deemed
to hold an attributable interest.
Current FCC nationwide ownership rules allow one entity to hold
"attributable" interests in up to 20 FM radio stations, 20 AM radio stations and
12 TV stations nationwide, provided that an entity may have a noncontrolling
attributable interest in 5 additional FM, 5 AM and 2 TV stations that are
controlled by members of minority groups or, in the case of radio stations, by
certain small businesses. The FCC's rules also prohibit any entity from
acquiring an additional television station if, after the acquisition, the entity
would hold an attributable interest in television stations reaching more than
25% of the United States television households. Historically, VHF stations have
shared a larger part of the market than UHF stations. As such, only half of the
households in the market area of any UHF station owned by an entity are included
when calculating whether an entity reaches more than 25% of the United States
television households. A higher ceiling applies to attributable interests held
in television stations controlled by certain ethnic or racial minority groups.
In addition to the nationwide limits on broadcast ownership, the FCC's
rules limit the number of co-located radio or television broadcast stations in
which a single entity may own an attributable interest. For television, no
single entity may hold an attributable interest in television stations with
overlapping Grade B service contours. The Grade B contour is a predicted signal
strength contour that generally approximates the area within which a viewer can
receive off the air a signal adequate for normal viewing. The local ownership
restrictions for radio broadcast stations vary based on market size and audience
share. In markets with fifteen or more commercial radio stations, a single
entity may have an attributable interest in two AM and two FM stations unless
common ownership would result in "excessive concentration" in the local market.
"Excessive concentration" is presumed where the combined audience share of the
same market of stations owned by a single entity exceeds twenty-five percent
(25%). No divestiture is required, however, if a station combination at or below
the 25% mark at the time of acquisition subsequently exceeds that limit. The
FCC's rules specify the definition of a "market" based on primary service
contours for the stations involved and the acceptable means for determining
audience share.
Under local radio ownership rules, an entity with an attributable interest
in one radio station is considered also to have an attributable interest in any
other radio station in the same market for which the first radio station
provides the programming for more than 15% of the broadcast time, on a weekly
basis. As a result,
54
<PAGE> 62
such programming arrangements may not be entered into by radio station
combinations that could not be commonly owned under FCC rules.
The FCC's cross-ownership rules prohibit the common ownership of
attributable interests in certain combinations of media outlets serving the same
geographic area. Under these rules, a single entity may not have an attributable
interest in (i) both a radio station and a television station that serve
specified overlapping areas; (ii) a daily newspaper and either a radio station
or a television station that serve specified overlapping areas; or (iii) a
television station and a cable television system that serve specified
overlapping areas. The FCC has established a liberal waiver policy to permit
common ownership of a radio station and a television station in any of the
nation's 25 largest markets, and in some circumstances involving "failed
stations" and in other situations where more stringent waiver standards can be
met. In addition, legislative proposals have been made from time to time to
liberalize or strengthen these prohibitions. See "Proposed Changes."
In cases involving competing media in the same market, FCC policy in
certain instances prohibits common ownership interests under its
"cross-interest" policy even if the interests involved are non-voting or other
non-attributable interests not specifically forbidden under the FCC's
cross-ownership rules. The FCC has initiated proceedings to inquire whether it
should change or eliminate this policy, covering joint ventures and common key
employees. The policy does not necessarily prohibit these interests, but may
require that the FCC consider whether they could have a significant adverse
affect on programming diversity and competition in the market. See "Proposed
Changes."
In cases where one person or entity (such as Mr. Paxson in the case of the
Company) holds more than 50% of the combined voting power of the common stock of
a broadcasting corporation, a minority shareholder of the corporation generally
would not acquire an "attributable" interest in the corporation. Any
attributable interest by any shareholder in another broadcast station or daily
newspaper in a market where such a corporation owns or seeks to acquire a
station may still be subject to review by the FCC under its "cross-interest"
policy, and could result in the Company's being unable to obtain from the FCC
one or more authorizations needed to acquire other broadcast stations.
Furthermore, if a majority shareholder of a company (such as Mr. Paxson in the
case of the Company) were no longer to hold more than 50% of the combined voting
power of the common stock of the Company, the interests of minority shareholders
that had theretofore been considered non-attributable could become attributable,
with the result that any other media interests held by such shareholders would
be combined with the media interests of such company for purposes of determining
the shareholders' compliance with FCC ownership rules. In the event of any
noncompliance, steps required to achieve compliance could include divestitures
by either the shareholder or the affected company. Furthermore, other media
interests of shareholders having or acquiring an attributable interest in such a
company could result in the company's being unable to obtain FCC consents for
future acquisitions. Conversely, the Company's media interests could operate to
restrict other media investments by shareholders having or acquiring an interest
in the Company.
Under the Communications Act, no FCC license may be held by a corporation
of which any officer or director is an alien or of which more than one-fifth of
its capital stock is owned of record or voted by aliens or their representatives
or by a foreign government or representative thereof, or by any corporation
organized under the laws of a foreign country (collectively "Aliens").
Furthermore, the Communications Act provides that no FCC license may be granted
to any corporation directly or indirectly controlled by any other corporation of
which any officer or more than one-fourth of its directors are Aliens, or of
which more than one-fourth of its capital stock is owned of record or voted by
Aliens if the FCC should find that the public interest would be served by the
refusal of such license. Restrictions on alien ownership also apply, in modified
form, to other types of business organizations, including partnerships.
Congress and the FCC are actively considering a number of matters that bear
upon broadcast ownership restrictions. See "-- Proposed Changes." The Company
cannot predict whether any proposed changes will be adopted nor can it predict
what other matters might be considered in the future, nor can it judge in
advance what impact, if any, the implementation of any of these proposals or
changes might have on its business.
Programming and Operation. The Communications Act requires broadcasters to
serve the "public interest." Since the late 1970's, the FCC gradually has
relaxed or eliminated many of the more formalized
55
<PAGE> 63
procedures it developed to promote the broadcast of certain types of programming
responsive to the needs of a station's market. Nevertheless, broadcast licensees
continue to be required to present programming that responds to community
problems, needs, and interests and to maintain certain records demonstrating
such responsiveness. Complaints from listeners or viewers about a broadcast
station's programming often will be considered by the FCC when it evaluates
renewal applications of a licensee, although such complaints may be filed at any
time.
Broadcast of obscene or indecent material is regulated by the FCC as well
as by state and federal law. Stations also must follow various rules promulgated
under the Communications Act that regulate, among other things, political
advertising, sponsorship identifications, the advertising of contests and
lotteries, and technical operations, including limits on radio frequency
radiation. In addition, licensees must develop and implement affirmative action
programs designed to promote equal employment opportunities, and must submit
reports to the FCC with respect to these matters on an annual basis and in
connection with a renewal application. Pursuant to the Children's Television Act
of 1990, the FCC has adopted rules limiting advertising in children's television
programming and requiring that television broadcast stations serve the
educational and informational needs of children. The Children's Television Act
specifically requires that the FCC must consider compliance with these
obligations in deciding whether to renew a television broadcast license.
Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short" term renewals (less than the full five or seven years) renewal terms or,
for particularly egregious violations, the denial of a license renewal
application or the revocation of a license.
Time Brokerage Agreements. Over the past several years a significant
number of radio broadcast licensees, including certain of the Company's
subsidiaries, have entered into time brokerage agreements. While these
agreements may take varying forms, under a typical time brokerage agreement
separately-owned and licensed radio stations agree to enter into arrangements of
varying sorts, subject to compliance with the requirements of antitrust laws and
with the FCC's rules and policies. These arrangements are subject under FCC
rules and regulations to maintenance by the licensee of each station of
independent control over the programming and station operations of its own
station.
Typically, a time brokerage agreement is a programming agreement between
two separately owned radio stations serving a common service area, whereby the
licensee of one station programs substantial parts of the broadcast day on the
other licensee's station, subject to ultimate editorial and other controls being
exercised by the licensee of the "brokered" station. The broker then sells
advertising time during such program segments for its own account. Such
arrangements are an extension of the concept of "time brokerage," under which a
licensee of a station sells the right to broadcast blocks of time on its station
to an entity or entities which program the blocks of time and sell their own
commercial advertising announcements for their own account during the time
periods in question.
The FCC has determined that issues of joint advertising sales should be
left to antitrust enforcement. In addition, it has specifically exempted time
brokerage agreements from its "cross-interest" policy. Furthermore, the FCC and
the staff of the FCC's Mass Media Bureau have held that time brokerage
agreements do not per se constitute a transfer of control and are not contrary
to the Communications Act provided that the licensee of the station maintains
ultimate responsibility for and control over operations of its broadcast station
(including, specifically, control over station finances, licensee personnel, and
programming) and complies with applicable FCC rules and with antitrust laws.
Thus far, the FCC has not considered what relevance, if any, a time brokerage
agreement may have upon its evaluation of a licensee's performance at renewal
time.
Under certain circumstances, the FCC will consider a station brokering time
on another radio station serving the same market to have an attributable
ownership interest in the brokered station for purposes of the FCC's radio local
ownership rules. In particular, a radio broadcast station is not permitted to
enter into a time brokerage agreement giving it the right to program more than
15% of the broadcast time, on a weekly basis, of another local station that it
could not own under the FCC's revised local radio "duopoly" multiple ownership
rules. Nevertheless, time brokerage agreements entered into before September 16,
1992, are generally grandfathered. The FCC has no present rules on the
attribution of television time brokerage agreements as it
56
<PAGE> 64
does with radio time brokerage agreements. The FCC has adopted an interim policy
on the grant of transfer and assignment applications that include television
time brokerage arrangements and the FCC is now considering whether to adopt
rules governing television time brokerage agreements. See "Proposed Changes."
The FCC rules also prohibit a broadcast licensee from simulcasting more
than 25% of its programming on another station in the same broadcast service
(that is, AM-AM or FM-FM) whether it owns both stations or operates both through
a time brokerage agreement where the brokered and brokering stations serve
substantially the same geographic area.
Must Carry/Retransmission Consent. Some provisions of the Cable Television
Consumer Protection and Competition Act of 1992 (the "1992 Cable Act") and the
implementing rules adopted by the FCC, such as signal and carriage and equal
employment opportunity requirements, directly affect television broadcasting.
Other provisions, although focused exclusively on the regulation of cable
television, may indirectly affect the Company because of the competition between
over-the-air television stations and cable systems.
The 1992 Cable Act contains broadcast signal carriage requirements that
allow local commercial television broadcast stations to elect once every three
years to require a cable system to carry the station on certain designated cable
channels subject to certain exceptions, or to negotiate for "retransmission
consent" to carry the station. A cable system generally is required to devote up
to one-third of its activated channel capacity for the mandatory carriage of
local commercial television stations. Local non-commercial television stations
are also given mandatory carriage rights; however, such stations are not given
the option to negotiate retransmission consent for the carriage of their signals
by cable systems. Additionally, cable systems are required to obtain
retransmission consent for all "distant" commercial television stations (except
for commercial satellite-delivered independent "superstations" such as WTBS),
commercial radio stations and certain low power television stations carried by
such systems after October 6, 1993. The constitutionality of the mandatory
signal carriage requirements has been challenged in federal court in an ongoing
proceeding. See "-- Proposed Changes."
The 1992 Cable Act also established a mechanism to modify local television
markets, under which television stations licensed to communities in one "area of
dominant influence" or "ADI," as defined by the ratings service Arbitron, may
become qualified for "must-carry" status on cable systems serving communities
outside their ADI and within the ADI of other television stations. The FCC is
authorized to entertain requests for expansion or other modification of
television station markets. The grant of such requests by a licensee to extend
its must carry rights into another ADI may fractionalize the viewing audience of
other television stations already classified as entitled to must carry rights
within the ADI.
Equal Employment Opportunity Requirements. The 1992 Cable Act also
codified the FCC's existing equal employment opportunity ("EEO") regulations and
reporting forms used by television broadcast stations. In addition, as required
by the 1992 Cable Act, the FCC has adopted rules providing for a review of the
EEO performance of each television station at the mid-point in its license term
(in addition to an examination at renewal time) and for the FCC to inform the
licensee of any improvements in recruiting practices that may be needed as a
result of the review.
Syndicated Exclusivity/Territorial Exclusivity. The FCC has imposed on
cable operators syndicated exclusivity rules and expanded existing network
non-duplication rules. These syndicated exclusivity rules allow local broadcast
stations to require that cable operators black out certain syndicated
non-network programming carried on "distant signals" (that is, signals of
broadcast stations, including so-called "super stations," which serve areas
substantially removed from the cable system's local community). The network
non-duplication rules allow local broadcast network affiliates to require that
cable operators black out duplicating network broadcast programming carried on
more distant signals that are not significantly viewed over the air.
Financial Interest/Syndication and Prime Time Access Rules. Previously,
financial interest/syndication ("FIN/SYN") rules applied to any network and
posed various restrictions on its operation and activities. Network status has
been considered to exist under these rules when a broadcast company's weekly
programming offerings exceed 15 hours. These rules prohibited networks from
engaging in syndication for the sale, licensing, or distribution of television
programs for non-network broadcast exhibition in the United
57
<PAGE> 65
States. Furthermore, these rules prohibited networks from sharing profits from
any syndication and from acquiring any new financial or proprietary interest in
programs of which they are not the sole producer.
The FCC has relaxed the restrictions on current FIN/SYN rules, enabling the
major networks to acquire specified amounts and kinds of financial interests in
program syndication and to engage in program syndication themselves. The Company
cannot predict the effect of these relaxed restrictions under the FIN/SYN rules
on the Company's ability to acquire desirable programming at reasonable prices.
The FCC's prime time access rule also places programming restrictions on
affiliates of major national television "networks." In the past, this rule
restricted affiliates of "networks" in the 50 largest television markets (as
defined by the rule) generally to no more than three hours of network
programming during the four hours of prime time. Recently, the FCC changed its
definition of "network" to include those entities that deliver more than 15
hours of "prime time programming" (a term defined in those rules) to affiliates
reaching 75% of the nation's television homes. Under this definition, certain
national television networks are not subject to the prime time access rule. In
July 1995, the FCC issued an order repealing the prime time access rules,
subject to a one-year transition period during which the rules will continue in
effect. The order remains subject to reconsideration. If the order is not
modified or overturned, the prime time access rules will terminate on August 30,
1996. The Company cannot predict what effect the repeal of the rules may have on
the operation of its network-affiliated television stations or the market for
syndicated television programming.
Television and radio broadcast stations also may be subject to a number of
other federal, state, and local regulation, including regulations of the Federal
Aviation Administration affecting tower height and marking, and federal, state,
and local environmental and land use restrictions and general business
regulation, and a variety of local regulatory concerns.
Proposed Changes. The Congress and the FCC have under consideration, and
in the future may consider and adopt, new laws, regulations and policies
involving a wide variety of matters that could affect, directly or indirectly,
the operation, ownership and profitability of the Company's broadcast stations,
result in the loss of audience and advertising revenue for the Company's
broadcast stations and affect the ability of the Company to acquire additional
broadcast stations or finance such acquisitions.
Pending Legislation to Amend the Communications Act. On June 15, 1995, the
United States Senate passed a bill that, among other measures, would eliminate
the 12-station nationwide television ownership limitation and increase the FCC's
national audience reach limitation for television from 25% to as much as 35%.
The Senate bill also provided for the grandfathering of existing television time
brokerage agreements, established a two-step licensing process that would tend
to protect broadcasters from renewal challenges, and extended the television
license term from five years to ten years.
On August 4, 1995, the United States House of Representatives passed a bill
that, among other measures, would limit the authority of the FCC to regulate the
multiple ownership of broadcast stations. If enacted into law, the House bill,
like the Senate bill, would eliminate the FCC's existing 12-station ownership
limit for television stations and increase the FCC's permissible nationwide
audience reach for television stations from 25% to as much as 35%. Under the
House bill, a single entity could hold two UHF television stations or a UHF and
a VHF television station in the same market, unless the FCC determines that the
combination would harm competition or diversity. The ownership of two VHF
television stations in the same market would not be permitted without an
affirmative finding by the FCC that the combination would not harm competition
or diversity in the market. (The Senate bill, in contrast, would allow present
FCC local television ownership restrictions to stand.) The House bill also
includes requirements for the establishment of a television rating code and for
the inclusion of an electronic device (commonly called a "V-Chip") in new
television sets, intended principally to permit parents to block programming
they deem unsuitable for children. The legislation also would lift the present
ban on the ownership of cable television systems by telephone companies, thus
allowing telephone companies to compete more freely in the delivery of video
programming directly to home. The House bill would revise renewal procedures in
a manner similar to that in the Senate bill, but would extend license terms only
to seven years to parallel radio broadcast license terms. There can be no
assurance that the legislation will become law in either the House or Senate
version and the ultimate impact on the Company cannot be predicted.
58
<PAGE> 66
FCC Proceedings to Revise Broadcast Ownership Rules. In January 1995, the
FCC issued a further notice of proposed rule making which proposed the following
changes in regulations governing television broadcasting: (i) raising the
national ownership limits to up to 24 stations and raising the national reach
restrictions to 35% or simply eliminating the numerical station limit altogether
and replacing it with an escalating national reach restriction which would
eventually hit a ceiling of 50%; (ii) modifying the reach discount as it applies
to UHF stations; (iii) narrowing the geographic area where common ownership
restrictions would be triggered by limiting it to overlapping "Grade A" contours
rather than "Grade B" contours and by permitting (or granting waivers in
particular cases or markets) certain UHF/UHF or UHF/VHF overlaps; (iv) relaxing
the rules prohibiting cross-ownership of radio and television stations in the
same market to allow certain combinations where there remain alternative outlets
and suppliers to ensure diversity; and (v) treating television time brokerage
agreements the same as radio time brokerage agreements which would presently
preclude certain television time brokerage agreements where the programmer owns
or has an attributable interest in another television station in the same
market. In June 1995, the FCC announced an interim policy for processing
television transfer and assignment application that include television time
brokerage arrangements. Pending the adoption of new rules, the FCC has stated
that it will not grant applications that propose a time-brokerage arrangement if
the arrangement also includes both debt financing by the time broker and an
option for the time broker to purchase the brokered station. The FCC will
continue to grant applications with time-brokerage if they include only one of
those elements (that is, either debt financing by the broker or an option of the
time broker to purchaser). Adoption of the most restrictive proposals in this
proceeding could limit the Company's alternatives for entering into new time
brokerage agreements and making new broadcast acquisitions and, if existing
arrangements are not "grandfathered", could require the Company to modify or
terminate certain of its time brokerage arrangements.
In January 1995, the FCC issued a further notice of proposed rule making
that combined several long-pending proceedings to consider changes in its
ownership rules and policies. In the new proceeding, the FCC is considering,
among other things, (i) whether to make non-voting stock interests attributable;
(ii) whether to change attribution thresholds; (iii) how to treat limited
liability companies for purposes of attribution; (iv) whether to extend the
cross-interest policy to require review of multi-layered business relationships,
including debt relationships, that now are not subject to scrutiny; and (v)
whether to change the insulation standards for non-attribution of limited
partnership interests. Adoption of the most restrictive alternatives available
to the FCC could require that the Company, in assessing acquisition and
compliance strategies, take into account additional interests in itself and its
principals that are now exempt from FCC ownership regulation, and potentially
divest or restructure some interests.
In a second notice of proposed rule making the FCC is seeking comment on
whether the FCC should relax attribution and other rules to facilitate greater
minority and female ownership. The Company cannot predict the outcome of these
proceedings or how they will affect the Company's business.
FCC Inquiry on Broadcast of Commercial Matter. The FCC also has initiated
a notice of inquiry proceeding seeking comment on whether the public interest
would be served by establishing limits on the amount of commercial matter
broadcast by television stations. No prediction can be made at this time as to
whether the FCC will propose any limits on commercial advertising at the
conclusion of its deliberation or the effect the imposition of limits on the
commercial matter broadcast by television stations would have upon the Company's
operations.
Digital Audio Broadcasting. The FCC recently has allocated spectrum to a
new technology, digital audio broadcasting ("DAB"), to deliver satellite-based
audio programming to a national or regional audience and is considering rules
for a DAB service. DAB may provide a medium for the delivery by satellite or
terrestrial means of multiple new audio programming formats with compact disc
quality sound to local and national audiences. It is not known at this time
whether this technology also may be used in the future by existing radio
broadcast stations either on existing or alternate broadcasting frequencies. In
addition, applications by several entities currently are pending at the FCC for
authority to offer multiple channels of digital, satellite-delivered S-Band
aural services that could compete with conventional terrestrial radio
broadcasting. These satellite radio services use technology that may permit
higher sound quality than is possible with conventional AM and FM terrestrial
radio broadcasting. Thus far, the FCC has not granted the
59
<PAGE> 67
pending requests for authorizations to offer satellite radio, nor has it adopted
rules for the proposed satellite radio service. Implementation of DAB would
provide an additional audio programming service that could compete with the
Company's radio stations for listeners, but the effect upon the Company cannot
be predicted.
Advanced High Definition Television System. The FCC has also begun to
adopt rules for implementing advanced (high definition) television ("ATV") in
the United States. Implementation of ATV service should improve the technical
quality of television broadcasts. The FCC has decided that it will set aside
specific new channel allotments for ATV service. Initial eligibility for these
channels will be limited to existing television licensees. The FCC has not yet
adopted a new technical standard for ATV, nor has it adopted a new Table of
Allotments for ATV channels.
Under the FCC's current plan for phasing in ATV service, each television
station would be able to continue to provide conventional television service on
its regular channel until advanced television service has become the prevalent
medium. In August 1995, the FCC issued its Fourth Further Notice of Proposed
Rule Making and Third Notice of Inquiry in its ATV proceeding. The notice and
inquiry requested public comment on a number of issues in connection with the
establishment of ATV television broadcasting, including (i) procedures and
timetables for existing broadcasters to move to ATV channels and relinquish
their present spectrum; (ii) restrictions on the use of ATV channels during the
transition period; (iii) the effect of conversion to digital transmission on a
broadcaster's public interest obligations; (iv) incentives for the rapid
adoption of ATV transmission technologies by broadcasters and by the public, and
(v) the impact of ATV on cable television carriage or retransmission consent.
Fifteen years after the start date, television broadcasters would be required to
surrender their conventional television licenses. Implementation of ATV service
is likely to impose additional costs on television stations providing new
service, due to increased equipment costs. While the Company believes the FCC
will authorize ATV, the Company cannot predict when such authorization might be
given or the effect such authorization might have on the Company's business.
Must-Carry/Retransmission Consent. On April 8, 1993, a special three-judge
federal district court issued a decision upholding the constitutional validity
of the mandatory signal carriage requirements. In June 1994, the United States
Supreme Court vacated this decision and remanded it to the district court to
determine, among other matters, whether the statutory carriage requirements are
necessary to preserve the economic viability of the broadcast industry. The
mandatory broadcast signal carriage requirements will remain in effect pending
the outcome of the further proceedings in the district court. If a station is
not carried by a cable system in its area or is shifted to an undesirable
channel on such cable system, the station could experience a decline in
viewership that could adversely affect its revenue, particularly revenue from
stations carried on a cable system solely to comply with the must-carry law (for
example, if the Infomall programming competes with the cable system's own,
similar non-broadcast offering).
Other changes that may result from matters under consideration by the FCC
or the Congress include (i) changes to the broadcast license renewal process;
(ii) spectrum use or other fees on FCC licensees; (iii) the FCC's equal
employment opportunity rules and other matters relating to female or minority
involvement in the broadcasting industry; (iv) rules relating to political
broadcasting; (v) technical and frequency allocation matters; (vi) changes in
the FCC's cross-interest, multiple ownership and cross-ownership rules and
policies; (vii) changes in policies governing the ability of telephone companies
to deliver audio and visual programming to the home by wire; (viii) changes in
the tax deductibility of advertising expenses; (ix) changes in standards
governing the evaluation and regulation of television programming directed
toward children, and violent or indecent programming; and (x) changes in
regulation of the relationship between major television networks and their
affiliates.
The foregoing is only a brief summary of certain provisions of the
Communications Act and of specific FCC and other regulations. Reference is made
to the Communications Act, FCC regulations, and the public notices and rulings
of the FCC for further information concerning the nature and extent of federal
regulation of broadcast stations.
60
<PAGE> 68
EMPLOYEES
As of September 30, 1995, the Company had approximately 670 full-time
employees and approximately 183 part-time employees, for a total of 853
employees. None of its employees is represented by a labor union. The Company
considers its relations with its employees to be good.
SEASONALITY
Seasonal revenue fluctuations are common within the radio and television
broadcasting industry and result primarily from fluctuations in advertising
expenditures by local retailers. Paxson Radio and Paxson Television generally
experience their lowest revenue for the year in the first quarter, whereas the
highest revenue for the year generally occurs in the fourth fiscal quarter.
Because of the short operating history, the Company cannot adequately assess the
effects of seasonality on IN TV.
PATENTS AND TRADEMARKS
The Company has one registered trademark and 12 trademark registrations
pending relating to its business. It does not own any patents or patent
applications. The Company does not believe that any of its trademarks are
material to its business or operations.
61
<PAGE> 69
PROPERTIES AND FACILITIES
The following table sets forth information with respect to the Company's
offices and its studios and broadcast tower locations. Management believes that
the Company's properties are in good condition and are suitable for its
operations.
<TABLE>
<CAPTION>
LEASE
MARKET* PROPERTY OWNED/LEASED EXPIRATION
- ------------------------ -------------------- ------------ ---------------
<S> <C> <C> <C>
Miami, FL Studio/Offices Owned
WLVE-FM Tower Leased January 2000
WZTA-FM Tower Leased April 2007
WINZ-AM Tower Owned
WFTL-AM Tower Owned
Tampa, FL Studio/Offices Leased May 1998
WHNZ-AM Tower Owned
WHPT-FM Tower Owned
WNZE-AM Tower Owned
WSJT-FM Tower Owned
Orlando, FL Studio/Offices Leased March 2002
WJRR-FM Tower Leased April 2000
WMGF-FM Tower Leased February 2001
WWNZ-AM Tower Owned
WWZN-AM Tower Owned
Jacksonville, FL Studio/Offices Leased February 1996
WROO-FM Tower Leased March 1999
WPLA-FM Tower Owned Perpetual
WNZS-AM Tower Leased
WZNZ-AM Tower Owned
Cookeville, TN Studio/Offices Leased December 1998
WGSQ-FM Tower Leased 2017
WPTN-AM Tower Owned
Los Angeles, CA Studio/Offices Leased October 1998
Tower Leased June 2005
National Sales Leased July 1998
Office
Philadelphia, PA Studio Leased September 2000
Tower Owned
San Francisco, CA Studio/Offices Leased June 2005
Tower Leased June 2020
Boston, MA Studio/Offices Leased February 2006
Tower Leased June 2026
Atlanta, GA Studio/Offices Leased June 2001
Tower Leased October 2015
</TABLE>
62
<PAGE> 70
<TABLE>
<CAPTION>
LEASE
MARKET* PROPERTY OWNED/LEASED EXPIRATION
- ------------------------ -------------------- ------------ ---------------
<S> <C> <C> <C>
Houston, TX Studio/Offices Leased October 1998
KTFH-TV Tower Owned January 1997
K33DB Tower Leased
Hartford, CT Studio Leased October 1999
Tower Leased October 2035
West Palm Beach, FL Studio/Offices Leased October 1998
Tower Owned
Headquarters Owned
</TABLE>
- ---------------
* Market of station (where applicable), which may differ from actual location.
LEGAL PROCEEDINGS
The Company is involved in litigation from time to time in the ordinary
course of its business. In the opinion of management, no material legal
proceedings are pending to which the Company, or any of its property, is
subject.
63
<PAGE> 71
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information concerning the Company's directors
and executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------- --- -----------------------------------------------------------
<S> <C> <C>
Lowell W. Paxson............ 60 Chairman of the Board, Director and Chief Executive Officer
James B. Bocock............. 51 President, Chief Operating Officer and Director
Vice President, Treasurer, Chief Financial Officer and
Arthur D. Tek............... 46 Director
Anthony L. Morrison......... 34 Vice President, Secretary and General Counsel
Jon Jay Hoker............... 56 President, Paxson Radio
Dean M. Goodman............. 48 President, Paxson Television
Michael J. Marocco.......... 36 Director
John A. Kornreich........... 49 Director
J. Patrick Michaels, Jr..... 51 Director
S. William Scott............ 62 Director
</TABLE>
Lowell W. Paxson has been Chairman of the Board, Chief Executive Officer,
and a Director of the Company since its inception. Mr. Paxson was the creator,
co-founder and president of Home Shopping Network, Inc. ("HSN"), a position he
held from HSN's inception in May 1985 to December 1990. He remained a consultant
to HSN through 1994. Mr. Paxson was a pioneer in the home shopping concept on
radio beginning in 1977, which he later transferred to television through HSN.
Mr. Paxson has been involved in radio for over 40 years, during which time he
owned a majority interest in a number of radio stations. At HSN, in which he was
a major initial stockholder, he was actively involved in the acquisition and
operation of ten television stations which were later spun-off by HSN as Silver
King Communications, Inc. Mr. Paxson earned his Bachelor's degree from Syracuse
University in 1956. He served as a U.S. Army captain from 1956 to 1957. Mr.
Paxson served on the boards of a variety of charitable, civic and educational
institutions. He holds memberships in the National Cable Television Association
and the National Association of Broadcasters.
James B. Bocock has been President and Chief Operating Officer of the
Company since July 1991 and has been a Director since January 1994. Mr. Bocock
was Vice President -- Broadcast Affiliations for HSN from September 1986 to June
1991. While at HSN, Mr. Bocock negotiated HSN's acquisition of several full and
low power television stations. Mr. Bocock has been involved in radio and
television since 1962, including service as the general manager of a number of
radio stations throughout the United States.
Arthur D. Tek has been Vice President and Chief Financial Officer of the
Company since December 1992. He has been Treasurer and a Director of the Company
since January 1994. Prior to joining the Company, Mr. Tek was Chief Financial
Officer and Controller of Chase Communications, Inc., a television and radio
broadcasting firm, from February 1990 to December 1992. Mr. Tek was Vice
President -- Finance for SunGroup, Inc., a radio station group, from November
1986 to February 1990.
Anthony L. Morrison has been Vice President, Secretary and General Counsel
since February 1995. He was an attorney in the New York office of the law firm
of O'Melveny & Myers from June 1990 to February 1995, with a practice consisting
of banking, finance, and general corporate matters. Mr. Morrison was an attorney
with the New York office of White & Case from November 1987 to June 1990.
Jon Jay Hoker has been the President of Paxson Radio since January 1995.
From April 1994 to January 1995 he was President of Paxson Networks, Inc. Mr.
Hoker is a former radio group owner, having formed Hoker Broadcasting in 1985.
Prior to forming his own group, Mr. Hoker was a vice president with Belo
Broadcasting from 1982 to 1985. Mr. Hoker was responsible for overall operations
of radio stations in Dallas and Denver as well as overseeing all radio
acquisitions. Mr. Hoker began his broadcast career with ABC, where he worked
from 1971 to 1981.
Dean M. Goodman has been President of Paxson Television since January 1995.
Mr. Goodman joined the Company in 1993 and prior to becoming President of Paxson
Communications Television, Inc., was the General Manager of the Company's Miami
radio group. Prior to joining the Company in 1993, Mr. Goodman
64
<PAGE> 72
was Executive Vice President of the television and radio broadcast group of
Gilmore Broadcasting Corp. Prior to joining Gilmore Broadcasting, Mr. Goodman
was Vice President and General Manager of Southwest Radio, Inc. and Community
Service Broadcasters, Inc.
Michael J. Marocco has served as a Director since December 1993. He has
been the President of Sandler Media Group, Inc. since May 1989. Mr. Marocco has
been a general partner of Sandler Associates since 1993 and, through affiliates,
a general partner of the Sandler Partnerships (as defined herein). Mr. Marocco
is a principal of certain other investment partnerships that invest primarily in
companies in the communications industry. The Sandler Partnerships hold an
equity interest in the Company. See "Principal Stockholders." He was a Vice
President at Morgan Stanley & Co. Inc., serving in its communications group,
from 1984 to 1989. Mr. Marocco is also a director of PageAmerica, Inc.
John A. Kornreich has served as a Director since December 1993. He joined
Sandler Media Group, Inc. in 1988 and is a general partner of Sandler Associates
and, through affiliates, a general partner of the Sandler Partnerships and the
21st Century Communications Partnership. The Sandler Partnerships hold an equity
interest in the Company. See "Principal Stockholders." In 1986, Mr. Kornreich
formed J.K. Media, L.P., a private investment partnership funded primarily by
communications industry executives, for which Mr. Kornreich serves as the sole
general partner.
J. Patrick Michaels, Jr. has been serving as a Director since February
1995. Mr. Michaels founded and since 1973 has been the Chairman of the Board of
Directors and Chief Executive Officer of Communications Equity Associates, Inc.
("CEA"), a firm that specializes in providing financial services to a variety of
organizations in the media, communications and entertainment industries. During
1973, Mr. Michaels was Vice President of Cable Funding Corporation, a
specialized finance company lending to the cable television industry. From
October 1968 through December 1972, Mr. Michaels served as one of the original
employees and Vice President of TM Communications, the cable subsidiary of The
Times Mirror Company. Mr. Michaels holds equity interests in a number of media
companies, some of which may be deemed competitive with the Company. Mr.
Michaels is the Vice Chairman of the Board of Directors, Acting President and
Acting Chief Operating Officer of Video Jukebox Network, Inc.
S. William Scott has been serving as a Director since February 1995. From
1983 to 1987, Mr. Scott was Executive Vice President, Westinghouse Broadcasting
Television Group. From 1981 through the end of 1983, Mr. Scott served as
President and Chief Operating Officer of a Westinghouse Broadcasting/American
Broadcasting Company joint venture for cable television known as the Satellite
News Channels. Currently, Mr. Scott provides consulting services to various
media companies, including the Company.
All officers are elected until the next annual meeting of the Board of
Directors or until their respective successors are chosen and qualified.
Directors serve for a one-year term or until their successors are elected.
BOARD COMMITTEES
The Company's Board of Directors appointed a Compensation Committee and an
Audit Committee in February 1995. Neither committee existed in 1994. The
Compensation Committee consists of Lowell W. Paxson, Michael J. Marocco, and
John A. Kornreich. The Compensation Committee recommends to the Board both base
salary levels and bonuses for the Chief Executive Officer and the other officers
of the Company. The Compensation Committee also reviews and makes
recommendations with respect to the Company's existing and proposed compensation
plans, and serves as the committee responsible for administering the Company's
Stock Incentive Plan. Until February 1995, the Compensation Committee's
functions were exercised by the Board of Directors.
On February 1995, the Board appointed an Audit Committee consisting of
James B. Bocock, Michael J. Marocco, and John A. Kornreich. The duties of the
Audit Committee are to recommend to the Board of Directors the selection of
independent certified public accountants, to meet with the Company's independent
certified public accountants to review the scope and results of the audit, and
to consider various accounting and auditing matters related to the Company,
including its system of internal controls and financial management practices.
Until February 1995, the Audit Committee's functions were exercised by the Board
of Directors.
65
<PAGE> 73
The Company does not have a nominating committee. This function is
performed by the Board of Directors.
All directors receive reimbursement of reasonable out-of-pocket expenses
incurred in connection with meetings of the Board of Directors. No director
receives separate compensation for services rendered as a director.
EXECUTIVE COMPENSATION
The following table sets forth the compensation received by the Company's
Chief Executive Officer and the four highest paid executive officers (the "Named
Executive Officers") for services rendered to the Company in 1992, 1993 and
1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------- --------------------- PAYOUTS
OTHER RESTRICTED SECURITIES -------
NAME AND ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
- --------------------------- ---- --------- -------- ------------ -------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lowell W. Paxson........... 1994 $ -- $ -- $ -- $ -- $ -- $-- $ --
Chairman and Chief 1993 -- -- -- -- -- -- --
Executive Officer(a) 1992 -- -- -- -- -- -- --
James B. Bocock............ 1994 160,000 (b) -- -- -- -- -- --
President and Chief 1993 125,000 -- -- -- -- -- --
Operating Officer 1992 125,000 -- -- -- -- -- --
Arthur D. Tek.............. 1994 112,500 (c) -- -- -- -- -- --
Vice President, 1993 100,000 -- -- -- -- -- --
Treasurer, and Chief 1992 4,167 (d) -- -- -- -- -- --
Financial Officer
William L. Watson(e)....... 1994 104,000 -- -- -- -- -- --
Secretary 1993 102,600 (f) -- -- -- -- -- --
1992 95,000 (f) -- -- -- -- -- --
</TABLE>
- ---------------
(a) Mr. Paxson has entered into a five and one-half year employment agreement
commencing June 30, 1994. See "Employment Agreements."
(b) Pursuant to the Company's Profit Sharing Plan, Mr. Bocock elected to defer
$9,240 of his 1994 salary.
(c) Pursuant to the Company's Profit Sharing Plan, Mr. Tek elected to defer
$9,240 of his 1994 salary.
(d) Mr. Tek was employed by the Company commencing in December 1992.
(e) Mr. Watson resigned as Secretary effective February 13, 1995. He currently
serves as the Company's Assistant Secretary.
(f) Mr. Watson received a $5,000 housing allowance in both 1993 and 1994.
OPTION GRANTS IN 1994
No stock options or stock appreciation rights were granted during 1994 to
the individuals shown in the Summary Compensation Table.
AGGREGATE OPTION EXERCISES IN 1994
No options were exercised during 1994 by the officers shown in the Summary
Compensation Table.
STOCK INCENTIVE PLAN
The Company established the Company's Stock Incentive Plan (the "Plan") in
November 1994 to provide incentives to officers and other employees who
contribute significantly to the strategic and long-term performance objectives
and growth of the Company. The Plan is administered by the Compensation
Committee of the Company's Board of Directors.
The Plan provides for the issuance of options, in the form of incentive
stock options or non-qualified stock options, to officers and employees selected
by the Compensation Committee. Under the Plan, options exercisable for an
aggregate amount of 2,143,575 shares of Class A Common Stock are available for
issuance.
66
<PAGE> 74
The exercise price per share of Class A Common Stock deliverable upon the
exercise of each stock option is determined by the Compensation Committee at the
date the stock option is granted; provided, however, that the exercise price of
incentive stock options shall be the fair market value of the Class A Common
Stock at the date of grant. Stock options are exercisable in whole or in part on
such date or dates as are determined by the Compensation Committee at the date
of the grant. The Compensation Committee may, in its sole discretion, accelerate
the time at which any stock option may be exercised. Stock options expire on the
date or dates determined by the Compensation Committee at the time the stock
options are granted; provided, however, that the term of the incentive stock
options shall not exceed 10 years after the date of grant. Holders of more than
10% of the combined voting power of the capital stock of the Company may be
granted stock options, provided that the exercise price be 110% of the fair
market value of Class A Common Stock as of the date of the grant, and provided
that the term of the stock option shall not exceed five years after the date of
the grant.
Stock options granted under the Plan may be exercised by the participant to
whom granted or by his or her legal representative. If a Plan participant's
employment is terminated for cause, each stock option which has not been
exercised shall terminate.
The Compensation Committee also has the discretion to award restricted
stock. Participants who receive restricted stock do not become 100% vested in
their restricted stock until five years after the effective date of the award.
During the restricted period prior to vesting, the participant may transfer the
restricted stock to a trust for the benefit of the participant or an immediate
family member, but may not otherwise sell, assign, transfer, give, or otherwise
dispose of, mortgage, pledge, or encumber such restricted stock. The
Compensation Committee may, in its discretion, provide that a participant shall
be vested in whole or with respect to any portion of the participant's award not
previously vested if the participant's employment with the Company is terminated
because of death, disability or retirement.
PROFIT SHARING PLAN
The Company has a profit sharing plan under Section 401(k) of the Internal
Revenue Code (the "Profit Sharing Plan"). The Profit Sharing Plan provides that
employees of the Company must complete one year of service in order to be
eligible to defer salary and, if available, receive matching contributions under
the Section 401(k) portion of the Profit Sharing Plan. Participants may elect to
defer a specified percentage of their compensation into the Profit Sharing Plan
on a pre-tax basis. The Company may, at its sole discretion, make matching
contributions based on a percentage of deferred salary contributions at a
percentage rate to be determined by the Board of Directors of the Company, which
matching contributions may be in Company stock. In addition, the Company may
make supplemental profit sharing contributions in such amounts as the Board of
Directors of the Company may determine. Participants earn a vested right to
their profit sharing contribution in increasing amounts over a period of five
years. After five years of service, the participant's right to his or her profit
sharing contribution vests 100%. Thereafter the participant may receive a
distribution of the entire value of his or her account at age 55, 62 or 65 or
upon termination of employment, death or disability.
EMPLOYMENT AGREEMENTS
Mr. Paxson is employed as Chairman and Chief Executive Officer of the
Company under an employment agreement. The agreement provides that Mr. Paxson
will be employed for a five and one-half year period commencing on June 30,
1994, unless sooner terminated. Mr. Paxson began receiving an annual base salary
of $350,000 commencing on January 1, 1995. Mr. Paxson's salary will be $385,000
in 1996, $423,500 in 1997, $465,850 in 1998, and $500,000 in 1999. In addition
to the base salary, Mr. Paxson may receive an annual bonus at the discretion and
in an amount set by members of the Compensation Committee that are not employees
of the Company. Mr. Paxson's employment agreement is renewable for successive
one-year terms, subject to good faith negotiation of its terms. Under the terms
of the agreement, Mr. Paxson is eligible to participate in all employee benefit
plans and arrangements that are generally available to other senior executives,
and is entitled to vacation days in an amount determined annually by the Board
of Directors after good faith negotiation. Mr. Paxson is reimbursed for all
reasonable expenses incurred by him in the discharge of his duties, including
entertainment and travel. Mr. Paxson's employment agreement is terminable by the
67
<PAGE> 75
Board of Directors before expiration for good cause, as defined in the
agreement, or by Mr. Paxson for good reason, as defined in the agreement. In the
event of Mr. Paxson's permanent disability or death, the Company will pay Mr.
Paxson, or his estate, as the case may be, his then existing salary for the
remaining term of the agreement, in the case of disability, or one year, in the
case of death.
In addition, in connection with the recent termination of Mr. Paxson's
consulting agreement with HSN, Mr. Paxson entered into a noncompete agreement
with the Company for a period ending on December 31, 1999 or the date of a
change of control (as defined with respect thereto) of the Company. See "Certain
Transactions -- Home Shopping Network, Inc."
CERTAIN TRANSACTIONS
Mr. Paxson is the Chairman and Chief Executive Officer of the Company.
Messrs. Marocco and Kornreich are directors of the Company and principals of the
Sandler Partnerships, which are significant stockholders of the Company. See
"Principal Stockholders." Mr. Michaels is a director of the Company and the
owner of CEA. Mr. Scott is a director of the Company and provides it certain
consulting services. Set forth below is a description of certain transactions
and relationships between Mr. Paxson, his affiliates and others and the Company,
between the Sandler Partnerships and the Company, CEA and the Company and Mr.
Scott and the Company.
WFCT-TV Transactions. On December 17, 1993, BBTC entered into an agreement
whereby CNI, a Section 501(c)(3) Florida non-profit corporation, to which Mr.
Paxson is a substantial contributor and of which he is a former director, would
make available to BBTC up to $3,120,000 for certain expenses in connection with
the redemption of a limited partnership interest in BBTC and the construction of
television station WFCT-TV, Bradenton, Florida (the "BBTC Loan Agreement"). In
connection with the loan, BBTC granted to CNI an irrevocable, exclusive option
to purchase the assets owned by BBTC that are used or useful in the construction
or operation of WFCT-TV, including the licenses issued by the FCC for WFCT-TV,
subject to the satisfaction of certain conditions and the receipt of necessary
regulatory approvals. CNI's option may be exercised, subject to the prior
approval of the FCC, at any time during the 10-year period beginning on the
first anniversary of the completion of construction of WFCT-TV. The price
payable to BBTC upon exercise of the option is $91,000 in cash and the
forgiveness of all outstanding indebtedness under the loan in an amount of
$1,120,000. WFCT-TV commenced broadcasting operations on August 1, 1994.
BBTC also entered into an agreement with Paxson Broadcasting of Tampa
Limited Partnership ("Paxson-Tampa"), an indirect, wholly-owned subsidiary of
the Company, as of December 17, 1993. Under this agreement, Paxson-Tampa
provides certain specified services relating to the construction and
installation of WFCT-TV facilities. Pursuant to a time brokerage agreement, BBTC
makes air-time available to CNI on WFCT-TV. In exchange for certain specified
payments, BBTC has broadcast programming and commercial announcements produced
by CNI.
In connection with the foregoing transactions, Mr. Paxson agreed to lend
CNI up to $3,120,000 to fund the loan to BBTC. On June 15, 1994, CNI and BBTC
revised the BBTC Loan Agreement to reduce the maximum amount of the loan from
$3,120,000 to $1,400,000, and to provide that BBTC lease rather than purchase
the equipment and related tangible personal property required to construct
WFCT-TV from Paxson Communications of Tampa-66, Inc. ("Paxson-66"), an indirect,
wholly-owned subsidiary of the Company.
Mr. Paxson assigned his rights and interests in the CNI loan to Paxson-66
in the amount of $3,120,000 (representing the outstanding principal balance owed
by CNI), and CNI agreed that the maximum principal amount of the loan would be
reduced from $3,120,000 to $1,400,000. On June 15, 1994, CNI assigned to
Paxson-66 the option to acquire the WFCT-TV assets from BBTC. On June 15, 1994,
CNI assigned to Paxson-66 its rights and interests under the time brokerage
agreement to provide up to 12 hours per day of programming on WFCT-TV.
Worship Channel Studio. On January 1, 1993, Mr. Paxson agreed to lend CNI
up to $2,500,000 to fund CNI's acquisition of certain equipment and related
tangible property used in the production of television programming. Mr. Paxson
assigned his rights and interests under the loan to Paxson-66. In consideration
for
68
<PAGE> 76
such assignment, the Company delivered to Mr. Paxson a promissory note in the
principal amount of $2,500,000. In accordance with the terms of an agreement
dated as of June 15, 1994, CNI sold to Paxson-66 CNI's production assets in
consideration for the cancellation of the $2,500,000 promissory note. CNI and
Paxson-66 have also contracted effective as of August 1, 1994 for Paxson-66 to
lease CNI's television production and distribution facility to Paxson-66 for the
purpose of producing television programming for the Infomall TV Network.
Christian Network, Inc. The Company and CNI entered into an agreement in
May 1994 (the "CNI Agreement") under which the Company agreed that, if the tax
exempt status of CNI were jeopardized by virtue of its relationships with the
Company and its subsidiaries, the Company would take certain actions to try and
ensure that CNI's tax exempt status would no longer be so jeopardized. Such
steps could include, but not be limited to, rescission of one or more
transactions or payment of additional funds by the Company. The Company believes
that all of its agreements with CNI have been on terms at least as favorable to
CNI as it would obtain in arm's length transactions. The Company intends any
future agreements with CNI to be at least as favorable to CNI as CNI would
obtain in arm's length transactions. Accordingly, if the Company's activities
with CNI are consistent with the terms governing their relationship, the Company
believes that it will not be required to take any action under the CNI
Agreement. However, there can be no assurance that the Company will not be
required to take any actions under the CNI Agreement at a material cost to the
Company. The Company has made loans, in an aggregate amount equal to $893,000,
to CNI.
Agreements Among Stockholders. On December 15, 1993, in connection with
the issuance of the Company's Initial Senior Preferred Stock (as defined herein)
and warrants to purchase shares of Class A Common Stock and Class B Common
Stock, the Company entered into a stockholders agreement with two entities
controlled by Lowell W. Paxson (collectively, "Management Investors"), and the
four purchasers of the Initial Senior Preferred Stock (the "Sandler Group"),
three of which are affiliates of Michael J. Marocco and John A. Kornreich, two
directors of the Company. On December 22, 1994, in connection with the issuance
of the Junior Preferred Stock and Series B Preferred Stock (as defined herein),
the purchasers of the Junior Preferred Stock and warrants to purchase Class C
Common Stock, became parties to the stockholders agreement, which was amended
and restated (as so amended and restated, the "Stockholders Agreement"). In
addition, at the same time, the Sandler Group entered into an exchange agreement
and consent with the Company under which certain call rights with respect to
warrants held by the Sandler Group were terminated and the Sandler Group
exercised certain of their warrants and exchanged them for the Series B
Preferred Stock. The ownership interest of the Sandler Group in the Initial
Senior Preferred Stock and Series B Preferred Stock are identical. The rights of
the holders of Senior Preferred Stock and the Junior Preferred Stock differ in
certain respects under the Stockholders Agreement.
Under the terms of the Stockholders Agreement, each holder of Senior
Preferred Stock has redemption rights that can be triggered by a change of
control (as defined with respect thereto) of the Company or by certain
bankruptcy-related events. In addition, subject to certain limitations and only
after December 15, 1999, each holder of Senior Preferred Stock has the right to
require that any shares of Senior Preferred Stock held by such holder be
purchased for cash by the Company. Commencing on December 15, 2000, and on each
subsequent anniversary thereof, holders of Senior Preferred Stock owning certain
warrants have a limited right for a sixty-day period to require the Company to
purchase any shares of Class A Common Stock or Class B Common Stock issuable
upon exercise of such warrants (the "Warrant Shares") held by the holder.
If a holder of Senior Preferred Stock chooses to exercise its put or
similar rights with respect to Senior Preferred Stock or Warrant Shares and the
Company is unable to purchase all of the shares on the applicable purchase date
because of a material contractual obligation that prohibits such a repurchase,
the Company is required to take reasonable actions to enable the Company to
purchase the securities subject to the put notice, and is required to engage a
nationally recognized investment banking firm in order to advise and assist the
Company in connection with such actions.
The Stockholders Agreement also grants to each holder of Senior Preferred
Stock and each holder of Junior Preferred Stock the right of first refusal to
purchase, subject to certain conditions, its pro rata share of any new
securities the Company may issue. The Company must give each holder of Senior
Preferred Stock
69
<PAGE> 77
and each holder of Junior Preferred Stock written notice of the Company's
intention to issue certain new securities.
Pursuant to registration rights granted in the Stockholders Agreement, at
any time after December 15, 1997, any holder of Senior Preferred Stock may
require the Company to register with the Commission under and in accordance with
the Securities Act of all or part of its Registrable Shares. "Registrable
Shares" are defined to include shares issued or issuable as Warrant Shares (as
adjusted for certain stock splits, stock dividends, recapitalizations, and
similar events) and any securities issued to the holders of Senior Preferred
Stock pursuant to the rights of first refusal described above. The Company is
required to effectuate a demand registration only if it (i) has been requested
by or consented to by the holders of a majority of the registrable shares held
by the holders of Senior Preferred Stock, and (ii) represents at least 25% of
the aggregate registrable shares held by the participating holders of Senior
Preferred Stock. Generally, the holders of Senior Preferred Stock as a group are
entitled to two demand registrations.
If at any time the Company proposes to file on its own behalf or on behalf
of any holder or holders of any equity securities a registration statement under
the Securities Act (other than a registration statement on Form S-4, Form S-8,
or any successor form for the registration of securities to be offered pursuant
to an employee benefit plan), then the Company must give notice to the holders
of Senior Preferred Stock of their right to include Registrable Shares in a
"piggyback" registration. The Company has the right, upon prompt written notice
to each holder of Senior Preferred Stock delivering a piggyback registration
request, to abandon such registration statement.
In the case of a demand registration or a piggyback registration, the
Company will pay all registration expenses except underwriting discounts and
commissions and transfer taxes. In the case of a piggyback registration, each
holder of Senior Preferred Stock shall pay its pro rata share of the incremental
registration filing fees and shall pay all fees and disbursements of its counsel
(other than a single counsel for the holders of a majority of the shares being
registered by the holders of Senior Preferred Stock) incurred in connection
therewith.
The holders of Junior Preferred Stock and Management Investors have
registration rights substantially similar to the registration rights of the
holders of Senior Preferred Stock. The registration rights agreement allocates
registrable shares among participating holders of Senior Preferred Stock,
holders of Junior Preferred Stock, and Management Investors if less than all the
requested shares are to be included in a registration statement.
Airplane. During 1994, the Company purchased an aircraft for $250,000 from
a company controlled by Mr. Paxson. The Company believes that the terms of such
transaction were at least as favorable as it would have obtained in an arm's
length transaction with an unaffiliated third party.
Home Shopping Network, Inc. In connection with the departure in 1990 of
Mr. Paxson from HSN, he executed a consulting agreement containing various
restrictions upon activities by him that might be considered competitive with
HSN, including activities as an investor in competitive and other enterprises.
Although Mr. Paxson's consulting services to HSN terminated in 1994, certain of
the restrictions survived. As the Company's business has evolved, the possible
effect of the consulting agreement upon Mr. Paxson's role as the Company's chief
executive officer and controlling stockholder became unclear. The Company
considered it advisable to eliminate doubts concerning, among other matters, Mr.
Paxson's role as a chief executive officer and controlling stockholder as the
Company's business develops, and the scope of HSN's rights under the consulting
agreement. Accordingly, on August 25, 1995, the Company and Mr. Paxson agreed
with HSN to, among other things, terminate HSN's rights under the consulting
agreement 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 the HSN consulting agreement would have otherwise terminated) or the date
of a change of control (as defined with respect thereto) of the Company.
70
<PAGE> 78
Todd Communications, Inc. In 1993, Mr. Paxson contributed a demand note
receivable in the amount of $1,750,000 from Todd Communications, Inc., a company
which owns WFSJ-FM (St. Augustine, Florida) and is beneficially owned by a
member of Mr. Paxson's family. The note receivable accrues interest at the
short-term annual applicable federal rate prescribed by the Internal Revenue
Service with the balance of principal and interest due upon demand. Interest
income received during 1994 on the note aggregated $70,900. The Company also
performs limited sales support and administrative functions for Todd
Communications, Inc., under a joint sales agreement which is billed for efforts
expanded on terms at least as favorable as would be obtained in arm's length
transactions with unaffiliated third parties.
Communications Equity Associates, Inc. J. Patrick Michaels, Jr. is
Chairman of the Board and Chief Executive Officer of CEA. Prior to his becoming
a Director in February 1995, the Company engaged CEA as a financial advisor in
connection with the private placements of the Senior Preferred Stock and Junior
Preferred Stock and the Private Offering, as well as with the Company's various
lending relationships. In connection with such matters, management of the
Company believes that its arrangements with CEA have been, and will continue to
be, on terms comparable to those generally available from unaffiliated third
parties.
S. William Scott, Consulting. S. William Scott has an arrangement with the
Company pursuant to which he provides consulting services to the Company with
respect to the development of its news programming for its radio and television
broadcast business and its radio network business. During 1994, Mr. Scott was
paid $84,000 for such services. Through August 15, 1995 Mr. Scott has received
$50,000 for such services. Mr. Scott has been providing such services since
prior to his becoming a Director.
71
<PAGE> 79
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of October 16, 1995, information as to
the Company's stock beneficially owned by (i) each director of the Company, (ii)
each executive officer named in the Summary Compensation Table, (iii) all
directors and executive officers of the Company as a group, and (iv) any person
who is known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
CLASS A CLASS B PERCENTAGE OF
COMMON STOCK COMMON STOCK ECONOMIC PERCENTAGE OF
NAME OF STOCKHOLDERS, --------------------------- -------------------------- OWNERSHIP OF VOTING POWER
DIRECTORS PERCENT OF PERCENT OF ALL COMMON OF ALL COMMON
AND EXECUTIVE OFFICERS(A) SHARES(B) CLASS A SHARES SHARES(B) CLASS B SHARES STOCK STOCK
- ----------------------------- ---------- -------------- --------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Lowell W. Paxson(c).......... 24,256,555 92.7% 8,311,639 100% 94.5% 98.3%
James B. Bocock(d)........... 680,000 2.6% -- -- * *
Arthur D. Tek(d)............. 60,000 * -- -- * *
William L. Watson(e)......... 13,403 * -- -- * *
Michael J. Marocco(f)(g)..... 2,419,252 8.5% 806,417 8.8% 8.6% 8.9%
John A. Kornreich(f)(g)...... 2,419,252 8.5% 806,417 8.8% 8.6% 8.9%
J. Patrick Michaels,
Jr.(h)..................... 200,000 * -- -- * *
S. William Scott............. -- -- -- -- -- --
Sandler Partnerships(g)(i)... 2,419,252 8.5% 806,417 8.8% 8.6% 8.9%
All directors and executive
officers as a
group(a)(j)................ 27,708,332 94.2% 9,118,056 100% 95.6% 98.6%
</TABLE>
- ---------------
* Less than one percent.
(a) The address of all persons in this table, unless otherwise specified, is c/o
Paxson Communications Corporation, 601 Clearwater Park Road, West Palm
Beach, Florida 33401.
(b) As used in this table, "beneficial ownership" means sole or shared power to
vote or direct the voting of a security, or the sole or shared investment
power with respect to a security (i.e., the power to dispose, or direct the
disposition, of a security). A person is deemed as of any date to have
"beneficial ownership" of any security that such person has a right to
acquire within 60 days after such date. For purposes of computing the
percentage of outstanding shares held by each person named above, any
security that such person has the right to acquire within 60 days of the
date of calculation is deemed to be outstanding, but is not deemed to be
outstanding for purposes of computing the percentage ownership of any other
person. This table does not include 4,853,629.5 shares of non-voting Class C
Common Stock. In addition, for purposes of this table, "beneficial
ownership" does not include the number of shares of Class A Common Stock
issuable upon conversion of Class C Common Stock even though such shares are
convertible under certain circumstances into shares of Class A Common Stock.
(c) Mr. Paxson is the beneficial owner of all of his Class A Common Stock and
all of his Class B Common Stock through his control of Second Crystal
Diamond, L.P. and Paxson Enterprises, Inc.
(d) Reflects vested options under the Company's Stock Incentive Plan.
(e) 13,000 of Mr. Watson's shares reflect vested options under the Company's
Stock Incentive Plan.
(f) Messrs. Marocco and Kornreich do not own any shares of the Company's Common
Stock. Because of their interests in the general partner of Sandler
Mezzanine Partners, L.P., Sandler Mezzanine Foreign Partners, L.P. and
Sandler Mezzanine T-E Partners, L.P. (the "Sandler Partnerships"), Messrs.
Marocco and Kornreich may be deemed to possess or share beneficial ownership
of the shares of Senior Preferred Stock and Common Stock subject to warrants
held by the Sandler Partnership owned by the Sandler Partnerships. Messrs.
Marocco and Kornreich are also stockholders, directors and officers of
certain corporations that serve as general partners of Sandler Mezzanine
General Partnership, which is the general partner of each of the Sandler
Partnerships. The Sandler Partnership's ownership includes 2,419,252 shares
of Class A Common Stock subject to warrants and 806,417 shares of Class B
Common Stock subject to warrants.
(g) Address is c/o Sandler Media Group, Inc., 767 Fifth Avenue, New York, NY
10281.
(h) Address is 101 East Kennedy Boulevard, Suite 3300, Tampa, FL 33602. Mr.
Michaels does not own any shares of Common Stock directly. Because of Mr.
Michaels' interest in certain trusts and a partnership, he is the beneficial
owner of such Class A Common Stock. Mr. Michaels disclaims beneficial
ownership in such Class A Common Stock, except to the extent of his
pecuniary interests in such trusts and partnerships.
(i) Represents shares of Class A Common Stock and Class B Common Stock subject
to warrants held by the Sandler Partnerships.
(j) Includes 831,272 shares subject to vested options under the Company's Stock
Incentive Plan and shares described in footnote (h).
In addition to its Common Stock, the Company's capital stock consists of
(i) Senior Preferred Stock held by National Union Fire Insurance Company of
Pittsburgh, PA and the three Sandler Partnerships and (ii) Junior Preferred
Stock held by BT Investment Partners, Inc., First Union Corporation of Virginia,
Paribas North America, Inc. and Union Venture Corporation. See "Description of
the Capital Stock."
72
<PAGE> 80
DESCRIPTION OF NEW CREDIT FACILITY
The Company has received a commitment letter from a major commercial bank
to provide the New Credit Facility, a senior secured revolving line of credit in
an aggregate principal amount of $100 million, which the Company plans to enter
into as soon as practicable. The following summary of the New Credit Facility is
based upon the terms thereof outlined in the commitment letter. The following
summary does not purport to be complete and is subject to and qualified in its
entirety by reference to the terms and conditions to be contained in the
definitive documentation to be entered into in connection with the New Credit
Facility.
The aggregate available commitment under the New Credit Facility will be
reduced incrementally on a quarterly basis, beginning December 31, 1997. The New
Credit Facility matures on June 30, 2002, unless previously terminated. Prior to
making any advance under the New Credit Facility, the Borrower will be required
to be in compliance with all financial and operating covenants. Certain
acquisitions to be funded under the New Credit Facility are expected to require
approval by 66 2/3% of the lenders thereunder. The lenders under the New Credit
Facility will be paid a commitment fee at the rate of 0.5% per annum on unused
commitments, payable quarterly. In addition, the agent thereunder will receive
other customary fees.
Borrowings under the New Credit Facility will bear interest at a rate equal
to, at the option of the Company, either (i) the Base Rate (which is defined as
the Federal Funds rate or the prime rate most recently announced by the agent
under the New Credit Facility), or (ii) LIBOR, in each case plus an applicable
margin determined by reference to the ratio of total debt to cash flow of the
Company.
The obligations of the Company under the New Credit Facility will be
unconditionally guaranteed, jointly and severally by all material subsidiaries
of the Company. The obligations of the Company and such guarantors under the New
Credit Facility will be secured primarily by a first priority pledge of the
stock of all material subsidiaries of the Company and a first priority lien on
all the assets of the Company and such guarantors, with the exception of certain
real estate assets, which will be subject to a negative pledge.
The New Credit Facility will contain customary conditions precedent,
including, among other things, the consummation of this Offering, no adverse
change in the business, assets, operations, prospects, conditions, (financial or
otherwise), or material agreements of the Company and its subsidiaries, taken as
a whole and the negotiation of satisfactory documentation. In addition, all
Existing Senior Indebtedness must be repaid in full. The New Credit Facility
will also contain customary representations and warranties and indemnities.
The New Credit Facility will contain, among other things, covenants
restricting the ability of the Company and its subsidiaries to dispose of
assets, pay dividends, repurchase or redeem capital stock and indebtedness,
create liens, make capital expenditures, make certain investments or
acquisitions, enter into transactions with affiliates and otherwise restrict
corporate activities. The New Credit Facility will also contain the following
financial covenants: maximum ratio of total debt to operating cash flow; minimum
permitted interest coverage and a minimum permitted fixed charge coverage ratio.
Events of default under the New Credit Facility include those usual and
customary for transactions of this type, including, among other things, default
in the payment of principal or interest in respect of material amounts of
indebtedness of the Company or its subsidiaries, any non-payment default on such
indebtedness and a Change of Control (as defined in the New Credit Facility),
any material breach of the covenants or representations and warranties included
in the New Credit Facility and related documents, the institution of any
bankruptcy proceedings and the failure of any security agreement related to the
New Credit Facility or lien granted thereunder to be valid and enforceable. Upon
the occurrence and continuance of an event of default under the New Credit
Facility, the lenders may terminate their commitments to lend and declare the
then outstanding loans due and payable.
73
<PAGE> 81
DESCRIPTION OF THE NOTES
The form of the New Notes and the Original Notes will be identical in all
material respects except that the New Notes will have been registered under the
Securities Act and, therefore, will not bear legends restricting their transfer.
The Original Notes were, and the New Notes will be issued under the Indenture,
dated as of September 28, 1995 (the "Indenture") among the Company and The Bank
of New York, as trustee (the "Trustee"). The terms of the New Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), as
in effect on the date of the Indenture. The New Notes are subject to all such
terms, and holders of the New Notes are referred to the Indenture and the Act
for a statement of them.
The following is a summary of the material terms and provisions of the
Notes. This summary does not purport to be a complete description of the Notes
and is subject to the detailed provisions of, and qualified in its entirety by
reference to, the Notes and the Indenture (including the definitions contained
therein). A copy of the Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. Definitions relating
to certain capitalized terms are set forth under "-- Certain Definitions" and
throughout this description. Capitalized terms that are used but not otherwise
defined herein have the meanings assigned to them in the Indenture and such
definitions are incorporated herein by reference.
GENERAL
The Notes are limited in aggregate principal amount to $230,000,000. The
Notes are general unsecured obligations of the Company, subordinated in right of
payment to Senior Indebtedness of the Company and senior in right of payment to
any current or future indebtedness of the Company subordinated thereto.
The Notes are unconditionally guaranteed, on a senior subordinated basis,
as to payment of principal, premium, if any, and interest, jointly and
severally, by the Guarantors (together with each other Restricted Subsidiary
which guarantees payment of the Notes pursuant to the covenant described under
"Limitation on Creation of Subsidiaries").
MATURITY, INTEREST AND PRINCIPAL
The Notes will mature on October 1, 2002. The Notes bear interest at a rate
of 11 5/8% per annum from the date of original issuance until maturity. Interest
is payable semi-annually in arrears on April 1 and October 1, commencing April
1, 1996, to holders of record of the Notes at the close of business on the
immediately preceding March 15, and September 15, respectively. The interest
rate on the Notes is subject to increase, and such Additional Interest is
payable on the payment dates set forth above, in certain circumstances, if the
Notes (or other securities substantially similar to the Notes) are not
registered with the Commission within the prescribed time periods. See "Exchange
Offer; Registration Rights."
REGISTRATION RIGHTS; ADDITIONAL INTEREST
The Company and the Guarantors entered into the Registration Rights
Agreement with the Initial Purchasers pursuant to which they have agreed, for
the benefit of the Holders of the Original Notes, that they will, at their cost,
(i) no later than October 28, 1995 (30 days after the date of original issuance
of the Original Notes), file a registration statement (the "Exchange Offer
Registration Statement") with the Commission with respect to a registered offer
to exchange the Original Notes for the New Notes, which will have terms
substantially identical in all material respects to the Original Notes (except
that the New Notes will not contain terms with respect to transfer
restrictions), and (ii) use their best efforts to cause the Exchange Offer
Registration Statement to be declared effective under the Securities Act no
later than February 25, 1996 (150 days after the date of original issuance of
the Original Notes). Upon this Exchange Offer Registration Statement being
declared effective, the Company will offer the New Notes in exchange for
surrender of the Original Notes. The Company will keep the Exchange Offer open
for not less than 30 days (or longer if required by applicable law) after the
date notice of the Exchange Offer is mailed to the Holders of the Original
Notes. For each Original Note surrendered to the Company pursuant to the
Exchange Offer, the Holder of such Original Note will receive a New Note having
a principal amount at maturity equal to that of
74
<PAGE> 82
the surrendered Original Note. Interest for federal income tax purposes on the
New Notes will accrue from September 28, 1995. Under existing Commission
interpretations, the New Notes would in general be freely transferable after the
Exchange Offer without further registration under the Securities Act; provided,
that in the case of Restricted Holders (as defined herein), a prospectus meeting
the requirements of the Securities Act be delivered as required. The Company and
the Guarantors have agreed for a period of 180 days after consummation of the
Exchange Offer to make available a prospectus meeting the requirements of the
Securities Act to any broker-dealer for use in connection with any resale of any
such New Notes acquired as described below. A broker-dealer that delivers such a
prospectus to purchasers in connection with such resales will be subject to
certain of the civil liability provisions under the Securities Act, and will be
bound by the provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations).
Each Holder of Original Notes that wishes to exchange such Original Notes
for New Notes in the Exchange Offer is required to make certain representations,
including representations that (i) any New Notes to be received by it will be
acquired in the ordinary course of its business, (ii) it has no arrangement with
any person to participate in the distribution of the New Notes and (iii) it is
not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company
or any of the Guarantors, or if it is an affiliate, it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
If the Holder is not a broker-dealer, it is required to represent that it
is not engaged in, and does not intend to engage in, the distribution of the New
Notes. If the Holder is a broker-dealer that will receive New Notes for its own
account in exchange for Original Notes that were acquired as a result of
market-making activities or other trading activities, it will be required to
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes.
If applicable interpretations of the staff of the Commission do not permit
the Company to effect the Exchange Offer, or if for any other reason the
Exchange Offer is not consummated within 180 days of the date of the
Registration Rights Agreement, the Company and the Guarantors will, at their own
expense, (a) as promptly as practicable, file a shelf registration statement
covering resales of the Original Notes (the "Shelf Registration Statement"), (b)
use their respective best efforts to cause the Shelf Registration Statement to
be declared effective under the Securities Act and (c) use their respective best
efforts to keep effective the Shelf Registration Statement until three years
after its effective date. The Company will, with respect to any Shelf
Registration Statement, provide to each Holder of the Original Notes copies of
the prospectus that are a part of the Shelf Registration Statement, notify each
such Holder when the Shelf Registration Statement for the Original Notes has
become effective and take certain other actions as are required to permit
unrestricted resales of the Original Notes. A Holder of the Original Notes that
sells such Notes pursuant to the Shelf Registration Statement generally would be
required to be named as a selling securityholder in the related prospectus and
to deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Rights Agreement that are
applicable to such a Holder (including certain indemnification rights and
obligations).
If the Company and the Guarantors fail to comply with the above provisions
or if such registration statement fails to become effective, then, as liquidated
damages, additional interest shall become payable in respect of the Original
Notes as follows:
if (i) the Exchange Offer Registration Statement or Shelf Registration
Statement is not filed by October 28, 1995 (30 days after the original
issuance of the Original Notes);
(ii) an Exchange Offer Registration Statement or Shelf Registration
Statement is not declared effective by February 25, 1996 (150 days after
the original issuance of the Original Notes); and
(iii) either (A) the Company has not exchanged the New Notes for all
Original Notes validly tendered in accordance with the terms of the
Exchange Offer on or prior to 60 days after the date on which the Exchange
Offer Registration Statement was declared effective or (B) the Exchange
Offer Registration Statement ceases to be effective at any time prior to
the time that the Exchange Offer is consummated or (C) if applicable, the
Shelf Registration Statement has been declared effective and
75
<PAGE> 83
such Shelf Registration Statement ceases to be effective at any time prior
to the third anniversary of its effective date;
(each such event referred to in clauses (i) through (iii) above is a
"Registration Default"), the sole remedy available to Holders of the Original
Notes will be the immediate assessment of additional interest ("Additional
Interest") as follows: the per annum interest rate on the Original Notes will
increase by 50 basis points; and the per annum interest rate on the Original
Notes will increase by an additional 25 basis points for each subsequent 90-day
period during which the Registration Default remains uncured, up to a maximum
additional interest rate of 200 basis points per annum in excess of the interest
rate originally borne by the Original Notes. All Additional Interest will be
payable to Holders of the Original Notes in cash on each April 1 and October 1,
commencing with the first such date occurring after any such Additional Interest
commences to accrue, until such Registration Default is cured. After the date on
which such Registration Default is cured, the interest rate on the Original
Notes will revert to the interest rate originally borne by the Original Notes.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is filed as an exhibit to the Registration Statement.
OPTIONAL REDEMPTION
The Notes are redeemable at the option of the Company, in whole or in part,
at any time on or after October 1, 1999 at the following redemption prices
(expressed as a percentage of principal amount), together, in each case, with
accrued and unpaid interest to the redemption date, if redeemed during the
twelve-month period beginning on October 1, of each year listed below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
1999...................................................................... 104%
2000...................................................................... 102%
2001 and thereafter....................................................... 100%
</TABLE>
Notwithstanding the foregoing, the Company may redeem in the aggregate up
to 25% of the original principal amount of Notes at any time and from time to
time prior to October 1, 1998 at a redemption price equal to 110% of the
aggregate principal amount so redeemed, plus accrued interest to the redemption
date with the Net Proceeds of either or both of one or more Public Equity
Offerings or Major Asset Sales; provided, that at least $172,500,000 aggregate
principal amount of Notes remain outstanding immediately after the occurrence of
any such redemption pursuant to a Public Equity Offering or a Major Asset Sale
and that any such redemption occurs within 90 days following the closing of any
such Public Equity Offering or Major Asset Sale.
In the event of redemption of fewer than all of the Notes, the Trustee
shall select by lot or in such other manner as it shall deem fair and equitable
the Notes to be redeemed. The Notes will be redeemable in whole or in part upon
not less than 30 nor more than 60 days' prior written notice, mailed by first
class mail to a holder's last address as it shall appear on the register
maintained by the Registrar of the Notes. On and after any redemption date,
interest will cease to accrue on the Notes or portions thereof called for
redemption unless the Company shall fail to redeem any such Note.
SUBORDINATION
The indebtedness represented by the Notes is, to the extent and in the
manner provided in the Indenture, subordinated in right of payment to the prior
indefeasible payment and satisfaction in full in cash of all existing and future
Senior Indebtedness of the Company. As of June 30, 1995, after giving pro forma
effect to the application of the net proceeds of the Private Offering, the
principal amount of outstanding Senior Indebtedness of the Company, on a
consolidated basis, would have been approximately $41.9 million.
76
<PAGE> 84
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, arrangement, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its creditors,
as such, or to its assets, whether voluntary or involuntary, or any liquidation,
dissolution or other winding-up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or any general assignment
for the benefit of creditors or other marshalling of assets or liabilities of
the Company (except in connection with the merger or consolidation of the
Company or its liquidation or dissolution following the transfer of
substantially all of its assets, upon the terms and conditions permitted under
the circumstances described under "Mergers and Consolidations") (all of the
foregoing referred to herein individually as a "Bankruptcy Proceeding" and
collectively as "Bankruptcy Proceedings"), the holders of Senior Indebtedness of
the Company will be entitled to receive payment and satisfaction in full in cash
of all amounts due on or in respect of all Senior Indebtedness of the Company
before the holders of the Notes are entitled to receive or retain any payment or
distribution of any kind on account of the Notes. In the event that,
notwithstanding the foregoing, the Trustee or any holder of Notes receives any
payment or distribution of assets of the Company of any kind, whether in cash,
property or securities, including, without limitation, by way of set-off or
otherwise, in respect of the Notes before all Senior Indebtedness of the Company
is paid and satisfied in full in cash, then such payment or distribution will be
held by the recipient in trust for the benefit of holders of Senior Indebtedness
and will be immediately paid over or delivered to the holders of Senior
Indebtedness or their representative or representatives to the extent necessary
to make payment in full of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution, or provision therefor,
to or for the holders of Senior Indebtedness. By reason of such subordination,
in the event of liquidation or insolvency, creditors of the Company who are
holders of Senior Indebtedness may recover more, ratably, than other creditors
of the Company, and creditors of the Company who are not holders of Senior
Indebtedness or of the Notes may recover more, ratably, than the holders of the
Notes.
No payment or distribution of any assets or securities of the Company or
any Restricted Subsidiary of any kind or character (including, without
limitation, cash, property and any payment or distribution which may be payable
or deliverable by reason of the payment of any other Indebtedness of the Company
being subordinated to the payment of the Notes by the Company) may be made by or
on behalf of the Company or any Restricted Subsidiary, including, without
limitation, by way of set-off or otherwise, for or on account of the Notes, or
for or on account of the purchase, redemption or other acquisition of the Notes,
and neither the Trustee nor any holder or owner of any Notes shall take or
receive from the Company or any Restricted Subsidiary, directly or indirectly in
any manner, payment in respect of all or any portion of Notes following the
delivery by the representative of the holders of Designated Senior Indebtedness
(the "Representative") to the Trustee of written notice of the occurrence of a
Payment Default, and in any such event, such prohibition shall continue until
such Payment Default is cured, waived in writing or ceases to exist. At such
time as the prohibition set forth in the preceding sentence shall no longer be
in effect, subject to the provisions of the following paragraph, the Company
shall resume making any and all required payments in respect of the Notes,
including any missed payments.
Upon the occurrence of a Non-Payment Event of Default on Designated Senior
Indebtedness, no payment or distribution of any assets of the Company of any
kind may be made by the Company, including, without limitation, by way of
set-off or otherwise, on account of the Notes, or on account of the purchase or
redemption or other acquisition of Notes, for a period (a "Payment Blockage
Period") commencing on the date of receipt by the Trustee of written notice from
the Representative of such Non-Payment Event of Default unless and until
(subject to any blockage of payments that may then be in effect under the
preceding paragraph) the earliest of (x) more than 179 days shall have elapsed
since receipt of such written notice by the Trustee, (y) such Non-Payment Event
of Default shall have been cured or waived in writing or shall have ceased to
exist or such Designated Senior Indebtedness shall have been paid in full or (z)
such Payment Blockage Period shall have been terminated by written notice to the
Company or the Trustee from such Representative, after which, in the case of
clause (x), (y) or (z), the Company shall resume making any and all required
payments in respect of the Notes, including any missed payments. Notwithstanding
any other provision of the Indenture, in no event shall a Payment Blockage
Period commenced in accordance with the provisions of the Indenture described in
this paragraph extend beyond 179 days from the date of the receipt by
77
<PAGE> 85
the Trustee of the notice referred to above (such period, an "Initial Blockage
Period"). Any number of additional Payment Blockage Periods may be commenced
during the Initial Blockage Period; provided, however, that no such additional
Payment Blockage Period shall extend beyond the Initial Blockage Period. After
the expiration of the Initial Blockage Period, no Payment Blockage Period may be
commenced until at least 180 consecutive days have elapsed from the last day of
the Initial Blockage Period. Notwithstanding any other provision of the
Indenture, no Non-Payment Event of Default with respect to Designated Senior
Indebtedness which existed or was continuing on the date of the commencement of
any Payment Blockage Period initiated by the Representative shall be, or be
made, the basis for the commencement of a second Payment Blockage Period
initiated by the Representative, whether or not within the Initial Blockage
Period, unless such Non-Payment Event of Default shall have been waived for a
period of not less than 90 consecutive days.
Each Guarantee is, to the extent set forth in the Indenture, subordinated
in right of payment to the prior payment in full of all Senior Indebtedness of
the respective Guarantor, including obligations of such Guarantor with respect
to the New Credit Facility (including any guarantee thereof), and is subject to
the rights of holders of Designated Senior Indebtedness of such Guarantor to
initiate blockage periods, upon terms substantially comparable to the
subordination of the Notes to all Senior Indebtedness of the Company.
If the Company or any Guarantor fails to make any payment on the Notes or
any Guarantee, as the case may be, when due or within any applicable grace
period, whether or not on account of payment blockage provisions, such failure
would constitute an Event of Default under the Indenture and would enable the
holders of the Notes to accelerate the maturity thereof. See "-- Events of
Default."
A Holder of Notes by his acceptance of Notes agrees to be bound by such
provisions and authorizes and expressly directs the Trustee, on his behalf, to
take such action as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the Trustee his
attorney-in-fact for such purpose.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants. Except as
otherwise specified, all of the covenants described below appear in the
Indenture.
Limitation on Additional Indebtedness
The Company will not, and will not permit any Restricted Subsidiary of the
Company to, directly or indirectly, incur (as defined) any Indebtedness
(including Acquired Indebtedness) unless (a) after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the ratio of the Company's total Indebtedness to the Company's Adjusted
EBITDA (determined on a pro forma basis for the last four fiscal quarters of the
Company for which financial statements are available at the date of
determination) is less than 7.0 to 1 if the Indebtedness is incurred prior to
the first anniversary of the Issue Date, 6.5 to 1 if the Indebtedness is
incurred after the first and before the second anniversary of the Issue Date and
5.75 to 1 if the Indebtedness is incurred thereafter; provided, however, that if
the Indebtedness which is the subject of a determination under this provision is
Acquired Indebtedness, or Indebtedness incurred in connection with the
simultaneous acquisition of any Person, business, property or assets, then such
ratio shall be determined by giving effect to (on a pro forma basis, as if the
transaction had occurred at the beginning of the four-quarter period) to both
the incurrence or assumption of such Acquired Indebtedness or such other
Indebtedness by the Company and the inclusion in the Company's Adjusted EBITDA
of the EBITDA of the acquired Person, business, property or assets; and,
provided, further, that in the event the EBITDA of the acquired Person,
business, property or assets reflects an operating loss, no amounts shall be
deducted from the Company's Adjusted EBITDA in making the determinations
described above and (b) no Default or Event of Default shall have occurred and
be continuing at the time or as a consequence of the incurrence of such
Indebtedness.
Notwithstanding the foregoing, the Company and its Restricted Subsidiaries
may incur Permitted Indebtedness; provided, that the Company will not incur any
Permitted Indebtedness that ranks junior in right
78
<PAGE> 86
of payment to the Notes that has a maturity or mandatory sinking fund payment
prior to the maturity of the Notes.
Limitation on Restricted Payments
The Company will not make, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, make, any Restricted Payment, unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving pro forma effect to such Restricted
Payment, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the covenant set forth under
"-- Limitation on Additional Indebtedness"; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date
does not exceed the sum of (1) 100% of the Company's Cumulative EBITDA
minus 1.4 times the Company's Cumulative Consolidated Interest Expense, and
(2) 100% of the aggregate Net Proceeds and the fair market value of
securities or other property received by the Company from the issue or
sale, after the Issue Date, of Capital Stock (other than Disqualified
Capital Stock or Capital Stock of the Company issued to any Subsidiary of
the Company) of the Company or any Indebtedness or other securities of the
Company convertible into or exercisable or exchangeable for Capital Stock
(other than Disqualified Capital Stock) of the Company which has been so
converted or exercised or exchanged, as the case may be. For purposes of
determining under this clause (c) the amount expended for Restricted
Payments, cash distributed shall be valued at the face amount thereof and
property other than cash shall be valued at its fair market value
determined, in good faith, by the Company's board of directors.
The provisions of this covenant shall not prohibit: (i) the payment of any
distribution within 60 days after the date of declaration thereof, if at such
date of declaration such payment would comply with the provisions of the
Indenture; (ii) the retirement of any shares of Capital Stock of the Company or
subordinated Indebtedness by conversion into, or by or in exchange for, shares
of Capital Stock (other than Disqualified Capital Stock), or out of, the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company) of other shares of Capital Stock of the Company (other than
Disqualified Capital Stock); (iii) the redemption or retirement of Indebtedness
of the Company subordinated to the Notes in exchange for, by conversion into, or
out of the Net Proceeds of, a substantially concurrent sale or incurrence of
Indebtedness (other than any Indebtedness owed to a Subsidiary) of the Company
that is contractually subordinated in right of payment to the Notes to at least
the same extent as the subordinated Indebtedness being redeemed or retired; (iv)
the retirement of any shares of Disqualified Capital Stock by conversion into,
or by exchange for, shares of Disqualified Capital Stock, or out of the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company) of other shares of Disqualified Capital Stock; (v) as long as no
Default or Event of Default shall have occurred and be continuing, the
retirement of the Senior Preferred Stock in accordance with the mandatory
redemption and put option provisions as in effect on the Issue Date in the
applicable amended and restated certificates of designation; provided, however,
that any amounts paid by the Company with respect to the Senior Preferred Stock
pursuant to such mandatory redemption and put option provisions shall reduce
amounts otherwise available for Restricted Payments; and provided, further, that
the aggregate amount permitted to be applied in respect of such retirement of
Senior Preferred Stock under this clause (v) on any date shall be reduced by the
aggregate amount of dividends (other than dividends payable in Common Stock of
the Company) paid subsequent to the Issue Date on the Common Stock of the
Company ; or (vi) beginning December 31, 1999, and as long as no Default or
Event of Default shall have occurred and be continuing, the payment of cash
dividends on the Junior Preferred Stock at times and in amounts no less
favorable to holders of the Notes than such provisions as are in effect in the
related certificate of designations on the Issue Date; provided, however, that
any cash dividends paid with respect to the Junior Preferred Stock shall reduce
amounts otherwise available for Restricted Payments.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant "Limitation on Restricted Payments" were computed,
which
79
<PAGE> 87
calculations may be based upon the Company's latest available financial
statements, and that no Default or Event of Default exists and is continuing and
no Default or Event of Default will occur immediately after giving effect to any
Restricted Payments.
Limitation on Other Senior Subordinated Debt
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, incur, contingently or otherwise, any
Indebtedness (other than the Notes and the Guarantees, as the case may be) that
is both (i) subordinate in right of payment to any Senior Indebtedness of the
Company or its Restricted Subsidiaries, as the case may be, and (ii) senior in
right of payment to the Notes and the Guarantees, as the case may be. For
purposes of this covenant, Indebtedness is deemed to be senior in right of
payment to the Notes and the Guarantees, as the case may be, if it is not
explicitly subordinate in right of payment to Senior Indebtedness at least to
the same extent as the Notes and the Guarantees, as the case may be, are
subordinate to Senior Indebtedness.
Limitations on Investments
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Investment other than (i) a Permitted Investment or
(ii) an Investment that is made as a Restricted Payment in compliance with the
"-- Limitation on Restricted Payments" covenant, after the Issue Date.
Limitations on Liens
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any property
or asset of the Company or any Restricted Subsidiary or any shares of stock or
debt of any Restricted Subsidiary which owns property or assets, now owned or
hereafter acquired, unless (i) if such Lien secures Indebtedness which is pari
passu with the Notes, then the Notes are secured on an equal and ratable basis
with the obligations so secured until such time as such obligation is no longer
secured by a Lien or (ii) if such Lien secures Indebtedness which is
subordinated to the Notes, any such Lien shall be subordinated to the Lien
granted to the Holders of the Notes to the same extent as such subordinated
Indebtedness is subordinated to the Notes.
Limitation on Transactions with Affiliates
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Affiliate (including entities in which the Company or any of its Restricted
Subsidiaries own a minority interest) or holder of 10% or more of the Company's
Common Stock (an "Affiliate Transaction") or extend, renew, waive or otherwise
modify the terms of any Affiliate Transaction entered into prior to the Issue
Date unless (i) such Affiliate Transaction is between or among the Company and
its Wholly-Owned Subsidiaries; or (ii) the terms of such Affiliate Transaction
is fair and reasonable to the Company or such Restricted Subsidiary, as the case
may be, and the terms of such Affiliate Transaction are at least as favorable as
the terms which could be obtained by the Company or such Restricted Subsidiary,
as the case may be, in a comparable transaction made on an arm's-length basis
between unaffiliated parties. In any Affiliate Transaction involving an amount
or having a value in excess of $1 million which is not permitted under clause
(i) above, the Company must obtain a resolution of the board of directors
certifying that such Affiliate Transaction complies with clause (ii) above. In
transactions with a value in excess of $3 million which are not permitted under
clause (i) above, the Company must obtain a written opinion as to the fairness
of such a transaction from an independent investment banking firm.
The foregoing provisions will not apply to (i) any Restricted Payment that
is not prohibited by the provisions described under "-- Limitation on Restricted
Payments" contained herein, (ii) any transaction, approved by the board of
directors of the Company, with an officer or director of the Company or of any
Subsidiary in his or her capacity as officer or director entered into in the
ordinary course of business, including compensation and employee benefit
arrangements with any officer or director of the Company or of any
80
<PAGE> 88
Subsidiary that are customary for public companies in the broadcasting industry
or (iii) modifications of the Senior Preferred Stock or the Junior Preferred
Stock.
Limitation on Creation of Subsidiaries
The Company shall not create or acquire, nor permit any of its Restricted
Subsidiaries to create or acquire, any Subsidiary other than (i) a Restricted
Subsidiary existing as of the date of the Indenture, (ii) a Restricted
Subsidiary that is acquired or created after the date thereof, or (iii) an
Unrestricted Subsidiary; provided, however, that each Restricted Subsidiary
acquired or created pursuant to clause (ii) shall at the time it has either
assets or stockholder's equity in excess of $5,000 execute a guarantee,
satisfactory in form and substance to the Trustee (and with such documentation
relating thereto as the Trustee shall require, including, without limitation a
supplement or amendment to the Indenture and opinions of counsel as to the
enforceability of such guarantee), pursuant to which such Restricted Subsidiary
shall become a Guarantor. As of the Issue Date, the Company had no Subsidiaries,
other than the Guarantors. See "-- General."
Limitation on Certain Asset Sales
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such sale or other disposition at least equal to the fair market value thereof
(as determined in good faith by the Company's board of directors, and evidenced
by a board resolution); (ii) not less than 85% of the consideration received by
the Company or its Subsidiaries, as the case may be, is in the form of cash or
Temporary Cash Investments other than in the case where the Company is
exchanging all or substantially all of the assets of one or more media
properties operated by the Company (including by way of the transfer of capital
stock) for all or substantially all of the assets (including by way of the
transfer of capital stock) constituting one or more media properties operated by
another Person provided that at least 85% of the consideration received by the
Company in such exchange, other than the media properties, is in the form of
cash or Temporary Cash Investments; and (iii) the Asset Sale Proceeds received
by the Company or such Restricted Subsidiary are applied (a) first, to the
extent the Company elects, or is required, to prepay, repay or purchase debt
under any then existing Senior Indebtedness of the Company or any Restricted
Subsidiary within 180 days following the receipt of the Asset Sale Proceeds from
any Asset Sale; (b) second, to the extent of the balance of Asset Sale Proceeds
after application as described above, to the extent the Company elects, to an
investment in assets (including Capital Stock or other securities purchased in
connection with the acquisition of Capital Stock or property of another person)
used or useful in businesses similar or ancillary to the business of the Company
or Restricted Subsidiary as conducted at the time of such Asset Sale, provided
that such investment occurs or the Company or a Restricted Subsidiary enters
into contractual commitments to make such investment, subject only to customary
conditions (other than the obtaining of financing), on or prior to the 181st day
following receipt of such Asset Sale Proceeds (the "Reinvestment Date") and
Asset Sale Proceeds contractually committed are so applied within 360 days
following the receipt of such Asset Sale Proceeds; (c) third, to make an offer
for the Notes as described under "-- Optional Redemption" above following a
Major Asset Sale; and (d) fourth, if on the Reinvestment Date with respect to
any Asset Sale, the Available Asset Sale Proceeds exceed $10 million, the
Company shall apply an amount equal to such Available Asset Sale Proceeds to an
offer to repurchase the Notes, at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase (an "Excess Proceeds Offer"). If an Excess Proceeds Offer is not
fully subscribed, the Company may retain the portion of the Available Asset Sale
Proceeds not required to repurchase Notes.
If the Company is required to make an Excess Proceeds Offer, the Company
shall mail, within 30 days following the Reinvestment Date, a notice to the
Holders stating, among other things: (1) that such Holders have the right to
require the Company to apply the Available Asset Sale Proceeds to repurchase
such Notes at a purchase price in cash equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase; (2)
the purchase date, which shall be no earlier than 30 days and not later than 60
days from the date such notice is mailed; (3) the instructions, determined by
the Company, that each Holder must follow in order to have such Notes
repurchased; and (4) the calculations used in determining the amount of
Available Asset Sale Proceeds to be applied to the repurchase of such Notes.
81
<PAGE> 89
Limitation on Preferred Stock of Restricted Subsidiaries
The Company will not permit any Restricted Subsidiary to issue any
Preferred Stock (except Preferred Stock to the Company or a Restricted
Subsidiary) or permit any Person (other than the Company or a Subsidiary) to
hold any such Preferred Stock unless the Company or such Restricted Subsidiary
would be entitled to incur or assume Indebtedness under the covenant described
under "-- Limitation on Additional Indebtedness" in the aggregate principal
amount equal to the aggregate liquidation value of the Preferred Stock to be
issued.
Limitation on Capital Stock of Restricted Subsidiaries
The Company will not (i) sell, pledge, hypothecate or otherwise convey or
dispose of any Capital Stock of a Restricted Subsidiary (other than under the
New Credit Facility or under the terms of any Secured Senior Debt) or (ii)
permit any of its Restricted Subsidiaries to issue any Capital Stock, other than
to the Company or a wholly-owned Subsidiary of the Company. The foregoing
restrictions shall not apply to an Asset Sale made in compliance with
"-- Limitation on Certain Asset Sales" or the issuance of Preferred Stock in
compliance with the covenant described under "-- Limitation on Additional
Indebtedness."
Limitation on Sale and Lease-Back Transactions
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale and Lease-Back Transaction unless (i) the consideration
received in such Sale and Lease-Back Transaction is at least equal to the fair
market value of the property sold, as determined, in good faith, by the board of
directors of the Company and (ii) the Company could incur the Attributable
Indebtedness in respect of such Sale and Lease-Back Transaction in compliance
with the covenant described under "-- Limitation on Additional Indebtedness."
Payments for Consent
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all holders of the Notes who so consent, waive or agree to amend
in the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
CHANGE OF CONTROL OFFER
Within 30 days of the occurrence of a Change of Control, the Company shall
notify the Trustee in writing of such occurrence and shall make an offer to
purchase (the "Change of Control Offer") the outstanding Notes at a purchase
price equal to 101% of the principal amount thereof plus any accrued and unpaid
interest thereon to the Change of Control Payment Date (as hereinafter defined)
(such purchase price being hereinafter referred to as the "Change of Control
Purchase Price") in accordance with the procedures set forth in this covenant.
Within 30 days of the occurrence of a Change of Control, the Company also
shall (i) cause a notice of the Change of Control Offer to be sent at least once
to the Dow Jones News Service or similar business news service in the United
States and (ii) send by first-class mail, postage prepaid, to the Trustee and to
each holder of the Notes, at the address appearing in the register maintained by
the Registrar of the Notes, a notice stating:
(i) that the Change of Control Offer is being made pursuant to this
covenant and that all Notes tendered will be accepted for payment, and
otherwise subject to the terms and conditions set forth herein;
(ii) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 20 business days from the date such
notice is mailed (the "Change of Control Payment Date"));
82
<PAGE> 90
(iii) that any Note not tendered will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any Notes accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(v) that holders accepting the offer to have their Notes purchased
pursuant to a Change of Control Offer will be required to surrender the
Notes to the Paying Agent at the address specified in the notice prior to
the close of business on the Business Day preceding the Change of Control
Payment Date;
(vi) that holders will be entitled to withdraw their acceptance if the
Paying Agent receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a facsimile
transmission or letter setting forth the name of the holder, the principal
amount of the Notes delivered for purchase, and a statement that such
holder is withdrawing his election to have such Notes purchased;
(vii) that holders whose Notes are being purchased only in part will
be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, provided that each Note purchased and each such new
Note issued shall be in an original principal amount in denominations of
$1,000 and integral multiples thereof;
(viii) any other procedures that a holder must follow to accept a
Change of Control Offer or effect withdrawal of such acceptance; and
(ix) the name and address of the Paying Agent.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (i) accept for payment Notes or portions thereof tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent money sufficient
to pay the purchase price of all Notes or portions thereof so tendered and (iii)
deliver or cause to be delivered to the Trustee Notes so accepted together with
an Officers' Certificate stating the Notes or portions thereof tendered to the
Company. The Paying Agent shall promptly mail to each holder of Notes so
accepted payment in an amount equal to the purchase price for such Notes, and
the Company shall execute and issue, and the Trustee shall promptly authenticate
and make available for delivery to such holder, a new Note equal in principal
amount to any unpurchased portion of the Notes surrendered; provided that each
such new Note shall be issued in an original principal amount in denominations
of $1,000 and integral multiples thereof.
The Indenture requires that if the New Credit Facility is in effect, or any
amounts are owing thereunder, at the time of the occurrence of a Change of
Control, prior to the mailing of the notice to holders described in the
preceding paragraph, but in any event within 30 days following any Change of
Control, the Company covenants to (i) repay in full all obligations under the
New Credit Facility or offer to repay in full all obligations under the New
Credit Facility and repay the obligations under the New Credit Facility of each
lender who has accepted such offer or (ii) obtain the requisite consent under
the New Credit Facility to permit the repurchase of the Notes as described
above. The Company must first comply with the covenant described in the
preceding sentence before it shall be required to purchase Notes in the event of
a Change of Control; provided that the Company's failure to comply with the
covenant described in the preceding sentence constitutes an Event of Default
described in clause (iii) under "Events of Default" below if not cured within 60
days after the notice required by such clause. As a result of the foregoing, a
holder of the Notes may not be able to compel the Company to purchase the Notes
unless the Company is able at the time to refinance all of the New Credit
Facility or obtain requisite consents under the New Credit Facility. Failure by
the Company to make a Change of Control Offer when required by the Indenture
constitutes a Default under the Indenture and, if not cured within 60 days after
notice, constitutes an Event of Default.
The Indenture provides that, (A) if the Company or any Subsidiary thereof
has issued any outstanding (i) Indebtedness that is subordinated in right of
payment to the Notes or (ii) Preferred Stock (which for these purposes shall
include, as of the Issue Date, the Senior Preferred Stock and the Junior
Preferred Stock), and the Company or such Subsidiary is required to repurchase,
or make an offer to repurchase, such
83
<PAGE> 91
indebtedness, or redeem, or make an offer to redeem, such Preferred Stock, in
the event of a Change of Control or to make a distribution with respect to such
subordinated Indebtedness or Preferred Stock in the event of a Change of
Control, the Company shall not consummate any such offer or distribution with
respect to such subordinated Indebtedness or Preferred Stock until such time as
the Company shall have paid the Change of Control Purchase Price in full to the
holders of Notes that have accepted the Company's Change of Control Offer and
shall otherwise have consummated the Change of Control Offer made to holders of
the Notes and (B) the Company will not issue Indebtedness that is subordinated
in right of payment to the Notes or Preferred Stock with change of control
provisions requiring the payment of such Indebtedness or Preferred Stock prior
to the payment of the Notes in the event of a Change of Control under the
Indenture.
In the event that a Change of Control occurs and the holders of Notes
exercise their right to require the Company to purchase Notes, if such purchase
constitutes a "tender offer" for purposes of Rule 14e-1 under the Exchange Act
at that time, the Company will comply with the requirements of Rule 14e-1 as
then in effect with respect to such repurchase.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Company will not and will not permit any Guarantor to consolidate with,
merge with or into, or transfer all or substantially all of its assets (as an
entirety or substantially as an entirety in one transaction or a series of
related transactions), to any Person unless: (i) the Company or the Guarantor,
as the case may be, shall be the continuing Person, or the Person (if other than
the Company or the Guarantor) formed by such consolidation or into which the
Company or the Guarantor, as the case may be, is merged or to which the
properties and assets of the Company or the Guarantor, as the case may be, are
transferred shall be a corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all of the obligations of the
Company or the Guarantor, as the case may be, under the Notes and the Indenture,
and the obligations under the Indenture shall remain in full force and effect;
(ii) immediately before and immediately after giving effect to such transaction,
no Default or Event of Default shall have occurred and be continuing; and (iii)
immediately after giving effect to such transaction on a pro forma basis the
Company or such Person could incur at least $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the covenant set forth under
"-- Limitation on Additional Indebtedness," provided that a Person that is a
Guarantor on the Issue Date may merge into the Company or another Person that is
a Guarantor on the Issue Date without complying with this clause (iii).
In connection with any consolidation, merger or transfer of assets
contemplated by this provision, the Company shall deliver, or cause to be
delivered, to the Trustee, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this provision and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
GUARANTEES
The Notes are guaranteed on a senior subordinated basis by the Guarantors.
All payments pursuant to the Guarantees by the Guarantors are subordinated in
right of payment to the prior payment in full of all Senior Indebtedness of the
Guarantor, to the same extent and in the same manner that all payments pursuant
to the Notes are subordinated in right of payment to the prior payment in full
of all Senior Indebtedness of the Company.
The obligations of each Guarantor are limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor (including, without limitation, any guarantees of Senior Indebtedness)
and after giving effect to any collections from or payments made by or on behalf
of any other Guarantor in respect of the obligations of such other Guarantor
under its Guarantee or pursuant to its contribution obligations under the
Indenture, result in the obligations of such Guarantor under the Guarantee not
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that
84
<PAGE> 92
makes a payment or distribution under a Guarantee shall be entitled to a
contribution from each other Guarantor in a pro rata amount based on the
Adjusted Net Assets of each Subsidiary Guarantor.
A Guarantor shall be released from all of its obligations under its
Guarantee if all or substantially all of its assets are sold or all of its
Capital Stock is sold, in each case in a transaction in compliance with the
covenant described under "-- Limitation on Certain Asset Sales," or the
Guarantor merges with or into or consolidates with, or transfers all or
substantially all of its assets to, the Company or another Guarantor in a
transaction in compliance with "-- Merger, Consolidation or Sale of Assets," and
such Guarantor has delivered to the Trustee an Officers' Certificate and an
opinion of counsel, each stating that all conditions precedent herein provided
for relating to such transaction have been complied with.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) default in payment of any principal of, or premium, if any, on the
Notes;
(ii) default for 30 days in payment of any interest on the Notes;
(iii) default by the Company or any Guarantor in the observance or
performance of any other covenant in the Notes or the Indenture for 60 days
after written notice from the Trustee or the holders of not less than 25%
in aggregate principal amount of the Notes then outstanding;
(iv) default in the payment at final maturity of principal in an
aggregate amount of $5,000,000 or more with respect to any Indebtedness of
the Company or any Restricted Subsidiary thereof which default shall not be
cured, waived or postponed pursuant to an agreement with the holders of
such Indebtedness within 60 days after written notice, or the acceleration
of any such Indebtedness aggregating $5,000,000 or more which acceleration
shall not be rescinded or annulled within 20 days after written notice as
provided in the Indenture;
(v) any final judgment or judgments which can no longer be appealed
for the payment of money in excess of $5,000,000 shall be rendered against
the Company or any Restricted Subsidiary thereof, and shall not be
discharged for any period of 60 consecutive days during which a stay of
enforcement shall not be in effect; and
(vi) certain events involving bankruptcy, insolvency or reorganization
of the Company or any Restricted Subsidiary thereof.
The Indenture provides that the Trustee may withhold notice to the holders
of the Notes of any default (except in payment of principal or premium, if any,
or interest on the Notes) if the Trustee considers it to be in the best interest
of the holders of the Notes to do so.
The Indenture provides that if an Event of Default (other than an Event of
Default resulting from certain events of bankruptcy, insolvency or
reorganization of the Company) shall have occurred and be continuing, then the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Notes then outstanding may declare to be immediately due and payable the entire
principal amount of all the Notes then outstanding plus accrued interest to the
date of acceleration and (i) such amounts shall become immediately due and
payable or (ii) if there are any amounts outstanding under the New Credit
Facility, such amounts shall become due and payable upon the first to occur of
an acceleration under the New Credit Facility or five business days after
receipt by the Company and the Representative of notice of the acceleration of
the Notes; provided, however, that after such acceleration but before a judgment
or decree based on acceleration is obtained by the Trustee, the holders of a
majority in aggregate principal amount of outstanding Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than nonpayment of accelerated principal, premium or interest, have been
cured or waived as provided in the Indenture. In case an Event of Default
resulting from certain events of bankruptcy, insolvency or reorganization of the
Company shall occur, the principal, premium and interest amount with respect to
all of the Notes shall be due and payable immediately without any declaration or
other act on the part of the Trustee or the holders of the Notes.
85
<PAGE> 93
The holders of a majority in principal amount of the Notes then outstanding
shall have the right to waive any existing default or compliance with any
provision of the Indenture or the Notes and to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, subject to
certain limitations specified in the Indenture.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the holders of at least 25% in aggregate principal
amount of the outstanding Notes shall have made written request and offered
reasonable indemnity to the Trustee to institute such proceeding as a trustee,
and unless the Trustee shall not have received from the holders of a majority in
aggregate principal amount of the outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. However, such limitations do not apply to a suit instituted on such Note
on or after the respective due dates expressed in such Note.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to the Notes (except for
the obligations to register the transfer or exchange of such Notes, to replace
temporary or mutilated, destroyed, lost or stolen Notes, to maintain an office
or agency in respect of the Notes and to hold monies for payment in trust)
("defeasance") or (b) to be released from their obligations with respect to the
Notes under certain covenants contained in the Indenture and described above
under "-- Certain Covenants" ("covenant defeasance"), upon the deposit with the
Trustee (or other qualifying trustee), in trust for such purpose, of money
and/or U.S. Government Obligations which through the payment of principal and
interest in accordance with their terms will provide money, in an amount
sufficient to pay the principal of, premium, if any, and interest on the Notes,
on the scheduled due dates therefor or on a selected date of redemption in
accordance with the terms of the Indenture. Such a trust may only be established
if, among other things, the Company has delivered to the Trustee an Opinion of
Counsel (as specified in the Indenture) (i) to the effect that neither the trust
nor the Trustee will be required to register as an investment company under the
Investment Company Act of 1940, as amended, and (ii) to the effect that holders
of the Notes or persons in their positions will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred which, in the case of a
defeasance only, must be based upon a private ruling concerning the Notes, a
published ruling of the Internal Revenue Service or a change in applicable
federal income tax law.
MODIFICATION OF INDENTURE
From time to time, the Company, the Guarantors and the Trustee may, without
the consent of holders of the Notes, amend the Indenture or the Notes or
supplement the Indenture for certain specified purposes, including providing for
uncertificated Notes in addition to certificated Notes, and curing any
ambiguity, defect or inconsistency, or making any other change that does not
materially and adversely affect the rights of any holder. The Indenture contains
provisions permitting the Company, the Guarantors and the Trustee, with the
consent of holders of at least a majority in principal amount of the outstanding
Notes, to modify or supplement the Indenture or the Notes, except that no such
modification shall, without the consent of each holder affected thereby, (i)
reduce the amount of Notes whose holders must consent to an amendment,
supplement, or waiver to the Indenture or the Notes, (ii) reduce the rate of or
change the time for payment of interest on any Note, (iii) reduce the principal
of or premium on or change the stated maturity of any Note, (iv) make any Note
payable in money other than that stated in the Note or change the place of
payment from New York, New York, (v) change the amount or time of any payment
required by the Notes or reduce the premium payable upon any redemption of
Notes, or change the time before which no such redemption may be made, (vi)
waive a default on the payment of the principal of, interest on, or redemption
payment with respect to any Note, or (vii) take any other action otherwise
prohibited by the Indenture to be taken without the consent of each holder
affected thereby.
86
<PAGE> 94
The consent of the holders is not necessary to approve the particular form
of any proposed amendment. It is sufficient if such consent approves the
substance of the proposed amendment.
REPORTS TO HOLDERS
So long as the Company is subject to the periodic reporting requirements of
the Exchange Act, it will continue to furnish the information required thereby
to the Commission and to the holders of the Notes. The Indenture provides that
even if the Company is entitled under the Exchange Act not to furnish such
information to the Commission or to the holders of the Notes, they will
nonetheless continue to furnish such information to the Commission and holders
of the Notes.
COMPLIANCE CERTIFICATE
The Company will deliver to the Trustee on or before 100 days after the end
of the Company's fiscal year and on or before 50 days after the end of each of
the first, second and third fiscal quarters in each year an Officers'
Certificate stating whether or not the signers know of any Default or Event of
Default that has occurred. If they do, the certificate will describe the Default
or Event of Default and its status.
THE TRUSTEE
The Trustee under the Indenture is the Registrar and Paying Agent with
regard to the Notes. The Indenture provides that, except during the continuance
of an Event of Default, the Trustee will perform only such duties as are
specifically set forth in the Indenture. During the existence of an Event of
Default, the Trustee will exercise such rights and powers vested in it under the
Indenture and use the same degree of care and skill in its exercise as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs.
TRANSFER AND EXCHANGE
Holders of the Notes may transfer or exchange Notes in accordance with the
Indenture. The Registrar under such Indenture may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
is not required to transfer or exchange any Note selected for redemption. Also,
the Registrar is not required to transfer or exchange any Note for a period of
15 days before selection of the Notes to be redeemed.
The Original Notes were issued in a transaction exempt from registration
under the Act and are subject to restrictions on transfer.
The registered holder of a Note may be treated as the owner of it for all
purposes.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
covenants contained in the Indenture. Reference is made to the Indenture for the
full definition of all such terms as well as any other capitalized terms used
herein for which no definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or assumed in connection with the acquisition of assets from such
Person.
"Adjusted EBITDA" means for any Person, the sum of (a) EBITDA of such
Person and its Restricted Subsidiaries for the four most recent fiscal quarters
of which internal financial statements are available, minus IN TV EBITDA for the
most recent four fiscal quarter period and (b) IN TV EBITDA for the most recent
quarterly period, multiplied by four.
"Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of
the amount by which (x) the fair value of the property of such Guarantor exceeds
the total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities),
but excluding
87
<PAGE> 95
liabilities under the Guarantee, of such Guarantor at such date and (y) the
present fair salable value of the assets of such Guarantor at such date exceeds
the amount that will be required to pay the probable liability of such Guarantor
on its debts (after giving effect to all other fixed and contingent liabilities
and after giving effect to any collection from any Subsidiary of such Guarantor
in respect of the obligations of such Subsidiary under the Guarantee), excluding
Indebtedness in respect of the Guarantee, as they become absolute and matured.
"Affiliate" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by," and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise. With respect to the Company, Affiliate will also include any
Permitted Holders or Persons controlled by the Permitted Holders.
"Asset Sale" means the sale, transfer or other disposition (other than to
the Company or any of its Restricted Subsidiaries) in any single transaction or
series of related transactions involving assets with a fair market value in
excess of $500,000 of (a) any Capital Stock of or other equity interest in any
Restricted Subsidiary of the Company, (b) all or substantially all of the assets
of the Company or of any Restricted Subsidiary thereof, (c) real property or (d)
all or substantially all of the assets of any media property, or part thereof,
owned by the Company or any Restricted Subsidiary thereof, or a division, line
of business or comparable business segment of the Company or any Restricted
Subsidiary thereof; provided that Asset Sales shall not include sales, leases,
conveyances, transfers or other dispositions to the Company or to a Restricted
Subsidiary or to any other Person if after giving effect to such sale, lease,
conveyance, transfer or other disposition such other Person becomes a Restricted
Subsidiary.
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Company or any Restricted Subsidiary from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income or other taxes measured by or resulting from such Asset
Sale, (b) payment of all brokerage commissions, underwriting, accounting, legal
and other fees and expenses related to such Asset Sale, (c) provision for
minority interest holders in any Restricted Subsidiary as a result of such Asset
Sale and (d) deduction of appropriate amounts to be provided by the Company or a
Restricted Subsidiary as a reserve, in accordance with GAAP, against any
liabilities associated with the assets sold or disposed of in such Asset Sale
and retained by the Company or a Restricted Subsidiary after such Asset Sale,
including, without limitation, pension and other post employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations associated with the assets sold or disposed of in
such Asset Sale, and (ii) promissory notes and other noncash consideration
received by the Company or any Restricted Subsidiary from such Asset Sale or
other disposition upon the liquidation or conversion of such notes or non-cash
consideration into cash.
"Attributable Indebtedness" under the Indenture in respect of a Sale and
Lease-Back Transaction means, as at the time of determination, the greater of
(i) the fair value of the property subject to such arrangement (as determined by
the Board of Directors) and (ii) the present value of the notes (discounted at a
rate of 10%, compounded annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such Sale and
Lease-Back Transaction (including any period for which such lease has been
extended).
"Available Asset Sale Proceeds" means, with respect to any Asset Sale, the
aggregate Asset Sale Proceeds from such Asset Sales that have not been applied
in accordance with clauses (iii)(a), (b) or (c), and which has not yet been the
basis for an Excess Proceeds Offer in accordance with clause (iii)(d) of the
first paragraph of "Certain Covenants -- Limitation on Certain Asset Sales."
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of capital stock, partnership interests
or any other participation, right or other interest in the
88
<PAGE> 96
nature of an equity interest in such Person or any option, warrant or other
security convertible into any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Debt shall be
the capitalized amount of such obligations determined in accordance with GAAP.
A "Change of Control" of the Company will be deemed to have occurred at
such time as (i) any Person (including a Person's Affiliates and associates),
other than a Permitted Holder, becomes the beneficial owner (as defined under
Rule 13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of 50% or more of the total voting or economic power of the Company's
Common Stock, (ii) any Person (including a Person's Affiliates and associates),
other than a Permitted Holder, becomes the beneficial owner of more than 33 1/3%
of the total voting power of the Company's Common Stock, and the Permitted
Holders beneficially own, in the aggregate, a lesser percentage of the total
voting power of the Common Stock of the Company than such other Person and do
not have the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the Company,
(iii) there shall be consummated any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which the Common Stock of the Company would be converted into cash, securities
or other property, other than a merger or consolidation of the Company in which
the holders of the Common Stock of the Company outstanding immediately prior to
the consolidation or merger hold, directly or indirectly, at least a majority of
the Common Stock of the surviving corporation immediately after such
consolidation or merger, (iv) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of the
Company has been approved by a majority of the directors then still in office
who either were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute a
majority of the Board of Directors of the Company or (v) any "change in control"
occurs (as defined at such time) with respect to the Senior Preferred Stock, the
Junior Preferred Stock or any issue of Disqualified Capital Stock).
"Common Stock" of any Person means all Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Consolidated Interest Expense" means, with respect to any Person, for any
period, the aggregate amount of interest which, in conformity with GAAP, would
be set forth opposite the caption "interest expense" or any like caption on an
income statement for such Person and its Subsidiaries on a consolidated basis
(including, but not limited to, Redeemable Dividends, whether paid or accrued,
on Subsidiary Preferred Stock (as defined below in these "Certain Definitions"),
imputed interest included in Capitalized Lease Obligations, all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, the net costs associated with hedging
obligations, amortization of other financing fees and expenses, the interest
portion of any deferred payment obligation, amortization of discount or premium,
if any, and all other non-cash interest expense (other than interest amortized
to cost of sales)) plus, without duplication, all net capitalized interest for
such period and all interest incurred or paid under any guarantee of
Indebtedness (including a guarantee of principal, interest or any combination
thereof) of any Person, plus the amount of all dividends or distributions paid
on Disqualified Capital Stock (other than dividends paid or payable in shares of
Capital Stock of the Company).
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided, however, that (a) the Net Income of any Person (the "other Person") in
which the Person in question or any of its Subsidiaries has less than a 100%
interest (which interest does not cause the net income of such other Person to
be consolidated into the net income of the Person in question in accordance with
GAAP) shall be included only to the extent of the amount of dividends or
distributions paid
89
<PAGE> 97
to the Person in question or the Subsidiary, (b) the Net Income of any
Subsidiary of the Person in question that is subject to any restriction or
limitation on the payment of dividends or the making of other distributions
(other than pursuant to the Notes or the Indenture) shall be excluded to the
extent of such restriction or limitation, (c)(i) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition and (ii) any net gain (but not loss) resulting from an Asset
Sale by the Person in question or any of its Subsidiaries other than in the
ordinary course of business shall be excluded, (d) extraordinary, unusual and
non-recurring gains and losses shall be excluded, (e) expenses incurred in 1995
relating to the relocation of the Company's headquarters shall be excluded, (f)
losses associated with discontinued and terminated operations in an amount not
to exceed $750,000 per annum shall be excluded and (g) all non-cash items
(including, without limitation, cumulative effects of changes in GAAP and equity
entitlements granted to employees of the Company and its Restricted
Subsidiaries) increasing and decreasing Consolidated Net Income and not
otherwise included in the definition of EBITDA shall be excluded.
"Cumulative Consolidated Interest Expense" means with respect to any
Person, as of any date of determination, Consolidated Interest Expense from
October 1, 1995 to the end of the Company's most recently ended full fiscal
quarter prior to such date, taken as a single accounting period.
"Cumulative EBITDA" means with respect to any Person, as of any date of
determination, EBITDA from October 1, 1995 to the end of the Company's most
recently ended full fiscal quarter prior to such date, taken as a single
accounting period.
"Designated Senior Indebtedness," as to the Company or any Guarantor, as
the case may be, means any Senior Indebtedness (a) under the New Credit
Facility, or (b) which at the time of determination exceeds $75 million in
aggregate principal amount (or accreted value in the case of Indebtedness issued
at a discount) outstanding or available under a committed facility and (x) which
is specifically designated in the instrument evidencing such Senior Indebtedness
as "Designated Senior Indebtedness" by such Person and (y) as to which the
Trustee has been given written notice of such designation.
"Disqualified Capital Stock" means any Capital Stock of the Company or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of the Notes, for cash or securities constituting
Indebtedness. Without limitation of the foregoing, Disqualified Capital Stock
shall be deemed to include (i) any Preferred Stock of a Restricted Subsidiary of
the Company and (ii) any Preferred Stock of the Company, with respect to either
of which, under the terms of such Preferred Stock, by agreement or otherwise,
such Restricted Subsidiary or the Company is obligated to pay current dividends
or distributions in cash during the period prior to the maturity date of the
Notes; provided, however, that Preferred Stock of the Company or any Restricted
Subsidiary thereof that is issued with the benefit of provisions requiring a
change of control offer to be made for such Preferred Stock in the event of a
change of control of the Company or Restricted Subsidiary, which provisions have
substantially the same effect as the provisions of the Indenture described under
"Change of Control," shall not be deemed to be Disqualified Capital Stock solely
by virtue of such provisions; and, provided, further, that the Senior Preferred
Stock and Junior Preferred Stock in effect on the Issue Date shall not be
considered Disqualified Capital Stock.
"EBITDA" means, for any Person, for any period, an amount equal to (a) the
sum of (i) Consolidated Net Income for such period, plus (ii) the provision for
taxes for such period based on income or profits to the extent such income or
profits were included in computing Consolidated Net Income and any provision for
taxes utilized in computing net loss under clause (i) hereof, plus (iii)
Consolidated Interest Expense for such period (including, for this purpose,
dividends on the Senior Preferred Stock and Junior Preferred Stock outstanding
on the Issue Date and any Redeemable Dividends in each case only to the extent
that such dividends were deducted in determining Net Income), plus (iv)
depreciation for such period on a consolidated basis, plus (v) amortization of
intangibles and broadcast program licenses for such period on a consolidated
basis, plus (vi) for the purpose of the covenant relating to the incurrence of
Indebtedness only, payments made under time brokerage or similar agreements with
broadcast properties to the extent such properties have
90
<PAGE> 98
been acquired during the period of determination or are proposed to be acquired
in connection with such incurrence of Indebtedness, minus (b) scheduled payments
relating to broadcast program license liabilities, except that with respect to
the Company each of the foregoing items shall be determined on a consolidated
basis with respect to the Company and its Restricted Subsidiaries only;
provided, however, that, for purposes of calculating EBITDA during any fiscal
quarter, cash income from a particular Investment of such Person shall be
included only if cash income has been received by such Person with respect to
such Investment during each of the previous four fiscal quarters.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"IN TV EBITDA" means EBITDA for the IN TV Network determined on a basis
consistent with the Company's internal financial statements, generated by
stations declared by the board of directors as IN TV properties.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such person (and
"incurrence," "incurred," "incurable," and "incurring" shall have meanings
correlative to the foregoing); provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness shall
not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables, and other accrued liabilities arising in the ordinary
course of business including, without limitation, any and all programming
broadcast obligations) if and to the extent any of the foregoing indebtedness
would appear as a liability upon a balance sheet of such Person prepared in
accordance with GAAP, and shall also include, to the extent not otherwise
included (i) any Capitalized Lease Obligations, (ii) obligations secured by a
Lien to which the property or assets owned or held by such Person is subject,
whether or not the obligation or obligations secured thereby shall have been
assumed (provided, however, that if such obligation or obligations shall not
have been assumed, the amount of such Indebtedness shall be deemed to be the
lesser of the principal amount of the obligation or the fair market value of the
pledged property or assets), (iii) guarantees of items of other Persons which
would be included within this definition for such other Persons (whether or not
such items would appear upon the balance sheet of the guarantor), (iv) all
obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (v) in the case of the
Company, Disqualified Capital Stock of the Company or any Restricted Subsidiary
thereof, and (vi) obligations of any such Person under any Interest Rate
Agreement applicable to any of the foregoing (if and to the extent such Interest
Rate Agreement obligations would appear as a liability upon a balance sheet of
such Person prepared in accordance with GAAP). The amount of Indebtedness of any
Person at any date shall be the outstanding balance at such date of all
unconditional obligations as described above and, with respect to contingent
obligations, the maximum liability upon the occurrence of the contingency giving
rise to the obligation, provided (i) that the amount outstanding at any time of
any Indebtedness issued with original issue discount is the principal amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with GAAP
and (ii) that Indebtedness shall not include any liability for federal, state,
local or other taxes. Notwithstanding any other provision of the foregoing
definition, any trade payable arising from the purchase of goods or materials or
for services obtained in the ordinary course of business or contingent
obligations arising out of customary indemnification agreements with respect to
the sale of assets or securities shall not be deemed to be "Indebtedness" of the
Company or any Restricted Subsidiaries for
91
<PAGE> 99
purposes of this definition. Furthermore, guarantees of (or obligations with
respect to letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included.
"Interest Rate Agreement" means, for any Person, any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement or other
similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Investments" means, directly or indirectly, any advance, account
receivable (other than an account receivable arising in the ordinary course of
business), loan or capital contribution to (by means of transfers of property to
others, payments for property or services for the account or use of others or
otherwise), the purchase of any stock, bonds, notes, debentures, partnership or
joint venture interests or other securities of, the acquisition, by purchase or
otherwise, of all or substantially all of the business or assets or stock or
other evidence of beneficial ownership of, any Person or the making of any
investment in any Person. Investments shall exclude extensions of trade credit
on commercially reasonable terms in accordance with normal trade practices and
repurchases or redemptions of the Notes by the Company.
"Issue Date" means the date the Notes are first issued by the Company and
authenticated by the Trustee under the Indenture.
"Lien" means with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"Major Asset Sale" means an Asset Sale or series of related Asset Sales
involving assets with a fair market value in excess of $25,000,000.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by the
Company or a Major Asset Sale, the aggregate net proceeds received by the
Company, after payment of expenses, commissions and the like incurred in
connection therewith, whether such proceeds are in cash or in property (valued
at the fair market value thereof, as determined in good faith by the board of
directors, at the time of receipt) and (b) in the case of any exchange,
exercise, conversion or surrender of outstanding securities of any kind for or
into shares of Capital Stock of the Company which is not Disqualified Capital
Stock, the net book value of such outstanding securities on the date of such
exchange, exercise, conversion or surrender (plus any additional amount required
to be paid by the holder to the Company upon such exchange, exercise, conversion
or surrender, less any and all payments made to the holders, e.g., on account of
fractional shares and less all expenses incurred by the Company in connection
therewith).
"New Credit Facility" means the credit agreement to be entered into by and
among the Company, the Guarantors, and one or more lenders, as the same may be
amended, extended, increased, renewed, restated, supplemented or otherwise
modified (in whole or in part, and without limitation as to amount, terms,
conditions, covenants and other provisions) from time to time, and any agreement
governing Indebtedness incurred to refinance, replace or refund in whole or in
part the borrowings and then maximum commitments under the New Credit Facility
or such agreement. The Company shall promptly notify the Trustee of any such
refunding, replacement or refinancing of the New Credit Facility.
"Non-Payment Event of Default" means any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chief Executive Officer, the President or any Vice President and
the Chief Financial Officer, Controller or any Treasurer of such Person that
shall comply with applicable provisions of the Indenture.
92
<PAGE> 100
"Payment Default" means any default, whether or not any requirement for the
giving of notice, the lapse of time or both, or any other condition to such
default becoming an event of default has occurred, in the payment of principal
of (or premium, if any) or interest on or any other amount payable in connection
with Designated Senior Indebtedness.
"Permitted Holders" means collectively Lowell W. Paxson, his spouse,
children or other lineal descendants (whether adoptive or biological) and any
revocable or irrevocable inter vivos or testamentary trust or the probate estate
of any such individual, so long as one or more of the foregoing individuals is
the principal beneficiary of such trust or probate estate.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Restricted Subsidiary arising
under or in connection with the New Credit Facility incurred prior to
December 31, 1996 in an amount not to exceed $42.7 million (including the
$22.7 million under the New Credit Facility anticipated to be used to
consummate the Acquisitions as described in this Prospectus);
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness not covered by any other clause of this definition
which is outstanding on the date of the Indenture;
(iv) Indebtedness of the Company to any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary to the Company or another
Restricted Subsidiary;
(v) Purchase Money Indebtedness and Capitalized Lease Obligations
incurred to acquire property in the ordinary course of business which
Indebtedness and Capitalized Lease Obligations do not in the aggregate
exceed 5% of the Company's consolidated total assets at any one time;
(vi) Interest Rate Agreements;
(vii) additional Indebtedness of the Company not to exceed $5 million
in principal amount outstanding at any time; and
(viii) Refinancing Indebtedness.
"Permitted Investments" means, for any Person, Investments made on or after
the date of the Indenture consisting of:
(i) Investments by the Company, or by a Restricted Subsidiary
thereof, in the Company or a Restricted Subsidiary;
(ii) Temporary Cash Investments;
(iii) Investments by the Company, or by a Restricted Subsidiary
thereof, in a Person (or in all or substantially all of the business or
assets), if as a result of such Investment (a) such Person becomes a
Restricted Subsidiary of the Company, (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary thereof or (c) such business or assets are owned by
the Company or a Restricted Subsidiary;
(iv) reasonable and customary loans made to employees not to exceed
$500,000 in the aggregate at any one time outstanding;
(v) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued
by a third party to the Company or Restricted Subsidiary solely as partial
consideration for the consummation of an Asset Sale that is otherwise
permitted under the covenant described under "-- Limitation on Sale of
Assets";
93
<PAGE> 101
(vi) time brokerage and other similar agreements under which
separately owned and licensed broadcast properties enter into cooperative
arrangements and which may include an option to acquire the broadcast
property at a future date;
(vii) accounts receivable of the Company and its Restricted
Subsidiaries generated in the ordinary course of business;
(viii) loans and guarantees of loans by third-party lenders to third
parties in connection with the acquisition of media properties, secured by
substantially all of such person's assets (to the extent permitted by FCC
rules), which are made in conjunction with the execution of a time
brokerage agreement; and
(ix) options on media properties having an exercise price of an
amount not in excess of $100,000 plus the forgiveness of any loan referred
to in clause (viii) above, entered into in connection with the execution of
time brokerage agreements.
"Permitted Liens" means (i) Liens on property or assets of, or any shares
of stock of or secured debt of, any corporation existing at the time such
corporation becomes a Restricted Subsidiary of the Company or at the time such
corporation is merged into the Company or any of its Restricted Subsidiaries,
provided that such Liens are not incurred in connection with, or in
contemplation of, such corporation becoming a Restricted Subsidiary of the
Company or merging into the Company or any of its Restricted Subsidiaries, (ii)
Liens securing Refinancing Indebtedness, provided that any such Lien does not
extend to or cover any Property, shares or debt other than the Property, shares
or debt securing the Indebtedness so refunded, refinanced or extended, (iii)
Liens in favor of the Company or any of its Restricted Subsidiaries, (iv) Liens
securing industrial revenue bonds, (v) Liens to secure Purchase Money
Indebtedness that is otherwise permitted under the Indenture, provided that (a)
any such Lien is created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund, the cost (including
sales and excise taxes, installation and delivery charges and other direct costs
of, and other direct expenses paid or charged in connection with, such purchase
or construction) of such Property, (b) the principal amount of the Indebtedness
secured by such Lien does not exceed 100% of such costs, and (c) such Lien does
not extend to or cover any Property other than such item of Property and any
improvements on such item, (vi) statutory liens or landlords', carriers',
warehousemen's, mechanics', suppliers', materialmen's, repairmen's or other like
Liens arising in the ordinary course of business which do not secure any
Indebtedness and with respect to amounts not yet delinquent or being contested
in good faith by appropriate proceedings, if a reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor, (vii) other Liens securing obligations incurred in the ordinary
course of business or judgment Liens not giving rise to an Event of Default
which obligations or judgments do not exceed $1,000,000 in the aggregate at any
one time outstanding, (viii) any extensions, substitutions, replacements or
renewals of the foregoing, (ix) Liens for taxes, assessments or governmental
charges that are not delinquent or are being contested in good faith by
appropriate proceedings, (x) Liens securing Capitalized Lease Obligations
permitted to be incurred under clause (v) of the definition of "Permitted
Indebtedness," provided that such Lien does not extend to any property other
than that subject to the underlying lease, (xi) easements or minor defects or
irregularities in title and other similar charges or encumbrances on property
not interfering in any material respect with the Company's use of such property
and (xii) Liens securing Secured Senior Debt.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government (including any agency or political subdivision thereof).
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
94
<PAGE> 102
"Public Equity Offering" means a public offering by the Company of shares
of its common stock (however designated and whether voting or non-voting) and
any and all rights, warrants or options to acquire such common stock.
"Purchase Money Indebtedness" means any Indebtedness incurred in the
ordinary course of business by a Person to finance the cost (including the cost
of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Redeemable Dividend" means, for any dividend or distribution with regard
to Disqualified Capital Stock, the quotient of the dividend or distribution
divided by the difference between one and the maximum statutory federal income
tax rate (expressed as a decimal number between 1 and 0) then applicable to the
issuer of such Disqualified Capital Stock.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Indebtedness of the Company or its Restricted Subsidiaries
outstanding on the Issue Date or other Indebtedness permitted to be incurred by
the Company or its Restricted Subsidiaries pursuant to the terms of the
Indenture, but only to the extent that (i) the Refinancing Indebtedness is
subordinated to the Notes to at least the same extent as the Indebtedness being
refunded, refinanced or extended, if at all, (ii) the Refinancing Indebtedness
is scheduled to mature either (a) no earlier than the Indebtedness being
refunded, refinanced or extended, or (b) after the maturity date of the Notes,
(iii) the portion, if any, of the Refinancing Indebtedness that is scheduled to
mature on or prior to the maturity date of the Notes has a weighted average life
to maturity at the time such Refinancing Indebtedness is incurred that is equal
to or greater than the weighted average life to maturity of the portion of the
Indebtedness being refunded, refinanced or extended that is scheduled to mature
on or prior to the maturity date of the Notes, (iv) such Refinancing
Indebtedness is in an aggregate principal amount that is equal to or less than
the sum of (a) the aggregate principal amount then outstanding under the
Indebtedness being refunded, refinanced or extended, (b) the amount of accrued
and unpaid interest, if any, and premiums owed, if any, not in excess of
preexisting prepayment provisions on such Indebtedness being refunded,
refinanced or extended and (c) the amount of customary fees, expenses and costs
related to the incurrence of such Refinancing Indebtedness, and (v) such
Refinancing Indebtedness is incurred by the same Person that initially incurred
the Indebtedness being refunded, refinanced or extended, except that the Company
may incur Refinancing Indebtedness to refund, refinance or extend Indebtedness
of any Wholly-Owned Subsidiary of the Company.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution or payment on Capital Stock of
the Company or any Restricted Subsidiary of the Company or any payment made to
the direct or indirect holders (in their capacities as such) of Capital Stock of
the Company or any Restricted Subsidiary of the Company (other than (x)
dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to purchase
Capital Stock (other than Disqualified Capital Stock), and (y) in the case of
Restricted Subsidiaries of the Company, dividends or distributions payable to
the Company or to a Wholly-Owned Subsidiary of the Company), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the Company or any of its Restricted Subsidiaries (other than Capital Stock
owned by the Company or a Wholly-Owned Subsidiary of the Company, excluding
Disqualified Capital Stock), (iii) the making of any principal payment on, or
the purchase, defeasance, repurchase, redemption or other acquisition or
retirement for value, prior to any scheduled maturity, scheduled repayment or
scheduled sinking fund payment, of any Indebtedness which is subordinated in
right of payment to the Notes other than subordinated Indebtedness acquired in
anticipation of satisfying a scheduled sinking fund obligation, principal
installment or final maturity, (in each case due within one year of the date of
acquisition), (iv) the making of any Investment or guarantee of any Investment
in any Person other than a Permitted Investment, (v) any designation of a
Restricted Subsidiary as an Unrestricted Subsidiary on the basis of the fair
market value of such Subsidiary utilizing standard valuation methodologies and
approved by the board of directors and (vi) forgiveness of any Indebtedness of
an Affiliate of the Company to the Company or a Restricted Subsidiary. For
purposes of determining the amount expended for Restricted Payments, cash
distributed or invested shall be valued at the
95
<PAGE> 103
face amount thereof and property other than cash shall be valued at its fair
market value determined by the Company's board of directors in good faith.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
existing as of the Issue Date. The Board of Directors of the Company may
designate any Unrestricted Subsidiary or any Person that is to become a
Subsidiary as a Restricted Subsidiary if immediately after giving effect to such
action (and treating any Acquired Indebtedness as having been incurred at the
time of such action), the Company could have incurred at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to the
"Limitation on Additional Indebtedness" covenant.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Subsidiary of the
Company of any real or tangible personal property, which property has been or is
to be sold or transferred by the Company or such Restricted Subsidiary to such
Person in contemplation of such leasing.
"Secured Senior Debt" means any Senior Indebtedness (a) under the New
Credit Facility or (b) which at the time of determination exceeds $25 million in
aggregate principal amount (or accreted value in the case of Indebtedness issued
at a discount) outstanding or available under a committed facility.
"Senior Indebtedness" means the principal of and premium, if any, and
interest (including, without limitation, interest accruing or that would have
accrued but for the filing of a bankruptcy, reorganization or other insolvency
proceeding whether or not such interest constitutes an allowed claim in such
proceeding) on, and any and all other fees, expense reimbursement obligations,
indemnities and other amounts due pursuant to the terms of all agreements,
documents and instruments providing for, creating, securing or evidencing or
otherwise entered into in connection with (a) all Indebtedness of the Company
owed to lenders under the New Credit Facility, (b) all obligations of the
Company with respect to any Interest Rate Agreement, (c) all obligations of the
Company to reimburse any bank or other person in respect of amounts paid under
letters of credit, acceptances or other similar instruments, (d) all other
Indebtedness of the Company which does not provide that it is to rank pari passu
with or subordinate to the Notes and (e) all deferrals, renewals, extensions and
refundings of, and amendments, modifications and supplements to, any of the
Senior Indebtedness described above. Notwithstanding anything to the contrary in
the foregoing, Senior Indebtedness will not include (i) Indebtedness of the
Company to any of its Subsidiaries, (ii) Indebtedness represented by the Notes,
(iii) any Indebtedness which by the express terms of the agreement or instrument
creating, evidencing or governing the same is junior or subordinate in right of
payment to any item of Senior Indebtedness, (iv) any trade payable arising from
the purchase of goods or materials or for services obtained in the ordinary
course of business or (v) Indebtedness incurred in violation of the Indenture
except if such Indebtedness was incurred under the New Credit Facility based on
financial information and certificates provided by responsible officers of the
Company and relied on in good faith by the lenders thereunder in which event
such Indebtedness shall be deemed to have been incurred in compliance with the
Indenture and constitute Senior Indebtedness.
"Subsidiary" of any specified Person means any corporation, partnership,
joint venture, association or other business entity, whether now existing or
hereafter organized or acquired, (i) in the case of a corporation, of which more
than 50% of the total voting power of the Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
officers or trustees thereof is held by such first-named Person or any of its
Subsidiaries; or (ii) in the case of a partnership, joint venture, association
or other business entity, with respect to which such first-named Person or any
of its Subsidiaries has the power to direct or cause the direction of the
management and policies of such entity by contract or otherwise or if in
accordance with GAAP such entity is consolidated with the first-named Person for
financial statement purposes.
"Temporary Cash Investments" means (i) Investments in marketable, direct
obligations issued, guaranteed or insured by the United States of America, or of
any governmental agency, instrumentality or political subdivision thereof,
maturing within 365 days of the date of purchase; (ii) Investments in
certificates of deposit issued by a bank organized under the laws of the United
States of America or any state thereof or the District of Columbia, in each case
having capital, surplus and undivided profits totaling more than
96
<PAGE> 104
$500,000,000 and rated at least A by Standard & Poor's Corporation and A-2 by
Moody's Investors Service, Inc., maturing within 365 days of purchase; (iii)
Investments not exceeding 365 days in duration in money market funds that invest
substantially all of such funds' assets in the Investments described in the
preceding clauses (i) and (ii); or (iv) any security maturing not more than 180
days after the date of acquisition, backed by stand-by or direct pay letters of
credit issued by a bank meeting the qualifications described in clause (ii)
above.
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary and (b) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted Subsidiary by a resolution adopted by the Board of
Directors of the Company; provided that a Subsidiary organized or acquired after
the Issue Date may be so classified as an Unrestricted Subsidiary only if such
classification is in compliance with the covenant set forth under "Limitation on
Restricted Payments." The Trustee shall be given prompt notice by the Company of
each resolution adopted by the Board of Directors of the Company under this
provision, together with a copy of each such resolution adopted.
"Wholly-Owned Subsidiary" means any Restricted Subsidiary all of the
outstanding voting securities (other than directors' qualifying shares) of which
are owned, directly or indirectly, by the Company.
DESCRIPTION OF THE CAPITAL STOCK
GENERAL
The Company's capital stock consists of 197,500,000 shares of common stock
with a par value of $.001 per share, and 1,000,000 shares of preferred stock,
with a par value of $.001 per share. Of the 197,500,000 shares of common stock
that the Company is authorized to issue: (i) 150,000,000 shares are designated
as Class A common stock (the "Class A Common Stock"); (ii) 35,000,000 shares are
designated as Class B common stock (the "Class B Common Stock"); and (iii)
12,500,000 shares are designated as Class C non-voting common stock (the "Class
C Common Stock," and with the Class A Common Stock and the Class B Common Stock,
the "Common Stock"). Of the 1,000,000 shares of preferred stock that the Company
is authorized to issue: (a) 2,000 shares have been designated as 15% Cumulative
Compounding Redeemable Preferred Stock (the "Initial Senior Preferred Stock");
(b) 714.286 shares have been designated as Series B 15% Cumulative Compounding
Redeemable Preferred Stock (the "Series B Preferred Stock," and with the Initial
Senior Preferred Stock, the "Senior Preferred Stock"); and (c) 33,000 shares
have been designated as Junior Cumulative Compounding Redeemable Preferred Stock
(the "Junior Preferred Stock," and with the Senior Preferred Stock, the
"Preferred Stock"). Currently, 26,161,726 shares of Class A Common Stock,
8,311,639 shares of Class B Common Stock, no shares of Class C Common Stock,
2,000 shares of Initial Senior Preferred Stock, 714.286 shares of Series B
Preferred Stock, and 33,000 shares of Junior Preferred Stock are outstanding. In
addition, 18,907,315 shares of Class A Common Stock are reserved for issuance
with respect to: (a) the conversion of shares of Class B Common Stock to Class A
Common Stock; (b) the conversion of shares of Class C Common to Class A Common
Stock; (c) the exercise of warrants issued in connection with the issuance of
the Initial Senior Preferred Stock and the Junior Preferred Stock, and (d) the
exercise of certain rights under the Company's Stock Incentive Plan.
COMMON STOCK
Holders of shares of Class A Common Stock and Class B Common Stock will
vote as a single class on all matters submitted to a vote of the stockholders of
the Company, with each share of Class A Common Stock entitled to one vote and
each share of Class B Common Stock entitled to ten votes, except as otherwise
provided by law. Holders of Class C Common Stock shall have no right to vote on
any matter voted on by the stockholders of the Company, except as may be
provided by law or as provided in limited circumstances in the Company's
certificate of incorporation. In all other respects, all shares of Common Stock
have identical rights, preferences and privileges. Each share of Class B Common
Stock and, under certain circumstances, Class C Common Stock, is convertible at
the option of its holder into one share of Class A Common Stock.
97
<PAGE> 105
SENIOR PREFERRED STOCK
The holders of the Senior Preferred Stock are entitled to cumulative
dividends from their respective dates of issue through December 15, 2000 at the
per annum rate of 15% of the liquidation price of such share. The liquidation
price for each share of Senior Preferred Stock is defined as the sum of $7,000
plus all accrued and unpaid dividends with respect to such share. The Company
has the option to defer the payment of accrued dividends until the Senior
Preferred Stock is redeemed. As of June 30, 1995, the Company has not paid any
cash dividends on the Senior Preferred Stock, and there are $3,641,301 in
accrued and unpaid dividends on the Senior Preferred Stock. The consent of the
holders of a majority of the outstanding shares of each class of Senior
Preferred Stock is required to, among other things, enter into an agreement that
would prevent the Company from performing its obligations with respect to the
Senior Preferred Stock. The Company is obligated to redeem on December 15, 2000
all the shares of the Senior Preferred Stock then outstanding, at a redemption
price equal to the liquidation price for such shares, plus the amount of all
unpaid dividends thereon, as of the redemption date, payable in cash. Holders of
shares of the Senior Preferred Stock are entitled to require the Company to
redeem their shares of Senior Preferred Stock upon the occurrence of certain
events, including a change in control of the Company.
JUNIOR PREFERRED STOCK
The holders of the Junior Preferred Stock are entitled to cumulative
dividends until December 22, 2001 at the per annum rate of 12% of the
liquidation price of such share. The liquidation price for each share of Junior
Preferred Stock is defined as the sum of $1,000 plus all accrued and unpaid
dividends with respect to such share. For each year subsequent to December 22,
2001, the per annum rate shall increase by 1%. In addition, the dividend rate
may be increased under certain circumstances, such as a change in control of the
Company. Until December 22, 1999, the Company has the option to defer the
payment of accrued dividends on the Junior Preferred Stock. As of June 30, 1995,
the Company has not paid any cash dividends on the Junior Preferred Stock, and
there are $2,138,476 in accrued and unpaid dividends on the Junior Preferred
Stock. The consent of the holders of a majority of the outstanding shares of
Junior Preferred Stock is required to, among other things, enter into an
agreement that would prevent the Company from performing its obligations with
respect to the Junior Preferred Stock. Subject to the rights of the Senior
Preferred Stock, the Company is obligated to redeem on December 22, 2003 out of
unrestricted funds legally available therefor, all the shares of the Junior
Preferred Stock then outstanding, at a redemption price equal to the liquidation
price for such shares, plus the amount of all unpaid dividends thereon, as of
the redemption date, payable in cash. Holders of shares of the Junior Preferred
Stock are entitled to require the Company to redeem their shares of Junior
Preferred Stock upon the occurrence of certain events, including a change in
control (as defined with respect thereto) of the Company at 113% of the
liquidation price through December 22, 2002 and 114% of the liquidation price
thereafter.
In addition, each share of Junior Preferred Stock is redeemable, at the
option of the Company, at $1,030 plus unpaid, deferred, and accrued dividends
prior to December 22, 1997, $1,020 plus unpaid, deferred and accrued dividends
from December 22, 1997 through December 22, 1998, and $1,000 plus unpaid,
deferred and accrued dividends per share thereafter.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
TAX CONSEQUENCES TO THE HOLDERS
The following is a summary of certain United States federal income tax
consequences of exchanging Original Notes for New Notes, and of acquiring,
owning and disposing of the Notes. The summary is based upon provisions of the
Internal Revenue Code (the "Code"), applicable Treasury Department Regulations,
judicial authority and current administrative rulings and practice, all of which
are subject to change at any time by legislative, judicial or administrative
action. Any such changes may be applied retroactively in a manner that could
adversely affect a Holder of the Notes. Further, there can be no assurance that
the Internal Revenue Service (the "IRS") will not take a contrary view, and no
rulings from the IRS have been or will be
98
<PAGE> 106
sought as to any of the matters discussed below. The discussion assumes the
Holders will hold the Notes as capital assets within the meaning of Section 1221
of the Code.
This summary is for general information only and does not purport to
address specific tax consequences that may be relevant to particular persons
(including, for example, foreign persons, financial institutions,
broker-dealers, insurance companies, tax-exempt organizations or persons in
special situations). In addition, the discussion does not address any aspect of
state, local or foreign taxation.
HOLDERS OF THE NOTES ARE URGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO THEM OF EXCHANGING ORIGINAL
NOTES FOR NEW NOTES AND OWNING AND DISPOSING OF THE NOTES AS WELL AS THE
APPLICATION OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
EXCHANGE OF ORIGINAL NOTES FOR NEW NOTES
Under general principles of tax law (without taking the Proposed
Regulations discussed below into account), an exchange of property is treated as
an "exchange" for federal income tax purposes if the properties differ
materially in kind or in extent. Because the New Notes are substantially
identical to the Original Notes and the Exchange Offer is specifically
contemplated by the Indenture pursuant to which the Original Notes were issued,
the Original Notes and the New Notes should not be considered to differ
materially in kind or in extent. The Treasury Department issued proposed
regulations (the "Proposed Regulations") on December 2, 1992, addressing the
federal income tax consequences of modifications of debt instruments, the
principles of which would also apply to transactions such as the Exchange Offer.
Under the rules contained in the Proposed Regulations, the exchange of New Notes
for Original Notes (the "Exchange") would not constitute an "exchange" for
federal income tax purposes. The IRS has stated that the Proposed Regulations
will be amended or modified before issued in final form. If the effective dates
set forth in the Proposed Regulations are retained in the final of Treasury
Department regulations (the "Final Regulations"), the Final Regulations will not
apply to the exchange of the Original Notes for the New Notes. There is no
assurance that the Final Regulations will be substantially similar to the
Proposed Regulations, however.
Consequently, under general principles of tax law, but subject to the
potential that Final Regulations could take a contrary view, the Exchange should
not be considered an "exchange" for federal income tax purposes and the New
Notes should be considered a continuation of the Original Notes. A Holder should
not recognize income or loss in connection with the exchange of Original Notes
for New Notes. A Holder's basis and holding period in the New Notes should be
the same as its basis and holding period in the Original Notes.
The Company intends to treat the Exchange as a transaction that is not an
"exchange" for federal income tax purposes.
ORIGINAL ISSUE DISCOUNT AND INTEREST
The Original Notes were, and the New Notes will be, issued with what is
considered a de minimis amount of original issue discount ("OID") for federal
income tax purposes. Accordingly, Holders of the Notes generally will be
required to include OID in gross income only as stated principal payments are
made. A Holder may elect to include OID in gross income by using the constant
yield method, subject to special rules for Notes that have either market
discount or amortizable bond premium with respect to the Holder.
The amount of OID with respect to a Note is equal to the excess of its
"stated redemption price at maturity" over its issue price. The stated
redemption price at maturity of a Note will be the sum of all payments to be
made on the Note except the portion of each interest payment that does not
exceed interest computed at the initial stated interest rate ("qualified stated
interest"). Qualified stated interest must be reported as income in accordance
with the Holder's method of accounting for tax purposes.
A Holder who purchases a Note from another Holder at a premium need not
include any of the de minimis OID in gross income. If such Holder purchases the
Note at a discount, such discount is taken into account under the "Market
Discount" rules discussed elsewhere.
99
<PAGE> 107
Acquisition Premium and Bond Premium
The amount of OID required to be included in gross income by a Holder that
acquires a Note subsequent to its original issuance at a price in excess of its
adjusted issue price may be affected by the Code provisions governing
acquisition premium or bond premium. The adjusted issue price of a Note at the
beginning of any accrual period is generally the issue price of the Note plus
the amount of OID previously included in income of all Holders (without regard
to reduction of such OID by any acquisition premium). Therefore, Holders who
acquire Notes after their original issuance should consult their own tax
advisors as to the application of the Code provisions governing any acquisition
premium or bond premium to their particular situations.
If a Holder's initial tax basis in a Note exceeds the "amount payable on
maturity" (such excess being the "bond premium"), the Holder may elect, under
Section 171 of the Code, to amortize the bond premium over the period from the
acquisition date to the maturity date of such Note and, except as Treasury
Regulations may otherwise provide, reduce the amount of interest included in
income in respect of the Note by such amount. A Holder who elects to amortize
bond premium must reduce its adjusted basis in the Note by the amount of such
allowable amortization. An election to amortize bond premium would apply to
amortizable bond premium on all taxable bonds (including a Note) held at or
acquired after the beginning of the Holders' taxable year as to which the
election is made, and may be revoked only with the consent of the IRS.
Market Discount
A Holder of a Note generally will be required to treat any gain recognized
on the sale, exchange, redemption or other disposition of a Note as ordinary
income to the extent of any accrued market discount. "Market discount" is
defined for federal income tax purposes generally as the excess of the stated
redemption price at maturity (adjusted to take into account the effects of OID)
over the tax basis in the hands of the holder immediately after acquisition of
the Note. Under a de minimis exception, the amount of market discount is
considered to be zero if it is less than 0.25% of the stated redemption price at
maturity multiplied by the number of complete years from acquisition to
maturity. Market discount generally will accrue ratably. A Holder of a Note
acquired at a market discount also may be required to defer the deduction of all
or a portion of the interest on any indebtedness incurred or maintained to carry
the Note until it is disposed of in a taxable transaction.
A Holder of a Note acquired at a market discount may elect to include the
market discount in income as interest as it accrues, in which case the foregoing
rules would not apply. This election would apply to all bonds with market
discount acquired by the electing Holder on or after the first day of the first
taxable year to which the election applies. The election may be revoked only
with the consent of the IRS.
Sale, Exchange, Redemption or Retirement
Upon the sale, exchange, redemption, retirement or other disposition of a
Note, a Holder generally will recognize gain or loss equal to the difference
between the amount realized on the disposition and the Holder's adjusted tax
basis in the Note. Subject to the market discount rules discussed above, gain or
loss recognized by a Holder on the disposition of a Note will be long-term
capital gain or loss provided that the Note was a capital asset in the hands of
the Holder and had been held for more than one year.
BACKUP WITHHOLDING
A Holder may be subject to backup withholding at the rate of 31% with
respect to interest and OID paid on a Note and gross proceeds upon sale or
retirement of a Note unless such Holder (a) is a corporation or other exempt
recipient and, when required, demonstrates this fact or (b) provides, when
required, a correct taxpayer identification number, certifies that backup
withholding is not in effect and otherwise complies with applicable requirements
of the backup withholding rules. Furthermore, a Holder that does not provide the
Company with the Holder's correct taxpayer identification number may be subject
to penalties imposed by the IRS. Any amounts withheld as backup withholding will
be creditable against the Holder's federal income tax liability.
100
<PAGE> 108
TAX EFFECTS TO THE COMPANY
The exchange of original Notes for New Notes will have no tax effect on the
Company.
PLAN OF DISTRIBUTION
Each broker-dealer that received New Notes for its own account pursuant to
the Exchange Offer ("Restricted Holder") must acknowledge that it will deliver a
prospectus in connection with any resale of such New Notes. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a Restricted
Holder in connection with resales of New Notes received in exchange for Original
Notes where such Original Notes were acquired as a result of market-making
activities or other trading activities. For a period of 180 days after the
Expiration Date, the Company will use reasonable efforts to make this Prospectus
available to any Restricted Holder for use in connection with any such resale,
provided that such Restricted Holder indicates in the Letter of Transmittal that
is a broker-dealer. In addition, until , 1996, all Restricted Holders
effecting transactions in the New Notes may be required to deliver a Prospectus.
The Company will not receive any proceeds from any sale of Original Notes
by Restricted Holders. Original Notes received by Restricted Holders for their
own account pursuant to the Exchange Offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such methods
of resale, at market prices prevailing at the time of resale, or at prices
related to such prevailing market prices on negotiated prices. Any such resale
may be made directly to purchasers or to or through Restricted Holders who may
receive compensation in the form of commissions or concessions from any such
Restricted Holder and/or the purchasers of any New Notes. Any Restricted Holder
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any person that participates in the distribution of such
New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such Restricted Holders may be deemed
to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a Restricted Holder will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Restricted Holder that requests such
documents in the Letter of Transmittal.
By acceptance of this Exchange Offer, each Restricted Holder that receives
New Notes pursuant to the Exchange Offer agrees that, upon receipt of notice
from the Company of the happening of any event which makes any statement in the
Prospectus untrue in any material respect or which requires the making of any
changes in the Prospectus in order to make the statements therein not misleading
(which notice the Company agrees to deliver promptly to such Restricted Holder),
such Restricted Holder will suspend use of the Prospectus until the Company has
amended or supplemented the Prospectus to correct such misstatement or omission
and has furnished copies of the amended or supplemented Prospectus to such
Restricted Holder. If the Company gives any such notice to suspend the use of
the Prospectus, it shall extend the 180-day period referred to above by the
number of days during the period from and including the date of the giving of
such notice up to and including when Restricted Holders shall have received
copies of the supplemental or amended Prospectus necessary to permit resales of
New Notes.
101
<PAGE> 109
LEGAL OPINIONS
Certain legal matters with respect to the issuance of New Notes will be
passed upon for the Company by its counsel, Holland & Knight (a partnership
including professional associations).
EXPERTS
The consolidated financial statements as of December 31, 1994 and 1993 and
for each of the two years in the period ended December 31, 1994, the financial
statements of KZKI-TV (a division of Sandino Telecasters, Inc.) as of and for
the year ended January 31, 1995, the financial statements of Paugus Television,
Inc. (WGOT-TV), and Delaware Valley Broadcasters (WTGI-TV) as of and for the
year ended December 31, 1994 and the combined financial statements of San
Jacinto Television Corporation and DuPont Investment Group, 85 Ltd. as of and
for the year ended December 31, 1994 included in this Prospectus have been so
included in reliance on the reports of Price Waterhouse LLP, independent
certified public accountants, given on authority of said firm as experts in
auditing and accounting (the reports related to the financial statements of
KZKI-TV (a division of Sandino Telecasters, Inc.), Paugus Television, Inc.
(WGOT-TV) the combined financial statements of San Jacinto Television
Corporation and DuPont Investment Group, 85 Ltd. contain an explanatory
paragraph relating to the entities ability to continue as a going concern as
described in Note 1 to such financial statements and combined financial
statements). Price Waterhouse LLP has not examined, compiled or applied agreed
upon procedures to the Pro Forma Financial Data included in this Offering
Prospectus and, consequently, assumes no responsibility for the Pro Forma
Financial Data and does not express an opinion or any other form of assurance
with respect thereto.
The consolidated financial statements for the year ending December 31, 1992
included in this Prospectus have been so included in reliance on the report of
by Ryals, Brimmer, Burek & Keelan, independent certified public accountants
given on authority of said firm as experts in auditing and accounting.
102
<PAGE> 110
PAXSON COMMUNICATIONS CORPORATION
INDEX OF FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PAXSON COMMUNICATIONS CORPORATION
Consolidated Financial Statements -- December 31, 1994, 1993 and 1992
Report of Independent Certified Public Accountants................................... F-2
Consolidated Balance Sheets.......................................................... F-3
Consolidated Statements of Operations................................................ F-5
Consolidated Statements of Changes in Common Stockholders' Equity.................... F-6
Consolidated Statements of Cash Flows................................................ F-7
Notes to Consolidated Financial Statements........................................... F-9
PAXSON COMMUNICATIONS CORPORATION
Unaudited Interim Consolidated Financial Statements -- June 30, 1995 and 1994
Consolidated Balance Sheets June 30, 1995 and December 31, 1994...................... F-28
Consolidated Statements of Operations for the Six Months Ended....................... F-29
Consolidated Statements of Operations for the Three Months Ended..................... F-30
Consolidated Statements of Changes in Common Stockholders' Equity.................... F-31
Consolidated Statements of Cash Flows................................................ F-32
Notes to Consolidated Financial Statements........................................... F-33
KZKI-TV (A DIVISION OF SANDINO TELECASTERS, INC.)
Financial Statements -- January 31, 1995
Report of Independent Certified Public Accountants................................... F-35
Balance Sheet........................................................................ F-36
Statements of Operations............................................................. F-37
Statements of Changes in Divisional Deficit.......................................... F-38
Statements of Cash Flows............................................................. F-39
Notes to Financial Statements........................................................ F-40
PAUGUS TELEVISION, INC. (WGOT-TV)
Financial Statements -- December 31, 1994
Report of Independent Certified Public Accountants................................... F-43
Balance Sheet........................................................................ F-44
Statement of Operations.............................................................. F-45
Statement of Changes in Stockholders' Deficit........................................ F-46
Statement of Cash Flows.............................................................. F-47
Notes to Financial Statements........................................................ F-48
DELAWARE VALLEY BROADCASTERS (WTGI-TV)
Financial Statements -- December 31, 1994
Report of Independent Certified Public Accountants................................... F-52
Balance Sheet........................................................................ F-53
Statement of Operations.............................................................. F-54
Statement of Changes in Parents' Deficit............................................. F-55
Statement of Cash Flows.............................................................. F-56
Notes to Financial Statements........................................................ F-57
SAN JACINTO TELEVISION CORPORATION AND DUPONT INVESTMENT GROUP, 85 LTD.
Combined Financial Statements -- December 31, 1994
Report of Independent Certified Public Accountants................................... F-61
Combined Balance Sheet............................................................... F-62
Combined Statement of Operations..................................................... F-63
Combined Statement of Changes in Combined Deficit.................................... F-64
Combined Statement of Cash Flows..................................................... F-65
Notes to Combined Financial Statements............................................... F-66
</TABLE>
F-1
<PAGE> 111
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
of Paxson Communications Corp.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of changes in common
stockholders' equity and of cash flows present fairly, in all material respects,
the financial position of Paxson Communications Corp. and its subsidiaries (the
"Company") at December 31, 1994 and 1993, and the results of their operations
and their cash flows for each of the two years in the period ended December 31,
1994, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above. The financial statements of the Company for the year ended December 31,
1992 were audited by other independent accountants whose report dated June 20,
1994 expressed an unqualified opinion on those statements.
/s/ Price Waterhouse LLP
- --------------------------------------
PRICE WATERHOUSE LLP
Tampa, Florida
March 15, 1995
F-2
<PAGE> 112
PAXSON COMMUNICATIONS CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1994 1993
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................... $ 21,571,658 $ 7,019,747
Accounts receivable, less allowance for doubtful accounts of
$556,950 and $212,244, respectively....................... 13,569,198 6,366,719
Related party note receivable................................ 1,750,000 1,750,000
Prepaid expenses and other current assets.................... 1,579,954 1,423,335
Current deferred income taxes................................ 194,940 --
Current program rights....................................... 1,980,000 --
------------- ------------
Total current assets................................. 40,645,750 16,559,801
Property and equipment, net.................................... 45,350,430 20,900,713
Intangible assets, net......................................... 53,350,967 25,362,841
Other assets, net.............................................. 13,078,346 3,751,253
Program rights, net............................................ 244,888 --
------------- ------------
Total assets......................................... $ 152,670,381 $ 66,574,608
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities..................... $ 5,123,691 $ 1,088,409
Current portion of program rights payable.................... 986,562 --
Current portion of long-term debt............................ 6,393,415 401,632
Current deferred income taxes................................ -- 2,175,191
------------- ------------
Total current liabilities............................ 12,503,668 3,665,232
Program rights payable......................................... 562,770 --
Long-term debt................................................. 76,013,542 32,206,770
Deferred income taxes.......................................... 1,474,940 784,809
Minority interest.............................................. 1,217,314 --
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of the consolidated financial statements.
F-3
<PAGE> 113
PAXSON COMMUNICATIONS CORP.
CONSOLIDATED BALANCE SHEETS -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1994 1993
------------ -----------
<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 in 1994 and 1993.......... 14,060,054 11,634,907
Redeemable Class A & B common stock warrants................... 1,735,979 2,163,633
Redeemable Cumulative Compounding Series B preferred stock,
$0.001 par value; 15% dividend rate per annum, 714.286 shares
authorized, issued and outstanding in 1994................... 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 in 1994................... 26,808,053 --
Common stock, $0.001 par value; 1,500 shares authorized; 1,200
shares issued and outstanding in 1993........................ -- 1
Class A common stock, $0.001 par value; one vote per share;
150,000,000 shares authorized, 26,042,561 and 23,686,461 (pro
forma) shares issued and outstanding, in 1994 and 1993,
respectively................................................. 26,042 --
Class B common stock, $0.001 par value; ten votes per share,
35,000,000 shares authorized, 8,311,640 and 7,895,487 (pro
forma) shares issued and outstanding, in 1994 and 1993,
respectively................................................. 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 --
Stock subscription notes receivable............................ (77,666) --
Additional paid-in capital..................................... 20,647,647 16,895,623
Accumulated deficit............................................ (8,923,897) (776,367)
Commitments and contingencies (Notes 15 and 16)
------------ -----------
Total liabilities and stockholders' equity........... $152,670,381 $66,574,608
=========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of the consolidated financial statements.
F-4
<PAGE> 114
PAXSON COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------
1994 1993 1992
----------- ------------ -----------
<S> <C> <C> <C>
Revenue:
Local and national advertising............................. $56,668,983 $ 29,405,559 $15,342,982
Retail and other........................................... 2,779,215 1,655,155 967,422
Trade...................................................... 2,619,245 1,001,317 751,433
----------- ------------ -----------
Total revenue................................................ 62,067,443 32,062,031 17,061,837
----------- ------------ -----------
Operating expenses:
Direct..................................................... 16,221,385 8,645,094 4,505,274
Programming................................................ 8,750,624 5,291,237 2,259,450
Sales and promotion........................................ 5,753,025 3,507,480 2,357,020
Technical.................................................. 2,113,117 1,543,583 1,560,304
General and administrative................................. 11,689,343 7,323,352 5,742,974
Trade...................................................... 2,426,118 1,029,105 544,583
Retail..................................................... 568,372 834,314 418,535
Time brokerage agreement fees.............................. 503,698 698,463 533,548
Sports rights fees......................................... 2,379,516 -- --
Program rights amortization................................ 820,754 -- --
Depreciation and amortization.............................. 12,403,528 9,350,633 5,977,301
----------- ------------ -----------
Total operating expenses..................................... 63,629,480 38,223,261 23,898,989
----------- ------------ -----------
Loss from operations......................................... (1,562,037) (6,161,230) (6,837,152)
Other income (expense):
Interest expense, net...................................... (4,874,710) (2,052,406) (1,262,308)
Gain (loss) on sale of radio broadcasting station.......... 28,105 427,397 (40,282)
Other income (expense), net................................ (33,432) (205,614) 175,163
----------- ------------ -----------
Loss before benefit (provision) for income taxes and
extraordinary item......................................... (6,442,074) (7,991,853) (7,964,579)
Benefit (provision) for income taxes......................... 1,680,000 (2,960,000) --
----------- ------------ -----------
Net loss before extraordinary item and change in accounting
principle.................................................. (4,762,074) (10,951,853) (7,964,579)
Extraordinary item........................................... -- (457,147) --
Cumulative effect of a change in accounting principle........ -- -- 109,540
----------- ------------ -----------
Net loss..................................................... (4,762,074) (11,409,000) (7,855,039)
Dividends and accretion on preferred stock and common stock
warrants................................................... (3,385,456) (151,367) --
----------- ------------ -----------
Net loss attributable to common stock and common stock
equivalents................................................ $(8,147,530) $(11,560,367) $(7,855,039)
============ ============= ============
Pro forma per share data (Note 1):
Pro forma net loss before extraordinary item............... $ (0.14) $ (0.35)
Extraordinary item........................................... -- (0.01)
----------- ------------
Pro forma net loss........................................... (0.14) (0.36)
Dividends and accretion on preferred stock and common stock
warrants................................................... (0.10) (0.01)
----------- ------------
Pro forma net loss attributable to common stock and common
stock equivalents.......................................... $ (0.24) $ (0.37)
============ =============
Pro forma weighted average shares outstanding -- primary and
fully diluted.............................................. 33,430,116 31,581,948
============ =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of the consolidated financial statements.
F-5
<PAGE> 115
PAXSON COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON
STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS C STOCK
COMMON STOCK COMMON SUBSCRIPTION ADDITIONAL
---------------------------- COMMON STOCK NOTES PAID-IN ACCUMULATED
CLASS A CLASS B CLASS C STOCK WARRANTS RECEIVABLE CAPITAL DEFICIT
-------- -------- ------- ------ ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1992..... $ 1 $10,850,892 $ (1,428,008)
Stockholder capital
contributions................ 16,760,110
Stockholder capital
distributions................ (4,000,000)
Net loss....................... (7,855,039)
-------- -------- ------- ------ ---------- ------------ ----------- ------------
Balance at December 31, 1992... 1 23,611,002 (9,283,047)
Stockholder capital
contributions................ 13,351,668
Net loss prior to
reorganization on December
15, 1993..................... (10,784,000)
Reclassification of
undistributed deficit prior
to reorganization............ (20,067,047) 20,067,047
Dividends on redeemable
preferred stock.............. (97,808)
Accretion on Senior redeemable
preferred stock.............. (15,144)
Accretion on Class A & B common
stock warrants............... (38,415)
Net loss subsequent to
reorganization on December
15, 1993..................... (625,000)
-------- -------- ------- ------ ---------- ------------ ----------- ------------
Balance at December 31, 1993... 1 16,895,623 (776,367)
Recapitalization of common
stock........................ $15,791 $5,264 (1) (21,054)
Stock issued for ANG
acquisition.................. 1,570 277 $(77,666) 3,784,530
Net proceeds from issuance of
common stock warrants........ $5,338,952
Dividends on redeemable
preferred stock.............. (2,216,137)
Accretion on Senior preferred
stock........................ (325,147)
Accretion on Series B preferred
stock........................ (7,968)
Accretion on Junior preferred
stock........................ (15,648)
Accretion on Class A & B common
stock warrants............... (820,556)
Net loss....................... (4,762,074)
Stock dividend................. 8,681 2,771 (11,452)
-------- -------- ------- ------ ---------- ------------ ----------- ------------
Balance at December 31, 1994... $26,042 $8,312 $ 0 $ 0 $5,338,952 $(77,666) $20,647,647 $ (8,923,897)
======== ======= ======= ======== ========== =========== ============ =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of the consolidated financial statements.
F-6
<PAGE> 116
PAXSON COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss....................................... $ (4,762,074) $(11,409,000) $ (7,855,039)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization.................. 12,403,528 9,350,633 5,977,301
Program rights amortization.................... 820,754 -- --
(Gain) loss on sale of assets.................. (28,105) (427,397) 40,282
Provision for doubtful accounts................ 344,706 89,681 109,900
(Benefit) provision for income taxes........... (1,680,000) 2,960,000 --
Loss on extinguishment of long-term debt....... -- 457,147 --
Change in accounting principle................. -- -- (109,540)
Decrease (increase) in accounts receivable..... (1,683,664) 470,942 (6,374,819)
Decrease (increase) in prepaid expenses and
other current assets........................ 234,301 1,308,404 (2,554,721)
Decrease in intangible assets.................. -- 175,452 125,007
Increase in other assets....................... (392,504) (20,731) (166,432)
(Decrease) increase in accounts payable and
accrued liabilities......................... (177,542) (109,491) 893,373
------------ ------------ ------------
Net cash provided by (used in) operating
activities.................................. 5,079,400 2,845,640 (9,914,688)
------------ ------------ ------------
Cash flows from investing activities:
Acquisitions of broadcasting properties........ (56,143,061) (32,145,000) (19,360,000)
Deposits on broadcasting properties............ (4,291,241) -- --
Deposits on buildings and equipment............ (642,890) -- --
Proceeds from sale of radio broadcasting
station..................................... 200,000 5,010,000 --
Purchases of property and equipment............ (5,916,512) (1,962,553) (1,273,388)
Increase in related party note receivable...... -- (1,750,000) --
------------ ------------ ------------
Net cash used for investing activities......... (66,793,704) (30,847,553) (20,633,388)
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt................... 50,000,000 38,100,000 19,000,000
Payments of long-term debt..................... (401,500) (27,001,362) (12,019)
Payments of loan origination costs and interest
rate caps................................... (5,030,352) (3,730,836) (640,237)
Payments for program rights.................... (335,646) -- --
Net proceeds from issuance of redeemable
preferred stock............................. 26,694,761 11,521,955 --
Net proceeds from issuance of common stock
warrants.................................... 5,338,952 2,125,218 --
Net stockholder capital contributions.......... -- 13,351,668 12,760,110
------------ ------------ ------------
Net cash provided by financing activities...... 76,266,215 34,366,643 31,107,854
------------ ------------ ------------
Increase in cash and cash equivalents............ 14,551,911 6,364,730 559,778
Cash and cash equivalents at beginning of year... 7,019,747 655,017 95,239
------------ ------------ ------------
Cash and cash equivalents at end of year......... $ 21,571,658 $ 7,019,747 $ 655,017
=========== =========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of the consolidated financial statements.
F-7
<PAGE> 117
PAXSON COMMUNICATIONS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Supplemental disclosures of cash flow
information:
Cash paid for interest......................... $ 4,765,800 $ 2,321,400 $ 1,129,331
=========== =========== ===========
Cash paid for income taxes..................... -- -- --
=========== =========== ===========
Non-cash operating and financing activities:
Issuance of common stock in connection with the
merger with ANG............................. $ 3,786,377 -- --
=========== =========== ===========
Dividends on redeemable preferred stock........ $ 2,216,137 $ 97,808 --
=========== =========== ===========
Accretion on redeemable securities............. $ 1,169,319 $ 53,559 --
=========== =========== ===========
Issuance of Series B preferred stock........... $ 1,248,209 -- --
=========== =========== ===========
Trade revenue.................................. $ 2,619,245 $ 1,001,317 $ 751,433
=========== =========== ===========
Trade expense.................................. $ 2,426,118 $ 1,029,105 $ 544,583
=========== =========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are
an integral part of the consolidated financial statements.
F-8
<PAGE> 118
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Presentation
Paxson Communications Corp. (the "Company"), a Delaware corporation, was
organized in December 1993 for the purpose of owning and operating radio and
television broadcasting stations and networks. The radio broadcasting activities
were previously operated by Paxson Enterprises, Inc. and related Paxson
Affiliates from the beginning of 1991 (all under common control of Mr. Lowell W.
Paxson, collectively referred to herein as "Enterprises"). On December 15, 1993,
Enterprises reorganized and consolidated the radio broadcasting activities
within the Company in exchange for 1,200 shares of Company common stock. The
Company accounted for the reorganization and consolidation in a manner similar
to the pooling of interests accounting method as the transactions took place
within entities under common control. Accordingly, all financial data, prior to
December 15, 1993, have been consolidated to include the operating results of
Enterprises' radio broadcasting stations, and the undistributed deficit prior to
the reorganization has been reclassified to additional paid-in capital.
On April 14, 1994, the Company acquired 68.1% of the common voting stock of
The American Network Group, Inc. ("ANG"), a publicly traded company, for $2.5
million. As a result, the Company has consolidated the financial results of ANG
since April 14, 1994. On November 4, 1994, a majority of the non-affiliated ANG
stockholders approved a merger, whereby ANG merged into the Company and,
accordingly, the holders of ANG common stock received the Company's Class A
common stock in exchange for ANG common stock outstanding. Additionally, upon
commencement of the merger, the Company shares exchanged for the ANG shares,
which were previously publicly traded, were listed on the NASDAQ Small-Cap
Exchange. These publicly traded shares represent approximately 3% of the
Company's Class A common shares outstanding and less than 1% of the Company's
voting power.
In connection with the merger with ANG, the Company amended its capital
structure to provide two classes of common voting stock, Class A common stock
and Class B common stock. Upon consummation of the recapitalization, the
Company's unclassified common stock outstanding was converted into 15,790,974
shares of Class A common stock and 5,263,658 shares of Class B common stock. The
pro forma effect of this conversion on the related Company common shares has
been included in the Company's balance sheet assuming the recapitalization
occurred at December 31, 1993. The pro forma net loss per share data has been
presented on the Company's statement of operations based on the weighted average
common shares outstanding after giving effect to the recapitalization.
On December 22, 1994, the Company amended its capital structure to
designate its preferred stock as 1,000,000 shares including: Senior preferred
stock -- 15% Cumulative Compounding Redeemable Stock; Series B preferred
stock -- 15% Cumulative Compounding Redeemable Stock, and Junior preferred stock
- -12% Cumulative Compounding Redeemable Stock and its common stock as 192,500,000
shares including: Class A common stock, one vote per share, 150,000,000 shares
authorized (increased from 45,000,000 shares); Class B common stock, ten votes
per share, 30,000,000 shares authorized (increased from 7,000,000 shares); and
Class C common stock, non-voting, 12,500,000 shares authorized. Additionally,
the Company announced a stock dividend for its common stock of an additional
one-half share for each common share outstanding for holders of record on
January 1, 1995. Accordingly, all Company common stock data has been
retroactively restated for the effects of the stock dividend for all periods
presented.
F-9
<PAGE> 119
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
Operations
At December 31, 1994, the Company owns and operates fifteen radio stations,
seven radio networks and two television stations and operates (under time
brokerage agreements) one radio station and three television stations located
primarily in the Southeastern United States as follows:
<TABLE>
<CAPTION>
RADIO HOLDINGS:
RADIO MARKET STATION FORMAT OWNED SINCE
- --------------------- --------------------- ------------------------------- --------------
<S> <C> <C> <C>
Miami, FL WLVE-FM New Adult Jazz 1993
WZTA-FM Classic Rock 1992
WINZ-AM News and Sports 1992
Tampa, FL WHPT-FM Rock/Adult Contemporary 1991
WHNZ-AM News and Sports 1991
Orlando, FL WMGF-FM Soft Adult Contemporary 1993
WJRR-FM Album Oriented Rock 1993
WWNZ-AM News 1992
WWZN-AM Sports 1994
Jacksonville, FL WROO-FM Country 1991
WAIA-FM Classic Rock 1993
WNZS-AM Sports 1993
WZNZ-AM News 1993
Cookeville, TN WGSQ-FM Country 1994
WPTN-AM News/Talk 1994
</TABLE>
<TABLE>
<CAPTION>
RADIO NETWORKS:
MARKET NETWORK AFFILIATION OWNED SINCE
- --------------------- --------------------- ------------------------------- --------------
<S> <C> <C> <C>
Florida Florida Radio -- 1993
Florida Sports University of Florida 1994
Tennessee Tennessee Radio -- 1994
South Carolina South Carolina Radio -- 1994
Pennsylvania Penn State Sports Pennsylvania State 1994
University
Virginia Virginia Sports Virginia Polytechnic Institute 1994
Georgia Georgia Sports University of Georgia 1994
</TABLE>
<TABLE>
<CAPTION>
TELEVISION HOLDINGS:
TELEVISION MARKET STATION AFFILIATION OWNED SINCE
- --------------------- --------------------- ------------------------------- --------------
<S> <C> <C> <C>
West Palm Beach, FL WPBF-TV ABC 1994
Atlanta, GA WTLK-TV Independent 1994
</TABLE>
<TABLE>
<CAPTION>
TIME BROKERAGE RADIO STATION:
RADIO MARKET STATION FORMAT BROKERED SINCE
- --------------------- --------------------- ------------------------------- --------------
<S> <C> <C> <C>
Tampa, FL WNZE-AM Sports 1994
</TABLE>
<TABLE>
<CAPTION>
TIME BROKERAGE TELEVISION STATION:
TELEVISION MARKET STATION AFFILIATION BROKERED SINCE
- --------------------- --------------------- ------------------------------- --------------
<S> <C> <C> <C>
Miami, FL WCTD-TV Independent 1994
Tampa, FL WFCT-TV Independent 1994
Orlando, FL WIRB-TV Independent 1994
</TABLE>
F-10
<PAGE> 120
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
Principles of Consolidation
The consolidated financial statements include accounts of the Company and
its subsidiaries. All intercompany balances and transactions have been
eliminated.
Cash and Cash Equivalents
Cash and cash equivalents are highly liquid investments with original
maturities of three months or less.
Property and Equipment
Purchases of property and equipment, including additions and improvements
and expenditures for repairs and maintenance that significantly add to
productivity or extend the economic lives of the assets, are capitalized at cost
and depreciated on a straight-line basis over their estimated useful lives as
follows:
<TABLE>
<S> <C>
Broadcasting towers and equipment............................. 6-13 years
Office furniture and equipment................................ 6-10 years
Buildings and building improvements........................... 40 years
Leasehold improvements........................................ Term of lease
Vehicles and other............................................ 5 years
</TABLE>
Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred. The Company periodically assesses its property and
equipment and other long term assets for impairment.
Intangible Assets
Intangible assets are stated at cost and are being amortized using the
straight-line method over the estimated useful life as follows:
<TABLE>
<S> <C>
FCC licenses.................................................. 25 years
Covenants not to compete...................................... Contract term
Favorable lease and other radio contracts..................... Contract term
Goodwill...................................................... 25 years
</TABLE>
Excess Costs Over Acquired Net Assets
The excess cost over acquired net assets has been capitalized as goodwill
and is being amortized on a straightline basis over 25 years. The Company
periodically reviews the valuation of goodwill for impairment.
Other Assets
Loan origination costs and interest rate cap agreements are stated at cost
and are amortized over the life of the loan or agreement using the effective
interest method. Interest rate cap agreements are amortized to interest expense.
Escrow funds represent funds held in escrow on acquisitions pending FCC
approval. Other assets are stated at cost.
Program Rights
The Company obtains licenses for program rights which allow the Company to
broadcast program material in accordance with contractual agreements. Pursuant
to a licensing agreement, an asset is recorded for the program rights acquired
and a liability is recorded for the obligation incurred, at the gross amount of
the liability. Program rights are amortized on a method that approximates the
straight-line basis over the related term. Program rights which will not be
aired are charged to expense. Current program rights represent
F-11
<PAGE> 121
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
programs which will be amortized during the next year; current liabilities
represent program rights which will be paid within the next year under
contractual arrangements.
Minority Interest
Minority interest represents the third party limited partners' interest in
the radio broadcasting stations located in Cookeville, Tennessee and minority
shareholders' interest in a start-up travel agency.
Redeemable Preferred Stock -- Senior, Series B & Junior and Redeemable
Common Stock Warrants
The differences between the fair value of the redeemable preferred stock
(Senior, Series B and Junior) at their date of issue and their redemption values
are being accreted using the effective interest method. The differences between
the fair value of the redeemable common stock warrants (Class A and B) at their
date of issue and their redemption values are being accreted on a straight line
method.
Stock Subscription Notes Receivable
In conjunction with the merger with ANG, the Company acquired and reissued
stock subscription notes receivable in exchange for shares of the Company Class
A common stock.
Revenue Recognition
Revenue is recognized as advertising air time is broadcast.
Trade and Barter Agreements
The Company enters into trade and barter agreements which give rise to
sales of advertising air time in exchange for products, services and
programming. Sales from trade and barter agreements are recognized at the fair
market value of products, services or programs received as the related
advertising air time is broadcast. Products, services and programs received are
expensed when used or when programs are broadcast. If the Company uses trade
products or services before advertising air time is provided, a trade liability
is recognized.
Time Brokerage Agreements
The Company operates certain stations under time brokerage agreements
("TBA's"). Under TBA's, the stations' operating revenues and expenses are
controlled by the Company and, accordingly, are reflected in the Company's
financial statements over the term of the TBA. A monthly time brokerage fee is
paid to the licensees of these stations.
Income Taxes
Provisions are made to record deferred income taxes in recognition of items
reported differently for financial reporting purposes than for federal and state
income tax purposes. The Company records deferred income taxes using the
liability method in accordance with Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes".
Prior to the reorganization and consolidation on December 15, 1993,
Enterprises operated in the form of partnerships and S corporations for federal
and state income tax purposes. Therefore, all income and loss for that period
was taxed at the partner and stockholder level and no provision for income taxes
was recorded.
The Company and its subsidiaries have filed consolidated tax returns for
all periods subsequent to December 15, 1993.
F-12
<PAGE> 122
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
A pro forma provision (benefit) for income taxes to reflect the effect on
the Statement of Operations had Enterprises filed a consolidated income tax
return for all periods, prior to the aforementioned reorganization and
consolidation on December 15, 1993, is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-----------------------------
1993 1992
----------- -----------
<S> <C> <C>
Tax benefit for net operating loss.......................... $(3,159,146) $(2,940,799)
Valuation allowance for net operating loss carryforward..... 3,159,146 2,940,799
----------- -----------
Provision for income taxes.................................. $ 0 $ 0
========== ==========
</TABLE>
Change in Accounting Principle
In 1992, depreciation was computed on all property and equipment using the
straight line method. The straight line method was adopted to recognize
depreciation expense in accordance with the estimated use of depreciable assets
over their service lives. In 1991, depreciation amounts were computed using the
declining balance method. As a result of this change, net loss before the
cumulative effect of a change in accounting principle increased by approximately
$669,000 for the year ended December 31, 1992. The cumulative effect on the
prior year, 1991, of the change in depreciation method was $109,540.
F-13
<PAGE> 123
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
2. ACQUISITIONS AND DISPOSITIONS:
Acquisitions
In 1994 and 1993, the Company purchased the assets of the following radio
broadcasting stations, radio networks and television broadcasting stations.
<TABLE>
<CAPTION>
ACQUISITION/TBS
DATE STATION/NETWORK MARKET ACQUISITION PRICE
- --------------- -------------------------- -------------------- -----------------
<S> <C> <C> <C>
December 1994 WGTO-AM(1) Orlando, FL $ 1,550,000
December 1994 WIRB-TV* Orlando, FL *
August 1994 WNZE-AM(2) Tampa, FL $ 1,100,000
August 1994 WFCT-TV* Tampa, FL $ 1,120,000
July 1994 WPBF-TV West Palm Beach, FL $32,500,000
July 1994 WTLK-TV*** Atlanta, GA $ 9,500,000
April 1994 WGSQ-FM Cookeville, TN **
April 1994 WPTN-AM Cookeville, TN **
April 1994 Florida Sports Network Florida **
April 1994 Tennessee Radio Network Tennessee **
South Carolina Radio
April 1994 Network South Carolina **
April 1994 Penn State Sports Network Pennsylvania **
April 1994 Virginia Sports Network Virginia **
April 1994 Georgia Sports Network Georgia **
April 1994 WCTD-TV* Miami, FL $ 3,300,000
May 1993 WMGF-FM*** Orlando, FL $ 6,250,000
May 1993 WJRR-FM*** Orlando, FL $ 6,700,000
May 1993 WWZN-AM***(3) Orlando, FL $ 250,000
May 1993 WA1A-FM*** Jacksonville, FL $ 2,000,000
May 1993 WZNZ-AM*** Jacksonville, FL $ 500,000
May 1993 WNZS-AM Jacksonville, FL $ 450,000
March 1993 WLVE-FM Miami, FL $14,950,000
March 1993 Florida Radio Network Florida $ 1,100,000
</TABLE>
- ---------------
(1) Renamed WWZN-AM by the Company in December 1994.
(2) Acquisition closed in February 1995.
(3) Sold by the Company in November 1994.
* The Company operates under a time brokerage agreement and does not own the
FCC licenses.
** Acquired in conjunction with the merger with ANG (Note 1).
*** Previously operated under a time brokerage agreement.
F-14
<PAGE> 124
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
Dispositions
In 1994 and 1993, the Company disposed of the assets of the following radio
broadcasting stations.
<TABLE>
<CAPTION>
DISPOSITION DISPOSITION
DATE STATION MARKET PRICE GAIN
- -------------- -------- ------------ ----------- ---------
<S> <C> <C> <C> <C>
November 1994 WWZN-AM Orlando, FL $ 300,000 $ 28,105
March 1993 WWNZ-FM Orlando, FL $ 5,010,000 $ 427,397
</TABLE>
Pro Forma Financial Information (unaudited)
The following pro forma financial information represents the unaudited pro
forma results of operations as if the aforementioned acquisitions had been
completed at the beginning of 1993 and 1994, after giving effect to certain
adjustments, including increased depreciation and amortization of property and
equipment and intangible assets and interest expense for acquisition debt. These
pro forma results have been prepared for comparative purposes only and do not
purport to be indicative of the results of operations which would have been
achieved had these acquisitions been completed as of these dates, nor are the
results indicative of the Company's future results of operations.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER
31,
------------------------------
1993
------------
1994 (UNAUDITED)
-----------
(UNAUDITED)
<S> <C> <C>
Revenues............................................... $71,013,521 $ 56,199,603
----------- ------------
Income (loss) from operations.......................... $(2,733,637) $ (8,892,846)
----------- ------------
Net loss attributable to common stock and common stock
equivalents.......................................... $(8,649,191) $(21,812,057)
----------- ------------
Net loss per share attributable to common stock and
common stock equivalents............................. $ (0.26) $ (0.69)
----------- ------------
Pro forma weighted average shares outstanding.......... 33,430,116 31,581,948
========== ===========
</TABLE>
3. RELATED PARTIES:
During 1994 and 1993, the Company entered into certain operating and
financing transactions with related parties as described below.
The Christian Network
The Company has entered into several agreements with The Christian Network,
Inc. ("CNI"), a not-for-profit ministry founded by Mr. Paxson.
In December 1994, CNI entered into a time brokerage agreement with the
owners of a television broadcasting station, WIRB-TV, Melbourne, Florida. CNI
assigned its rights and obligations under the time brokerage agreement to the
Company. Additionally, CNI entered into an asset purchase agreement in which CNI
would purchase substantially all the tangible, real and intangible assets of the
station for $3,800,000. The Company has guaranteed CNI's obligations under the
asset purchase agreement. The transaction will take place upon FCC approval.
In April 1994, CNI purchased WCTD-TV, an independent television
broadcasting station in Miami, Florida, for $4,400,000. The Company acquired
certain of the WCTD-TV broadcasting assets for $3,300,000, as part of the CNI
acquisition, as well as an option to acquire the station from CNI. The option is
exercisable over a five year period upon payment to CNI of $100,000 plus the
remaining principal on its third party
F-15
<PAGE> 125
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
$1,100,000 note payable. The note amortizes monthly over a five year period
concurrent with the option agreement. The Company leases the broadcasting assets
it acquired to CNI for operation at WCTD-TV under a five year lease agreement
for approximately $5,000 per month. Additionally, the Company purchases up to
twelve hours per day of broadcasting time on WCTD-TV from CNI under a five-year
time brokerage agreement for approximately $35,000 per month.
In June 1994, the Company and CNI agreed to assist Bradenton Broadcast
Television Company Ltd., ("BBTC") in the construction and operation of an
independent television broadcasting station WFCT-TV, in Bradenton, Florida
serving the Tampa Bay, Florida market. CNI leases the Company related studio
facilities under a five year agreement for approximately $150,000 per annum. The
Company has an option to purchase the station license for approximately
$191,000. The Company leases certain broadcasting assets to BBTC for fees of
$60,000 per annum. Additionally, the Company entered into a partial time
brokerage agreement with BBTC and CNI, whereby the Company purchases up to
twelve hours per day of broadcasting time from BBTC for a monthly fee of
approximately $3,500. The station began broadcasting on August 1, 1994.
Todd Communications
Mr. Paxson contributed a demand note receivable with Todd Communications,
Inc., a related party owner of WFSJ-FM (St. Augustine, Florida), formerly
WSTF-FM, in the amount of $1,750,000. The note receivable accrues interest at
the short-term annual Applicable Federal Rate prescribed by the Internal Revenue
Service, with the balance of principal and interest due upon demand. Interest
income received related to the note aggregated $70,900 for the year ended
December 31, 1994. The Company performs limited sales support and administrative
functions for Todd Communications, Inc. which is billed for efforts expended.
Marketing Magic
During 1994, the Company formed a travel agency, The World Travelers
Network, with Marketing Magic. During 1994, Marketing Magic brokered advertising
space and time and other goods and services to the Company through both trade
and cash transactions of approximately $1,500,000.
4. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1994 1993
----------- -----------
<S> <C> <C>
Broadcasting towers and equipment................. $39,445,071 $15,745,386
Office furniture and equipment.................... 5,075,412 3,727,183
Buildings and leasehold improvements.............. 4,302,476 3,064,918
Land and land improvements........................ 3,142,532 2,238,257
Vehicles and other................................ 3,877,851 1,233,168
----------- -----------
55,843,342 26,008,912
Accumulated depreciation.......................... (10,492,912) (5,108,199)
----------- -----------
Property and equipment, net....................... $45,350,430 $20,900,713
========== ==========
</TABLE>
Depreciation expense aggregated $5,433,038, $2,804,157 and $1,979,491 for
the three years ended December 31, 1994.
F-16
<PAGE> 126
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
5. INTANGIBLE ASSETS:
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1994 1993
----------- -----------
<S> <C> <C>
FCC licenses...................................... $42,332,125 $17,262,192
Covenants not to compete.......................... 11,811,375 11,147,875
Favorable lease and other contracts............... 6,514,507 6,111,100
Goodwill.......................................... 7,819,778 58,643
----------- -----------
68,477,785 34,579,810
Accumulated amortization.......................... (15,126,818) (9,216,969)
----------- -----------
Intangible assets, net............................ $53,350,967 $25,362,841
========== ==========
</TABLE>
Amortization expense aggregated $5,940,575, $5,927,744 and $3,866,024 for
the three years ended December 31, 1994.
6. OTHER ASSETS:
Other assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1994 1993
----------- ----------
<S> <C> <C>
Loan origination costs............................. $ 7,739,288 $3,730,836
Escrow funds for station acquisitions.............. 4,291,241 --
Interest rate caps, net............................ 983,803 290,219
Deposits on building and equipment................. 642,890 --
Organization costs................................. 407,672 331,036
Other assets....................................... 724,835 80,651
----------- ----------
14,789,729 4,432,742
Accumulated amortization........................... (1,711,383) (681,489)
----------- ----------
Other assets, net.................................. $13,078,346 $3,751,253
========== =========
</TABLE>
Amortization expense aggregated $1,029,915, $618,732 and $131,786 for the
three years ended December 31, 1994.
7. PROGRAM RIGHTS:
Program rights relate to the broadcast operations of WPBF-TV, purchased in
July 1994, and consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Program rights.................................. $ 3,045,642
Accumulated amortization........................ (820,754)
------------
2,224,888
Less current program rights..................... (1,980,000)
------------
$ 244,888
==========
</TABLE>
F-17
<PAGE> 127
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
Program rights amortization expense aggregated $820,754 for the year ended
December 31, 1994.
8. PROGRAM RIGHTS PAYABLE:
Program rights payable represent the obligation incurred to secure the
right to broadcast program material in accordance with a contractual agreement.
Future minimum annual payments under these contractual agreements as of December
31, 1994, are as follows:
<TABLE>
<S> <C>
1995............................................. $ 986,562
1996............................................. 431,008
1997............................................. 131,762
----------
$1,549,332
=========
</TABLE>
9. LONG-TERM DEBT:
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1994 1993
----------- -----------
<S> <C> <C>
Revolving credit loans, total commitment of $150,000,000,
interest at LIBOR plus 2.75% (averaged 8.06% at December
31, 1994) payable quarterly, principal payments due
quarterly from December 31, 1995 to June 30, 2001......... $82,000,000 $32,000,000
Note payable, $1,100,000 principal, interest at 8.5% payable
monthly, principal payments of $100,000 due monthly
through April 1994........................................ -- 400,000
Mortgage note payable, $211,000 principal, interest at
9.75%, principal and interest payment of $1,813 due
monthly from January 1991 to December 1998, remaining
balance due December 1998................................. 206,902 208,402
Mortgage note payable, $200,055 principal, interest at 10%,
principal and interest payment of $3,000 due monthly from
January 1995 to April 1999, remaining balance due April
1999...................................................... 200,055 --
----------- -----------
82,406,957 32,608,402
Less current portion........................................ (6,393,415) (401,632)
----------- -----------
$76,013,542 $32,206,770
========== ==========
</TABLE>
On March 31, 1993, the Company executed an agreement with certain foreign
and domestic banks for revolving credit loans totalling $32,000,000. The
agreement was amended in December 1993 and in July 1994 to increase the facility
to include term and revolving loan commitments to $40,000,000 and $150,000,000,
respectively. Interest on the facility accrues at an initial rate of LIBOR plus
2.75%, decreasing to LIBOR plus 1.75% based on operating cash flows achieved
(interest at December 31, 1994 accrued at LIBOR plus 2.75%). Principal payments
are due from December 1995 to June 2001. These term and revolving credit loans
are secured by certain radio and television broadcasting assets and subsidiary
guarantees. Additionally, the credit agreement limits the distribution of cash
dividends from the radio and television broadcasting subsidiaries to other
Company entities.
The term and revolving credit agreement contains a number of covenants (all
of which the Company was in compliance with at December 31, 1994) that, among
other things, require the Company to maintain interest rate cap protection for
75% of the loan balance, maintain specified financial ratios and place certain
limitations on asset sales and purchases, incurrences of additional indebtedness
and liens related to leases,
F-18
<PAGE> 128
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
changes in business or capital structure, and transactions with affiliates. The
credit agreement requires a maximum commitment fee of 0.375% per annum on the
daily average amount of available revolving credit commitments.
In December 1994, in conjunction with the purchase of WWZN-AM, Orlando,
Florida, formerly WGTO-AM, the Company assumed a mortgage of $200,055, with
monthly payments due until April 1999.
In March 1993, the Company extinguished a $21,300,000 credit agreement.
Loan origination costs of $457,147 associated with the debt have been retired
and reflected as an extraordinary item.
Aggregate maturities of long-term debt at December 31, 1994 for the next
five years are as follows:
<TABLE>
<S> <C>
1995............................................ $ 6,393,415
1996............................................ 10,645,339
1997............................................ 21,772,464
1998............................................ 24,973,954
1999............................................ 18,621,785
------------
$ 82,406,957
==========
</TABLE>
10. INCOME TAXES:
As a result of the reorganization and consolidation on December 15, 1993,
the tax status of the Company changed to a taxable entity requiring the
cumulative change in tax status to be computed as of that date and be reflected
in the current year tax provision for continuing operations reflecting the
cumulative differences between the tax basis and book basis of assets and
liabilities.
Significant components of the (benefit) provision for income taxes are as
follows:
<TABLE>
<CAPTION>
FOR THE YEARS
ENDED DECEMBER 31,
--------------------------
1994 1993
----------- ----------
<S> <C> <C>
Current tax (benefit) expense
Federal............................................... -- --
State................................................. -- --
----------- ----------
Total current.................................... -- --
----------- ----------
Deferred tax (benefit) expense
Federal............................................... $(1,503,200) $2,674,000
State................................................. (176,800) 286,000
----------- ----------
Total deferred............................................. (1,680,000) 2,960,000
----------- ----------
Total (benefit) provision.................................. $(1,680,000) $2,960,000
========== =========
</TABLE>
F-19
<PAGE> 129
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
Significant components of the Company's deferred tax liabilities (assets)
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1994 1993
----------- ----------
<S> <C> <C>
Deferred taxes -- current:
Assets
Doubtful accounts allowance and other......................... $ (194,940) $ (159,173)
Net operating loss carryforward............................... -- (235,187)
Liabilities
Unrecognized cash to accrual adjustments...................... -- 2,334,364
----------- ----------
(194,940) 1,940,004
Deferred tax asset valuation allowance for net operating loss
carryforwards................................................ -- 235,187
----------- ----------
Deferred tax (asset) liability -- current.......................... (194,940) 2,175,191
----------- ----------
Deferred taxes -- noncurrent:
Assets
Net operating loss carryforward.......................... (4,126,507) --
Liability
Tax over book depreciation and amortization................... 1,474,940 784,809
Deferred tax asset valuation allowance for net
operating loss carryforwards................................ 4,126,507 --
----------- ----------
Deferred tax liability -- non-current......................... 1,474,940 784,809
----------- ----------
$ 1,280,000 $2,960,000
========== =========
</TABLE>
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. A valuation allowance
has been provided for the net operating loss carryforwards. A portion of the net
operating losses were acquired in the acquisition of ANG. Future recognition of
the benefit from these losses will be applied first to reduce goodwill related
to the acquisition, then to reduce other non-current intangible assets related
to the acquisition and then to reduce income tax expense.
The reconciliation of income tax benefit attributable to continuing
operations, computed at U.S. Federal Statutory tax rates, to provision for
income taxes is:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------
1994 1993
----------- -----------
<S> <C> <C>
Tax benefit at U.S. Federal Statutory tax rates................... $(2,190,305) $(2,717,230)
State income tax benefit, net of federal benefit.................. (257,682) (290,104)
Tax benefits attributable to losses recognized for book purposes
in period that Enterprises operated as non-taxable entities..... -- 3,397,783
Deferred taxes attributable to income recognized on accrual basis
for book purposes, in period that Enterprises operated as
non-taxable entities, but recognized for tax purposes after
reorganization.................................................. -- 2,334,364
Non-deductible items.............................................. 83,000 --
Valuation allowance for net operating loss carryforwards.......... 684,987 235,187
----------- -----------
(Benefit) provision for income taxes.............................. $(1,680,000) $ 2,960,000
========== ==========
</TABLE>
F-20
<PAGE> 130
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
The following table summarizes the Company's total (benefit) provision for
income taxes:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1994 1993
----------- ----------
<S> <C> <C>
Tax (benefit) provision before extraordinary item.................. $(1,680,000) $2,960,000
Extraordinary item................................................. -- --
----------- ----------
$(1,680,000) $2,960,000
========== =========
</TABLE>
Extraordinary item in 1993 relates to debt retirements in the period before
the Company reorganized on December 15, 1993 which are taxable at the
stockholder level and, accordingly, are not tax effected.
The Company has net operating loss carryforwards for income tax purposes of
approximately $10.8 million at December 31, 1994. Net operating losses expire
through 2009. A portion of the net operating losses relate to ANG and are
limited to annual utilization as a result of the change in ownership.
11. EMPLOYEE BENEFIT PLANS:
Savings and Profit Sharing Plan
In October 1991, the Company established retirement savings and cafeteria
plans pursuant to Sections 401(k) and 125 of the Internal Revenue Code which
cover substantially all of the Company's employees. Employer contributions to
the retirement savings plan are discretionary. The Company elected not to make
retirement savings contributions for the three plan years ended December 31,
1994. Under the cafeteria plan, employees may elect to participate in health,
dental, life and disability insurance benefit plans funded through employee
payroll deductions.
Stock Incentive Plan
On November 4, 1994, the Company instituted a stock incentive plan to
provide incentives to officers and employees through the issuance of options and
restricted stock. The options may be either in the form of incentive or
non-qualified stock options. The issuance, exercise price, exercise dates and
number of options are determined at the discretion of the Company's compensation
committee. The aggregate number of Company Class A common shares available for
issuance is 2,143,575 shares (after giving effect for the January 1, 1995 stock
dividend). At December 31, 1994, no options had been issued under this plan. On
February 13, 1995, options were authorized to be granted under the stock
incentive plan which would allow for the purchase of Class A common shares at an
exercise price of $3.42 per share. Subsequent to grant, such options may be
exercised by the officers or employees upon vesting.
12. REDEEMABLE PREFERRED STOCK:
Redeemable Senior Preferred Stock
Redeemable Senior preferred stock consists of 2,000 15% cumulative
compounding shares, par value of $0.001 per share, stated value of $7,000 per
share, issued with 225 detachable redeemable common stock purchase warrants
(exercisable into 3,116,865 shares of Company Class A common stock and 1,038,955
shares of Company Class B common stock after giving effect to the Company's
recapitalization and stock dividends, at $0.01 per share), issued on December
15, 1993 in exchange for $14,000,000. The holder of preferred stock is entitled
to preferential cumulative dividends at a rate of 15% per share, per annum,
payable quarterly commencing on December 31, 1993. These shares have
preferential liquidation rights and are entitled to elect 25% of the Company's
Board of Directors.
F-21
<PAGE> 131
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
The Senior preferred shares are redeemable, at the option of the holder, on
or after the seventh anniversary of the issue date (December 15, 2000) at $7,000
per share plus all accrued and unpaid dividends to date. The shares may also be
redeemed, at the option of the Company, on or after the fourth anniversary of
the issue date (December 15, 1997) at $7,000 per share plus all accrued and
unpaid dividends to date. The shares also provide redemption features in the
event of certain changes in ownership control of the Company, bankruptcy, and
twelve month dividend arrearages after the fifth anniversary of issue date
(December 15, 1998).
Cumulative preferred dividends in arrears aggregated $2,197,808 and $97,808
at December 31, 1994 and 1993, respectively.
Redeemable Series B Preferred Stock
Redeemable Series B preferred stock consists of 714.286 15% Cumulative
Compounding shares, par value of $0.001 per share, stated value of $7,000 per
share, issued on December 22, 1994 as a result of the call of 94.6223 detachable
redeemable common stock purchase warrants into 1,310,779 shares of Class A
common stock and 436,926 shares of Class B common stock which were then
surrendered for Series B preferred stock. The holder of Series B preferred stock
is entitled to cumulative dividends at a rate of 15% per share, per annum,
payable quarterly commencing on December 31, 1994. Series B preferred stock
ranks prior to all classes of Junior preferred stock and junior to Senior
preferred stock.
The Series B preferred shares are redeemable, at the option of the holder,
on or after December 15, 2000 at $7,000 per share plus all accrued and unpaid
dividends to date. The shares may also be redeemed at the option of the Company,
on or after December 15, 1997 at $7,000 per share plus all accrued and unpaid
dividends to date.
Cumulative Series B preferred dividends in arrears aggregated $18,493 at
December 31, 1994.
Redeemable Junior Preferred Stock
Redeemable Junior preferred stock consists of 33,000 cumulative compounding
shares, par value of $0.001 per share, stated value of $1,000 per share, issued
with 3,235,753 Class C common stock warrants, issued on December 22, 1994 in
exchange for $33,000,000. The holder of Junior preferred stock is entitled to
cumulative dividends at a rate of 12% per annum prior to the seventh anniversary
of the issue date (December 22, 2001), 13% per annum from the seventh through
the eighth anniversary (December 22, 2002), and 14% per annum after the eighth
anniversary, payable semi-annually commencing on December 31, 1999.
The Junior preferred shares are redeemable, at the option of the Company,
at $1,030 plus unpaid, deferred, and accrued dividends prior to the third
anniversary (December 22, 1997), $1,020 plus unpaid, deferred, and accrued
dividends after the third and prior to the fourth anniversary (December 22,
1998), and $1,000 plus unpaid, deferred, and accrued dividends per share on or
after the fourth anniversary. A mandatory redemption is scheduled on the ninth
anniversary (December 22, 2003).
Cumulative Junior preferred dividends in arrears aggregated $97,644 at
December 31, 1994.
13. COMMON STOCK WARRANTS:
Redeemable Common Stock Warrants
In connection with the 1993 redeemable senior Preferred Stock issuance, the
Company issued 225 detachable redeemable common stock purchase warrants
entitling the holder to purchase one common share per warrant at an exercise
price of $0.01 per share. These purchase warrants represent an aggregate
purchase
F-22
<PAGE> 132
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
interest of 15% of the Company which must be maintained in the event of
subsequent changes in the Company's capital structure.
The stock purchase warrants include a put provision requiring the Company
to repurchase any warrants, at the option of the holder, at the fair market
value per share on or after the seventh anniversary of issue date (December 15,
2000).
On December 22, 1994, 94.6223 of the 120 callable warrants were called by
the Company into 1,310,779 shares of Class A common stock and 436,926 shares of
Class B common stock and were then surrendered for the Redeemable Series B
preferred stock. The remaining 130.3777 redeemable common stock purchase
warrants entitle the holders to purchase 2,709,129 Class A common shares and
903,044 Class B common shares (after giving effect to the stock dividend), or
approximately 9% of all common shares.
Class C Common Stock Warrants
In connection with the Redeemable Junior Preferred Stock issuance on
December 22, 1994, the Company issued 4,853,630 detachable Class C common stock
purchase warrants (after giving effect to the stock dividend), entitling the
holder to purchase one Class C common share per warrant at an exercise price of
$0.001 per share. These purchase warrants represent an aggregate purchase
interest of 10% of all currently outstanding common shares.
14. COMMON STOCK:
On December 15, 1993, in connection with the reorganization and
consolidation of its radio broadcasting activities, the Company authorized 1,500
shares and issued 1,200 shares of unclassified common stock.
In November 1994, in connection with the merger with ANG, the Company
amended its capital structure to provide two classes of common voting stock,
Class A common stock, and Class B common stock. Upon consummation of the
recapitalization, the Company's unclassified common stock outstanding was
converted into 15,790,974 shares of Class A common stock and 5,263,658 shares of
Class B common stock. Upon consummation of the merger, the holders of ANG common
stock received the Company's Class A common stock in exchange for ANG common
stock outstanding. Additionally, the Company's Class A common shares exchanged
for the ANG shares, which were previously publicly traded, were listed on the
NASDAQ Small-Cap Exchange. These publicly traded shares represent approximately
3% of the Company's Class A common shares outstanding and less than 1% of the
Company's voting power.
On December 22, 1994, the Company amended its capital structure to
designate a third class of non-voting common stock and amended authorized shares
of: Class A common stock, one vote per share, 150,000,000 shares authorized
(increased from 45,000,000 shares); Class B common stock, ten votes per share,
35,000,000 shares authorized (increased from 7,000,000 shares); and Class C
common stock, non-voting, 12,500,000 shares authorized. Additionally, the
Company announced a stock dividend for its common stock of an additional
one-half share for each common share outstanding for holders of record on
January 1, 1995.
Voting rights allow the voting common stockholders to elect up to 75% of
the Company's Board of Directors, but do not allow the common stockholders to
change the rights and privileges of the preferred stockholders without a
majority affirmative vote of the preferred stockholders. Class A common stock
and Class B common stock will vote as a single class in all matters submitted to
a vote of the stockholders with each share of Class A common stock entitled to
one vote and each share of Class B common stock entitled to ten votes. Each
share of Class B common stock is convertible, at the option of its holder, into
one share of Class A common stock at any time.
F-23
<PAGE> 133
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
15. COMMITMENTS AND CONTINGENCIES:
The Company incurred total expenses of $2,405,745, for the year ended
December 31, 1994, under operating leases for radio broadcasting facilities and
equipment and employment agreements. Future minimum annual payments under these
non-cancelable operating leases and agreements, as of December 31, 1994, are as
follows:
<TABLE>
<S> <C>
1995.......................................... $ 2,413,078
1996.......................................... 2,054,570
1997.......................................... 1,938,186
1998.......................................... 1,696,972
1999.......................................... 1,264,769
Thereafter.................................... 1,356,414
-----------
$10,723,989
==========
</TABLE>
The Company has entered into commitments for radio broadcast rights related
to sporting events that are not currently available for broadcast and are
therefore not included in the financial statements. The Company incurred total
expenses of $2,379,516 and had total commitments of approximately $5,589,300 as
of and for the year ended December 31, 1994.
On December 31, 1992, the Company entered into an agreement to purchase the
assets of WEZY-FM, a radio broadcasting station in Lakeland, Florida. The
purchase was contingent upon obtaining land for a new tower/transmitter site and
regulatory approval for its construction. In January 1995, the Company received
all required approvals for a tower site and will close and begin construction in
the first half of 1995. The previous owner will operate the station under a time
brokerage agreement until the tower is complete. The total purchase price is
$4,750,000.
16. SUBSEQUENT EVENTS:
Purchases:
WTGI-TV, Philadelphia, Pennsylvania
On February 3, 1995, the Company purchased the assets of WTGI-TV, an
independent television broadcasting station in Wilmington, Delaware, serving the
Philadelphia, Pennsylvania market for $10,200,000.
F-24
<PAGE> 134
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
Asset Purchase Agreements
Subsequent to year end, the Company entered into several agreements to
purchase the assets of television and radio broadcasting stations. Applications
to transfer the Federal Communications Commission licenses in connection with
the purchases have been filed. The Company is waiting for approval to close the
following transactions:
<TABLE>
<CAPTION>
PURCHASE
STATION MARKET PRICE
- --------- --------------------------- ------------
<S> <C> <C>
KZKI-TV Los Angeles, CA $ 18,000,000
KLXV-TV San Francisco, CA $ 5,000,000
WTWS-TV Hartford/New Haven, CT(1) $ 2,700,000
Channel
68 Dallas, TX(2) $ 2,000,000
KTFH-TV Houston, TX(3) $ 7,900,000
WGOT-TV Boston, MA $ 3,050,000
WFTL-AM Miami, FL $ 2,000,000
</TABLE>
- ---------------
(1) Approval received, scheduled to close in March 1995.
(2) Station not currently on the air. The Company estimates spending $2,000,000
in build-out costs before broadcasting can begin.
(3) Operated under a time brokerage agreement since March 1, 1995.
Other
In September 1994, the Company entered into an agreement with Whitehead
Media, Inc. ("Whitehead"), in which the Company agreed to loan Whitehead
$17,175,000 to purchase WTVX-TV, West Palm Beach, Florida. Whitehead has signed
an asset purchase agreement for WTVX-TV and has filed an application with the
FCC for transfer of the license. Under the agreement, the Company would operate
WTVX-TV under a time brokerage agreement.
17. SEGMENT DATA:
Since closing the acquisition of WPBF-TV in July 1994, the Company operates
two principal business segments consisting of radio and television. The radio
segment includes fifteen stations for which the Company is the licensee, and one
station operated under a time brokerage agreement, all of which operate in five
different markets. The radio segment also operates seven radio networks. The
television segment includes two stations for which the Company is the licensee
and three stations which are operated under time brokerage agreements; all of
which operate in five different markets. The other segment includes corporate
and ancillary service company activities.
F-25
<PAGE> 135
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
Selected financial information for these segments is presented below:
<TABLE>
<CAPTION>
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
RADIO
Total revenue.......................................... $ 50,323,875 $31,058,472 $16,480,445
Operating expenses, less depreciation and
amortization......................................... 38,919,088 25,012,435 14,746,078
Depreciation and amortization.......................... 9,118,001 9,128,847 5,760,756
------------ ----------- -----------
Income (loss) from operations.......................... $ 2,286,786 $(3,082,810) $(4,026,389)
=========== ========== ==========
Cumulative effect of change in accounting principle.... -- -- $ 105,572
=========== ========== ==========
Total identifiable assets.............................. $ 71,126,358 $61,686,096 $35,193,821
=========== ========== ==========
Capital expenditures................................... $ 2,490,960 $ 1,962,553 $ 429,531
=========== ========== ==========
TELEVISION
Total revenue.......................................... $ 10,844,820 -- --
Operating expenses, less depreciation and
amortization......................................... 8,524,316 -- --
Depreciation and amortization.......................... 2,888,176 -- --
------------ ----------- -----------
Loss from operations................................... $ (567,672) -- --
=========== ========== ==========
Cumulative effect of change in accounting principle.... -- -- --
=========== ========== ==========
Total identifiable assets.............................. $ 55,784,331 -- --
=========== ========== ==========
Capital expenditures................................... $ 3,185,280 -- --
=========== ========== ==========
OTHER
Total revenue.......................................... $ 898,748 $ 1,003,559 $ 581,392
Operating expenses, less depreciation and
amortization......................................... 3,782,548 3,860,193 3,175,610
Depreciation and amortization.......................... 397,351 221,876 216,545
------------ ----------- -----------
Loss from operations................................... $ (3,281,151) $(3,078,420) $(2,810,763)
=========== ========== ==========
Cumulative effect of change in accounting principle.... -- -- $ 3,968
=========== ========== ==========
Total identifiable assets.............................. $ 25,759,692 $ 4,888,512 $ 1,873,263
=========== ========== ==========
Capital expenditures................................... $ 240,272 -- $ 843,857
=========== ========== ==========
CONSOLIDATED
Total revenue.......................................... $ 62,067,443 $32,062,031 $17,061,837
Operating expenses, less depreciation and
amortization......................................... 51,225,952 28,872,628 17,921,688
Depreciation and amortization.......................... 12,403,528 9,350,633 5,977,301
------------ ----------- -----------
Loss from operations................................... $ (1,562,037) $(6,161,230) $(6,837,152)
=========== ========== ==========
Cumulative effect of change in accounting principle.... -- -- $ 109,540
=========== ========== ==========
Total identifiable assets.............................. $152,670,381 $66,574,608 $37,067,084
=========== ========== ==========
Capital expenditures................................... $ 5,916,512 $ 1,962,553 $ 1,273,388
=========== ========== ==========
</TABLE>
F-26
<PAGE> 136
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994 AND 1993
18. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER DECEMBER
MARCH 31, JUNE 30, 30, 31,
1994 QUARTER QUARTER QUARTER QUARTER
- -------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenue......................... $ 9,365,158 $12,148,603 $18,327,456 $22,226,226
Operating expenses, less depreciation
and amortization.................... 8,324,334 10,268,884 14,219,712 18,413,022
Depreciation and amortization......... 2,410,146 2,855,767 3,292,245 3,845,370
----------- ----------- ----------- -----------
Income (loss) from operations......... $(1,369,322) $ (976,048) $ 815,499 $ (32,166)
========== ========== ========== ==========
Net loss before extraordinary item.... $(1,798,625) $ (318,376) $ (672,445) $(1,972,628)
========== ========== ========== ==========
Net loss.............................. $(1,798,625) $ (318,376) $ (672,445) $(1,972,628)
========== ========== ========== ==========
Pro forma per share data (Note 1):
Pro forma net loss before
extraordinary item............... $ (0.06) $ (0.01) $ (0.02) $ (0.06)
Pro forma net loss.................. $ (0.06) $ (0.01) $ (0.02) $ (0.06)
Pro forma weighted average common
shares outstanding.................. 31,581,948 32,506,032 33,430,116 33,430,116
========== ========== ========== ==========
Stock Price:
High................................ -- -- -- $ 16.00*
Low................................. -- -- -- $ 10.17*
1993
- --------------------------------------
Total revenue......................... $ 6,034,575 $ 8,920,029 $ 7,758,618 $ 9,348,809
Operating expenses, less depreciation
and amortization.................... 6,186,466 8,524,197 6,720,123 7,441,842
Depreciation and amortization......... 1,894,865 2,142,004 2,163,065 3,150,699
----------- ----------- ----------- -----------
Loss from operations.................. $(2,046,756) $(1,746,172) $(1,124,570) $(1,243,732)
========== ========== ========== ==========
Net loss before extraordinary item.... $(2,131,761) $(2,406,988) $(1,672,633) $(4,740,471)
========== ========== ========== ==========
Net loss.............................. $(2,131,761) $(2,406,988) $(1,672,633) $(5,197,618)
========== ========== ========== ==========
Pro forma per share data (Note 1):
Pro forma net loss before
extraordinary item............... $ (0.07) $ (0.08) $ (0.05) $ (0.15)
Pro forma net loss.................. $ (0.07) $ (0.08) $ (0.05) $ (0.16)
Pro forma weighted average common
shares outstanding.................. 31,581,948 31,581,948 31,581,948 31,581,948
========== ========== ========== ==========
Stock Price:
High................................ -- -- -- --
Low................................. -- -- -- --
</TABLE>
- ---------------
The Company's common stock is traded on the Nasdaq Stock Market under the
symbol PAXN.
* Stock price after giving effect to the January 1, 1995 stock dividend (Note
1).
F-27
<PAGE> 137
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 8,409,187 $ 21,571,658
Accounts receivable, less allowance for doubtful accounts of
$687,516 and $556,950 respectively......................... 13,011,251 13,569,198
Prepaid expenses and other current assets..................... 1,392,830 1,579,954
Current deferred income taxes................................. 194,940 194,940
Current program rights........................................ 1,243,746 1,980,000
------------ ------------
Total current assets..................................... 24,251,954 38,895,750
Property and equipment, net..................................... 66,647,658 45,350,430
Intangible assets, net.......................................... 81,572,496 53,350,967
Other assets, net............................................... 20,037,439 13,078,346
Related party notes receivable.................................. 2,250,000 1,750,000
Program rights, net............................................. 204,084 244,888
------------ ------------
Total assets............................................. $194,963,631 $152,670,381
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities...................... $ 3,458,161 $ 5,123,691
Current portion of program rights payable..................... 970,316 986,562
Current portion of long-term debt............................. 11,976,975 6,393,415
------------ ------------
Total current liabilities................................ 16,405,452 12,503,668
Program rights payable.......................................... 348,989 562,770
Long-term debt.................................................. 120,300,853 76,013,542
Deferred income taxes........................................... 834,941 1,474,940
Minority interest............................................... -- 1,217,314
Redeemable Cumulative Compounding Senior preferred stock, $0.001
par value; 15% dividend rate per annum, 2,000 shares
authorized, issued and outstanding............................ 15,276,065 14,060,054
Redeemable Class A & B common stock warrants.................... 3,498,274 1,735,979
Redeemable Cumulative Compounding Series B preferred stock,
$0.001 par value; 15% dividend rate per annum, 714.286 shares
authorized, issued and outstanding............................ 1,802,919 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............................ 29,165,660 26,808,053
Class A common stock, $0.001 par value; one vote per share;
150,000,000 shares authorized, 26,137,026 shares issued and
outstanding................................................... 26,137 26,042
Class B common stock, $0.001 par value; ten votes per share,
30,000,000 shares authorized, 8,311,639 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............................. (76,833) (77,666)
Additional paid-in capital...................................... 33,835,759 20,647,647
Deferred option plan compensation............................... (2,584,078) --
Accumulated deficit............................................. (29,217,771) (8,923,897)
Commitments and contingencies
------------ ------------
Total liabilities and stockholders' equity............ $194,963,631 $152,670,381
=========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
F-28
<PAGE> 138
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
----------------------------
1995 1994
------------ -----------
(UNAUDITED)
<S> <C> <C>
Revenue:
Local and national advertising................................. $ 40,454,900 $19,715,590
Retail and other............................................... 2,497,723 996,325
Trade.......................................................... 1,403,725 801,846
------------ -----------
Total revenue.................................................... 44,356,348 21,513,761
Operating expenses:
Direct......................................................... 11,554,850 6,277,662
Programming.................................................... 5,940,066 2,995,697
Sales and promotion............................................ 4,473,186 2,417,421
Technical...................................................... 2,147,289 863,373
General and administrative..................................... 9,989,674 4,801,749
Trade.......................................................... 1,193,843 1,012,316
Time brokerage agreement fees.................................. 549,947 225,000
Sports rights fees............................................. 1,019,355 --
Option plan compensation....................................... 9,404,129 --
Program rights amortization.................................... 777,057 --
Depreciation and amortization.................................. 8,054,256 5,265,913
------------ -----------
Total operating expenses......................................... 55,103,652 23,859,131
------------ -----------
Income (loss) from operations.................................... (10,747,304) (2,345,370)
Other income (expense):
Interest expense, net.......................................... (4,308,646) (1,390,715)
Other income, net.............................................. (13,763) 223,084
------------ -----------
Loss before income tax benefit................................... (15,069,713) (3,513,001)
Income tax benefit............................................... 640,000 1,396,000
------------ -----------
Net loss......................................................... (14,429,713) (2,117,001)
Dividends and accretion on preferred stock and common stock
warrants....................................................... (5,864,161) (1,587,058)
------------ -----------
Net loss attributable to common stock and common stock
equivalents.................................................... $(20,293,874) $(3,704,059)
=========== ==========
Net loss per share............................................... $ (.42) $ (.06)
Dividends and accretion on preferred stock and common stock
warrants per share............................................. (.17) (.05)
------------ -----------
Net loss attributable to common stock and common stock
equivalents per share.......................................... $ (.59) $ (.11)
=========== ==========
Weighted average shares outstanding -- primary
and fully diluted.............................................. 34,401,282 32,506,032
=========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
F-29
<PAGE> 139
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JUNE 30,
------------------------------
1995 1994
------------ -----------
(UNAUDITED)
<S> <C> <C>
Revenue:
Local and national advertising............................... $ 21,971,676 $11,174,281
Retail and other............................................. 1,006,757 559,037
Trade........................................................ 758,212 415,285
------------ -----------
Total revenue.................................................. 23,736,645 12,148,603
Operating expenses:
Direct....................................................... 5,920,695 3,397,770
Programming.................................................. 2,813,262 1,596,419
Sales and promotion.......................................... 2,293,673 1,234,622
Technical.................................................... 1,168,083 479,840
General and administrative................................... 5,331,824 2,818,396
Trade........................................................ 722,302 516,837
Time brokerage agreement fees................................ 310,899 225,000
Sports rights fees........................................... (22,227) --
Option plan compensation..................................... 9,404,129 --
Program rights amortization.................................. 425,222 --
Depreciation and amortization................................ 4,269,627 2,855,767
------------ -----------
Total operating expenses....................................... 32,637,489 13,124,651
------------ -----------
Income (loss) from operations.................................. (8,900,844) (976,048)
Other income (expense):
Interest expense, net........................................ (2,514,487) (782,351)
Other income, net............................................ (81,398) 44,023
------------ -----------
Loss before income tax benefit................................. (11,496,729) (1,714,376)
Income tax benefit............................................. 320,000 1,396,000
------------ -----------
Net loss....................................................... (11,176,729) (318,376)
Dividends and accretion on preferred stock and common stock
warrants..................................................... (3,673,209) (803,254)
------------ -----------
Net loss attributable to common stock and common stock
equivalents.................................................. $(14,849,938) $(1,121,630)
=========== ==========
Net loss per share............................................. $ (.32) $ (.01)
Dividends and accretion on preferred stock and common stock
warrants per share........................................... (.11) (.02)
------------ -----------
Net loss attributable to common stock and common stock
equivalents
per share.................................................... $ (.43) $ (.03)
=========== ==========
Weighted average shares outstanding -- primary and fully
diluted...................................................... 34,448,665 32,506,032
=========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
F-30
<PAGE> 140
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN
COMMON STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS C STOCK DEFERRED
COMMON STOCK COMMON SUBSCRIPTION ADDITIONAL OPTION
--------------------------- COMMON STOCK NOTES PAID-IN PLAN ACCUMULATED
CLASS A CLASS B CLASS C STOCK WARRANTS RECEIVABLE CAPITAL COMPENSATION DEFICIT
------- ------- ------- ------ ---------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December
31, 1993......... $ 1 $16,895,623 $ (776,367 )
Recapitalization of
common stock..... $15,791 $5,264 (1) (21,054)
Stock issued for
ANG
acquisition...... 1,570 277 $(77,666) 3,784,530
Net proceeds from
issuance of
common stock
warrants......... $5,338,952
Dividends on
redeemable
preferred
stock............ (2,216,137 )
Accretion on
redeemable
securities....... (1,169,319 )
Net loss........... (4,762,074 )
Stock dividend..... 8,681 2,771 (11,452)
------- ------- ------- ------ ---------- ------------ ----------- ------------ ------------
Balance at December
31, 1994......... 26,042 8,312 0 0 5,338,952 (77,666) 20,647,647 0 (8,923,897 )
Stock issued for
Cookeville
acquisition
(unaudited)...... 95 1,199,905
Deferred option
plan compensation
(unaudited)...... 11,988,207 (11,988,207 )
Option plan
compensation
(unaudited)...... 9,404,129
Note repayment
(unaudited)...... 833
Dividends on
redeemable
preferred stock
(unaudited)...... (3,465,829 )
Accretion on
redeemable
securities
(unaudited)...... (2,398,332 )
Net loss
(unaudited)...... (14,429,713 )
------- ------- ------- ------ ---------- ------------ ----------- ------------ ------------
Balance at June 30,
1995
(unaudited)...... $26,137 $8,312 $ 0 $ 0 $5,338,952 $(76,833) $33,835,759 $(2,584,078 ) $(29,217,771)
======= ======= ======= ======== ========= =========== ========== ============ =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
F-31
<PAGE> 141
PAXSON COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------------
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss.......................................................... $(14,429,713) $ (2,117,001)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization..................................... 8,054,256 5,265,913
Option plan compensation.......................................... 9,404,129 --
Program rights amortization....................................... 777,057 --
Provision for doubtful accounts................................... 325,294 119,938
Income tax benefit................................................ (640,000) (1,396,000)
Minority interest in net loss..................................... -- (86,667)
Decrease (increase) in accounts receivable........................ 232,653 178,857
Decrease (increase) in prepaid expenses and other current
assets......................................................... 187,121 (250,182)
Increase in intangible assets..................................... -- --
Decrease (increase) in other assets............................... (2,454,459) 77,094
Increase (decrease) in accounts payable and accrued liabilities... (1,665,530) 920,994
------------ ------------
Net cash provided by (used in) operating activities............... (209,192) 2,712,946
------------ ------------
Cash flows for investing activities:
Acquisitions of broadcasting properties........................... (45,110,012) (12,646,293)
Deposits on broadcasting properties............................... (2,392,000) (3,500,000)
Increase in related party note receivable......................... (500,000) --
Purchases of property and equipment............................... (9,589,477) (1,485,143)
------------ ------------
Net cash used for investing activities............................ (57,591,489) (17,631,436)
------------ ------------
Cash flows from financing activities:
Increase in related party note payable............................ -- 7,700,000
Proceeds from long-term debt...................................... 49,980,000 3,000,000
Payments of loan origination costs................................ (5,002,634) --
Payments of long-term debt........................................ (109,129) (400,731)
Payments for program rights....................................... (230,027) --
------------ ------------
Net cash provided by financing activities......................... 44,638,210 10,299,269
------------ ------------
Decrease in cash and cash equivalents............................... (13,162,471) (4,619,221)
------------ ------------
Cash and cash equivalents at beginning of period.................... 21,571,658 7,019,747
------------ ------------
Cash and cash equivalents at end of period.......................... $ 8,409,187 $ 2,400,526
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid for interest............................................ $ 4,249,482 $ 1,244,212
=========== ===========
Cash paid for income taxes........................................ -- --
=========== ===========
Non-cash operating and financing activities:
Issuance of common stock for Cookeville partner buyout............ $ 1,200,000 $ --
=========== ===========
Dividends on redeemable preferred stock........................... $ 3,465,829 $ 1,046,425
=========== ===========
Accretion on redeemable securities................................ $ 2,398,332 $ 540,633
=========== ===========
Trade revenue..................................................... $ 1,403,725 $ 801,846
=========== ===========
Trade expense..................................................... $ 1,193,843 $ 1,012,316
=========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
F-32
<PAGE> 142
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 June 30, 1995 and
for the six month and three month periods ended June 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 significant changes in
accounting policies since the period ended December 31, 1994. The composition of
accounts has changed to reflect the incorporation of the stock option plan
grants, the operations of acquisitions discussed below and the reclassification
of related party notes receivable amounts to long term assets. This note
reclassification to long-term is in anticipation of pending revisions of certain
station ownership regulation restrictions that could allow the Company's
subsequent acquisition of the underlying stations.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements, footnotes, and
discussions should be read in conjunction with the December 31, 1994 financial
statements and related footnotes and discussions contained in the Company's form
10-K, filed with the Securities and Exchange Commission on March 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 and the forms 8-K and 8-K/A filed on June 1,
1995 and July 31, 1995, respectively.
STOCK INCENTIVE PLAN COMPENSATION
Stock Incentive Plan Compensation -- During the fiscal quarter ended June
30, 1995, the Company granted to employees 1,821,916 non-qualified stock options
("Stock Options") under the Paxson Communications Corporation Stock Incentive
Plan (the "Plan"). The Stock Options are exercisable at $3.42 per share for
Class A Common Stock of the Company (the "Common Stock") and vest ratably over a
five year period, except with respect to Stock Options granted to certain
individuals which provide for shorter vesting schedules. In early 1995 the
Company conferred with its independent certified public accountants, Price
Waterhouse LLP, as to the use of the Company's prior independent valuation of
the Common Stock in determining the value of the Stock Options and the
appropriate expense to be recognized by the Company in connection with the
granting thereof to employees. In the Company's initial Form 10-Q for the second
quarter the Company did not recognize any option plan compensation expense for
the Stock Options granted during the second quarter. After the filing of such
report on Form 10-Q on August 14, 1995, the Company's independent certified
public accountants advised the Company that the quoted market price of the
Company's Common Stock was required to be used in determining the value of the
Stock Options. The Company's application of this market price valuation to the
Stock Options resulted in a higher valuation of such Stock Options and in an
additional non-cash charge of $9.4 million in the Company's Form 10-Q/A for the
second quarter filed August 30, 1995.
REDEEMABLE COMMON STOCK WARRANT ACCRETION
The Company's 130.3777 redeemable common stock warrants entitle the holders
to purchase 2,709,129 shares of Class A Common Stock and 903,044 shares of Class
B Common Stock, or approximately 9% of all Common Stock. Due to an increase in
the value of the underlying Common Stock, the Company has recognized additional
accretion of $1,458,000 on these warrants for the six months ended June 30,
1995. The Common Stock warrants contain a put provision requiring the Company to
repurchase any warrants, at the option of the holder, at the fair market value
per share of the Common Stock on or after the seventh anniversary of the
original issue date (December 15, 2000). The difference between the fair market
value of the redeemable Common Stock warrants at their date of issue and their
redemption values are accreted on a straight line method over the life of the
warrants.
F-33
<PAGE> 143
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PRO FORMA FINANCIAL INFORMATION
The following represents the unaudited pro forma results of operations as
if the acquisitions and time brokerage agreements described in Item 2 of Part I
had been completed at the beginning of 1995 and 1994, after giving effect to
certain adjustments, including increased depreciation and amortization of
property and equipment and intangible assets and interest expense for
acquisition debt. These pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of the results of operations
which would have been achieved had these acquisitions been completed as of these
dates, nor are the results indicative of the Company's future results of
operations.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
---------------------------
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Revenues.......................................................... $ 47,940,297 $ 36,274,055
=========== ===========
Broadcast cash flow............................................... $ 12,039,367 $ 6,031,268
=========== ===========
Income (loss) from operations..................................... $(12,538,058) $ (9,035,647)
=========== ===========
Net loss.......................................................... $(22,200,940) $(16,110,543)
=========== ===========
Net loss per share................................................ $ (.65) $ (.50)
=========== ===========
Pro forma weighted average shares outstanding -- primary
and fully diluted............................................... 34,401,282 32,506,032
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JUNE 30,
---------------------------
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Revenues.......................................................... $ 24,600,296 $ 18,117,067
=========== ===========
Broadcast cash flow............................................... $ 7,379,542 $ 3,893,901
=========== ===========
Income (loss) from operations..................................... $ (9,946,689) $ (4,269,002)
=========== ===========
Net loss.......................................................... $(15,143,529) $ (7,526,177)
=========== ===========
Net loss per share................................................ $ (.44) $ (.23)
=========== ===========
Pro forma weighted average shares outstanding -- primary
and fully diluted............................................... 34,448,665 32,506,032
=========== ===========
</TABLE>
"Broadcast cash flow" is defined as Income (loss) from operations plus
non-cash expenses and non-broadcasting 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.
F-34
<PAGE> 144
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
of KZKI-TV (a division of Sandino Telecasters)
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in divisional deficit and of cash flows present
fairly, in all material respects, the financial position of KZKI-TV (a division
of Sandino Telecasters), (the "Station") at January 31, 1995 and the results of
its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Station's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
The accompanying financial statements have been prepared assuming that the
Station will continue as a going concern. As discussed in Note 1 to the
financial statements, the Station has incurred cumulative net losses and has
significant notes payable which are due on demand, which raise substantial doubt
about the Station's ability to continue as a going concern. Management's plans
in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Price Waterhouse LLP
- --------------------------------------
PRICE WATERHOUSE LLP
Tampa, Florida
July 17, 1995
F-35
<PAGE> 145
KZKI-TV (A DIVISION OF SANDINO TELECASTERS)
BALANCE SHEET
<TABLE>
<CAPTION>
JANUARY
MAY 17, 31,
1995 1995
----------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................................... $ 22,053 $ 91,180
Accounts receivable............................................... 3,289 6,695
Prepaid expenses and other assets................................. 3,733 10,813
----------- ----------
Total current assets...................................... 29,075 108,688
Property and equipment, net......................................... 2,008,203 2,180,634
Intangible assets, net.............................................. 6,685,736 6,792,333
----------- ----------
Total assets $ 8,723,014 $9,081,655
========= =========
LIABILITIES AND DIVISIONAL DEFICIT
Current liabilities:
Accounts payable and accrued liabilities.......................... $ 30,399 $ 41,261
Unearned revenue.................................................. 34,915 71,074
Related party payables
Accrued interest............................................... 2,920,897 2,650,378
Notes payable.................................................. 8,872,874 9,572,874
----------- ----------
Total current liabilities................................. 11,859,085 12,335,587
----------- ----------
Divisional deficit.................................................. (3,136,071) (3,253,932)
----------- ----------
Commitments and contingencies (see Note 6)
Total liabilities and divisional deficit.................. $ 8,723,014 $9,081,655
========= =========
</TABLE>
The accompanying Notes to Financial Statements
are an integral part of the financial statements.
F-36
<PAGE> 146
KZKI-TV (A DIVISION OF SANDINO TELECASTERS)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
MAY 17, JANUARY 31,
1995 1995
------------ -----------
(UNAUDITED)
<S> <C> <C>
Revenue:
Network programming................................................ $ 330,413 $ 871,701
Paid programming and other......................................... 688,142 840,210
------------ -----------
Total revenue.............................................. 1,018,555 1,711,911
------------ -----------
Operating expenses:
Technical.......................................................... 113,671 395,512
Direct............................................................. 15,150 64,363
Programming........................................................ 9,758 22,215
General and administrative......................................... 212,568 558,220
Depreciation and amortization...................................... 279,028 743,396
------------ -----------
Total operating expenses................................... 630,175 1,783,706
------------ -----------
Income (loss) from operations........................................ 388,380 (71,795)
Related party interest expense....................................... (270,519) (855,800)
------------ -----------
Net income (loss).......................................... $ 117,861 $ (927,595)
========== =========
</TABLE>
The accompanying Notes to Financial Statements
are an integral part of the financial statements.
F-37
<PAGE> 147
KZKI-TV
(A DIVISION OF SANDINO TELECASTERS)
STATEMENT OF CHANGES IN DIVISIONAL DEFICIT
<TABLE>
<S> <C>
Balance at February 1, 1994..................................................... $(2,326,337)
Net loss........................................................................ (927,595)
-----------
Balance at January 31, 1995..................................................... (3,253,932)
Net income through May 17, 1995 (unaudited)..................................... 117,861
-----------
Balance at May 17, 1995 (unaudited)............................................. $(3,136,071)
==========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-38
<PAGE> 148
KZKI-TV
(A DIVISION OF SANDINO TELECASTERS)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
MAY 17, JANUARY 31,
1995 1995
------------ -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................. $ 117,861 $ (927,595)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization..................................... 279,028 743,396
Decrease (increase) in accounts receivable........................ 3,406 (5,297)
Decrease (increase) in prepaid expenses and other assets.......... 7,080 (7,069)
(Decrease) increase in accounts payable and accrued liabilities... (10,862) 31,209
(Decrease) increase in unearned revenue........................... (36,159) 56,228
Increase in related party accrued interest........................ 270,519 855,800
------------ -----------
Net cash provided by operating activities......................... 630,873 746,672
------------ -----------
Cash flows from investing activities:
Purchases of property and equipment............................... -- (204,410)
------------ -----------
Cash flows from financing activities:
Proceeds from related party note payable.......................... -- 418,588
Payments of related party note payable............................ (700,000) (935,000)
------------ -----------
Net cash used for financing activities............................ (700,000) (516,412)
------------ -----------
(Decrease) increase in cash and cash equivalents.................... (69,127) 25,850
Cash and cash equivalents at beginning of year...................... 91,180 65,330
------------ -----------
Cash and cash equivalents at end of period.......................... $ 22,053 $ 91,180
========== =========
Supplemental disclosure of cash flow information:
Cash paid for interest............................................ $ 0 $ 0
========== =========
Cash paid for income taxes........................................ $ 0 $ 0
========== =========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-39
<PAGE> 149
KZKI-TV
(A DIVISION OF SANDINO TELECASTERS)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
KZKI-TV (A division of Sandino Telecasters) (the "Station"), is engaged in
the operation of a television broadcasting station in the Los Angeles,
California market. Sandino Telecasters operates the television station under a
license granted by the Federal Communications Commission.
The Station has incurred cumulative net losses through January 31, 1995
totaling approximately $3,254,000. Additionally, the Station owes approximately
$12,223,000 on demand notes payable and accrued interest to a related party. The
Station does not have sufficient means to repay the notes payable if called (see
Note 4). These conditions raise substantial doubt regarding the Station's
ability to continue as a going concern. Owners plan to liquidate the Station's
liabilities through a sale of the Station's assets (see Note 7).
Cash and cash equivalents
Cash and cash equivalents are highly liquid investments with original
maturities of three months or less.
Property and equipment
Purchases of property and equipment, including additions and improvements
and expenditures for repairs and maintenance that significantly add to
productivity or extend the economic lives of the assets, are capitalized at cost
and depreciated on a straight-line basis over their estimated useful lives as
follows:
<TABLE>
<S> <C>
Broadcasting tower and equipment.............................. 10 years
Leasehold improvements........................................ Term of lease
Office furniture and equipment................................ 6 years
</TABLE>
Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred.
Intangible assets
Intangible assets consists of the FCC license which is stated at cost and
is being amortized using the straight-line method over the estimated useful life
of 25 years.
Revenue recognition
Revenue is recognized as advertising air time is broadcast.
Income taxes
The Station's operating results have been included in the tax return filed
by Sandino Telecasters. A provision for intercompany income taxes, which
approximates the income tax provision calculated for Station income on a
standalone basis was calculated to be $0 based upon cumulative net losses.
Interim financial data
The interim financial data of the Station is unaudited; however, in the
opinion of Station management, the interim financial data includes all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair presentation of results of the interim period. The results of operations
for the period from February 1, 1995 through May 17, 1995 are not necessarily
indicative of the results that could be expected for the entire fiscal year
ending January 31, 1996.
F-40
<PAGE> 150
KZKI-TV
(A DIVISION OF SANDINO TELECASTERS)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 31, 1995
2. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
JANUARY 31,
1995
----------
<S> <C>
Broadcasting tower and equipment................................. $2,171,897
Leasehold improvements........................................... 473,413
Office furniture and equipment................................... 33,002
----------
2,678,312
Accumulated depreciation......................................... (497,678)
----------
Property and equipment, net...................................... $2,180,634
=========
Depreciation expense for the year................................ $ 459,396
=========
</TABLE>
3. INTANGIBLE ASSETS:
Intangible assets consist of the following:
<TABLE>
<CAPTION>
JANUARY 31,
1995
-----------
<S> <C>
FCC licenses................................................. $ 7,100,000
Accumulated amortization..................................... (307,667)
-----------
Intangible assets, net....................................... $ 6,792,333
=========
Amortization expense for the year............................ $ 284,000
=========
</TABLE>
4. RELATED PARTY NOTES PAYABLE:
Related party notes payable consist of the following:
<TABLE>
<CAPTION>
JANUARY 31,
1995
-----------
<S> <C>
Note payable, prime + 1% interest compounded annually,
interest and principal due on demand....................... $ 7,100,000
Revolving credit note payable, prime + 1% interest compounded
annually, interest and principal due on demand............. 2,472,874
-----------
$ 9,572,874
=========
</TABLE>
In 1991, the Station borrowed $7,100,000 from Astrum Management Group
("Astrum"), a minority shareholder of Sandino Telecasters, in order to purchase
the FCC license and begin operations (see Note 5). The note accrues interest at
prime + 1% and is due on demand. At January 31, 1995, accrued interest payable
on the note was $2,319,638; no interest or principal repayments have been made
to date.
Additionally, the Station entered into a revolving credit agreement with
Astrum, whereby Astrum funded initial construction of the Station and continues
to fund working capital shortfalls. The working capital note accrues interest at
prime + 1% and is due on demand. At January 31, 1995, accrued interest payable
on the note was $330,740; no interest repayments have been made to date.
F-41
<PAGE> 151
KZKI-TV
(A DIVISION OF SANDINO TELECASTERS)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JANUARY 31, 1995
5. RELATED PARTY TRANSACTIONS:
The Station has entered into several agreements with related parties. As
discussed in Note 4, the Station has significant outstanding notes payable and
accrued interest payable with Astrum, a minority shareholder of Sandino
Telecasters. Additionally, Astrum provides financial management and accounting
services for the Station. The value of these services based on estimated hours
expended by Astrum was approximately $6,000, for the year ended January 31,
1995. All other overhead, debt and interest allocations have been appropriately
reflected in the Station's financial statements.
6. COMMITMENTS AND CONTINGENCIES:
The Station incurred expenses of approximately $44,922 for the year ended
January 31, 1995 under a non-cancelable operating lease for office space.
Additionally, the Station incurred expenses of approximately $10,695 for a
special use permit from the U.S. Department of Forestry for use of the land
surrounding the station's tower. Future minimum annual payments under the
operating lease as of January 31, 1995, are $31,820, due during fiscal year
1996.
7. SUBSEQUENT EVENT:
On May 17, 1995, the Owners sold the Station's assets to Paxson
Communications Corporation for approximately $18,000,000.
F-42
<PAGE> 152
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Stockholders
of Paugus Television, Inc.
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in stockholders' deficit and of cash flows present
fairly, in all material respects, the financial position of Paugus Television,
Inc. (the "Company"), at December 31, 1994 and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
accompanying financial statements, the Company has incurred cumulative net
losses from operations and has significant notes payable which are due on demand
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1 to
the accompanying financial statements. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Price Waterhouse LLP
- --------------------------------------
PRICE WATERHOUSE LLP
Tampa, Florida
August 21, 1995
F-43
<PAGE> 153
PAUGUS TELEVISION, INC. (WGOT-TV)
BALANCE SHEET
<TABLE>
<CAPTION>
MAY 17, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 42,148 $ 14,127
Accounts receivable, less allowance for doubtful accounts of
$14,948 and $23,965, respectively.......................... 92,659 124,510
Prepaid expenses and other assets............................. 35,120 21,319
Current program rights........................................ 42,971 68,754
------------ ------------
Total current assets.................................. 212,898 228,710
Property and equipment, net..................................... 111,526 202,203
Intangible assets, net.......................................... 574,923 587,318
Program rights, net............................................. 34,671 34,671
------------ ------------
Total assets.......................................... $ 934,018 $ 1,052,902
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities...................... $ 8,121 $ 135,340
Other payables................................................ 168,306 182,051
Current program rights payable................................ 106,060 111,594
Related party payables:
Accrued interest payable................................... 1,217,469 1,043,505
Notes payable.............................................. 6,931,243 6,767,800
------------ ------------
Total current liabilities............................. 8,431,199 8,240,290
Program rights payable.......................................... 21,400 36,089
------------ ------------
Total liabilities..................................... 8,452,599 8,276,379
Stockholders' deficit:
Common stock, $1 par, 300 shares authorized, 284.38 shares
issued and outstanding..................................... 284 284
Additional paid-in capital.................................... 2,843,516 2,843,516
Retained deficit.............................................. (10,362,381) (10,067,277)
------------ ------------
Total stockholders' deficit........................... (7,518,581) (7,223,477)
------------ ------------
Commitments and contingencies (see Note 8)
Total liabilities and stockholders' deficit........... $ 934,018 $ 1,052,902
=========== ===========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-44
<PAGE> 154
PAUGUS TELEVISION, INC. (WGOT-TV)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
MAY 17, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Revenue:..........................................................
Local and national advertising.................................. $ 296,586 $ 877,165
Trade........................................................... 62,834 305,821
Production and other............................................ 240,395 38,698
------------ ------------
Total revenue..................................................... 599,815 1,221,684
------------ ------------
Operating expenses:
Technical....................................................... 82,967 194,241
News............................................................ 49,670 193,583
Direct.......................................................... 87,086 184,081
Sales........................................................... 54,992 141,393
Production...................................................... 54,769 131,089
Programming and promotion....................................... 81,278 116,631
General and administrative...................................... 113,831 534,430
Trade........................................................... 58,495 275,352
Program rights amortization..................................... 25,784 174,034
Depreciation and amortization................................... 101,729 203,456
------------ ------------
Total operating expenses.......................................... 710,601 2,148,290
------------ ------------
Loss from operations.............................................. (110,786) (926,606)
Other income (expense):
Related party interest expense.................................. (174,155) (331,815)
Loss on sale of assets.......................................... -- (13,146)
Other expense, net.............................................. (10,163) (37,951)
------------ ------------
Net loss.......................................................... $ (295,104) $ (1,309,518)
========== ==========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-45
<PAGE> 155
PAUGUS TELEVISION INC. (WGOT-TV)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
STOCKHOLDERS' DEFICIT
---------------------------------------------------
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL DEFICIT TOTAL
------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1994................... $284 $2,843,516 $ (8,757,759) $(5,913,959)
Net loss..................................... (1,309,518) (1,309,518)
------ ---------- ------------ -----------
Balance at December 31, 1994................. 284 2,843,516 (10,067,277) (7,223,477)
Net loss through May 17, 1995 (unaudited).... (295,104) (295,104)
------ ---------- ------------ -----------
Balance at May 17, 1995 (unaudited).......... $284 $2,843,516 $(10,362,381) $(7,518,581)
====== ========= =========== ==========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-46
<PAGE> 156
PAUGUS TELEVISION, INC. (WGOT-TV)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE
YEAR
FOR THE ENDED
PERIOD ENDED DECEMBER
MAY 17, 31,
1995 1994
------------ -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................................ $ (295,104) $(1,309,518)
Adjustments to reconcile net loss to net cash used for operating
activities:
Depreciation and amortization................................... 101,729 203,456
Program rights amortization..................................... 25,784 174,034
Allowance for doubtful accounts................................. (9,017) 708
Loss on sale of assets.......................................... -- 13,146
Decrease (increase) in accounts receivable...................... 40,868 (62,644)
(Increase) decrease in prepaid expenses and other assets........ (13,801) 157,833
(Decrease) increase in accounts payable and accrued
liabilities.................................................. (127,219) 8,466
Decrease in other payables...................................... (13,745) (193,227)
Increase in related party accrued interest...................... 173,964 322,947
------------ -----------
Net cash used for operating activities.......................... (116,541) (684,799)
------------ -----------
Cash flows from investing activities:
Purchases of property and equipment............................. -- (43,374)
Sale of property and equipment.................................. 1,342 42,000
------------ -----------
Net cash used for investing activities.......................... 1,342 (1,374)
------------ -----------
Cash flows from financing activities:
Payments for program rights..................................... (20,223) (142,581)
Proceeds from related party notes payable....................... 163,443 791,888
------------ -----------
Net cash provided by financing activities....................... 143,220 649,307
------------ -----------
Increase (decrease) in cash and cash equivalents.................. 28,021 (36,866)
Cash and cash equivalents at beginning of year.................... $ 14,127 $ 50,993
------------ -----------
Cash and cash equivalents at end of period........................ $ 42,148 $ 14,127
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest.......................................... $ 0 $ 0
========== ==========
Non-cash operating activities:
Trade revenue................................................... $ 62,834 $ 305,821
========== ==========
Trade expense................................................... $ 58,495 $ 275,352
========== ==========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-47
<PAGE> 157
PAUGUS TELEVISION, INC. (WGOT-TV)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Paugus Television, Inc. (the "Company"), a Delaware Corporation, was
organized in 1988 for the purpose of owning and operating a television station,
WGOT-TV, in Manchester, New Hampshire, serving the Boston, Massachusetts market.
The Company has incurred substantial cumulative net losses through December
31, 1994 totalling approximately $10,067,000. Additionally, the Company owes
approximately $7,811,000 on demand notes payable and accrued interest to a
related party. The Company does not have sufficient means to repay the notes
payable (see Note 6). These conditions raise substantial doubt regarding the
Company's ability to continue as a going concern. Management plans to liquidate
the Company's liabilities through a sale of the Company's assets (see Note 9).
Property and equipment
Purchases of property and equipment, including additions and improvements
and expenditures for repairs and maintenance that significantly add to
productivity or extend the economic lives of the assets, are capitalized at cost
and depreciated on a straight-line basis over their estimated useful lives as
follows:
<TABLE>
<S> <C>
Broadcasting tower and equipment.............................. 7 years
Office furniture equipment and other.......................... 5 years
Leasehold improvements........................................ Term of lease
</TABLE>
Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred.
Intangible assets
Intangible assets are stated at cost and are being amortized using the
straight-line method over the estimated useful life as follows:
<TABLE>
<S> <C>
Goodwill...................................................... 25 years
Favorable lease agreement..................................... Term of lease
Organization costs............................................ 5 years
</TABLE>
Program rights
The Company obtains licenses for program rights which allow the Company to
broadcast program material in accordance with contractual agreements. Pursuant
to a licensing agreement, an asset is recorded for the program rights acquired
and a liability is recorded for the obligation incurred, at the gross amount of
the liability. Program rights are amortized on a method that approximates the
straight-line basis over the related term. Program rights which will not be
aired are charged to expense. Current program rights represent programs which
will be amortized during the next year, current liabilities represent program
rights which will be paid within the year under contractual agreement.
Income taxes
Provisions are made to record deferred income taxes in recognition of items
reported differently for financial reporting purposes than for federal and state
income tax purposes. The Company records deferred income taxes using the
liability method in accordance with Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes".
F-48
<PAGE> 158
PAUGUS TELEVISION, INC. (WGOT-TV)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994
Revenue recognition
Revenue is recognized as advertising air time is broadcast.
Trade agreements
The Company enters into trade agreements which give rise to sales of
advertising air time in exchange for products and services. Sales from trade
agreements are recognized at the fair market value of products or services
received as advertised air time is broadcast. Products and services received are
expensed when used in the broadcast operations. If the Company uses exchanged
products or services before advertising air time is provided, a trade liability
is recognized.
Interim financial data
The interim financial data of the Company is unaudited; however, in the
opinion of the Company's management, the interim data includes all adjustments,
consisting of only normal recurring adjustments, necessary for a fair statement
of results for the interim periods. The results of operations for the period
ended May 17, 1995 are not necessarily indicative of the results that can be
expected for the entire fiscal year ending December 31, 1995.
2. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER
31,
1994
-----------
<S> <C>
Broadcasting tower and equipment................................ $ 1,138,870
Office furniture, equipment and other........................... 188,992
Leasehold improvements.......................................... 122,491
-----------
1,450,353
Accumulated depreciation........................................ (1,248,150)
Property and equipment, net..................................... $ 202,203
==========
Depreciation expense for the year............................... $ 170,537
==========
</TABLE>
3. INTANGIBLE ASSETS:
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Goodwill........................................................ $ 734,245
Favorable lease agreement....................................... 119,500
Organization costs.............................................. 14,705
------------
868,450
Accumulated amortization........................................ (281,132)
------------
Intangible assets, net.......................................... $ 587,318
------------
Amortization expense for the year............................... $ 32,919
==========
</TABLE>
F-49
<PAGE> 159
PAUGUS TELEVISION, INC. (WGOT-TV)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994
4. PROGRAM RIGHTS:
Program rights consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Program rights............................................... $ 305,751
Accumulated amortization..................................... (202,326)
------------
103,425
Less current program rights.................................. (68,754)
------------
$ 34,671
==========
Amortization expense for the year............................ $ 174,034
==========
</TABLE>
5. PROGRAM RIGHTS PAYABLE:
Program rights payable represent the obligation incurred to secure the
right to broadcast program material in accordance with a contractual agreement.
Future minimum annual payments under these contractual agreements as of December
31, 1994, are as follows:
<TABLE>
<S> <C>
1995......................................................... $111,594
1996......................................................... 36,089
------------
$147,683
==========
</TABLE>
6. RELATED PARTY NOTES PAYABLE:
Related party notes payable consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Note payable to stockholder, interest at Federal Funds Rate +1%,
principal and interest due on demand.................................. $3,853,650
Note payable to stockholder, interest at Federal Funds Rate +1%,
principal and interest due on demand.................................. 2,914,150
------------
$6,767,800
==========
</TABLE>
The Company has entered into multiple note payable agreements with its
primary stockholders, the Perceival Lowell Trust and the Roger L. Putnam Trust
(the "Trusts") whereby the Trusts fund working capital shortfalls on a monthly
basis. The notes payable are secured by all assets of the Company, including the
FCC license, accrue interest at the Federal Funds rate +1% and are due on
demand. At December 31, 1994, accrued interest payable on the notes was $569,047
and $474,458, respectively. No principal or interest payments were made for the
year ended December 31, 1994.
F-50
<PAGE> 160
PAUGUS TELEVISION, INC. (WGOT-TV)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994
7. INCOME TAXES:
Deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Assets
Fixed assets.......................................................... $ 9,432
Allowance for doubtful accounts....................................... 9,255
Net operating loss carryforwards...................................... 4,038,004
Valuation allowance................................................... (4,049,045)
Liabilities
Intangible assets..................................................... (7,646)
------------
$ 0
==========
</TABLE>
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. A valuation allowance
has been provided for the net operating loss carryforwards.
8. COMMITMENTS AND CONTINGENCIES:
The Company incurred expenses of approximately $94,652 for the year ended
December 31, 1994 under non-cancelable operating leases for office equipment and
tower space. Future minimum annual payments under these non-cancelable operating
leases as of December 31, 1994, are as follows:
<TABLE>
<CAPTION>
PAYMENT
--------
<S> <C>
1995.............................................................. $ 95,320
1996.............................................................. 15,600
--------
$110,920
========
</TABLE>
9. SUBSEQUENT EVENT:
On May 17, 1995, the Company sold the assets to Paxson Communications
Corporation for approximately $3,100,000.
F-51
<PAGE> 161
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Partners of
Delaware Valley Broadcasters Limited Partnership (WTGI-TV)
In our opinion, the accompanying balance sheet and the related statements
of operations, of changes in partners' deficit and of cash flows present fairly,
in all material respects, the financial position of Delaware Valley Broadcasters
Limited Partnership (WTGI-TV, the "Partnership") at December 31, 1994 and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Partnership's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern, which contemplates the realization
of assets and the liquidation of liabilities in the ordinary course of business.
On February 25, 1987, the Partnership filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy Code, thereby
raising substantial doubt about their ability to continue as a going concern.
Management's plans in regard to the bankruptcy matters are described in Note 1
to the accompanying financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Tampa, Florida
August 21, 1995
F-52
<PAGE> 162
DELAWARE VALLEY BROADCASTERS LIMITED PARTNERSHIP (WTGI-TV)
BALANCE SHEET
<TABLE>
<CAPTION>
FEBRUARY 3, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 62,644 $ 74,952
Accounts receivable, less allowance for doubtful accounts of
$53,119 (unaudited) and $44,727, respectively.............. 364,299 364,373
Other current assets.......................................... 51,213 53,171
------------ ------------
Total current assets.................................. 478,156 492,496
Property and equipment, net (Note 2)............................ 778,838 795,578
Intangible assets, net.......................................... 95,160 96,773
------------ ------------
Total assets.......................................... $ 1,352,154 $ 1,384,847
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
Current Liabilities:
Accounts payable and accrued liabilities...................... $ 282,384 $ 307,926
Unearned revenue.............................................. 31,487 64,670
Current notes payable (Note 4)................................ 40,431 57,410
Liabilities subject to Chapter 11 proceedings (Note 6)........ 1,956,618 1,956,618
Related party liabilities (Notes 5 and 6):
Accrued interest........................................... 142,263 140,533
Management fees payable.................................... 2,079,894 2,069,753
Accrued interest subject to Chapter 11 proceedings......... 2,662,317 2,619,257
Liabilities subject to Chapter 11 proceedings.............. 4,980,425 4,980,425
Note payable............................................... 156,000 156,000
------------ ------------
Total current liabilities............................. 12,331,819 12,352,592
Partners' deficit............................................... (10,979,665) (10,967,745)
------------ ------------
Commitments and contingencies (Note 7)
Total liabilities and partners' deficit............... $ 1,352,154 $ 1,384,847
=========== ===========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-53
<PAGE> 163
DELAWARE VALLEY BROADCASTERS LIMITED PARTNERSHIP (WTGI-TV)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
FEBRUARY 3, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Local and national advertising................................. $341,684 $2,664,362
Network and other.............................................. 26,922 364,862
Trade.......................................................... 1,810 81,959
------------ ------------
Total revenue.................................................... 370,416 3,111,183
------------ ------------
Operating expenses:
Direct......................................................... 85,878 648,539
Technical...................................................... 50,016 408,204
Sales and promotions........................................... 21,489 246,106
Programming.................................................... 16,913 263,352
General and administrative..................................... 98,230 1,033,570
Trade.......................................................... 1,207 121,177
Depreciation and amortization.................................. 32,613 391,355
------------ ------------
Total operating expenses......................................... 306,346 3,112,303
Income (loss) from operations.................................... 64,070 (1,120)
Interest expense, net (Note 1)................................... (44,790) (460,605)
Management fees (Note 5)......................................... (31,200) (318,526)
Reorganization expenses (Note 1)................................. (186,407)
------------ ------------
Net loss......................................................... $(11,920) $ (966,658)
========== ==========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-54
<PAGE> 164
DELAWARE VALLEY BROADCASTERS LIMITED PARTNERSHIP (WTGI-TV)
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
<TABLE>
<CAPTION>
SPECIAL
GENERAL LIMITED LIMITED
PARTNERS PARTNERS PARTNER TOTAL
-------- ------------ -------- ------------
<S> <C> <C> <C> <C>
Balance at January 1, 1994..................... $(90,010) $ (9,901,076) $(10,001) $(10,001,087)
Net loss....................................... (8,700) (956,991) (967) (966,658)
-------- ------------ -------- ------------
Balance at December 31, 1994................... (98,710) (10,858,067) (10,968) (10,967,745)
Net loss through February 3, 1995
(unaudited).................................. (107) (11,801) (12) (11,920)
-------- ------------ -------- ------------
Balance at February 3, 1995 (unaudited)........ $(98,817) $(10,869,868) $(10,980) $(10,979,665)
======== =========== ======== ===========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-55
<PAGE> 165
DELAWARE VALLEY BROADCASTERS LIMITED PARTNERSHIP (WTGI-TV)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
FEBRUARY 3, DECEMBER 31,
1995 1994
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss......................................................... $(11,920) $ (966,658)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Depreciation and amortization.................................... 32,613 391,355
Allowance for doubtful accounts.................................. 8,392 34,363
Increase in accounts receivable.................................. (8,318) (114,771)
(Increase) decrease in prepaid expenses and other current
assets........................................................ 1,958 (11,085)
Increase (decrease) in accounts payable and accrued
liabilities................................................... (25,542) 135,869
Increase (decrease) in other liabilities......................... (33,183) 87,710
Increase in related party accrued interest....................... 1,730 5,920
Increase in related party management fees payable................ 10,141 233,547
Increase in related party accrued interest subject to Chapter 11
proceedings................................................... 43,060 403,581
------------ ------------
Net cash provided by operating activities........................ 18,931 199,831
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment.............................. (14,260) (49,252)
------------ ------------
Net cash used for investing activities........................... (14,260) (49,252)
------------ ------------
Cash flows from financing activities:
Payments on note payable......................................... (16,979) (113,568)
------------ ------------
Net cash used for financing activities........................... (16,979) (113,568)
------------ ------------
Increase (decrease) in cash and cash equivalents................... (12,308) 37,011
Cash and cash equivalents at beginning of year..................... 74,952 37,941
------------ ------------
Cash and cash equivalents at end of period......................... $ 62,644 $ 74,952
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest........................................... $ -- $ 51,104
========== ==========
Non-cash operating activities:
Trade revenue.................................................... $ 1,810 $ 81,959
========== ==========
Trade expense.................................................... $ 1,207 $ 121,177
========== ==========
</TABLE>
The accompanying Notes to Financial Statements are
an integral part of the financial statements.
F-56
<PAGE> 166
DELAWARE VALLEY BROADCASTERS LIMITED PARTNERSHIP (WTGI-TV)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Delaware Valley Broadcasters Limited Partnership (the "Partnership")
was organized in March 1984 for the purpose of constructing, owning and
operating a television broadcasting station in Wilmington, Delaware. The
Partnership consists of two general partners, 44 limited partners and a special
limited partner. Delaware Valley Broadcasters, Inc., a general partner, performs
the duties of the managing partner for which a fee is paid (Note 5).
On February 25, 1987, the Partnership filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy Code in
Wilmington, Delaware. On May 1, 1989, the Plan of Reorganization which had been
submitted by the Partnership was accepted by the creditors and confirmed by the
Court. Subsequently, the Partnership was unable to realize the financing
anticipated by the Plan of Reorganization and therefore defaulted on payments.
On September 23, 1993, the Partnership refiled under Chapter 11 of the United
States Bankruptcy Code in Philadelphia, Pennsylvania. This secondary filing in
Pennsylvania was dismissed and remanded back to Delaware with a Court Order
mandating the Delaware Court to oversee the sale of the station.
The financial statements of the Partnership have been prepared on a
"going-concern" basis which contemplates the realization of assets and the
liquidation of liabilities in the ordinary course of business. However, as a
result of the Chapter 11 filing and the Court mandated sale, such realization of
assets and liquidation of liabilities are subject to a significant number of
uncertainties including management's plan to liquidate the Partnership's
liabilities through the Court approved sale of the Company's assets (Note 8).
Reorganization expenses included in the Statement of Operations for the
year ended December 31, 1994 is comprised of professional fees of $186,407.
Partnership ownership and allocations
The Partnership ownership interest consists of the following:
<TABLE>
<S> <C>
General Partners.................................................. 0.9%
Limited Partners.................................................. 99.0%
Special Limited Partner........................................... 0.1%
-----
100.0%
=====
</TABLE>
All items of income, loss or gain are allocated to the Partners' capital
accounts in proportion to their ownership interest.
Cash and cash equivalents
Cash and cash equivalents are highly liquid investments with original
maturities of three months or less.
Property and equipment
Purchases of property and equipment, including additions and improvements
and expenditures for repairs and maintenance that significantly add to
productivity or extend the economic lives of the assets, are capitalized at cost
and depreciated on a straight-line basis over their estimated useful lives as
follows:
<TABLE>
<S> <C>
Broadcasting tower and equipment................................. 5-15 years
Building and improvements........................................ 32 years
Transmitters..................................................... 5 years
Office furniture and equipment................................... 5-7 years
</TABLE>
F-57
<PAGE> 167
DELAWARE VALLEY BROADCASTERS LIMITED PARTNERSHIP (WTGI-TV)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994
Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred.
Intangible assets
Intangible assets consist of the FCC license which is stated at cost and is
being amortized using the straight-line method over the estimated useful life of
15 years.
Income taxes
Income or loss of the Partnership is included in the tax returns of the
individual partners. Accordingly, federal income taxes are not recognized by the
Partnership.
Related party transactions
The Partnership pays an annual management fee to a general partner who acts
as the stations' managing partner and to the special limited partner who acts as
the stations' administrative contractor (Note 5).
Additionally, a significant amount of liabilities subject to Chapter 11
proceedings and accrued interest is owed to either limited or general partners.
Interest expense on liabilities to related parties aggregated $442,064 for the
year ended December 31, 1994 (Note 6).
Revenue recognition
Revenue is recognized as advertising air time is broadcast.
Trade agreements
The Partnership enters into trade agreements which give rise to sales of
advertising air time in exchange for products and services. Sales from trade
agreements are recognized at the fair market value of products or services
received as advertising air time is broadcast. Products and services received
are expensed when used in the broadcast operations. If the Partnership uses
exchanged products or services before advertising air time is provided, a trade
liability is recognized.
Interim financial data
The interim financial data of the Company is unaudited; however, in the
opinion of the Company, the interim data includes all adjustments, consisting of
only normal recurring adjustments necessary for a fair statement of results of
the interim periods. The results of operations for the period from January 1,
1995 through February 3, 1995 are not necessarily indicative of the results that
can be expected for the entire fiscal year ending December 31, 1995.
F-58
<PAGE> 168
DELAWARE VALLEY BROADCASTERS LIMITED PARTNERSHIP (WTGI-TV)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994
2. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Broadcasting tower and equipment............................ $ 3,527,199
Building, land and improvements............................. 418,169
Office furniture and equipment.............................. 175,500
Transmitters................................................ 62,572
------------
4,183,440
Accumulated depreciation.................................... (3,387,862)
------------
Property and equipment, net................................. $ 795,578
==========
</TABLE>
Depreciation expense aggregated $372,000 for the year ended December 31,
1994.
3. INTANGIBLE ASSETS:
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
FCC license.................................................. $ 290,319
Accumulated amortization..................................... (193,546)
------------
Intangible assets, net....................................... $ 96,773
==========
</TABLE>
Amortization expense aggregated $19,355 for the year ended December 31,
1994.
4. CURRENT NOTES PAYABLE:
Current notes payable at December 31, 1994 consists of a mortgage note
payable secured by the station's tower and land. Although the Partnership has
been making payments on the mortgage note payable of approximately $7,500 a
month, the balance is currently past due and is classified as a current
liability.
5. RELATED PARTY TRANSACTIONS:
At December 31, 1994, the Partnership has a $156,000 demand note payable to
a general partner. In 1988, the Court approved the execution of an agreement
with a general partner, whereby a general partner loaned the Partnership
$156,000 at 16% interest per annum, to fund current working capital needs. This
note payable has been given post-petition payment priority by the court and is
due on demand, and therefore classified as a current payable.
Delaware Valley Broadcasters, Inc., a general partner, performs the duties
of the managing partner, as outlined in the limited partnership agreement (the
"Partnership Agreement"). The Partnership Agreement specifies that the
Partnership will pay the managing partner a fee consisting of $100,000 per year
plus 5% of gross revenues. Under the terms of this agreement the Partnership
accrued an aggregate of $250,725 due to the general partner for the year ended
December 31, 1994.
Weatherly Private Capital ("Weatherly"), the special limited partner,
performs the duties of administrative contractor, who, as outlined in the
Weatherly Agreement, prepared and underwrote the limited partnership offering
and performs on-going investor relations and financial consulting. The Weatherly
Agreement specifies that the Partnership will pay Weatherly an annual management
fee of 2% of the original
F-59
<PAGE> 169
DELAWARE VALLEY BROADCASTERS LIMITED PARTNERSHIP (WTGI-TV)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994
capital raised for ongoing duties. The Partnership accrued $67,800 due to
Weatherly for the year ended December 31, 1994.
Management fees payable consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Delaware Valley Broadcasters, Inc. (Managing general
partner)................................................... $1,527,353
Weatherly Private Capital (Special limited partner).......... 542,400
------------
$2,069,753
==========
</TABLE>
6. LIABILITIES SUBJECT TO CHAPTER 11 PROCEEDINGS:
The principal categories of claims classified in the Balance Sheet as
liabilities subject to Chapter 11 proceedings at December 31, 1994 are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Accounts payable and accrued expenses........................ $1,336,618
Notes payable................................................ 220,000
Program license contracts.................................... 400,000
------------
$1,956,618
==========
Related party:
Secured notes payable...................................... $3,882,828
Notes payable.............................................. 1,097,597
------------
$4,980,425
==========
</TABLE>
Reorganization expenses included in the statement of operations consist
primarily of professional fees related directly to the bankruptcy proceedings
(Note 1).
7. COMMITMENTS AND CONTINGENCIES:
The Partnership incurred lease expense of approximately $127,575 for the
year ended December 31, 1994, under a non-cancelable operating leases for office
facilities. Future minimum annual payments under this non-cancelable operating
lease as of December 31, 1994, is $65,475 for the year ended December 31, 1995.
8. SUBSEQUENT EVENT:
On February 3, 1995, the Partnership sold all the assets, as specified in
the asset purchase agreement, to Paxson Communications Corporation for
approximately $10,200,000.
F-60
<PAGE> 170
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors, Stockholders and Partners
of San Jacinto Television Corporation and DuPont Investment Group, 85 Ltd.
In our opinion, the accompanying combined balance sheet and the related
combined statements of operations, of changes in combined deficit and of cash
flows present fairly, in all material respects, the combined financial position
of San Jacinto Television Corporation and DuPont Investment Group, 85 Ltd.,
(collectively referred to as the "Company") at December 31, 1994 and the results
of their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our
audit of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
The accompanying combined financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
combined financial statements, the Company has incurred recurring losses from
operations that raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The combined financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Price Waterhouse LLP
- --------------------------------------
PRICE WATERHOUSE LLP
Tampa, Florida
August 21, 1995
F-61
<PAGE> 171
SAN JACINTO TELEVISION CORPORATION AND DUPONT INVESTMENT GROUP, 85 LTD.
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................ $ 325,801 $ 314,951
Accounts receivable, less allowance for doubtful accounts of
$102,655 and $65,234, respectively............................ 115,115 172,313
Prepaid expenses................................................. 13,592 14,070
----------- ------------
Total current assets..................................... 454,508 501,334
Property and equipment, net........................................ 1,196,011 1,264,598
Intangible assets, net............................................. 641,867 647,500
----------- ------------
Total assets............................................. $ 2,292,386 $2,413,432
========= ==========
LIABILITIES AND COMBINED DEFICIT
Current liabilities:
Accounts payable and accrued liabilities......................... $ 55,450 $ 28,999
Notes payable to shareholders.................................... 500,000 500,000
Liabilities subject to Plan of Reorganization (Note 1, 5)........ 2,364,898 2,605,077
----------- ------------
Total current liabilities................................ 2,920,348 3,134,076
----------- ------------
Combined deficit:
Stockholders' deficit (San Jacinto Television Corporation)....... (252,276) (386,834)
Partners' deficit (DuPont Investment Group, 85 Ltd.)............. (375,686) (333,810)
----------- ------------
Total combined deficit................................... (627,962) (720,644)
Commitments and contingencies (Note 6)
----------- ------------
Total liabilities and combined deficit................... $ 2,292,386 $2,413,432
========= ==========
</TABLE>
The accompanying Notes to Combined Financial Statements are
an integral part of the combined financial statements.
F-62
<PAGE> 172
SAN JACINTO TELEVISION CORPORATION AND DUPONT INVESTMENT GROUP, 85 LTD.
COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1995 1994
---------- ------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Local and national advertising.................................... $259,907 $1,601,023
Network and other................................................. 104,624 616,677
Trade............................................................. 99,142 447,044
Time brokerage fees............................................... 184,332 --
---------- ------------
Total revenue............................................. 648,005 2,664,744
---------- ------------
Operating expenses:
Direct............................................................ 76,788 425,066
Sales and promotions.............................................. 73,572 330,745
Technical......................................................... 15,308 175,219
Programming....................................................... 3,810 47,616
General and administrative........................................ 149,444 818,811
Trade............................................................. 93,826 423,075
Depreciation and amortization..................................... 92,357 225,276
---------- ------------
Total operating expenses.................................. 505,105 2,445,808
---------- ------------
Income from operations.............................................. 142,900 218,936
Other income (expense):
Loss on sale of assets............................................ -- (69,996)
Interest expense, net............................................. (45,522) (105,862)
Reorganization income, net (Note 1)............................... -- 512,312
---------- ------------
Net income.......................................................... $ 97,378 $ 555,390
======== ==========
</TABLE>
The accompanying Notes to Combined Financial Statements are
an integral part of the combined financial statements.
F-63
<PAGE> 173
SAN JACINTO TELEVISION CORPORATION AND DUPONT INVESTMENT GROUP, 85 LTD.
COMBINED STATEMENT OF CHANGES IN COMBINED DEFICIT
<TABLE>
<CAPTION>
DUPONT INVESTMENT GROUP, 85
SAN JACINTO TELEVISION CORPORATION LTD.
STOCKHOLDERS' DEFICIT PARTNERS' DEFICIT
-------------------------------------------- -------------------------------
COMMON ACCUMULATED TREASURY GENERAL LIMITED
STOCK DEFICIT STOCK TOTAL PARTNER PARTNER TOTAL
------ ----------- -------- ----------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994....... $1,591 $(1,078,475) $(10,000) $(1,086,884) $ $ (89,150) $ (89,150)
Distribution to partners......... (100,000) (100,000)
Net income (loss)................ 700,050 700,050 (144,660) (144,660)
------ ----------- -------- ----------- ------- --------- ---------
Balance at December 31, 1994..... 1,591 (378,425) (10,000) (386,834) (333,810) (333,810)
Distribution to partners
(unaudited).................... (4,696) (4,696)
Net income (loss) (unaudited).... 134,558 134,558 (37,180) (37,180)
------ ----------- -------- ----------- ------- --------- ---------
Balance at June 30, 1995
(unaudited).................... $1,591 $ (243,867) $(10,000) $ (252,276) $ $(375,686) $(375,686)
======== ============ ========= ============ ======= ========== ==========
</TABLE>
The accompanying Notes to Combined Financial Statements are
an integral part of the combined financial statements.
F-64
<PAGE> 174
SAN JACINTO TELEVISION CORPORATION AND DUPONT INVESTMENT GROUP, 85 LTD.
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE FOR THE
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, 1995 1994
------------- ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income....................................................... $ 97,378 $ 555,390
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization.................................... 92,357 225,276
Allowance for doubtful accounts.................................. 37,421 42,768
Negotiated settlements........................................... -- (579,543)
Decrease (increase) in accounts receivable....................... 19,777 (59,075)
Decrease in prepaid expenses..................................... 478 14,879
Increase in accounts payable and accrued liabilities............. 26,451 3,184
Decrease in liabilities subject to Plan of Reorganization........ (240,179) (112,715)
------------- ------------
Net cash provided by operating activities........................ 33,683 90,164
------------- ------------
Cash flows from investing activities:
Purchases of property and equipment.............................. (18,137) (115,885)
Sale of property and equipment................................... -- 84,377
------------- ------------
Net cash used for investing activities........................... (18,137) (31,508)
------------- ------------
Cash flows from financing activities:
Distribution to partners......................................... (4,696) (100,000)
------------- ------------
Net cash used for financing activities........................... (4,696) (100,000)
------------- ------------
Decrease in cash and cash equivalents.............................. 10,850 (41,344)
Cash and cash equivalents at beginning of year..................... 314,951 356,295
------------- ------------
Cash and cash equivalents at end of year........................... $ 325,801 $ 314,951
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest........................................... $ 10,382 $ 57,862
========== ==========
Non-cash operating activities:
Trade revenue.................................................... $ 99,142 $ 447,044
========== ==========
Trade expense.................................................... $ 93,826 $ 423,075
========== ==========
</TABLE>
The accompanying Notes to Combined Financial Statements are
an integral part of the combined financial statements.
F-65
<PAGE> 175
SAN JACINTO TELEVISION CORPORATION AND DUPONT INVESTMENT GROUP, 85 LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
San Jacinto Television Corporation, ("San Jacinto"), was organized in
September 1984 for the purpose of constructing, owning and operating a
television station, KTFH-TV, in Houston, Texas. DuPont Investment Group, 85
Ltd., ("DuPont"), a limited partnership and majority shareholder of San Jacinto,
purchased a low power station, K33DB, in 1989 from which San Jacinto
simultaneously rebroadcasts its signal to cover the Southern region of Houston.
The financial positions, results of operations and of cash flows of San Jacinto
and DuPont (collectively referred to as the "Company"), which reflect the
broadcast operations of the station, are combined for financial statement
purposes.
On February 7, 1989, San Jacinto filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy Code. On
December 9, 1993, the Plan of Reorganization which had been submitted by San
Jacinto was accepted by the creditors and confirmed by the Bankruptcy Court. The
Plan of Reorganization provides for the repayment of pre-petition liabilities
over a four year period, funded by operating cash flows.
The combined financial statements of the Company have been prepared on a
"going-concern" basis which contemplates the realization of assets and the
liquidation of liabilities in the ordinary course of business. However, as a
result of the Chapter 11 filing of San Jacinto and approved Plan of
Reorganization, such realization of assets and liquidation of liabilities are
subject to a significant number of uncertainties, including funding the Plan of
Reorganization from positive cash flows. Company management plans to liquidate
the Company liabilities through a sale of the Company assets (See Note 8).
Reorganization income included in the Statement of Operations for the six
months ended June 30, 1995 and the year ended December 31, 1994, respectively,
is comprised of the following:
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1995 1994
----------- ------------
(UNAUDITED)
<S> <C> <C>
Income from negotiated settlements........................... $ $ (579,543)
Professional fees............................................ -- 67,231
----------- ------------
$ $ (512,312)
========= ==========
</TABLE>
Income from negotiated settlements represents debt forgiveness via
negotiations and discounting by certain creditors in exchange for accelerated
payment by the Company.
Partnership allocations
All items of income or loss are allocated to the limited partner.
Principles of combination
The combined financial statements include accounts of San Jacinto and
DuPont. All intercompany balances and transactions have been eliminated.
Cash and cash equivalents
Cash and cash equivalents are highly liquid investments with original
maturities of three months or less.
F-66
<PAGE> 176
SAN JACINTO TELEVISION CORPORATION AND DUPONT INVESTMENT GROUP, 85 LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994
Property and equipment
Purchases of property and equipment, including additions and improvements
and expenditures for repairs and maintenance that significantly add to
productivity or extend the economic lives of the assets, are capitalized at cost
and depreciated on a straight-line basis over their estimated useful lives as
follows:
<TABLE>
<S> <C>
Broadcasting tower and equipment........................... 6-13 years
Office furniture equipment and other....................... 6-10 years
Building................................................... 40 years
Leasehold improvements..................................... Term of lease
</TABLE>
Maintenance, repairs, and minor replacements of these items are charged to
expense as incurred.
Intangible assets
Intangible assets consist of FCC licenses which are stated at cost and are
being amortized using the straight-line method over the estimated useful life of
25 years.
Revenue recognition
Revenue from broadcast operations is recognized as advertising air time is
broadcast.
Trade agreements
The Company enters into trade agreements which give rise to sales of
advertising air time in exchange for products and services. Sales from trade
agreements are recognized at the fair market value of products or services
received as advertised air time is broadcast. Products and services received are
expensed when used in the broadcast operations. If the Company uses exchanged
products or services before advertising air time is provided, a trade liability
is recognized.
Income taxes
San Jacinto is a C-Corporation for federal income tax purposes and has
experienced cumulative net losses of $378,425 as of December 31, 1994. Income or
loss of DuPont, is included in the tax returns of the individual partners.
Accordingly, federal income taxes are not recognized by the Partnership (see
Note 7).
Treasury stock
Treasury stock is accounted for under the cost method. Currently, San
Jacinto holds 80 shares of $1 par value in Treasury at its acquisition cost of
$10,000.
Interim financial data
The interim financial data of the Company is unaudited; however, in the
opinion of the Company, the interim data includes all adjustments, consisting of
only normal recurring adjustments necessary for a fair presentation of results
of the interim periods. The results of operations for the six months ended June
30, 1995 are not necessarily indicative of the results that can be expected for
the entire fiscal year ending December 31, 1995.
Effective March 1, 1995, the Company and Paxson Communications Corporation,
("Paxson"), entered into a time brokerage agreement whereby Paxson provides
programming for the station for total fees of $184,332 for the period March 1,
1995 through June 30, 1995.
F-67
<PAGE> 177
SAN JACINTO TELEVISION CORPORATION AND DUPONT INVESTMENT GROUP, 85 LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994
2. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Broadcasting tower and equipment........................................ $1,845,473
Land.................................................................... 152,827
Building and leasehold improvements..................................... 125,895
Office furniture and equipment.......................................... 95,566
------------
2,219,761
Accumulated depreciation................................................ (955,163)
------------
Property and equipment, net............................................. $1,264,598
==========
Depreciation expense for the year....................................... $ 191,476
==========
</TABLE>
3. INTANGIBLE ASSETS:
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
FCC licenses............................................................ $ 848,500
Accumulated amortization................................................ (201,000)
------------
Intangible assets, net.................................................. $ 647,500
==========
Amortization expense for the year....................................... $ 33,800
==========
</TABLE>
4. NOTES PAYABLE TO SHAREHOLDERS:
Notes payable to shareholders consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Shareholder notes payable, (12% interest due annually, principal
payments past due since December 31, 1991)............................ $360,000
Shareholder notes payable, (12% interest due annually, principal
payments past due since December 31, 1993)............................ 140,000
------------
$500,000
==========
</TABLE>
Notes payable to shareholders accrue interest at 12% per annum, with
principal payments due on December 31, 1991 and 1993, respectively. Notes
payable have past their stated maturities and are therefore classified as
current liabilities. Interest paid monthly to shareholders on the outstanding
past due balances, aggregated $57,862 for the year ended December 31, 1994.
F-68
<PAGE> 178
SAN JACINTO TELEVISION CORPORATION AND DUPONT INVESTMENT GROUP, 85 LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994
5. LIABILITIES SUBJECT TO PLAN OF REORGANIZATION:
The principal categories of claims classified in the Combined Balance Sheet
as liabilities subject to Plan of Reorganization at December 31, 1994 are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Unsecured claims........................................................ $1,692,839
Notes payable........................................................... 753,243
Administrative claims................................................... 158,995
------------
$2,605,077
==========
</TABLE>
6. COMMITMENTS AND CONTINGENCIES:
The Company incurred expenses of approximately $44,012 for the year ended
December 31, 1994 under non-cancelable operating leases for office equipment and
tower space. Future minimum annual payments under these non-cancelable operating
leases as of December 31, 1994, are as follows:
<TABLE>
<CAPTION>
PAYMENT
-------
<S> <C>
1995....................................................................... $45,892
1996....................................................................... 41,792
1997....................................................................... 2,894
-------
$90,578
=======
</TABLE>
7. INCOME TAXES:
Significant components of the Company's deferred tax liabilities (assets)
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1994
------------
<S> <C>
Deferred taxes
Assets
Doubtful accounts allowance and other.............................. $ (24,117)
Net operating loss carryforward.................................... (190,046)
Liabilities........................................................... --
------------
(214,163)
Deferred tax asset valuation allowance............................. 214,163
------------
Deferred tax (asset) liability.......................................... $ 0
==========
</TABLE>
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. A valuation allowance
has been provided for the net deferred asset.
F-69
<PAGE> 179
SAN JACINTO TELEVISION CORPORATION AND DUPONT INVESTMENT GROUP, 85 LTD.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1994
The reconciliation of income tax benefit attributable to continuing
operations, computed at U.S. Federal Statutory tax rates, to provision for
income taxes is:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
1994
------------------
<S> <C>
Tax at U.S. Federal Statutory tax rates............................. $ 188,833
State income tax.................................................... 24,993
Partnership income/(loss) effect.................................... 55,694
Permanent differences............................................... 25,884
Utilization of net operating losses................................. (295,404)
------------------
$ 0
==============
</TABLE>
8. SUBSEQUENT EVENT:
On January 20, 1995, the Company entered into an asset purchase agreement
to sell substantially all of the operating assets and related intangible assets
to Paxson for approximately $7,900,000. On March 1, 1995, Paxson began operating
the station under a time brokerage agreement ("TBA"). Under a TBA, the stations'
operating revenues and expenses are operated by Paxson in exchange for a monthly
time brokerage fee.
F-70
<PAGE> 180
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE OR EXCHANGE
MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Certain Definitions and Market and
Industry Data....................... i
Available Information................. ii
Prospectus Summary.................... 1
Risk Factors.......................... 12
The Exchange Offer.................... 19
The Company........................... 27
The Guarantors........................ 27
The Acquisitions...................... 27
Use of Proceeds....................... 29
Capitalization........................ 30
Pro Forma Financial Information....... 31
Selected Historical and Pro Forma
Financial Data...................... 36
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 39
Business.............................. 43
Legal Proceedings..................... 63
Management............................ 64
Certain Transactions.................. 68
Principal Stockholders................ 72
Description of New Credit Facility.... 73
Description of the Notes.............. 74
Description of the Capital Stock...... 97
Certain Federal Income Tax
Consideration....................... 98
Plan of Distribution.................. 101
Legal Opinions........................ 102
Experts............................... 102
Index of Financial Statements......... F-1
</TABLE>
------------------
Until 1996, (90 days after the date of this Prospectus) all
dealers effecting transactions in the New Notes, whether or not participating in
this distribution, may be required to deliver a Prospectus. This is in addition
to the obligations of dealers to deliver a Prospectus when selling New Notes
received in exchange for Original Notes held for their account. See "Plan of
Distribution."
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$230,000,000
LOGO
PAXSON COMMUNICATIONS
CORPORATION
11 5/8% SENIOR SUBORDINATED
NOTES DUE 2002
-----------------
PROSPECTUS
-----------------
, 1995
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 181
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Paxson Communications Corporation (the "Company" or "PCC") and two other
Registrants that are its direct or indirect subsidiaries are Delaware
corporations (collectively referred to as the "Delaware Corporations"). The
Delaware Corporations' Certificates of Incorporation and Bylaws contain
provisions limiting the personal liability of its directors for monetary damages
resulting from breaches of their duty of care to the extent permitted by Section
102(b)(7) of the Delaware General Corporation Law. The Delaware Corporations'
Certificates of Incorporation and Bylaws also contain provisions making
indemnification of the Delaware Corporations' directors and officers mandatory
to the fullest extent permitted by the Delaware General Corporation Law,
including circumstances in which indemnification is otherwise discretionary.
The Delaware General Corporation Law permits the indemnification by a
Delaware corporation of its directors, officers, employees and other agents
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement in connection with specified actions, suits or proceedings,
whether civil, criminal, administrative or investigative (other than derivative
actions which are by or in the right of the corporation) if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceedings, had no reasonable cause to believe their conduct was illegal. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such an action and require
court approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation.
Eight of the Registrants are Florida limited partnerships. Such
Registrants' Agreements of Limited Partnership contain provisions indemnifying
the general partner for any loss, expense (including attorneys' fees) or damage
incurred by reason of any act or omission by it in good faith on behalf of the
partnership and in a manner that it reasonably believes to be within the scope
of authority granted to it under the limited partnership agreement and in the
best interest of the partnership (but not, in any event, any loss, expense or
damage incurred by a general partner by reason of gross negligence or willful
misconduct).
The Florida Revised Uniform Limited Partnership Act (the "Limited
Partnership Act") provides general partners of a limited partnership the same
rights and powers, except as provided in the Limited Partnership Act or in the
partnership agreement, as a partner in a general partnership. The Florida
Uniform Partnership Act provides that the partnership must indemnify every
partner for payments made and personal liabilities reasonably incurred in the
ordinary and proper conduct of the partnership's business or for the
preservation of its business or property.
All of the remaining Registrants are direct or indirect subsidiaries of
Paxson Communications Corporation and are Florida corporations (collectively
referred to as the "Florida Corporations"). The Florida Corporations' Bylaws
contain provisions making indemnification of the Florida Corporations' officers
and directors mandatory to the fullest extent permitted by Florida law. The
Florida Business Corporation Act permits the indemnification by a Florida
corporation of its directors, officers, employees and other agents against
liability in connection with any proceeding, including any appeal thereof (other
than derivative actions which are by or in the right of the corporation), if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was illegal.
II-1
<PAGE> 182
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------
<S> <C> <C>
3.1.1 -- Certificate of Incorporation of the Company**
3.1.2 -- The Company's Certificate of Designations of PCC's 15% Cumulative Compounding
Redeemable Preferred Stock*
3.1.3 -- The Company's Certificate of Designations of PCC's Series B 15% Cumulative
Compounding Redeemable Preferred Stock**
3.1.4 -- The Company's Certificate of Designations of PCC's Junior Cumulative Compounding
Redeemable Preferred Stock**
3.1.5 -- Bylaws of the Company*
3.2.1 -- Articles of Incorporation of Paxson Communications of Florida, Inc.
3.2.2 -- Bylaws of Paxson Communications of Florida, Inc.
3.3.1 -- Articles of Incorporation of Paxson Communications LP, Inc.
3.3.2 -- Bylaws of Paxson Communications LP, Inc.+
3.4.1 -- Articles of Incorporation of Paxson Communications Management Company
3.4.2 -- Bylaws of Paxson Communications Management Company+
3.5.1 -- Articles of Incorporation of Paxson Communications Marketing, Inc.
3.5.2 -- Bylaws of Paxson Communications Marketing, Inc.+
3.6.1 -- Articles of Incorporation of Paxson Communications Networks, Inc.
3.6.2 -- Bylaws of Paxson Communications Networks, Inc.+
3.7.1 -- Articles of Incorporation of Excel Marketing Enterprises, Inc.
3.7.2 -- Bylaws of Excel Marketing Enterprises, Inc.
3.8.1 -- Articles of Incorporation of Paxson Outdoor, Inc.
3.8.2 -- Bylaws of Paxson Outdoor, Inc.
3.9.1 -- Articles of Incorporation of Paxson Networks, Inc.
3.9.2 -- Bylaws of Paxson Networks, Inc.+
3.10.1 -- Articles of Incorporation of Paxson Communications Television, Inc.
3.10.2 -- Bylaws of Paxson Communications Television, Inc.+
3.11.1 -- Limited Partnership Agreement of Paxson Broadcasting of Jacksonville, Limited
Partnership
3.11.2 -- Certificate of Limited Partnership of Paxson Broadcasting of Jacksonville, Limited
Partnership+
3.12.1 -- Limited Partnership Agreement of Paxson Broadcasting Of Miami, Limited Partnership
3.12.2 -- Certificate of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership+
3.13.1 -- Limited Partnership Agreement of Paxson Broadcasting Of Orlando, Limited
Partnership
3.13.2 -- Certificate of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership+
3.14.1 -- Limited Partnership Agreement of Paxson Broadcasting of Tampa, Limited Partnership
3.14.2 -- Certificate of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership+
3.15.1 -- Limited Partnership Agreement of Paxson Tampa License Limited Partnership
3.15.2 -- Certificate of Limited Partnership of Paxson Tampa License Limited Partnership+
3.16.1 -- Limited Partnership Agreement of Paxson Jacksonville License Limited Partnership
3.16.2 -- Certificate of Limited Partnership of Paxson Jacksonville License Limited
Partnership+
3.17.1 -- Limited Partnership Agreement of Paxson Miami License Limited Partnership
</TABLE>
II-2
<PAGE> 183
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------
<S> <C> <C>
3.17.2 -- Certificate of Limited Partnership of Paxson Miami License Limited Partnership+
3.18.1 -- Limited Partnership Agreement of Paxson Orlando License Limited Partnership
3.18.2 -- Certificate of Limited Partnership of Paxson Orlando License Limited Partnership+
3.19.1 -- Articles of Incorporation of Paxson Communications of Atlanta-14, Inc.
3.19.2 -- Bylaws of Paxson Communications of Atlanta-14, Inc.+
3.20.1 -- Articles of Incorporation of Paxson Atlanta License, Inc.
3.20.2 -- Bylaws of Paxson Atlanta License, Inc.+
3.21.1 -- Articles of Incorporation of Paxson Communications of Boston-60, Inc.
3.21.2 -- Bylaws of Paxson Communications of Boston-60, Inc.+
3.22.1 -- Articles of Incorporation of Paxson Boston License, Inc.
3.22.2 -- Bylaws of Paxson Boston License, Inc.+
3.23.1 -- Articles of Incorporation of Paxson Communications of Dallas-68, Inc.
3.23.2 -- Bylaws of Paxson Communications of Dallas-68, Inc.+
3.24.1 -- Articles of Incorporation of Paxson Dallas License, Inc.
3.24.2 -- Bylaws of Paxson Dallas License, Inc.+
3.25.1 -- Articles of Incorporation of Paxson Communications of New London-26, Inc.
3.25.2 -- Bylaws of Paxson Communications of New London-26, Inc.+
3.26.1 -- Articles of Incorporation of Paxson New London License, Inc.
3.26.2 -- Bylaws of Paxson New London License, Inc.+
3.27.1 -- Articles of Incorporation of Paxson Communications of Philadelphia-61, Inc.
3.27.2 -- Bylaws of Paxson Communications of Philadelphia-61, Inc.+
3.28.1 -- Articles of Incorporation of Paxson Philadelphia License, Inc.
3.28.2 -- Bylaws of Paxson Philadelphia License, Inc.+
3.29.1 -- Articles of Incorporation of Paxson Communications of Miami-35, Inc.
3.29.2 -- Bylaws of Paxson Communications of Miami-35, Inc.+
3.30.1 -- Articles of Incorporation of Paxson Communications of San Jose-65, Inc.
3.30.2 -- Bylaws of Paxson Communications of San Jose-65, Inc.+
3.31.1 -- Articles of Incorporation of Paxson San Jose License, Inc.
3.31.2 -- Bylaws of Paxson San Jose License, Inc.+
3.32.1 -- Articles of Incorporation of Paxson Communications of Tampa-66, Inc.
3.32.2 -- Bylaws of Paxson Communications of Tampa-66, Inc.+
3.33.1 -- Articles of Incorporation of Paxson Communications of West Palm Beach-25, Inc.
3.33.2 -- Bylaws of Paxson Communications of West Palm Beach-25, Inc.+
3.34.1 -- Articles of Incorporation of Paxson West Palm Beach License, Inc.
3.34.2 -- Bylaws of Paxson West Palm Beach License, Inc.+
3.35.1 -- Articles of Incorporation of Paxson Communications of Los Angeles-30, Inc.
3.35.2 -- Bylaws of Paxson Communications of Los Angeles-30, Inc.+
3.36.1 -- Articles of Incorporation of Paxson Los Angeles License, Inc.
3.36.2 -- Bylaws of Paxson Los Angeles License, Inc.+
3.37.1 -- Articles of Incorporation of Paxson Communications of Minneapolis-41, Inc.
3.37.2 -- Bylaws of Paxson Communications of Minneapolis-41, Inc.+
</TABLE>
II-3
<PAGE> 184
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------
<S> <C> <C>
3.38.1 -- Articles of Incorporation of Paxson Communications of St. Louis, Inc.
3.38.2 -- Bylaws of Paxson Communications of St. Louis, Inc.+
3.39.1 -- Articles of Incorporation of Paxson Minneapolis License, Inc.
3.39.2 -- Bylaws of Paxson Minneapolis License, Inc.+
3.40.1 -- Articles of Incorporation of Paxson Communications of Cookeville, Inc.
3.40.2 -- Bylaws of Paxson Communications of Cookeville, Inc.+
3.41.1 -- Articles of Incorporation of Paxson Cookeville License, Inc.
3.41.2 -- Bylaws of Paxson Cookeville License, Inc.+
3.42.1 -- Articles of Incorporation of Paxson Communications of Ft. Pierce-34, Inc.
3.42.2 -- Bylaws of Paxson Communications of Ft. Pierce-34, Inc.+
3.43.1 -- Articles of Incorporation of Paxson Communications of Orlando-56, Inc.
3.43.2 -- Bylaws of Paxson Communications of Orlando-56, Inc.+
3.44.1 -- Articles of Incorporation of Paxson Communications of Houston-49, Inc.
3.44.2 -- Bylaws of Paxson Communications of Houston-49, Inc.+
3.45.1 -- Articles of Incorporation of Paxson Houston License, Inc.
3.45.2 -- Bylaws of Paxon Houston License, Inc.+
3.46.1 -- Certificate of Incorporation of Infomall TV Network, Inc.
3.46.2 -- Bylaws of Infomall TV Network, Inc.
3.47.1 -- Articles of Incorporation of Paxson St. Louis License, Inc.
3.47.2 -- Bylaws of Paxson St. Louis License, Inc.+
3.48.1 -- Certificate of Incorporation of Infomall Cable Network, Inc.
3.48.2 -- Bylaws of Infomall Cable Network, Inc.+
3.49.1 -- Articles of Incorporation of Paxson Communications of Cleveland-67, Inc.
3.49.2 -- Bylaws of Paxson Communications of Cleveland-67, Inc.+
3.50.1 -- Articles of Incorporation of Paxson Communications of Washington-60, Inc.
3.50.2 -- Bylaws of Paxson Communications of Washington-60, Inc.+
3.51.1 -- Articles of Incorporation of Paxson Washington License, Inc.
3.51.2 -- Bylaws of Paxson Washington License, Inc.+
3.52.1 -- Articles of Incorporation of Paxson Communications of Phoenix-13, Inc.
3.52.2 -- Bylaws of Paxson Communications of Phoenix-13, Inc.+
3.53.1 -- Articles of Incorporation of Paxson Phoenix License, Inc.
3.53.2 -- Bylaws of Paxson Phoenix License, Inc.+
3.54.1 -- Articles of Incorporation of Infomall Los Angeles, Inc.
3.54.2 -- Bylaws of Infomall Los Angeles, Inc.+
3.55.1 -- Articles of Incorporation of Paxson Communications of Milwaukee-55, Inc.
3.55.2 -- Bylaws of Paxson Communications of Milwaukee-55, Inc.+
3.56.1 -- Articles of Incorporation of Paxson Communications of Denver-59, Inc.
3.56.2 -- Bylaws of Paxson Communications of Denver-59, Inc.+
3.57.1 -- Articles of Incorporation of Paxson Communications of New York-43, Inc.
3.57.2 -- Bylaws of Paxson Communications of New York-43, Inc.+
3.58.1 -- Articles of Incorporation of Paxson New York License, Inc.
</TABLE>
II-4
<PAGE> 185
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------
<S> <C> <C>
3.58.2 -- Bylaws of Paxson New York License, Inc.+
3.59.1 -- Articles of Incorporation of Paxson Communications of Akron-23, Inc.
3.59.2 -- Bylaws of Paxson Communications of Akron-23, Inc.+
3.60.1 -- Articles of Incorporation of Paxson Akron License, Inc.
3.60.2 -- Bylaws of Paxson Akron License, Inc.+
3.61.1 -- Articles of Incorporation of Paxson Communications of Dayton-26, Inc.
3.61.2 -- Bylaws of Paxson Communications of Dayton-26, Inc.+
4.1 -- Indenture dated as of September 28, 1995 among the Company, The Bank of New York,
as Trustee, and the Guarantors named therein (the "Indenture")
4.2.1 -- Form of Original Note No. 1 for $115,000,000, CUSIP No. 704231-AA-7, with Guarantee
of Guarantors listed therein
4.2.2 -- Form of Original Note No. 2 for $115,000,000, CUSIP No. 704231-AA-7, with Guarantee
of Guarantors listed therein
4.3 -- Form of New Note with Form of New Guarantee
4.4 -- Registration Rights Agreement dated as of September 28, 1995 by and among the
Company, the Guarantors named therein and each of the Purchasers referred to
therein
5 -- Legal Opinion of Holland & Knight+
8 -- Legal Opinion of Holland & Knight regarding Tax Matters+
9 -- Amended and Restated Stockholders Agreement, dated as of December 22, 1994, by and
among PCC and stockholders thereof**
10.1 -- Securities Purchase Agreement, dated as of September 22, 1995, by and among PCC,
the Guarantors named therein and the Initial Purchasers named therein
10.2 -- Stock Purchase Agreement, dated as of December 15, 1993, by and among PCC and
certain purchasers of PCC securities**
10.3 -- Stock Purchase Agreement dated as of December 22, 1994, by and among PCC and
certain purchasers of PCC securities**
10.4 -- Amended and Restated Stockholders Agreement dated as of December 22, 1994, by and
among PCC and certain stockholders thereof (incorporated by reference to Exhibit 9)
10.5 -- Exchange and Consent Agreement dated as of December 22, 1994 by and among PCC and
certain stockholders thereof**
10.9 -- Asset Purchase Agreement, dated as of March 10, 1994, by and between
Phipps-Potamkin Television Partners and PCC*
10.10 -- Asset Purchase Agreement, dated as of March 31, 1994, by and between Paxson
Communications of Atlanta-14, Inc. and TV-14, Inc.*
10.11 -- Time Brokerage Agreement dated as of March 31, 1994, by and between TV-14, Inc. and
Paxson Communications of Atlanta-14, Inc.*
10.12 -- Asset Purchase Agreement between Delaware Valley Broadcasters Limited Partnership
and PCC dated October 14, 1994**
10.13 -- Asset Purchase Agreement between Paxson Communications of New London-26, Inc. and
R&R Media Corp. dated November 25, 1994**
10.14 -- Asset Purchase Agreement between PCC and Sandino Telecasters, Inc. dated December
5, 1994**
10.15 -- Asset Purchase Agreement by and among Paxson Communications of San Jose-65, Inc.
and Friendly Bible Church, Inc. and United Christian Broadcasting, Inc. dated
December 21, 1994**
</TABLE>
II-5
<PAGE> 186
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------
<S> <C> <C>
10.16 -- Asset Purchase Agreement by and among Channel 56 of Orlando, Inc., Treasure Coast
Communications, Inc. and PCC dated December 23, 1994**
10.17 -- Asset Purchase Agreement by and among PCC and San Jacinto Television Corp. and
DuPont Investment Group 85, Ltd. dated January 20, 1995**
10.18 -- Asset Purchase Agreement by and among Paxson Communications of Boston-60, Inc. and
Paugus Television, Inc. and The Roger L. Putnam Trust and The Estate of Percival
Lowell**
10.19 -- Warrant Agreement dated as of December 15, 1993 by and among PCC and William Watson
as Warrant Agent*
10.20 -- Asset Purchase Agreement by and among Paxson Broadcasting of Tampa, L.P. and Largo
Broadcasting Company dated July 20, 1994**
10.21 -- Asset Purchase Agreement between Paxson Broadcasting of Orlando, L.P. and Florida
Media, Inc. dated September 23, 1994**
10.22 -- Asset Purchase Agreement between PCC and Tri-Talk Radio, L.C. dated February 24,
1995**
10.23 -- Agreement between United Broadcast Group, Ltd. and Paxson Communications of
Dallas-68, Inc. dated December 14, 1994 and related Joint Request for Approval of
Settlement Agreement**
10.24 -- Warrant Agreement dated as of December 22, 1994 by and among PCC and William Watson
as Warrant Agent**
10.25 -- Form of Employment Agreement dated as of June 30, 1994, by and between PCC and
Lowell W. Paxson*
10.26 -- Paxson Communications Corp. Profit Sharing Plan*
10.27 -- Form of Paxson Communications Corp. Stock Incentive Plan*
10.28 -- Paxson Broadcasting/Communications Second Amendment To Credit Agreement, dated as
of March 31, 1995***
10.29 -- Asset Purchase Agreement, dated as of March 31, 1995, by and among The Christian
Network, Inc. and LeSea Broadcasting Corporation and PCC***
10.30 -- Stock Purchase Agreement, dated as of April 30, 1995, by and among Channel 59 of
Denver, Inc. and David M. Drucker and Charles Ergen and PCC***
10.31 -- Asset Purchase Agreement, dated as of April 30, 1995, by and among Channel 59 of
Denver, Inc. and Echonet Corporation and PCC***
10.32 -- First Letter Agreement, dated as of December 2, 1994, to Asset Purchase Agreement
by and between Paxson Communications Corp. and Sandino Telecasters, Inc., dated as
of December 5, 1994****
10.33 -- Second Letter Agreement, dated as of December 5, 1994, to Asset Purchase Agreement
by and between Paxson Communications Corp. and Sandino Telecasters, Inc., dated as
of December 5, 1994****
10.34 -- Third Amendment, dated as of May 17, 1995, to Asset Purchase Agreement by and
between Paxson Communications Corp. and Sandino Telecasters, Inc., dated as of
December 5, 1994****
10.35 -- First Amendment, dated as of May 17, 1995, to Asset Purchase Agreement by and
between Paxson Communications of Boston-60, Inc., Paugus Television, Inc., The
Roger L. Putnam Trust and The Estate of Percival Lowell, dated as of January 20,
1995****
10.36 -- Asset Purchase Agreement, dated January 31, 1995, between Gary A. Rosen in his
capacity as Bankruptcy Trustee for Flying A Communications, Inc. and Paxson
Communications Corp.*****
</TABLE>
II-6
<PAGE> 187
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------
<S> <C> <C>
10.37 -- Real Estate Sale and Purchase Agreement, dated as of May 18, 1995, by and between
F&M Bank -- Martinsburg and Paxson Communications of Washington-60, Inc.*****
10.38 -- Asset Purchase Agreement, dated as of June 1, 1995, by and between Channel 26 of
Dayton, Inc. and Video Mall Communications, Inc. for Television Station WTJC-TV,
Springfield, Ohio*****
10.39 -- Asset Purchase Agreement, dated as of May 23, 1995, by and among Whitehead Media,
Inc., Morton J. Kent and Canton, Inc. for Television Station WOAC(TV) Canton,
Ohio*****
10.41 -- Loan Agreement, dated as of September 22, 1994, among Paxson Communications Corp.
and Whitehead Media, Inc.*****
10.42 -- Amendment to Loan Agreement, dated October 3, 1994, among Paxson Communications
Corp. and Whitehead Media, Inc.*****
10.43 -- Second Amendment to Loan Agreement, dated August 4, 1995, among Paxson
Communications Corporation and Whitehead Media, Inc.*****
10.44 -- Time Brokerage Agreement, dated September 22, 1994, effective as of August 4, 1995,
between Whitehead Media, Inc. and Paxson Communications Corporation for Television
Station WTVX-TV Fort Pierce, Florida******
10.45 -- Amendment to Time Brokerage Agreement, dated as of April 19, 1995, between
Whitehead Media, Inc. and Paxson Communications Corporation for Television Station
WTVX-TV Fort Pierce, Florida******
10.46 -- Non-compete Agreement dated August 18, 1995 between Paxson Communications
Corporation and Lowell W. Paxson
10.47 -- Asset Purchase Agreement dated as of August 23, 1995 by and among Valuevision
International, Inc., VVI Bridgeport, Inc., VVI Akron, Inc., and Paxson
Communications Corporation
10.48 -- Time Brokerage Agreement dated August 31, 1995 by and between Channel 56 of
Orlando, Inc. and Paxson Communications of Orlando-56 Inc. for Television Station
WIRB(TV), Melbourne, Florida
10.49 -- Loan Agreement dated August 31, 1995 among Paxson Communications of Orlando-56,
Inc. and Channel 56 of Orlando, Inc.
10.50 -- Time Brokerage Agreement dated August 31, 1995 by and between UHF Channel 59 Corp.
and Paxson Communications of Denver-59, Inc. for Television Station KUBD(TV),
Denver, Colorado
10.51 -- Loan Agreement dated August 31, 1995 by and between Paxson Communications of
Denver-59, Inc. and Channel 59 of Denver, Inc.
10.52 -- Option Agreement dated August 31, 1995 by and among Paxson Communications of
Denver-59, Inc., Channel 59 of Denver, Inc., and UHF Channel 59 Corp.
10.53 -- Asset Purchase Agreement dated August 31, 1995 by and between Channel 13 of
Flagstaff, Inc., Michael C. Gelfand, and Del Ray Television Company, Inc.
10.54 -- Asset Purchase Agreement dated October 2, 1995 by and between Whitehead Media, Inc.
and NGM Television Partners, Limited for Television Station WNGM-TV, Athens,
Georgia
10.55 -- Time Brokerage Agreement dated October 16, 1995 by and between Channel 26 of
Dayton, Inc. and Paxson Communications of Dayton-26, Inc. for Television Station
WTJC(TV), Springfield, Ohio
10.56 -- Loan Agreement dated October 6, 1995 by and among Paxson Communications of
Dayton-26, Inc. and Channel 26 of Dayton, Inc.
10.57 -- Option Agreement dated October 6, 1995 by and between Paxson Communications of
Dayton-26, Inc. and Channel 26 of Dayton, Inc.
</TABLE>
II-7
<PAGE> 188
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------
<S> <C> <C>
10.58 -- Asset Purchase Agreement dated August 25, 1995 by and between Channel 13 of St.
Louis, Inc. and McEntee Broadcasting, Inc., for Television Station WCEE-TV, Mt.
Vernon, Illinois
12 -- Statement re: Computation of Ratios
21 -- List of Subsidiaries
23 -- Consent of Holland & Knight (contained in Exhibit 5)
23.1 -- Consent of Price Waterhouse LLP, independent certified public accountants
23.2 -- Consent of Ryals, Brimmer, Burek & Keelan, independent certified public accountants
24 -- Powers of Attorney (included on signature pages of Registration Statement)
25 -- Statement of Eligibility of Trustee, The Bank of New York, on Form T-1
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Guaranteed Delivery
99.3 -- Exchange Agent Agreement
</TABLE>
- ---------------
<TABLE>
<C> <S>
* Filed with the Company's Registration Statement of Form S-4, dated September 26,
1994, Registration No. 33-84416 and incorporated herein by reference.
** Filed with the Company's Annual Report on Form 10-K, dated March 31, 1995 and
incorporated herein by reference.
*** Filed with the Company's Quarterly Report on Form 10-Q, dated May 12, 1995 and
incorporated herein by reference.
**** Filed with the Company's Report on Form 8-K dated June 1, 1995 and incorporated
herein by reference.
***** Filed with the Company's Quarterly Report on Form 10-Q, dated August 14, 1995 and
incorporated herein by reference.
****** Filed with the Company's Report on Form 8-K, dated August 21, 1995 and incorporated
herein by reference.
+ To be filed by amendment.
</TABLE>
(b) Financial Statement Schedules
All financial statement schedules are omitted because they are either not
applicable or the required information is included in the financial statements
or notes thereto appearing elsewhere in this Registration Statement.
(c) Not Applicable.
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(b)(1) The undersigned Registrants hereby undertake as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by
II-8
<PAGE> 189
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The Registrants undertake that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned Registrants hereby undertake:
(1) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the Registration Statement through the date of responding
to the request.
(2) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not subject of and included in the Registration Statement when it
became effective.
II-9
<PAGE> 190
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
PAXSON COMMUNICATIONS CORPORATION, a Delaware corporation, has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of West Palm Beach, State of Florida on October 26,
1995.
PAXSON COMMUNICATIONS
CORPORATION
By: /s/ LOWELL W. PAXSON
------------------------------------
Lowell W. Paxson
Chairman of the Board
POWER OF ATTORNEY
Each of the undersigned officers and directors of PAXSON COMMUNICATIONS
CORPORATION (the "Company"), a Delaware corporation, for himself and not for one
another, does hereby constitute and appoint ANTHONY L. MORRISON and ARTHUR D.
TEK, and each and any of them and his substitutes, a true and lawful attorney in
his name, place and stead, in any and all capacities, to sign his name to any
and all amendments to this registration statement, including post-effective
amendments, and to cause the same to be filed with the Securities and Exchange
Commission, granting unto said attorneys and each of them full power of
substitution and full power and authority to do and perform any act and thing
necessary and proper to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present, and each of the
undersigned for himself hereby ratifies and confirms all that said attorneys or
any one of them shall lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- ---------------------------- -------------------
<C> <S> <C>
/s/ LOWELL W. PAXSON Chairman of the Board, Chief October 26, 1995
- --------------------------------------------- Executive Officer, and
Lowell W. Paxson Director (Principal
Executive Officer)
/s/ ARTHUR D. TEK Vice President, Chief October 26, 1995
- --------------------------------------------- Financial Officer, and
Arthur D. Tek Director (Principal
Financial Officer)
/s/ KENNETH M. GAMACHE Controller (Principal October 26, 1995
- --------------------------------------------- Accounting Officer)
Kenneth M. Gamache
/s/ JAMES B. BOCOCK President, Chief Operating October 26, 1995
- --------------------------------------------- Officer, and Director
James B. Bocock
/s/ MICHAEL J. MAROCCO Director October 26, 1995
- ---------------------------------------------
Michael J. Marocco
</TABLE>
II-10
<PAGE> 191
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- ---------------------------- -------------------
<C> <S> <C>
/s/ JOHN A. KORNREICH Director October 26, 1995
- ---------------------------------------------
John A. Kornreich
/s/ J. PATRICK MICHAELS, JR. Director October 26, 1995
- ---------------------------------------------
J. Patrick Michaels, Jr.
/s/ S. WILLIAM SCOTT Director October 26, 1995
- ---------------------------------------------
S. William Scott
</TABLE>
II-11
<PAGE> 192
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrants listed directly below have duly caused this Registration Statement
to be signed on each their behalfs, respectively, by the undersigned, thereunto
duly authorized in the City of West Palm Beach, State of Florida on October 26,
1995.
<TABLE>
<S> <C>
PAXSON COMMUNICATIONS TELEVISION, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FLORIDA, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS LP, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS MANAGEMENT
COMPANY
(a Florida corporation)
PAXSON COMMUNICATIONS MARKETING, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS NETWORKS, INC.
(a Florida corporation)
PAXSON OUTDOOR, INC.
(a Florida corporation)
PAXSON NETWORKS, INC.
(a Florida corporation)
EXCEL MARKETING ENTERPRISES, INC.
(a Florida corporation)
INFOMALL CABLE NETWORK, INC.
(a Delaware corporation)
INFOMALL TV NETWORK, INC.
(a Delaware corporation)
INFOMALL LOS ANGELES, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF AKRON-23, INC.
(a Florida corporation)
PAXSON AKRON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ATLANTA-14, INC.
(a Florida corporation)
PAXSON ATLANTA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BOSTON-60, INC.
(a Florida corporation)
PAXSON BOSTON LICENSE, INC.
(a Florida corporation)
</TABLE>
II-12
<PAGE> 193
<TABLE>
<S> <C>
PAXSON COMMUNICATIONS OF
CLEVELAND-67, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
COOKEVILLE, INC.
(a Florida corporation)
PAXSON COOKEVILLE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DALLAS-68, INC.
(a Florida corporation)
PAXSON DALLAS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DAYTON-26, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DENVER-59, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
FT. PIERCE-34, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
HOUSTON-49, INC.
(a Florida corporation)
PAXSON HOUSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
LOS ANGELES-30, INC.
(a Florida corporation)
PAXSON LOS ANGELES LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MIAMI-35, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
MILWAUKEE-55, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
MINNEAPOLIS-45, INC.
(a Florida corporation)
PAXSON MINNEAPOLIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
NEW LONDON-26, INC.
(a Florida corporation)
PAXSON NEW LONDON LICENSE, INC.
(a Florida corporation)
</TABLE>
II-13
<PAGE> 194
<TABLE>
<S> <C>
PAXSON COMMUNICATIONS OF
NEW YORK-43, INC.
(a Florida corporation)
PAXSON NEW YORK LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
ORLANDO-56, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
PHILADELPHIA-61, INC.
(a Florida corporation)
PAXSON PHILADELPHIA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHOENIX-13, INC.
(a Florida corporation)
PAXSON PHOENIX LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ST. LOUIS, INC.
(a Florida corporation)
PAXSON ST. LOUIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SAN JOSE-65, INC.
(a Florida corporation)
PAXSON SAN JOSE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF TAMPA-66, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
WASHINGTON-60, INC.
(a Florida corporation)
PAXSON WASHINGTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WEST PALM
BEACH-25, INC.
(a Florida corporation)
PAXSON WEST PALM BEACH LICENSE, INC.
(a Florida corporation)
By: /s/ LOWELL W. PAXSON
-------------------------------------------------
Name: Lowell W. Paxson
Title: Chairman of the Board and Director
</TABLE>
II-14
<PAGE> 195
POWER OF ATTORNEY
Each of the Registrants listed directly above, for itself and not for one
another, does hereby constitute and appoint ANTHONY L. MORRISON and ARTHUR D.
TEK, and each and any of them and his substitutes, a true and lawful attorney in
his name, place and stead, in any and all capacities, to sign his name to any
and all amendments to this registration statement, including post-effective
amendments, and to cause the same to be filed with the Securities and Exchange
Commission, granting unto said attorneys and each of them full power of
substitution and full power and authority to do and perform any act and thing
necessary and proper to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present, and each of the
undersigned for himself hereby ratifies and confirms all that said attorneys or
any one of them shall lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- ------------------------------ -----------------
<S> <C> <C>
/s/ LOWELL W. PAXSON Chairman of the Board and October 26, 1995
- --------------------------------------------- Director (Principal
Lowell W. Paxson Executive Officer)
/s/ ARTHUR D. TEK Treasurer (Principal Financial October 26, 1995
- --------------------------------------------- Officer)
Arthur D. Tek
/s/ KENNETH M. GAMACHE Controller (Principal October 26, 1995
- --------------------------------------------- Accounting Officer)
Kenneth M. Gamache
</TABLE>
II-15
<PAGE> 196
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrants listed directly below have duly caused this Registration Statement
to be signed on each their behalfs, respectively, by the undersigned, thereunto
duly authorized in the City of West Palm Beach, State of Florida on October 26,
1995.
PAXSON BROADCASTING OF
JACKSONVILLE, LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON JACKSONVILLE LICENSE
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF MIAMI,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON MIAMI LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF ORLANDO,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON ORLANDO LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF TAMPA,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON TAMPA LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
By: Paxson Communications of Florida,
Inc., their general partner
By: /s/ LOWELL W. PAXSON
------------------------------------
Name: Lowell W. Paxson
Title: Director
POWER OF ATTORNEY
Each of the Registrants listed directly above, for itself and not for one
another, does hereby constitute and appoint ANTHONY L. MORRISON and ARTHUR D.
TEK, and each and any of them and his substitutes, a true and lawful attorney in
his name, place and stead, in any and all capacities, to sign his name to any
and all amendments to this registration statement, including post-effective
amendments, and to cause the same to be filed with the Securities and Exchange
Commission, granting unto said attorneys and each of them full power of
substitution and full power and authority to do and perform any act and thing
necessary and proper to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present, and each of the
undersigned for himself hereby ratifies and confirms all that said attorneys or
any one of them shall lawfully do or cause to be done by virtue hereof.
II-16
<PAGE> 197
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------- ---------------------------- -------------------
<C> <S> <C>
/s/ LOWELL W. PAXSON Chairman of the Board and October 26, 1995
- --------------------------------------------- sole Director
Lowell W. Paxson
</TABLE>
II-17
<PAGE> 1
EXHIBIT 3.2.1
<PAGE> 2
EXHIBIT 3.2.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF FLORIDA, INC.
The undersigned, acting as incorporator of Paxson
Communications of Florida, Inc., under the Florida Business Corporation Act,
adopts the following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
Paxson Communications of Florida, Inc.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence on the date of
filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or
business permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is
authorized to have outstanding at any time is 10,000 shares of common stock
having a par value of $.01 per share.
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the
corporation is 700 Spottis Woode Lane, Clearwater, Florida 34616, and the name
of the corporation's initial registered agent at that address is Lowell W.
Paxson.
<PAGE> 3
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number
of directors may be either increased or diminished from time to time, as
provided in the bylaws, but shall never be less than one. The name and street
address of the initial director is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation
his rights under Section 607.0201, Florida Statutes, to constitute a
corporation, and he assigns to those persons designated by the board of
directors any rights he may have as incorporator to acquire any of the capital
stock of this corporation, this assignment becoming effective on the date
corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be
vested in the board of directors and the shareholders, except that the board of
directors may not amend or repeal any bylaw adopted by the shareholders if the
shareholders specifically provide that the bylaw is not subject to amendment or
repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or
repeal any provision in these Articles of Incorporation in the manner
prescribed by law, and all rights conferred on shareholders are subject to this
reservation.
-2-
<PAGE> 4
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 29 day of November, 1993.
/s/ Lowell W. Paxson
-----------------------
Lowell W. Paxson
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That Paxson Communications of Florida, Inc., desiring to organize under
the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 700 Spottis Woode Lane,
Clearwater, Florida 34616, has named Lowell W. Paxson as its agent to accept
service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
LOWELL W. PAXSON
By: /s/ Lowell W. Paxson
---------------------
-4-
<PAGE> 1
EXHIBIT 3.2.2
<PAGE> 2
EXHIBIT 3.2.2
AMENDED & RESTATED BYLAWS
OF
PAXSON COMMUNICATIONS OF FLORIDA, INC.
ARTICLE I. MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the
shareholders of the Corporation for the election of directors and the
transaction of other business shall be held during the month of April each year
and on the date and at the time and place that the board of directors
determines. If any annual meeting is not held, by oversight or otherwise, a
special meeting shall be held as soon as practical, and any business transacted
or election held at that meeting shall be as valid as if transacted or held at
the annual meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the
shareholders for any purpose shall be held when called by the chairman of the
board, president, or the board of directors, or when demanded in writing by the
holders of not less than ten percent (unless a greater percentage not to exceed
fifty percent is required by the articles of incorporation) of all the shares
entitled to vote at the meeting. Such demand must be delivered to the
Corporation's secretary. A meeting demanded by shareholders shall be called
for a date not less than ten nor more than sixty days after the request is
made, unless the shareholders requesting the meeting designate a later date.
The secretary shall issue the call for the meeting, unless the president,
chairman of the board, the board of directors, or shareholders requesting the
meeting designate another person to do so. The shareholders at a special
meeting may transact only business that is related to the purposes stated in
the notice of the special meeting.
SECTION 3. PLACE. Meetings of shareholders may be held
either within or outside the State of Florida.
SECTION 4. NOTICE. A written notice of each meeting of
shareholders, stating the place, day, and time of the meeting and, in the case
of a special meeting, the purpose or purposes for which the meeting is called,
shall be delivered to each shareholder of record entitled to vote at the
meeting, not less than ten nor more than sixty days before the date set for the
meeting, either personally or by first-class mail, by or at the direction of
the chairman of the board, president, the secretary, or the officer or other
persons calling the meeting. If mailed, the notice shall be considered
delivered when it is deposited in the United States mail, postage prepaid,
addressed to the shareholder at his address as it appears on the records of the
Corporation.
SECTION 5. WAIVERS OF NOTICE. Whenever any notice is
required to be given to any shareholder of the Corporation under these bylaws,
the articles of incorporation, or the Florida Business Corporation Act, a
written waiver of notice, signed anytime by the person entitled to
-1-
<PAGE> 3
notice shall be equivalent to giving notice. Attendance by a shareholder
entitled to vote at a meeting, in person or by proxy, shall constitute a waiver
of (a) notice of the meeting, except when the shareholder attends a meeting
solely for the purpose, expressed at the beginning of the meeting, of objecting
to the transaction of any business because the meeting is not lawfully called
or convened, and (b) an objection to consideration of a particular matter at
the meeting that is not within the purpose of the meeting unless the
shareholders object to considering the matter when it is presented.
SECTION 6. RECORD DATE. For the purpose of determining the
shareholders for any purpose, the board of directors may either require the
stock transfer books to be closed for up to seventy days or fix a record date,
which shall be not more than seventy days before the date on which the action
requiring the determination is to be taken. However, a record date shall not
precede the date upon which the resolution fixing the record date is adopted.
If the transfer books are not closed and no record date is set by the board of
directors, the record date shall be determined as follows: For determining
shareholders entitled to demand a special meeting, the record date is the date
the first such demand is delivered to the Corporation; For determining
shareholders entitled to a share dividend, the record date is the date the
board of directors authorizes the dividend; If no prior action is required by
the board of directors pursuant to the Florida Business Corporation Act, the
record date for determining shareholders entitled to take action without a
meeting is the date the first signed written consent is delivered to the
Corporation; If prior action is required by the board of directors pursuant to
the Florida Business Corporation Act, the record date for determining
shareholders entitled to take action without a meeting is at the close of
business on the day that the board of directors adopts a resolution taking such
prior action; and For determining shareholders entitled to notice of and to
vote at an annual or special shareholders meeting the record date is as of the
close of business on the day before the first notice is delivered to the
shareholders. When a determination of the shareholders entitled to vote at any
meeting has been made, that determination shall apply to any adjournment of the
meeting, unless the board of directors fixes a new record date. The board of
directors shall fix a new record date if the meeting is adjourned to a date
more than 120 days after the date fixed for the original meeting.
SECTION 7. SHAREHOLDER'S LIST FOR MEETING. A complete
alphabetical list of the names of the shareholders entitled to receive notice
of and to vote at the meeting shall be prepared by the secretary or other
authorized agent having charge of the stock transfer book. The list shall be
arranged by voting group and include each shareholder's address, and the
number, series, and class of shares held. The list must be made available at
least ten days before and throughout each meeting of shareholders, or such
shorter time as exists between the record date and the meeting. The list must
be made available at the Corporation's principal office, registered agent's
office, transfer agent's office or at a place identified in the meeting notice
in the city where the meeting will be held. Any shareholder, his agent or
attorney, upon written demand and at his own expense may inspect the list
during regular business hours. The list shall be available at the meeting and
any shareholder, his agent or attorney is entitled to inspect the list at any
time during the meeting or its adjournment.
-2-
<PAGE> 4
If the requirements of this section have not been
substantially complied with, the meeting, on the demand of any shareholder in
person or by proxy, shall be adjourned until the requirements of this section
are met. If no demand for adjournment is made, failure to comply with the
requirements of this section does not affect the validity of any action taken
at the meeting.
SECTION 8. SHAREHOLDER QUORUM AND VOTING. A majority of the
shares entitled to vote, represented in person or by proxy, constitutes a
quorum at a meeting of shareholders. If a quorum is present, the affirmative
vote of a majority of the shares entitled to vote on the matter is the act of
the shareholders unless otherwise provided by law. A shareholder may vote
either in person or by proxy executed in writing by the shareholder or his duly
authorized attorney-in-fact. After a quorum has been established at a
shareholders' meeting, a withdrawal of shareholders that reduces the number of
shareholders entitled to vote at the meeting below the number required for a
quorum does not affect the validity of an adjournment of the meeting or an
action taken at the meeting prior to the shareholders' withdrawal.
Authorized but unissued shares including those redeemed or
otherwise reacquired by the corporation, and shares of stock of this
Corporation owned by another corporation the majority of the voting stock of
which is owned or controlled by this Corporation, directly or indirectly, at
any meeting shall not be counted in determining the total number of outstanding
shares at any time. The chairman of the board, the president, any vice
president, the secretary, and the treasurer of a corporate shareholder are
presumed to possess, in that order, authority to vote shares standing in the
name of a corporate shareholder, absent a bylaw or other instrument of the
corporate shareholder designating some other officer, agent, or proxy to vote
the shares. Shares held by an administrator, executor, guardian, or
conservator may be voted by him without a transfer of the shares into his name.
A trustee may vote shares standing in his name, but no trustee may vote shares
that are not transferred into his name. If he is authorized to do so by an
appropriate order of the court by which he was appointed, a receiver may vote
shares standing in his name or held by or under his control, without
transferring the shares into his name. A shareholder whose shares are pledged
may vote the shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee or his nominee shall be entitled to vote
the shares unless the instrument creating the pledge provides otherwise.
ARTICLE II. DIRECTORS
SECTION 1. FUNCTION. The business of this Corporation shall
be managed and its corporate powers exercised by the board of directors.
SECTION 2. NUMBER. The Corporation shall have one director
initially. The number of directors may be increased or diminished from time to
time by action of the board of directors or shareholders, but no decrease shall
have the effect of shortening the term of any incumbent director, unless the
shareholders remove the director.
-3-
<PAGE> 5
SECTION 3. QUALIFICATION. Each member of the board of
directors must be a natural person who is eighteen years of age or older. A
director need not be a resident of Florida or a shareholder of the Corporation.
SECTION 4. ELECTION AND TERM. The persons named in the
articles of incorporation as members of the initial board of directors shall
hold office until the first annual meeting of shareholders and until their
successors have been elected and qualified or until their earlier resignation,
removal from office, or death. At the first annual meeting of shareholders and
at each annual meeting thereafter the shareholders shall elect directors to
hold office until the next succeeding annual meeting. Each director shall hold
office for the term for which he is elected and until his successor is elected
and qualifies or until his earlier resignation, removal from office, or death.
SECTION 5. COMPENSATION. The board of directors has
authority to fix the compensation of the directors, as directors and as
officers.
SECTION 6. DUTIES OF DIRECTORS. A director shall perform his
duties as a director, including his duties as a member of any committee of the
board upon which he serves, in good faith, in a manner he reasonably believes
to be in the best interests of the Corporation.
SECTION 7. PRESUMPTION OF ASSENT. A director of the
Corporation who is present at a meeting of the board of directors or a
committee of the board of directors when corporate action is taken is presumed
to have assented to the action unless he votes against it or expressly abstains
from voting on the action taken, or, he objects at the beginning of the meeting
to the holding of the meeting or transacting specific business at the meeting.
SECTION 8. VACANCIES. Unless filled by the shareholders, any
vacancy occurring in the board of directors, including any vacancy created
because of an increase in the number of directors, may be filled by the
affirmative vote of a majority of the remaining directors, even if the number
of remaining directors does not constitute a quorum of the board of directors.
A director elected to fill a vacancy shall hold office only until the next
election of directors by the shareholders.
SECTION 9. REMOVAL OR RESIGNATION OF DIRECTORS. At a meeting
of shareholders called for that purpose, the shareholders, by a vote of the
holders of a majority of the shares entitled to vote at an election of
directors, may remove any director, or the entire board of directors, with or
without cause, and fill any vacancy or vacancies created by the removal.
A director may resign at any time by delivering written notice
to the board of directors or its chairman of the board or the corporation. A
resignation is effective when the notice is delivered unless the notice
specifies later effective date. If a resignation is made effective at a later
date, the board of directors may fill the pending vacancy before the effective
date if the board of directors provided that the successor does not take office
until the effective date.
-4-
<PAGE> 6
SECTION 10. QUORUM AND VOTING. A majority of the board of
directors constitutes a quorum for the transaction of business. The act of the
majority of the directors at a meeting at which a quorum is present is the act
of the board of directors.
SECTION 11. PLACE OF MEETINGS. Regular and special meetings
by the board of directors may be held within or outside the State of Florida.
SECTION 12. REGULAR MEETINGS. A regular meeting of the board
of directors shall be held without notice, other than this bylaw, immediately
after and at the same place as the annual meeting of shareholders. The board
of directors may provide, by resolution, the time and place for the holding of
additional regular meetings without notice other than the resolution.
SECTION 13. SPECIAL MEETINGS. Special meetings of the board
of directors may be called by or at the request of the president, chairman of
the board, or any directors.
SECTION 14. NOTICE OF MEETINGS. Written notice of the time
and place of special meetings of the board of directors shall be given to each
director by either personal delivery or by first class United States mail,
telegram, or cablegram at least two days before the meeting. Notice of a
meeting of the board of directors need not be given to any director who signs a
waiver of notice either before or after the meeting. Attendance of a director
at a meeting constitutes a waiver of notice of the meeting and all objections
to the time and place of the meeting, or the manner in which it has been called
or convened, except when the director states, at the beginning of the meeting,
or promptly upon arrival at the meeting, any objection to the transaction of
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the board of directors need be specified in the notice or waiver of
notice of the meeting.
A majority of the directors present, whether or not a quorum
exists, may adjourn any meeting of the board of directors to another time and
place. Notice of any adjourned meeting shall be given to the directors who
were not present at the time of the adjournment and, unless the time and place
of the adjourned meeting are announced at the time of the adjournment, to the
other directors.
ARTICLE III. OFFICERS
SECTION 1. OFFICERS. The officers of the Corporation shall
consist of the chairman of the board, a president, a secretary, and a
treasurer, and may include one or more vice presidents, one or more assistant
secretaries, and one or more assistant treasurers. The officers shall be
elected initially by the board of directors at the organizational meeting of
board of directors and thereafter at the first meeting of the board following
the annual meeting of the shareholders in each year. The board from time to
time may elect or appoint other officers, assistant officers, and agents, who
shall have the authority and perform the duties prescribed by the board. An
elected or duly appointed officer may, in turn, appoint one or more officers or
-5-
<PAGE> 7
assistant officers, unless the board of directors disapproves or rejects the
appointment. All officers shall hold office until their successors have been
appointed and have qualified or until their earlier resignation, removal from
office, or death. One person may simultaneously hold any two or more offices.
The failure to elect the chairman of the board, president, secretary, or
treasurer shall not affect the existence of the Corporation.
SECTION 2. CHAIRMAN OF THE BOARD. The chairman of the board,
shall be the chief executive officer, subject to the directions of the board of
directors, is responsible for the general and active management of the business
and affairs of the Corporation, has the power to sign certificates of stock,
bonds, deeds, and contracts for the Corporation, and shall preside at all
meetings of the shareholders.
SECTION 3. PRESIDENT. In the absence of the chairman of
board, the president, subject to the directions of the board of directors, is
responsible for the general and active management of the business and affairs
of the Corporation, has the power to sign certificates of stock, bonds, deeds,
and contracts for the Corporation, and shall preside at all meetings of the
shareholders.
SECTION 4. VICE PRESIDENTS. Each vice president has the
power to sign bonds, deeds, and contracts for the Corporation and shall have
the other powers and perform the other duties prescribed by the board of
directors, the chairman of the board, or the president. Unless the board
otherwise provides, if the chairman of the board and president are absent or
unable to act, the vice president who has served in that capacity for the
longest time and who is present and able to act shall perform all the duties
and may exercise any of the powers of the chairman of the board and president.
Any vice president may sign, with the secretary or assistant secretary,
certificates for stock of the Corporation.
SECTION 5. SECRETARY. The secretary shall have the power to
sign contracts and other instruments for the Corporation and shall (a) keep the
minutes of the proceedings of the shareholders and the board of directors in
one or more books provided for that purpose, (b) see that all notices are duly
given in accordance with the provisions of these bylaws or as required by law,
(c) maintain custody of the corporate records and the corporate seal, attest
the signatures of officers who execute documents on behalf of the Corporation,
authenticate records of the Corporation, and assure that the seal is affixed to
all documents of which execution on behalf of the Corporation under its seal is
duly authorized, (d) keep a register of the post office address of each
shareholder that shall be furnished to the secretary by the shareholder, (e)
sign with the chairman of the board, the president, or a vice president,
certificates for shares of stock of the Corporation, the issuance of which have
been authorized by resolution of the board of directors, (f) have general
charge of the stock transfer books of the Corporation, and (g) in general
perform all duties incident to the office of secretary and other duties as from
time to time may be prescribed by the chairman of the board, the president, or
the board of directors.
SECTION 6. TREASURER. The treasurer shall (a) have charge
and custody of and be responsible for all funds and securities of the
Corporation, (b) receive and give receipts for
-6-
<PAGE> 8
monies due and payable to the Corporation from any source whatsoever, and
deposit monies in the name of the Corporation in the banks, trust companies, or
other depositaries as shall be selected by the board of directors, and (c) in
general perform all the duties incident to the office of treasurer and other
duties as from time to time may be assigned to him by the chairman of the
board, the president, or the board of directors. If required by the board of
directors, the treasurer shall give a bond for the faithful discharge of his
duties in the sum and with the surety or sureties that the board of directors
determines.
SECTION 7. REMOVAL OF OFFICERS. An officer or agent elected
or appointed by the board of directors or appointed by another officer may be
removed by the board whenever in its judgment the removal of the officer or
agent will serve the best interests of the Corporation. Any officer or
assistant officer, if appointed by another officer, may likewise be removed by
such officer. Removal shall be without prejudice to any contract rights of the
person removed. The appointment of any person as an officer, agent, or
employee of the Corporation does not create any contract rights. The board of
directors may fill a vacancy, however occurring, in any office.
An officer may resign at any time by delivering notice to the
corporation. A resignation is effective when the notice is delivered unless
the notice specifies a later effective date. If a resignation is made
effective at a later date, its board of directors may fill the pending vacancy
before the effective date if the board of directors provides that the successor
does not take office until the effective date. An officer's resignation does
not affect the officer's contract rights, if any, with the corporation.
SECTION 8. SALARIES. The board of directors from time to
time shall fix the salaries of the officers, and no officer shall be prevented
from receiving his salary merely because he is also a director of the
Corporation.
ARTICLE IV. INDEMNIFICATION
Any person, his heirs, or personal representative, made, or
threatened to be made, a party to any threatened, pending, or completed action
or proceeding, whether civil, criminal, administrative, or investigative,
because he is or was a director, officer, employee, or agent of this
Corporation or serves or served any other corporation or other enterprise in
any capacity at the request of this Corporation, shall be indemnified by this
Corporation, and this Corporation may advance his related expenses to the full
extent permitted by Florida law. In discharging his duty, any director,
officer, employee, or agent, when acting in good faith, may rely upon
information, opinions, reports, or statements, including financial statements
and other financial data, in each case prepared or presented by (1) one or more
officers or employees of the Corporation whom the director, officer, employee,
or agent reasonably believes to be reliable and competent in the matters
presented, (2) counsel, public accountants, or other persons as to matters that
the director, officer, employee, or agent believes to be within that person's
professional or expert competence, or (3) in the case of a director, a
committee of the board of
-7-
<PAGE> 9
directors upon which he does not serve, duly designated according to law, as to
matters within its designated authority, if the director reasonably believes
that the committee is competent. The foregoing right of indemnification or
reimbursement shall not be exclusive of other rights to which the person, his
heirs, or personal representatives may be entitled. The Corporation may, upon
the affirmative vote of a majority of its board of directors, purchase
insurance for the purpose of indemnifying these persons. The insurance may be
for the benefit of all directors, officers, or employees.
ARTICLE V. STOCK CERTIFICATES
SECTION 1. ISSUANCE. Shares may but need not be represented
by certificates. The board of directors may authorize the issuance of some or
all of the shares of the Corporation of any or all of its classes or series
without certificates. If certificates are to be issued, the share must first
be fully paid.
SECTION 2. FORM. Certificates evidencing shares in this
Corporation shall be signed by the chairman of the board, president or a vice
president and the secretary, assistant secretary or any other officer
authorized by the board of directors, and may be sealed with the seal of this
Corporation or a facsimile of the seal. Unless the Corporation's stock is
registered pursuant to every applicable securities law, each certificate shall
bear an appropriate legend restricting the transfer of the shares evidenced by
that certificate.
SECTION 3. LOST, STOLEN, OR DESTROYED CERTIFICATES. The
Corporation may issue a new certificate in the place of any certificate
previously issued if the shareholder of record (a) makes proof in affidavit
form that the certificate has been lost, destroyed, or wrongfully taken, (b)
requests the issue of a new certificate before the Corporation has notice that
the certificate has been acquired by the purchaser for value in good faith and
without notice of any adverse claim, (c) if requested by the Corporation, gives
bond in the form that the Corporation directs, to indemnify the Corporation,
the transfer agent, and the registrar against any claim that may be made
concerning the alleged loss, destruction, or theft of a certificate, and (d)
satisfies any other reasonable requirements imposed by the Corporation.
SECTION 4. RESTRICTIVE LEGEND. Every certificate evidencing
shares that are restricted as to sale, disposition, or other transfer shall
bear a legend summarizing the restriction or stating that the Corporation will
furnish to any shareholder, upon request and without charge, a full statement
of the restriction.
ARTICLE VI. DIVIDENDS
The board of directors from time to time may declare, and the
Corporation may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided by law.
-8-
<PAGE> 10
ARTICLE VII. SEAL
The corporate seal shall have the name of the Corporation and
the word "seal" inscribed on it, and may be a facsimile, engraved, printed, or
an impression seal.
ARTICLE VIII. AMENDMENT
These bylaws may be repealed or amended, and additional bylaws
may be adopted, by either a vote of a majority of the full board of directors
or by vote of the holders of a majority of the issued and outstanding shares
entitled to vote, but the board of directors may not amend or repeal any bylaw
adopted by the shareholders if the shareholders specifically provide that the
bylaw is not subject to amendment or repeal by the directors. In order to be
effective, any amendment approved hereby must be in writing and attached to
these Bylaws.
-9-
<PAGE> 1
EXHIBIT 3.3.1
<PAGE> 2
EXHIBIT 3.3.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS LP, INC.
The undersigned, acting as incorporator of Paxson
Communications LP, Inc., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
Paxson Communications LP, Inc.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence on the date of
filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or
business permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is
authorized to have outstanding at any time is 10,000 shares of common stock
having a par value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the
corporation is 18401 U.S. Highway 19, North, Clearwater, Florida 34624, and the
name of the corporation's initial registered agent at that address is Lowell W.
Paxson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number
of directors may be either increased or diminished from time to time, as
provided in the bylaws, but shall never be less than one. The name and street
address of the initial director is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation
his rights under Section 607.0201, Florida Statutes, to constitute a
corporation, and he assigns to those persons designated by the board of
directors any rights he may have as incorporator to acquire any of the capital
stock of this corporation, this assignment becoming effective on the date
corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be
vested in the board of directors and the shareholders, except that the board of
directors may not amend or repeal any bylaw adopted by the shareholders if the
shareholders specifically provide that the bylaw is not subject to amendment or
repeal by the directors.
-2-
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or
repeal any provision in these Articles of Incorporation in the manner
prescribed by law, and all rights conferred on shareholders are subject to this
reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 29 day of November, 1993.
/s/ Lowell W. Paxson
--------------------
Lowell W. Paxson
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That Paxson Communications LP, Inc., desiring to organize under the
laws of the State of Florida with its initial registered office, as indicated
in the Articles of Incorporation, at 18401 U.S. Highway 19, North, Clearwater,
Florida 34624, has named Lowell W. Paxson as its agent to accept service of
process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
LOWELL W. PAXSON
By: /s/ Lowell W. Paxson
----------------------
-4-
<PAGE> 1
EXHIBIT 3.4.1
<PAGE> 2
EXHIBIT 3.4.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS MANAGEMENT COMPANY
The undersigned, acting as incorporator of Paxson
Communications Management Company, under the Florida Business Corporation Act,
adopts the following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
Paxson Communications Management Company
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence on the date of
filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or
business permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is
authorized to have outstanding at any time is 10,000 shares of common stock
having a par value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the
corporation is 18401 U.S. Highway 19, North, Clearwater, Florida 34624, and the
name of the corporation's initial registered agent at that address is Lowell W.
Paxson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number
of directors may be either increased or diminished from time to time, as
provided in the bylaws, but shall never be less than one. The name and street
address of the initial director is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation
his rights under Section 607.0201, Florida Statutes, to constitute a
corporation, and he assigns to those persons designated by the board of
directors any rights he may have as incorporator to acquire any of the capital
stock of this corporation, this assignment becoming effective on the date
corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be
vested in the board of directors and the shareholders, except that the board of
directors may not amend or repeal any bylaw adopted by the shareholders if the
shareholders specifically provide that the bylaw is not subject to amendment or
repeal by the directors.
-2-
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or
repeal any provision in these Articles of Incorporation in the manner
prescribed by law, and all rights conferred on shareholders are subject to this
reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 29 day of November, 1993.
/s/ Lowell W. Paxson
--------------------
Lowell W. Paxson
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That Paxson Communications Management Company, desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
Clearwater, Florida 34624, has named Lowell W. Paxson as its agent to accept
service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
LOWELL W. PAXSON
By: /s/ Lowell W. Paxson
----------------------
-4-
<PAGE> 1
EXHIBIT 3.5.1
<PAGE> 2
EXHIBIT 3.5.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS MARKETING, INC.
The undersigned, acting as incorporator of Paxson
Communications Marketing, Inc., under the Florida Business Corporation Act,
adopts the following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
Paxson Communications Marketing, Inc.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence on the date of
filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or
business permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is
authorized to have outstanding at any time is 10,000 shares of common stock
having a par value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the
corporation is 18401 U.S. Highway 19, North, Clearwater, Florida 34624, and the
name of the corporation's initial registered agent at that address is Lowell W.
Paxson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number
of directors may be either increased or diminished from time to time, as
provided in the bylaws, but shall never be less than one. The name and street
address of the initial director is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation
his rights under Section 607.0201, Florida Statutes, to constitute a
corporation, and he assigns to those persons designated by the board of
directors any rights he may have as incorporator to acquire any of the capital
stock of this corporation, this assignment becoming effective on the date
corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be
vested in the board of directors and the shareholders, except that the board of
directors may not amend or repeal any bylaw adopted by the shareholders if the
shareholders specifically provide that the bylaw is not subject to amendment or
repeal by the directors.
-2-
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or
repeal any provision in these Articles of Incorporation in the manner
prescribed by law, and all rights conferred on shareholders are subject to this
reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 29 day of November, 1993.
/s/ Lowell W. Paxson
----------------------
Lowell W. Paxson
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That Paxson Communications Marketing, Inc., desiring to organize under
the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
Clearwater, Florida 34624, has named Lowell W. Paxson as its agent to accept
service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
LOWELL W. PAXSON
By: /s/ Lowell W. Paxson
-----------------------
-4-
<PAGE> 1
EXHIBIT 3.6.1
<PAGE> 2
EXHIBIT 3.6.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS NETWORKS, INC.
The undersigned, acting as incorporator of Paxson
Communications Networks, Inc., under the Florida Business Corporation Act,
adopts the following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
Paxson Communications Networks, Inc.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence on the date of
filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or
business permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is
authorized to have outstanding at any time is 10,000 shares of common stock
having a par value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the
corporation is 18401 U.S. Highway 19, North, Clearwater, Florida 34624, and the
name of the corporation's initial registered agent at that address is Lowell W.
Paxson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number
of directors may be either increased or diminished from time to time, as
provided in the bylaws, but shall never be less than one. The name and street
address of the initial director is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation
his rights under Section 607.0201, Florida Statutes, to constitute a
corporation, and he assigns to those persons designated by the board of
directors any rights he may have as incorporator to acquire any of the capital
stock of this corporation, this assignment becoming effective on the date
corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be
vested in the board of directors and the shareholders, except that the board of
directors may not amend or repeal any bylaw adopted by the shareholders if the
shareholders specifically provide that the bylaw is not subject to amendment or
repeal by the directors.
-2-
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or
repeal any provision in these Articles of Incorporation in the manner
prescribed by law, and all rights conferred on shareholders are subject to this
reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 29 day of November, 1993.
/s/ Lowell W. Paxson
---------------------
Lowell W. Paxson
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That Paxson Communications Networks, Inc., desiring to organize under
the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
Clearwater, Florida 34624, has named Lowell W. Paxson as its agent to accept
service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
LOWELL W. PAXSON
By: /s/ Lowell W. Paxson
----------------------
-4-
<PAGE> 1
EXHIBIT 3.7.1
<PAGE> 2
EXHIBIT 3.7.1
ARTICLES OF INCORPORATION
OF
CLASSIC MOTOR CARS OF FLORIDA, INC.
The undersigned, for the purpose of forming a corporation under the
Florida General Corporation Act, do hereby adopt the following articles of
incorporation:
ARTICLE ONE - NAME
The name of the corporation is CLASSIC MOTOR CARS OF FLORIDA, INC.
ARTICLE TWO - TERM OF EXISTENCE
The duration of the corporation is perpetual. Corporate existence is
to commence upon the signing of the Articles of Incorporation provided that the
Articles are filed with the Secretary of State within five (5) days after
signing.
ARTICLE THREE - NATURE OF BUSINESS
The general purposes for which this corporation is organized are:
To transact and engage in any activity or business permitted under the
laws of the United States and the State of Florida, except that it is not to
conduct banking, safe deposit, trust, insurance, surety, express, railroad,
canal, telegraph, telephone or cemetery company, a building and loan
association, mutual fire insurance association, cooperative association,
fraternal benefit society, state fair or exposition. To do such other things
as are incidental to the foregoing or necessary or desirable in order to
accomplish the foregoing.
ARTICLE FOUR - CAPITAL STOCK
The aggregate number of shares which the corporation is authorized to
issue is One Hundred (100). Such shares will be of a single class, and shall
have a par value of Five ($5.00) Dollars per share.
-1-
<PAGE> 3
ARTICLE FIVE - INITIAL CAPITAL
The amount of capital with which this corporation will begin business
is Five Hundred ($500.00) Dollars. Capital contributions shall be in cash or
other equivalent property, but shall not include services.
ARTICLE SIX - ADDRESS
The street address of the initial registered office of the corporation
is 1803 U.S. Hwy. 19, Holiday, Florida 33590, and the name of its initial
registered agent is DAVID E. OLSON. The Board of Directors may from time to
time move the principal office to any other address in Florida.
ARTICLE SEVEN - INITIAL DIRECTORS
The number of Directors constituting the initial Board of Directors of
the corporation is one (1). The number of Directors may be increased or
diminished from time to time, by By-Laws adopted by the Stockholders, but shall
never be less than one (1).
ARTICLE EIGHT - DIRECTORS
The name and address of the person who is to serve as member of the
initial Board of Directors and Officers of the corporation is as follows:
NAME ADDRESS OFFICE
DAVID E. OLSON 1803 U.S. Highway 19, N. President
Holiday, Florida, 33590
ARTICLE NINE - SUBSCRIBERS
The names and addresses of each subscriber of these Articles of
Incorporation, and the shares of stock each will have are:
NAME ADDRESS OFFICE
DAVID E. OLSON 1803 U.S. Highway 19, N. President
Holiday, Florida, 33590
ARTICLE TEN - AMENDMENT
These Articles of Incorporation may be amended in the manner provided
by law. Every amendment shall be approved by the Board of Directors, proposed
by them to the Stockholder, and
-2-
<PAGE> 4
approved at a Stockholders' meeting by a majority of the stock entitled to vote
thereon, unless all the Directors and all the Stockholders sign a written
statement manifesting their intention that a certain amendment of these
Articles of Incorporation be made.
ARTICLE ELEVEN - BY-LAWS
The power to make By-Laws of and for the corporation shall be vested
in the Board of Directors.
I, the undersigned, being the original subscriber to the capital stock
hereinbefore described, for the purpose of forming a corporation for profit
under the laws of the State of Florida, do hereby make and file this
certificate, hereby declaring and certifying that the facts contained therein
are true and we have hereunto set my hand and seal this 16 day of December,
1986.
/s/ David E. Olson
----------------------------
DAVID E. OLSON
STATE OF FLORIDA
COUNTY OF PASCO
I HEREBY CERTIFY that on this day personally appeared before, an
officer duly authorized to take acknowledgements, DAVID E. OLSON, to me known
to be the person described in and who executed the foregoing Articles of
Incorporation, and acknowledged before me that he has subscribed to those
Articles of Incorporation.
WITNESS my hand and official seal in the County and State named above this
16 day of December, 1986.
/s/ David E. Olson
-----------------------------------------
Notary Public, State of Florida at Large
(NOTARIAL SEAL)
My Commission Expires:
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED
In pursuance of Chapter 48.091, Florida Statutes, t he following is
submitted in compliance with said Act:
First that CLASSIC MOTOR CARS OF FLORIDA, INC. desiring to organize
under the laws of the State of Florida, with its principal office as indicated
in the Articles of Incorporation at City of Holiday, Florida, has named
DAVID E. OLSON
1803 U.S. Highway 19, N.
Holiday, Florida 33590
as agent to accept service of process within this State.
ACKNOWLEDGEMENT:
Having been named to accept service of process for the above stated
corporation at place designated in this certificate, I hereby accept to act in
this capacity, and agree to comply with the provision of said Act relative to
keeping open said office.
/s/ David E. Olson
-----------------------------
DAVID E. OLSON
<PAGE> 6
ARTICLES OF AMENDMENT CHANGING NAME OF
CLASSIC MOTOR CARS OF FLORIDA, INC.
TO EXCEL MARKETING ENTERPRISES, INC.
Pursuant to section 607.1006, Florida Statutes, and upon the
memorandum of action of the sole shareholder, the articles of incorporation of
this corporation are amended as set forth below:
1. The name of the corporation is CLASSIC MOTOR CARS OF FLORIDA,
INC.
2. The nature of the amendment is to change the name of the
corporation to EXCEL MARKETING ENTERPRISES, INC., effective upon the filing of
appropriate documents with the Secretary of State and his approval of the
change.
3. The amendment is executed pursuant to memorandum action of the
sole shareholder of all of the corporation's outstanding shares of common stock
on the 23 day of January 1991.
Executed this 23 day of January 1991.
CORPORATE SEAL
/s/ Lowell W. Paxson
-----------------------------------
Lowell W. Paxson
President & Sole Shareholder
State of Florida
County of Pinellas
Before me personally appeared LOWELL W. PAXSON, president of CLASSIC
MOTOR CARS OF FLORIDA, INC., who acknowledged that he executed the foregoing
for the purposes stated therein.
SEAL Date January 23, 1991 /s/ Donna Gaston
----------------------------------
Notary Public
My commission expires:
<PAGE> 1
EXHIBIT 3.7.2
<PAGE> 2
EXHIBIT 3.7.2
BYLAWS
OF
CLASSIC MOTOR CARS OF FLORIDA, INC.
N/K/A EXCEL MARKETING ENTERPRISES, INC.
ARTICLE I
Seal and Fiscal Year
Section 1. Seal. The seal of this corporation shall have inscribed
on it the name of this corporation, the date of its organization, and the
words, "Corporate Seal, State of Florida."
Section 2. Fiscal Year. The fiscal year of this corporation shall
be determined by the Board of Directors upon filing the tax return of the
corporation.
ARTICLE II
Shareholders' Meetings
Section 1. Place of Meetings. Meetings of the shareholders shall be
held at the office of the corporation or at any other place (within or without
the State of Florida) the Board of Directors or shareholders may from time to
time select.
Section 2. Annual Meeting. The annual meeting of the shareholders
of this corporation shall be held at the time and place designated by the Board
of Directors of the corporation. Unless otherwise directed by the Board of
Directors, the annual meeting shall be held within three (3) months after the
close of the corporation's fiscal year. The annual meeting of shareholders for
any year shall be held no later than thirteen (13) months after the last
preceding annual meeting of shareholders. Business transacted at the annual
meeting shall include the election of directors of the corporation.
Section 3. Special Meetings. Special meetings of the shareholders
may be called by the President, by the Board of Directors, or by the holders of
one-tenth (1/10th) or more of the shares outstanding and entitled to vote.
Section 4. Notice. Written notice stating the place, day and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
of which the meeting is called, shall be delivered not less than ten (10) nor
more than fifty (50) days before the meeting, either personally or by first
class mail, by or at the direction of the President, the Secretary, or the
officer or persons calling the meeting, to each shareholder of record entitled
to vote at such meeting. If mailed, such notice
<PAGE> 3
shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
Section 5. Notice of Adjourned Meetings. When a meeting is
adjourned to another time or place, it shall not be necessary to give any
notice of the adjourned meeting if the time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment is taken; and
at the adjourned meeting, any business may be transacted that might have been
transacted on the original date of the meeting. If, however, after the
adjournment the Board of Directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting shall be given as provided in this
section to each shareholder of record on the new record date entitled to vote
at such meeting.
Section 6. Closing of Transfer Books and Fixing Record Date. For
the purpose of determining shareholders entitled to notice or to vote at any
meeting of shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of shareholders
for any other purpose, the Board of Directors may provide that the stock
transfer books shall be closed for a stated period but not to exceed, in any
case, sixty (60) days. If the stock transfer books shall be closed for the
purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the record date for any determination of
shareholders, such date in any case to be not more than sixty (60) days and, in
case of a meeting of shareholders not less than ten (10) days prior to the date
on which the particular action requiring such termination of shareholders is to
be taken.
If the stock transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice to receive payment of
dividend, the date on which notice of the meeting is mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination of
shareholders.
When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, unless the Board of Directors fixes a
new record date for the adjourned meeting.
2
<PAGE> 4
Section 7. Voting Record. If the corporation has six (6) or more
shareholders of record, the officers or agent (which shall be the Secretary
unless the Board of Directors otherwise designates) having charge of the stock
transfer books for shares of the corporation shall make, at least ten (10) days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting or any adjournment thereof, with the address
of and the number and class and series, if any, of shares held by each. The
list, for a period of ten (10) days prior to such meeting, shall be kept on
file at the registered office of the corporation, at the principal place of
business of the corporation or at the office of the transfer agent or registrar
of the corporation, and any shareholder shall be entitled to inspect the list
at any time during usual business hours. The list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder at any time during the meeting.
If the requirements of this section have not been substantially
complied with, the meeting, on demand of any shareholder in person or by proxy,
shall be adjourned until the requirements are complied with. If no such demand
is made, failure to comply with the requirements of this section shall not
affect the validity of any action taken at such meeting.
Section 8. Shareholder Quorum and Voting. Unless otherwise required
in the Articles of Incorporation, a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. When a specified item of business is required to be voted on by
a class or series of stock, unless otherwise required in the Articles of
Incorporation, a majority of the shares of such class or series shall
constitute a quorum for the transaction of such item of business by that class
or series.
If a quorum is present, unless otherwise required in the Articles of
Incorporation, the affirmative vote of the majority of the shares represented
at the meeting and entitled to vote on the subject matter shall be the act of
the shareholders unless otherwise provided by law.
After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of
shareholders entitled to vote at the meeting below the number required for a
quorum, shall not affect the validity of any action taken at the meeting or any
adjournment thereof.
Section 9. Voting of Shares. Each outstanding share, regardless of
class, shall be entitled to one (1) vote on each matter submitted to a vote at
a meeting of shareholders.
3
<PAGE> 5
Treasury shares, shares of stock of this corporation, if any, owned by
another corporation, the majority of the voting stock of which is owned or
controlled by this corporation, and shares of stock of this corporation held by
it in a fiduciary capacity shall not be voted, directly or indirectly, at any
meeting, and shall not be counted in determining the total number of
outstanding shares at any given time.
A shareholder may vote either in person or by proxy executed in
writing by the shareholder or his duly authorized attorney-in-fact.
At each election for directors, every shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number
of shares owned by him for as many persons as there are directors to be elected
at that time and for whose election he has a right to vote, or, if permitted in
the Articles of Incorporation, to cumulate his votes by giving one candidate as
many votes as shall equal the number of directors to be elected at that time
multiplied by the number of his shares, or by distributing such votes on the
same principle among any number of such candidates.
Shares standing in the name of another corporation, domestic or
foreign, may be voted by the officer, agent, or proxy designated by the bylaws
of the corporate shareholder; or, in the absence of any applicable bylaw, by
such person as the Board of Directors of he corporate shareholder may
designate. Proof of such designation may be made by presentation of a
certified copy of the bylaws of any such designation, or in case of conflicting
designation by the corporate shareholder, the Chairman of the Board, President,
any Vice President, Secretary and Treasurer of the corporate shareholder shall
be presumed to possess, in that order, authority to vote such shares.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name if authority so to do
be contained in an appropriate order of the court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have bene transferred into the
4
<PAGE> 6
name of the pledgee, and thereafter the pledgee or his nominee shall be
entitled to vote the shares so transferred.
On or after the date on which written notice of redemption of
redeemable shares has been mailed to the holders thereof and a sum sufficient
to redeem such shares has been deposited with a bank or trust company with
irrevocable instruction and authority to pay the redemption price to the
holders thereof upon surrender of certificates therefor, such shares shall not
be entitled to vote on any matter and shall not be deemed to be outstanding
shares.
Section 10. Proxies. Every shareholder entitled to vote at a meeting
of shareholders or to express consent or dissent without a meeting or a
shareholder's duly authorized attorney-in-fact may authorize another person or
persons to act for him by proxy.
Every proxy must be signed by the shareholder or his attorney-in-fact.
No proxy shall be valid after the expiration of eleven (11) months from the
date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the shareholder executing it, except as otherwise
provided by law.
The authority of the holder of a proxy to act shall not be revoked by
the incompetence or death of the shareholder who executed the proxy unless,
before the authority is exercised, written notice of an adjudication of such
incompetence or of such death is received by the corporate officer responsible
for maintaining the list of shareholders.
If a proxy for the same shares confers authority upon two or more
persons and does not otherwise provide, a majority of them present at the
meeting, or if only one is present then that one, may exercise all the powers
conferred by the proxy; but if the proxy holders present at the meeting are
equally divided as to the right and manner of voting in any particular case,
the voting of such shares shall be prorated.
If a proxy expressly provides, any proxy holder may appoint in writing
a substitute to act in his place.
Section 11. Waiver of Notice. A shareholder, either before or after
a shareholders' meeting, may waive notice of the meeting; and his waiver shall
be deemed the equivalent of giving notice. Attendance at a shareholders'
meeting, either in person or by proxy, of a person entitled to notice shall
constitute a waiver of notice of the meeting unless he attends for the express
purpose of objecting to the transaction of business on the ground that the
meeting was not lawfully called or convened.
5
<PAGE> 7
Section 12. Voting Trusts. Unless prohibited by law, any number of
shareholders of this corporation may create a voting trust for the purpose of
conferring upon a trustee or trustees the right to vote or otherwise represent
their shares, as provided by law. Where the counterpart of a voting trust
agreement and the copy of the record of the holders of voting trust
certificates has been deposited with the corporation, in person or by agent or
attorney, as are the books and records of the corporation, such counterpart and
such copy of such record shall be subject to examination by the holder of
record of voting trust certificates either in person or by agent or attorney,
at any reasonable time for any proper purpose.
Section 13. Shareholders' Agreements. Two or more shareholders of
this corporation may enter into an agreement providing for the exercise of
voting rights in the manner provided in the agreement or relating to any phase
of the affairs of the corporation as provided by law. Nothing therein shall
impair the right of this corporation to treat the shareholders of record as
entitled to vote the shares standing in their name.
Section 14. Action by Shareholders Without a Meeting. Any action
required by law, these bylaws, or the Articles of Incorporation of this
corporation to be taken at any annual or special meeting of shareholders of the
corporation, or any action which may be taken at any annual or special meeting
of such shareholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. If any class of shares is entitled to vote thereon as a class, such
written consent shall be required of the holders of a majority of the shares of
each class of shares entitled to vote as a class thereon and of the total
shares entitled to vote thereon.
Within ten (10) days after obtaining such authorization by written
consent, notice shall be given to those shareholders who have not consented in
writing. the notice shall fairly summarize the material features of the
authorized action and, if the action be a merger, consolidation or sale or
exchange of assets for which dissenters' rights are provided under this act,
the notice shall contain a clear statement of the right of shareholders
dissenting therefrom to be paid the fair value of their shares upon compliance
with further provisions of this act regarding the rights of dissenting
shareholders.
Section 15. Order of Business. The order of business at all meetings
of the stockholders shall be as follows:
(1) Roll call.
6
<PAGE> 8
(2) Proof of notice of meeting or waiver of notice.
(3) Reading of minutes of preceding meeting.
(4) Reports of officers.
(5) Reports of committees.
(6) Election of directors.
(7) Unfinished business.
(8) New business.
ARTICLE III
Directors
Section 1. Function. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation shall
be managed under the direction of, the Board of Directors.
Section 2. Qualification. Directors need not be residents of this
state or shareholders of this corporation.
Section 3. Compensation. The Board of Directors shall have
authority to fix the compensation of directors.
Section 4. Duties of Directors. A director shall perform his duties
as a director, including his duties as a member of any committee of the Board
upon which he may serve, in good faith, in a manner he reasonably believes to
be in the best interests of the corporation, and with such care as an
ordinarily prudent person in a like position would use under similar
circumstances.
In performing his duties, a director shall be entitled to rely on
information, opinions, reports or statements, including financial statements
and other financial data, in each case prepared or presented by:
(a) one or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the matters
presented;
(b) counsel, public accountants or other persons as to matters
which the director reasonably believes to be within such person's professional
or expert competence; or
(c) a committee of the Board upon which he does not serve, duly
designated in accordance with a provision of the Articles of Incorporation or
the Bylaws, as to matters within its designated authority, which committee the
director reasonably believes to merit confidence.
A Director shall not be considered to be acting in good faith if he
has knowledge concerning the matter in question that would cause such reliance
described above to be unwarranted.
7
<PAGE> 9
A person who performs his duties in compliance with this section shall
have no liability by reason of being or having been a director of the
corporation.
Section 5. Presumption of Assent. A director of the corporation who
is present at a meeting of its Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless he votes against such action or abstains from voting in respect
thereto because of an asserted conflict of interest.
Section 6. Number. This corporation shall have one (1) director
initially. The number of directors may be increased or decreased from time to
time by resolution of the shareholders adopted at any duly-called special or
regular meeting of the shareholders or by written actin in accordance with
these Bylaws, but no decrease shall have the effect of shortening the terms of
any incumbent director.
Section 7. Election and Term. Each person named in the Articles of
Incorporation or appointed by the incorporation director as a member of the
initial Board of Directors shall hold office until the first annual meeting of
shareholders and until his successor shall have been elected and qualified or
until his earlier resignation, removal from office or death.
At the first annual meeting of shareholders and at each annual meeting
thereafter, the shareholders shall elect directors to hold office until the
next succeeding annual meeting. Each director shall hold office for the term
for which he is elected and until his successor shall have been elected and
qualified or until his earlier resignation, removal from office or death.
Section 8. Vacancies. Unless otherwise required in the Articles of
Incorporation, any vacancy occurring in the Board of Directors, including any
vacancy created by reason of an increase in the number of directors, may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the Board of Directors. A director elected to fill a
vacancy shall hold office until the next election of directors by the
shareholders.
Section 9. Removal of Directors. At a meeting of shareholders
called expressly for that purpose, any director or the entire Board of
Directors may be removed, with or without cause, by a vote of the holders of a
majority of the shares then entitled to vote at an election of directors.
Section 10. Quorum and Voting. A majority of the number of directors
fixed by these Bylaws shall constitute a quorum for the transaction of
business. The act of the majority of the direc-
8
<PAGE> 10
tors present at a meeting at which a quorum is present shall be the act of the
Board of Directors.
Section 11. Director Conflicts of Interest. No contract or other
transaction between this corporation and one or more of its directors or any
other corporation, firm, association or entity in which one or more of the
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because
such director or directors are present at the meeting of the Board of Directors
or a committee thereof which authorizes, approves, or ratifies such contract or
transaction or because his or their votes are counted for such purpose, if:
(a) the fact of such relationship or interest is disclosed or
known to the Board of Directors or committee which authorizes, approves or
ratifies the contract or transaction by a vote or consent sufficient for the
purpose without counting the votes or consents of such interested directors; or
(b) the fact of such relationship or interest is disclosed or
known to the shareholders entitled to vote and they authorize, approve or
ratify such contract or transaction by vote or written consent; or
(c) the contract or transaction is fair and reasonable as to the
corporation at the time it is authorized by the Board, a committee or the
shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes, approves or ratifies such contract or transaction.
Section 12. Executive and Other Committees. The Board of Directors,
by resolution adopted by a majority of the full Board of Directors, may
designate from among its members an executive committee and one or more other
committees of which, to the extent provided in such resolution, shall have and
may exercise all the authority of the Board of Directors, except that no
committee shall have the authority to:
(a) approve or recommend to shareholders actions or proposals
required by law to be approved by shareholders;
(b) designate candidates for the office of director, for purposes
of proxy solicitation or otherwise;
(c) fill vacancies on the Board of Directors or any committee
thereof;
(d) amend the Bylaws;
9
<PAGE> 11
(e) authorize or approve the re-acquisition of shares unless
pursuant to a general formula or method specified by the Board of Directors; or
(f) authorize or approve the issuance or sale of, or any contract
to issue or sell, shares or designate the terms of a series of a class of
shares, except that the Board of Directors, having acted regarding general
authorization for the issuance or sale of shares, or any contract therefor,
and, in the case of a series, the designation thereof, may, pursuant to a
general formula or method specified by the board of Directors, by resolution or
by adoption of a stock option or other plan, authorize a committee to fix the
terms of any contract for the sale of the shares and to fix the terms upon
which such shares may be issued to sold, including, without limitation, the
price, the rate or manner of payment of dividends, provisions for redemption,
sinking fund, conversion, voting or preferential rights, and provisions for
other features of a class of shares, or a series of a class of shares, with
full power in such committee to adopt any final resolution setting forth all
the terms thereof and to authorize the statement of the terms of a series for
filing with the Department of State.
The Board of Directors, by resolution adopted in accordance with this
section, may designate one or more directors as alternate members of any such
committee, who may act in the place and stead of any absent member or members
at any meeting of such committee.
Section 13. Place of Meetings. Regular and special meetings by the
Board of Directors may be held within or without the State of Florida.
Section 14. Time, Notice and Call of Meetings. Regular meetings of
the Board of Directors shall be held without notice on the date established by
the Board of Directors by resolution delivered to all members of the Board of
Directors; but if none is so established, then immediately after the annual
shareholders' meeting. Written notice of the time and place of special
meetings of the Board of Directors shall be given to each director by either
personal delivery, telegraph or cablegram at least two (2) days before the
meeting or by notice mailed to the director at least five (5) days before the
meeting.
Notice of a meeting of the Board of Directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all obligations to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the
10
<PAGE> 12
meeting, any objection to the transaction of business because the meeting is
not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of any such adjourned meeting shall be given to the directors who were
not present at the time of the adjournment and, unless the time and place of
the adjourned meeting are announced at the time of the adjournment, to the
other directors.
Members of the Board of Directors may participate in a meeting of such
Board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
Section 15. Action Without a Meeting. Any action required to be
taken at a meeting of the directors of a corporation, or any action which may
be taken at a meeting of the directors or a committee thereof, may be taken
without a meeting if a consent in writing, setting forth the action so to be
taken, signed by all of the directors, or all of the members of the committee,
as the case may be, is filed in the minutes of the proceedings of the Board or
of the committee. Such consent shall have the same effect as an unanimous
vote.
ARTICLE IV
Officers
Section 1. Officers. The officers of this corporation shall consist
of a President, Vice President, a Secretary and a Treasurer, each of whom shall
be elected by the Board of Directors. Such other officers and assistant
officers and agents as may be deemed necessary may be elected or appointed by
the Board of Directors from time to time. Any two or more offices may be held
by the same person. The failure to elect a President, Vice President,
Secretary or Treasurer shall not affect the existence of this corporation.
Section 2. Duties. The officers of this corporation shall have the
following duties:
The President shall be the chief executive officer of the corporation,
shall have general and active management of the business and affairs of the
corporation subject to the directors
11
<PAGE> 13
of the Board of Directors, and shall preside at all meetings of the
shareholders and Board of Directors.
The Vice President of the corporation shall have such duties as are
allocated to him by the President. In the absence of the President, the Vice
President shall preside at all meetings of the shareholders and Board of
Directors and shall exercise the duties of the President until his return.
The Secretary shall have custody of, and maintain, all of the
corporate records except the financial records; shall record the minutes of all
meetings of the shareholders and Board of Directors; send all notices of
meetings out; and perform such other duties as may be prescribed by the Board
of Directors or the President.
The Board may appoint one or more Assistant Secretaries and, if so
appointed, each Assistant Secretary shall be vested with all the powers and
authority to perform all of the duties of the Secretary in his absence or
disability.
The Treasurer shall have a custody of all corporate funds and
financial records, shall keep full and accurate accounts of receipts and
disbursements and render accounts thereof at the annual meetings of
shareholders and whenever else required by the Board of Directors or the
President, and shall perform such other duties as may be prescribed by the
Board of Directors or the President.
The Board may appoint one or more Assistant Treasurers and, if so
appointed, each Assistant Treasurer shall be vested with all the powers and
authority to perform all of the duties of the Treasurer in his absence of
disability.
The duties of other officers, and other duties of these officers, may
be prescribed from time to time by resolution of the Board of Directors.
Section 3. Removal of Officers. Any officer or agent elected or
appointed by the Board of Directors may be removed by the Board whenever in its
judgment the best interests of the corporation will be served thereby.
Any officer or agent elected by the shareholders may be removed only
vote of the shareholders, unless the shareholders hall have authorized the
directors to remove such officer or agent.
Any vacancy, however, occurring, in any office may be filled by the
Board of Directors, unless the bylaws shall have expressly reserved such powers
to the shareholders.
12
<PAGE> 14
Removal of any officer shall be without prejudice to the contract
rights, if any, of the person so removed; however, election or appointment of
an officer or agent shall not of itself create contract rights.
Section 4. Delegation of Duties. Whenever an officer is absent or
whenever for any reason the Board of Directors may deem it desirable, the Board
may delegate the powers and duties of an officer to any other officer or
officers or to any director or directors.
Section 5. Chairman of the Board. The Chairman of the Board, if one
is elected, shall preside at all meetings of the shareholders and directors.
The Chairman shall be a member and Chairman of the Executive Committee and of
all committees appointed by the Board, and he shall have other powers and
perform such other duties as may be prescribed from time to time by the Board.
ARTICLE V
Stock Certificates
Section 1. Issuance. Every holder of shares in the corporation
shall be entitled to have a certificate, representing all shares to which he is
entitled. No certificate shall be issued for any share until such share is
fully paid.
Section 2. Form. Certificates representing shares in this
corporation shall be signed by the President or Vice President and the
Secretary or an Assistant Secretary and may be sealed with the seal of this
corporation or a facsimile thereof. The Signatures of the President or Vice
President and the Secretary or Assistant Secretary may be facsimiles if the
certificate is manually signed on behalf of a transfer agent or a registrar,
other than the corporation itself or an employee of the corporation. In case
any officer who signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issuance.
If there is more than one class of stock, every certificate
representing shares issued by this corporation shall set forth or fairly
summarize upon the face or back of the certificate, or shall state that the
corporation will furnish to any shareholder upon request and without charge a
full statement of, the designations, preferences, limitations and relative
rights of the shares of each class or series authorized to be issued, and the
variations in the relative rights and preferences between the shares of each
series so far as the same have bene fixed and determined,
13
<PAGE> 15
and the authority of the Board of Directors to fix and determine the relative
rights and preferences of subsequent series.
Every certificate representing shares which are restricted as to the
sale, disposition or other transfer of such shares shall state that such shares
are restricted as to transfer and shall set forth or fairly summarize upon the
certificate, or shall state that the corporation will furnish to any
shareholder upon request and without charge a full statement of, such
restrictions.
Each certificate representing shares shall state upon the face
thereof: the name of the corporation; that the corporation is organized under
the laws of the state; the name of the person or persons to whom issued; the
number and class of shares; and the designation of the series, if any, which
such certificate represents; and the par value of each share represented by
such certificate or a statement that the shares are without par value.
Section 3. Transfers of Shares. Shares of the corporation shall
only be transferred on its books upon the surrender to the corporation of the
share certificates duly endorsed or accompanied by proper evidence of
successions, assignment or authority to transfer. In that event, the
surrendered certificates shall be canceled, new certificates issued to the
person entitled to them, and the transaction recorded on the books of the
corporation.
Section 4. Lost, Stolen or Destroyed Certificates. The corporation
shall issue a new stock certificate in the place of any certificate previously
issued if the holder of record of the certificate (a) makes proof in affidavit
form that it has been lost, destroyed or wrongfully taken; (b) requests the
issuance of a new certificate before the corporation has notice that the
certificate has been acquired by a purchaser for value in good faith and
without notice of any adverse claim; (c) gives bond in such form as the
corporation may direct, to indemnify the corporation, the transfer agent, and
registrar against any claim that may be made on account of the alleged loss,
destruction, or theft of a certificate; and (d) satisfies any other reasonable
requirements imposed by the corporation.
Section 5. Pre-emptive Rights. No shareholder shall have the right
to purchase his pro rata share of any new stock of the same kind as he holds,
whether such new issue is to be issued for the sale of cash, or whether such
new issue is to be issued for the exchange of stock or property of any other
corporation, or for whatever reason said new issue of stock is issued.
14
<PAGE> 16
ARTICLE VI
Books and Records
Section 1. Books and Records. This corporation shall keep correct
and complete books and records of account and shall keep minutes of the
proceedings of its shareholders, Board of Directors and committees of
directors.
This corporation shall keep at its registered office or principal
place of business, or at the office of its transfer agent or registrar, a
record of its shareholders, giving the names and addresses of all shareholders,
and the number, class and series, if any, of the shares held by each.
Any books, records and minutes may be in written form or in any other
form capable of being converted into written form within a reasonable time.
Section 2. Shareholders' Inspection Rights. Any person who shall
have been a holder of record of shares or of voting trust certificates therefor
at least six (6) months immediately preceding his demand or shall be the holder
of a record of, or the holder of voting trust certificates for, at least five
(5) percent of the outstanding shares of any class or series of the
corporation, upon written demand stating the purpose thereof, shall have the
right to examine, in person or by agent or attorney, at any reasonable time or
times, for any proper purpose its relevant books and records of accounts,
minutes and records of shareholders and to make extracts therefrom.
Section 3. Financial Information. Unless modified by resolution of
the shareholders, not later than four (4) months after the close of each fiscal
year, this corporation shall prepare a balance sheet showing in reasonable
detail the financial condition of the corporation as of the close of its fiscal
year, and a profit and loss statement showing the results of the operations of
the corporation during its fiscal year.
Upon the written request of any shareholder or holder of voting trust
certificates for shares of the corporation, the corporation shall mail to such
shareholder or holder of voting trust certificates a copy of the most recent
such balance sheet and profit and loss statement.
The balance sheets and profit loss statements shall be filed in the
registered office of the corporation in this state, shall be kept for at least
five (5) years, and shall be subject to inspection during business hours by any
shareholder or holder of voting trust certificates, in person or by agent.
15
<PAGE> 17
ARTICLE VII
Dividends
The Board of Directors of this corporation may, from time to time,
declare and the corporation may pay dividends on its shares in cash, property
or its own shares, except when the corporation is insolvent or when the payment
thereof would render the corporation insolvent or when the declaration or
payment thereof would be contrary to any restrictions contained in the Articles
of Incorporation, subject to the following provisions:
(a) Dividends in cash or property may be declared and paid, except
as otherwise provided in this section, only out of the unreserved and
unrestricted earned surplus of the corporation or out of capital surplus,
howsoever arising, but each dividend paid out of capital surplus shall be
identified as a distribution of capital surplus, and the amount per share paid
from such surplus shall be disclosed to the shareholders receiving the same
concurrently with the distribution.
(b) Dividends may be declared and paid in the corporation's own
treasury shares.
(c) Dividends may be declared and paid in the corporation's own
authorized but unissued shares out of any unreserved and unrestricted surplus
of the corporation upon the following conditions:
(1) If a dividend is payable in shares having a par
value, such shares shall be issued at not less than the par value
thereof and there shall be transferred to stated capital at the time
such dividend is paid an amount of surplus equal to the aggregate par
value of the shares to be issued as a dividend.
(2) If a dividend is payable in shares without par value,
such shares shall be issued at such stated value as shall be fixed by
the Board of Directors by resolution adopted at the time such dividend
is declared, and there shall be transferred to stated capital at the
time such dividend is paid an amount of surplus equal to the aggregate
stated value so fixed in respect of such shares; and the amount per
share so transferred to stated capital shall be disclosed to the
shareholders receiving such dividend concurrently with the payment
thereof.
(d) No dividend payable in shares of any class shall be paid to
the holders of shares of any other class unless the Articles of Incorporation
so provide or such payment is authorized by the affirmative vote or the written
consent of the
16
<PAGE> 18
holders of at least a majority of the outstanding shares of the class in which
the payment is to be made.
(e) A split-up or division of the issued shares of any class into
a greater number of shares of the same class without increasing the stated
capital of the corporation shall not be construed to be a share dividend within
the meaning of this section.
ARTICLE VIII
Amendment
These Bylaws may be repealed or amended, and new bylaws may be
adopted, by either the Board of Directors or the shareholders but the Board of
Directors may not amend or repeal any bylaw adopted by shareholders if the
shareholders specifically provide such bylaw is not subject to amendment or
repeal by the directors.
ARTICLE IX
Indemnification of Directors and Officers
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding to the full
extent permitted by the General Corporation Law of Florida, upon such
determination having been made as to his good faith and conduct as is required
by said General Corporation Law. Expenses incurred in defending a civil or
criminal action, suit or proceeding shall be paid by the Corporation in advance
of the final deposition of such action, suit or proceeding to the extent, if
any, authorized by the Board in accordance with the provisions of said General
Corporation Law, upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation.
17
<PAGE> 19
ARTICLE X
Fidelity Bonds
If required by the Board, any officer shall give the Corporation a
bond in a sum and with one or more sureties, satisfactory to the Board, for the
faithful performance of the duties of his office, and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belongs to the Corporation.
DATED: 12-22-86 /s/ Lowell W. Paxson
-------------------------
LOWELL W. PAXSON
/s/ Devon W. Paxson
-------------------------
DEVON W. PAXSON
18
<PAGE> 1
EXHIBIT 3.8.1
<PAGE> 2
EXHIBIT 3.8.1
STATE OF FLORIDA
ARTICLES OF INCORPORATION
OF
PAXSON OUTDOOR, INC.
FIRST: The corporate name that satisfies the requirements of section
607.0401 is: PAXSON OUTDOOR, INC.
SECOND: The address of the principal office, if known, and the
mailing address of the corporation is:
18401 U.S. 19 North
Clearwater, Florida 34624
THIRD: The number of shares the corporation is authorized to issue
is: Ten Thousand (10,000) common shares with a par value of One Dollar
($1.00).
FOURTH: The street address of the initial registered office of the
corporation is: c/o C T CORPORATION SYSTEM, 1200 South Pine Island Road, City
of Plantation, Florida 33324, and the name of its initial registered agent at
such address is C T CORPORATION SYSTEM.
FIFTH: The number of directors constituting the initial board of
directors is one (1), and the name and address of the person who is to serve as
director until the first annual meeting of shareholders or until his successor
is elected and shall qualify is:
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34616
SIXTH: The name and address of each incorporator is:
Joey Bryan 1311 Executive Center Drive
Suite 200
Tallahassee, Florida 32301
The undersigned has executed these Articles of Incorporation this ___
day of ________________, 1993.
/s/ Joey Bryan
--------------------------------
Joey Bryan, Incorporator
<PAGE> 3
Acceptance by the registered agent as required in section 607.0501 (3)
F.S.: C T CORPORATION SYSTEM is familiar with and accepts the obligations
provided for in section 607.0505.
C T CORPORATION SYSTEM
Dated August 31, 1993
By: /s/ Connie Buyer
-------------------------------
Special Assistant Secretary
2
<PAGE> 1
EXHIBIT 3.8.2
<PAGE> 2
EXHIBIT 3.8.2
PAXSON OUTDOOR, INC.
* * * * *
B Y L A W S
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be located in Plantation,
Florida.
Section 2. The corporation may also have offices at such other places
both within and without the State of Florida as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
ANNUAL MEETINGS OF SHAREHOLDERS
Section 1. All meetings of shareholders for the election of directors
shall be held in Clearwater, State of Florida, at such place as may be fixed
from time to time by the board of directors.
Section 2. Annual meetings of shareholders, commencing with the year
1994, shall be held on the 1st Monday in October if not a legal holiday, and if
a legal holiday, then on the next secular day following, at 10:00 A.M., at
which they shall elect by a plurality vote a board of directors, and transact
such other business as may properly be brought before the meeting.
1
<PAGE> 3
Section 3. Written or printed notice of the annual meeting stating
the place, day and hour of the meeting shall be delivered not less than ten nor
more than sixty days before the date of the meeting, either personally or by
mail, by or at the direction of the president, secretary, or the officer or
person calling the meeting, to each shareholder of record entitled to vote at
such meeting.
ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1. Special meetings of shareholders for any purpose other
than the election of directors may be held at such time and place within or
without the State of Florida as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. Special meetings of shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president, the board of directors, or the
holders of not less than one-tenth of all the shares entitled to vote at the
meeting.
Section 3. Written or printed notice of a special meeting stating the
place, day, and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than sixty
days before the date of the meeting, either personally or by mail, by or at the
direction of the board, president, or the holders of not less than one-tenth of
2
<PAGE> 4
all the shares entitled to vote at the meeting to each shareholder of record
entitled to vote at such meeting.
Section 4. The business transacted at any special meeting of
shareholders shall be limited to the purposes stated in the notice.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1. The holders of a majority of the shares of stock issued
and outstanding and entitled to vote, represented in person or by proxy, shall
constitute a quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by the articles of incorporation. If,
however, such quorum shall not be present or represented at any meeting of the
shareholders, the shareholders present in person or represented by proxy shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 2. If a quorum is present, the affirmative vote of a
plurality of the shares of stock represented at the meeting shall be the act of
the shareholders unless the vote of a greater number or voting by classes is
required by law or the articles of incorporation.
3
<PAGE> 5
Section 3. Each outstanding share of stock, having voting power,
shall be entitled to one vote on each matter submitted to a vote at a meeting
of shareholders. A shareholder may vote either in person or by proxy executed
in writing by the shareholder or by his duly authorized attorney-in-fact.
Section 4. Any action required to be taken at a meeting of the
shareholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE V
DIRECTORS
Section 1. The number of directors shall be one (1). Directors need
not be residents of the State of Florida nor shareholders of the corporation.
The directors, other than the first board of directors, shall be elected at the
annual meeting of the shareholders, and each director elected shall serve until
the next succeeding annual meeting and until his successor shall have been
elected and qualified. The first board of directors shall hold office until
the first annual meeting of shareholders.
The number of directors may be increased or decreased by amendment to
the articles of incorporation or to these bylaws.
Section 2. Any vacancy occurring in the board of directors may be
filled by the affirmative vote of a majority of the remaining directors though
less than a quorum of the board of
4
<PAGE> 6
directors, or by the shareholders, unless the articles of incorporation provide
otherwise. A director elected to fill a vacancy shall be elected for the
unexpired portion of the term of his predecessor in office. A director elected
to fill a newly created directorship shall serve until the next succeeding
annual meeting of shareholders and until his successor shall have been elected
and qualified.
Section 3. The business affairs of the corporation shall be managed
by its board of directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the articles
of incorporation or by these bylaws directed or required to be exercised or
done by the shareholders.
Section 4. The directors may keep the books of the corporation,
except such as are required by law to be kept within the state, outside of the
State of Florida, at such place or places as they may from time to time
determine.
Section 5. The board of directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish reasonable
compensation of all directors for services to the corporation as directors,
officers or otherwise.
5
<PAGE> 7
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Meetings of the board of directors, regular or special,
may be held either within or without the State of Florida.
Section 2. The first meeting of each newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
shareholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present, or it may convene at such place
and time as shall be fixed by the consent in writing of all the directors.
Section 3. Regular meetings of the board of directors may be held
upon such notice, or without notice, and at such time and at such place as
shall from time to time be determined by the board.
Section 4. Meetings of the board of directors may be called by the
chairman of the board or by the president. Special meetings of the board of
directors shall be preceded by two (2) days' notice sent to directors of the
date, time, and place of the meeting. Notice may be sent in writing or orally,
and communicated in person, by telephone, telegraph, teletype, electronic
communication, or by mail. The notice shall include the purpose of the
meeting.
Section 5. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where a director attends for the
express purpose of objecting to the
6
<PAGE> 8
transaction of any business because the meeting is not lawfully called or
convened.
Section 6. A majority of the directors shall constitute a quorum for
the transaction of business unless a different number is required by law or by
the articles of incorporation. The act of a majority of the directors present
at any meeting at which a quorum is present shall be the act of the board of
directors, unless the act of a greater number is required by statute or by the
articles of incorporation. Whether or not a quorum shall be present at any
meeting of directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum is present.
ARTICLE VII
EXECUTIVE COMMITTEES
Section 1. The board of directors, by resolution adopted by a
majority of the full board of directors, may designate two or more directors to
constitute an executive committee, to the extent provided in such resolution,
shall have and exercise all of the authority of the board of directors in the
management of the corporation, except as otherwise required by law. Vacancies
in the membership of the committee shall be filled by the board of directors at
a regular or special meeting of the board of directors. The executive
committee shall keep regular minutes of its proceedings and report the same to
the board when required.
7
<PAGE> 9
ARTICLE VIII
NOTICES
Section 1. Whenever any notice whatever is required to be given under
the provisions of the statutes or under the provisions of the articles of
incorporation or these by-laws, a waiver thereof in writing signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1. The officers of the corporation shall be chosen by the
board of directors and shall be a chairman, a president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers.
Section 2. The board of directors at its first meeting after each
annual meeting of shareholders shall choose a president, a secretary and a
treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
8
<PAGE> 10
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until
their successors are chosen and qualify. Any officer elected or appointed by
the board of directors may be removed at any time by the affirmative vote of a
majority of the board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE CHAIRMAN
Section 6. The chairman shall be the chief executive officer of the
corporation, shall preside at all meetings of the shareholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
THE PRESIDENT
Section 7. The president, subject to the chairman, shall be the chief
operating officer of the corporation, in the absence of the president shall
preside at all meetings of the shareholders and the board of directors, shall
have general and active management of the business of the corporation and shall
see that all orders and resolutions of the board of directors are carried into
effect.
Section 8. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be
9
<PAGE> 11
otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the board of directors to some other
officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 9. The vice-president, or if there shall be more than one,
the vice-presidents in the order determined by the board of directors, shall,
in the absence or disability of the chairman or president, perform the duties
and exercise the powers of the president and shall perform such other duties
and have such other powers as the board of directors may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 10. The secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all the proceedings
of the meetings of the corporation and of the board of directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the board of directors,
and shall perform such other duties as may be prescribed by the board of
directors, the chairman, or president, under whose supervision he shall be. He
shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of
10
<PAGE> 12
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
Section 11. The assistant secretary, or if there be more than one,
the assistant secretaries in the order determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 12. The treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the board of
directors.
Section 13. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 14. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the
11
<PAGE> 13
faithful performance of the duties of his office and for the restoration to the
corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 15. The assistant treasurer, or, if there shall be more than
one, the assistant treasurers in the order determined by the board of
directors, shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by a
certificate or shall be uncertificated. Certificates shall be signed by the
president of the corporation, and may be sealed with the seal of the
corporation or a facsimile thereof.
When the corporation is authorized to issue shares of more than one
class there shall be set forth upon the face or back of the certificate, or the
certificate shall have a statement that the corporation will furnish to any
shareholder upon request and without charge, a full or summary statement of the
designations, preferences, limitations, and relative rights of the shares of
each class authorized to be issued and, if the corporation is authorized to
issue any preferred or special class in series, the variations
12
<PAGE> 14
in the relative rights and preferences between the shares of each such series
so far as the same have been fixed and determined and the authority of the
board of directors to fix and determine the relative rights and preferences of
subsequent series.
Section 2. The signature of the officer of the corporation upon a
certificate may be a facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the date of its
issue.
UNCERTIFICATED SHARES
Section 3. The board of directors of the corporation may authorize
the issue of some or all of the shares of any or all of its classes or series
without certificates. Shares already represented by certificates shall not be
affected until they are surrendered to the corporation.
Section 4. Within two (2) days after the issue or transfer of shares
without certificates, the corporation shall send shareholders a written
statement of the information required on the certificates by F.S. section
607.0625 (2) and (3), and, if applicable, F.S. section 607.0627.
LOST CERTIFICATES
Section 5. The board of directors may direct a new certificate or an
equivalent new uncertificated security in place
13
<PAGE> 15
of any certificate theretofore issued by the corporation alleged to have been
lost, destroyed, or wrongfully taken. When authorizing such issue of a new
certificate or an equivalent new uncertificated security, the board of
directors, in its discretion and as a condition precedent to the issuance
thereof, may prescribe such terms and conditions as it deems expedient, and may
require such indemnities as it deems adequate, to protect the corporation from
any claim that may be made against it with respect to any such certificate
alleged to have been lost, destroyed, or wrongfully taken.
TRANSFERS OF SHARES
Section 6. Upon surrender to the corporation or the transfer agent of
the corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate or an equivalent new uncertificated security shall
be issued to the person entitled thereto, and the old certificate cancelled and
the transaction recorded upon the books of the corporation.
FIXING OF RECORD DATE
Section 7. For the purpose of determining shareholders entitled to
notice of a shareholders' meeting, to demand a special meeting, to vote, or in
order to make a determination of shareholders for any other proper purpose, the
board of directors may provide that the record date be fixed not more than
seventy
14
<PAGE> 16
days before the meeting or action requiring a determination of shareholders.
For the purpose of determining those shareholders entitled to demand a special
meeting, such record date shall be ten (10) days before the special meeting.
For the purpose of determining those shareholders entitled to take action
without a meeting, such record date shall be ten (10) days before the action
requiring a determination of shareholders. For the purpose of determining
those shareholders entitled to notice of and to vote at an annual or special
shareholders' meeting, such record date shall be ten (10) days before the
meeting. When a determination of shareholders entitled to vote at any meeting
of shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof.
LIST OF SHAREHOLDERS
Section 8. After fixing a record date for a meeting, the officer or
agent in charge of the records for shares shall prepare an alphabetical list of
the names of all shareholders who are entitled to notice of a shareholders'
meeting, arranged by voting group, with the address of, and the number and
class and series, if any, of shares held by each.
The shareholders' list shall be available for inspection by any
shareholder for a period of 10 days prior to the meeting and shall be kept on
file at the corporation's principal office. A shareholder or his agent or
attorney shall be entitled on written demand to inspect the list, subject to
the requirements of F.S.
15
<PAGE> 17
section 607.1602(3) during regular business hours and at his expense, during
the period it shall be available for inspection. The shareholders' list shall
be made available at the meeting, and any shareholder or his agent or attorney
shall be entitled to inspect the list at any time during the meeting or any
adjournment. The shareholders' list shall be prima facie evidence of the
identity of shareholders entitled to examine the shareholders' list or to vote
at a meeting of shareholders.
ARTICLE XI
GENERAL PROVISIONS
DISTRIBUTIONS
Section 1. Subject to the restrictions of the articles of
incorporation relating thereto, if any, and to limitation by statute,
distributions may be declared by the board of directors at any regular or
special meeting, pursuant to law. Distributions may be made in cash, in
property, or as a dividend.
Share dividends may be issued pro rata and without consideration to
the corporation's shareholders or to the shareholders of one or more classes or
series, subject to the provisions of the articles of incorporation.
Section 2. Before any distribution may be made, there may be set
aside out of any funds of the corporation available for distributions such sum
or sums as the directors from time to time, in their absolute discretion, think
proper to meet debts of the corporation as they become due in the usual course
of business, or
16
<PAGE> 18
for such other purpose as the directors shall think conducive to the interest
of the corporation.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name
of the corporation, the year of its organization and the words "Corporate Seal,
Florida". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
ARTICLE XII
AMENDMENTS
Section 1. These bylaws may be altered, amended, or repealed or new
bylaws may be adopted by the affirmative vote of a majority of the board of
directors at any regular or special meeting of the board.
17
<PAGE> 1
EXHIBIT 3.9.1
<PAGE> 2
EXHIBIT 3.9.1
ARTICLES OF INCORPORATION
OF
PAXSON NETWORKS, INC.
The undersigned, acting as incorporator of Paxson Networks,
Inc., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
Paxson Networks, Inc.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence on the date of
filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or
business permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is
authorized to have outstanding at any time is 10,000 shares of common stock
having a par value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the
corporation is 700 Spottis Woode Lane, Clearwater, Florida 34616, and the name
of the corporation's initial registered agent at that address is Lowell W.
Paxson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number
of directors may be either increased or diminished from time to time, as
provided in the bylaws, but shall never be less than one. The name and street
address of the initial director is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
Lowell W. Paxson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation
his rights under Section 607.0201, Florida Statutes, to constitute a
corporation, and he assigns to those persons designated by the board of
directors any rights he may have as incorporator to acquire any of the capital
stock of this corporation, this assignment becoming effective on the date
corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be
vested in the board of directors and the shareholders, except that the board of
directors may not amend or repeal any bylaw adopted by the shareholders if the
shareholders specifically provide that the bylaw is not subject to amendment or
repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or
repeal any provision in these Articles of Incorporation in the
-2-
<PAGE> 4
manner prescribed by law, and all rights conferred on shareholders are subject
to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this ___ day of December, 1993.
/s/ Lowell W. Paxson
----------------------------
Lowell W. Paxson
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That Paxson Networks, Inc., desiring to organize under the laws of the
State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 700 Spottis Woode Lane, Clearwater, Florida
34616, has named Lowell W. Paxson as its agent to accept service of process
within this state. ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
LOWELL W. PAXSON
By: /s/ Lowell W. Paxson
------------------------------
-4-
<PAGE> 1
EXHIBIT 3.10.1
<PAGE> 2
EXHIBIT 3.10.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS TELEVISION, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS
TELEVISION, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS TELEVISION, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
-2-
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 2 day of November, 1994.
/s/ William L. Watson
---------------------------------
William L. Watson, Incorporator
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON COMMUNICATIONS TELEVISION, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U. S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.11.1
<PAGE> 2
EXHIBIT 3.11.1
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF JACKSONVILLE, LIMITED PARTNERSHIP
This Agreement of Limited Partnership ("Agreement") is entered into
and shall be effective as of the 27th day of June, 1991, by and between Paxson
Enterprises, Inc., a Nevada Corporation, as the General Partner and Lowell
Paxson, as a Limited Partner, pursuant to the provisions of the Florida Uniform
Limited Partnership Act, on the following terms and conditions:
ARTICLE I.
FORM AND INTERPRETATION
1. Definitions. The following capitalized terms, as used in
this Agreement and in the attached exhibits, which constitute a part of this
Agreement, have the meanings ascribed to them below and include the plural as
well as the singular number:
"Act" means the Florida Uniform Limited Partnership Act, as amended,
or any subsequent Florida law concerning partnerships that are enacted in
substitution for the Act.
"Affiliate" of a Partner means (1) another Partner of the
Partnership; (2) a legal or personal representative of any Partner; (3) the
Partner's lineal descendants and spouse (other than a spouse who is legally
separated from the Partner under a decree of divorce or separate maintenance);
(4) a trustee of a trust for the benefit of any Person referred to in clause
(1), (2) or (3); (5) a Person, other than an individual, of which 80% or more
of the voting or equity interests is owned directly or indirectly by a Partner
and/or one or more of the Persons referred to in clauses (1) through (4); (6) a
Person owning 80% or more of the voting or equity interests of a Partner that
is not an individual; or (7) a Person other than an individual, 80% or more of
the voting or equity interests of which is owned by the same Person that owns
80% or more of the voting or equity interests of a Partner that is not an
individual.
"Agreement" means this Limited Partnership Agreement as originally
executed and as subsequently amended or supplemented from time to time in
accordance with section 48.
"Assignment" means a sale, exchange, gift, pledge, transfer or
disposition of any kind whatsoever and, in the case of a Person that is not an
individual, it includes the sale, exchange, pledge, transfer or disposition of
a majority of either voting control or the equity interests in such Person.
-1-
<PAGE> 3
"Bankruptcy" means taking advantage of any bankruptcy or insolvency
act (including the Bankruptcy Reform Act of 1978 or similar law, and also any
proceeding under state or local insolvency or debtor relief laws), or a final
adjudication of insolvency or an assignment of a major portion of a Person's
assets for the benefit of creditors.
"Capital Account" has the meaning set forth in section 10.
"Capital Contribution" means the total amount of cash, securities and
other property contributed by a Partner to the equity of the Partnership, or
agreed to be contributed by a Partner to the equity of the Partnership,
pursuant to section 9(a), and reduced by any return of capital to the Partner
within the meaning of section 9(c). Any reference in this Agreement to the
Capital Contribution of either a Partner or an assignee of a Partner shall
include the Capital Contribution of any prior Partner to whose Partnership
Interest the then existing Partner or assignee succeeded.
"Cash Flow" means the excess of cash derived by the Partnership from
all sources, including from capital contributions, loans, sales of securities
and other activities, (but excluding cash derived from the winding-up and
liquidation of the Partnership pursuant to section 32) over the sum of all cash
disbursements, including repayments of loans from Partners, loans to Partners
from the Partnership, and distributions to Partners pursuant to section 14(a)
or (b) (but excluding disbursements pursuant to section 14(c)), plus a
reasonable allowance for reserves for repairs, investments in Property
(including Marketable Securities), replacements, contingencies and anticipated
obligations (including debt service, capital improvements and replacements to
the extent not funded by reserves) as reasonably determined by the Managing
General Partner. Notwithstanding the preceding sentence, in determining the
reasonable allowance for reserves, the Managing General Partner shall reduce
such allowance to the extent necessary to ensure that annual distributions of
Cash Flow to each Partner will be in an amount at least equal to the annual
income tax liability (exclusive of income tax liability resulting from a
transaction pursuant to section 14(b) or (c)) of each such Partner (determined
assuming that the maximum possible income tax rate is applicable) resulting
from the allocation to the Partner of his share of the Partnership's Taxable
Income and Taxable Loss.
"Code" means the Internal Revenue Code of 1986, as amended, or any
subsequent federal law concerning income taxes that is enacted in substitution
for the Code.
"General Partner" means any Person admitted as a general partner in
accordance with this Agreement.
"General Partnership Interest" means the Partnership Interest of a
General Partner, in his capacity as a General Partner.
"Limited Partner" means those Persons who are signatories to this
Agreement as limited partners; and all other Persons who shall be admitted to
the Partnership as limited partners.
-2-
<PAGE> 4
"Majority in Interest", when used in regard to the degree of consent,
approval or agreement required among the Partners, means Partners whose
aggregate Capital Account balances constitute over 50% of the total aggregate
Capital Account balances of all owners of Partnership Interests then
outstanding.
"Managing General Partner" means the Person designated in this
Agreement as the general partner responsible for management of the affairs of
the Partnership and thereafter any Person which becomes a general partner
responsible for management of the affairs of the Partnership pursuant to this
Agreement, in the Person's capacity as a managing general partner of the
Partnership. Initially, the Managing General Partner shall be Paxson
Enterprises, Inc.
"Marketable Securities" means securities, including stock, which are
traded on an established securities market, whether or not registered under the
Securities Act of 1933.
"Partner" means each Person which is a General Partner or a Limited
Partner.
"Partnership" means the PAXSON BROADCASTING OF JACKSONVILLE, LIMITED
PARTNERSHIP, the Florida limited partnership formed in accordance with the Act
pursuant to this Agreement.
"Partnership Interest" includes only a Partner's Capital Contribution
and right to receive his Percentage Interest and excludes Partnership Rights.
"Partnership Rights" excludes the Partnership Interest of a Partner,
and includes, in addition to other rights provided in this Agreement, the
rights provided to him by the Act except to the extent expressly modified by
this Agreement.
"Percentage Interest" means a Partner's percentage share (as
initially stated opposite such Partner's name on EXHIBIT A as amended from time
to time), of the Profits and Losses, Taxable Income or Taxable Loss, cash and
other distributions and liquidation proceeds of the Partnership all subject to
and interpreted in accordance with the terms of this Agreement. The Percentage
Interests of Partners shall be proportionate to the Capital Accounts of the
Partnership at all times so that, for example, if a Partner's Capital Account
is 100 and the aggregate of all Capital Accounts is 1000, the Partner's
Percentage Interest in the Partnership is 10%. In the event of a change among
the Partners in the Percentage Interests in the Partnership during the year,
the Partnership shall use a closing-of-the-books method with respect to such
change or changes in Percentage Interests in computing a Partner's share of
Profits and Losses, Taxable Income and Taxable Losses, and entitlement to
distributions during such year.
"Person" means any individual and any general or limited partnership,
corporation, estate, joint venture, trust, business trust, cooperative,
association or other organization or entity.
-3-
<PAGE> 5
"Profits and Losses" means the annual net income or loss of the
Partnership determined on a generally accepted accounting principles basis, as
disclosed on the annual financial statements of the Partnership.
"Property" means any real, personal, tangible or intangible property
contributed by a Partner to the equity of the Partnership or otherwise acquired
by the Partnership.
"Pro Rata" means in the proportion that the Percentage Interest of
each Partner bears to the total Percentage Interests of all the Partners.
"Retirement" means the death, Bankruptcy, adjudication of
incompetency as determined by a court of appropriate jurisdiction, dissolution
and liquidation or termination of existence, merger or consolidation (except as
provided in section 29) of a Partner, or the sale, lease or other disposition
of all or substantially all the property of a Partner (except as provided in
section 29).
"Taxable Income or Taxable Loss" means the net income or loss of the
Partnership for federal income tax purposes, as determined at the close of the
Partnership's fiscal year by the accountants employed by the Partnership to
prepare its income tax returns.
2. Captions and Certain Terms. The titles and captions
preceding the text of the articles and sections of this Agreement are solely
for convenience of reference and neither constitute a part of this Agreement
nor affect its meaning, interpretation, or effect. The words "hereby,"
"herein," "hereof," "hereto," "hereunder," and terms of similar import refer to
this Agreement as a whole and not to any particular article, section,
subsection or other part of this Agreement.
3. Severability. If any article, section or other provision of
this Agreement, or its application, is held to be invalid, illegal or
unenforceable in any respect or for any reason, the remainder of this Agreement
and the application of such article, section or other provision to a person or
circumstance with respect to which it is valid, legal and enforceable is not
affected.
4. Limitation of Grant. Nothing in this Agreement, whether
express or implied, is intended or may be construed to confer upon, or to grant
to, any creditor or any other Person (other than the Partners and their legal
and personal representatives, heirs, successors and permitted assignees) any
right, remedy or claim under or because of this Agreement or any covenant,
condition or stipulation of it.
-4-
<PAGE> 6
ARTICLE II
ORGANIZATION OF PARTNERSHIP
5. Formation, Name, Office and Registered Agent. The
Partnership is organized as of the date of this Agreement and the signatories
to this Agreement constitute the members of this partnership under the Act as
of the date hereof. The rights and obligations of the Partners are determined
by the Act, except as otherwise expressly provided in this Agreement. The name
of the Partnership is "PAXSON BROADCASTING OF JACKSONVILLE, LIMITED
PARTNERSHIP." The recordkeeping office of the Partnership is located at 700
Spottis Woode Lane, Clearwater, Florida 34616. The principal business office
of the Partnership is located at 50 West Liberty Street, Reno, Nevada 89501.
The Managing General Partner may change the name of the Partnership or the
location of its principal business office at any time and from time to time by
giving written notice of such change to each Partner.
6. Term of Partnership. The term of the Partnership shall
continue until the earlier of (i) December 31, 2066, or (ii) the death or
adjudication of incompetency as determined by a court of appropriate
jurisdiction of Lowell Paxson, unless the Partnership is earlier dissolved and
terminated under this Agreement.
7. Purposes of Partnership; Authorized Acts.
A. (a) Purposes of the partnership are to
(i) acquire, operate, manage and perform all matters necessary
and attendant to the operation of one or more radio stations
in Duval County, Florida,
(ii) invest in, own, sell, acquire, manage and exercise the
voting rights associated with Marketable Securities,
(iii) acquire, hold, sell, own, improve, develop or lease other
types of real and personal property, and
(iv) engage in any other lawful activity for profit approved by
an affirmative vote of a Majority in Interest.
(a) Notwithstanding Section 7, unless unanimously approved by the
Partners, the Partnership shall not engage in any activity(ies) which
would result, based upon opinion of tax counsel, in the
characterization of the Partnership as an investment company as that
term is used in Section 721(b) or any successor provision of the
Code.
-5-
<PAGE> 7
B. In furtherance of its purposes, but subject to every other provision of
this Agreement, the Partnership is authorized to do the following:
(a) acquire by purchase, lease or otherwise, any real or
personal, tangible or intangible property that may be necessary, convenient or
incidental to the accomplishment of the purposes of the Partnership;
(b) construct, operate, maintain, finance, improve, own,
sell, convey, exchange, assign, mortgage or lease any property (or a part
thereof) as may be necessary, convenient or incidental to the accomplishment of
the purposes of the Partnership;
(c) borrow money and issue evidences of indebtedness in
furtherance of any purpose of the Partnership and secure the same by a
mortgage, pledge, security interest or other liens on the property, any part
thereof, any interest therein or on any improvements thereto;
(d) prepay, in whole or in part, refinance, increase,
renew, modify or extend any indebtedness of the Partnership and, in connection
therewith, extend, renew or modify any mortgage, pledge, security interest or
other lien affecting any property;
(e) invest and reinvest the assets of the Partnership
in, and purchase, acquire, hold, sell, transfer and exchange securities of all
kinds;
(f) lend money to Partners;
(g) exercise the voting rights associated with property
owned by the Partnership; and
(h) enter into any activity and perform and carry out
any contract in connection with, or necessary or incidental to, the
accomplishment of the purposes of the Partnership.
8. Co-Ownership of Partnership Interests. Any consent required
of a Partner shall require the action or vote of each Person (or in such other
manner as such Persons have designated in writing to the Partnership) having an
interest in such Partnership Interest, with a majority approval needed for
consent. On the death of a co-owner of a Partnership Interest held in either
joint tenancy with right of survivorship or tenancy by the entirety, the
Partnership Interest is owned solely by the survivor as a Partner, and not as
an assignee. The Partnership need not (although it may) recognize the death of
a co-owner of a Partnership Interest until the Managing General Partner
receives notice of the death. A co-owner of a Partnership Interest may sever
the tenancy by giving to the Managing General Partner notice to that effect,
and signed by the co-owner requesting the severance in the case of a joint
tenancy, and by both co-owners in the case of a tenancy by the entirety. Upon
receipt of the notice and the certificate evidencing the Partnership Interest
owned by the co-owners, the Managing General
-6-
<PAGE> 8
Partner shall cause the Partnership Interest to be allocated as directed by the
co-owners and shall indicate on the Partnership records such allocation. In
absence of joint direction, the interests shall be allocated between the owners
as the severed ownership interests would be valued for federal estate tax
purposes.
ARTICLE III
PARTNERSHIP CAPITAL
9. Capital Contributions.
(a) Upon executing this Agreement, each Partner shall
make or has made a Capital Contribution in the amount and of the type, and
initially shall have a Percentage Interest equal to the percentage, set forth
opposite his name on EXHIBIT A. Partners may make (but Limited Partners are not
required to make) additional Capital Contributions at such time and in such
amount as they in their sole discretion shall determine but only if the
Managing General Partner and a Majority in Interest consent to such additional
Capital Contributions. Upon the assignment of any Partnership Interest, the
making of an additional Capital Contribution or any return of a Capital
Contribution, or any substitution of a Partner, EXHIBIT A shall be amended to
accurately reflect the name, address, Capital Contribution and Percentage
Interest of each Partner.
(b) Notwithstanding (a) above, no Capital Contributions
shall be made or permitted by any Partner which would result, directly or
indirectly, in the Partnership being treated as an investment company under
section 721(b) of the Code, and any such attempted Capital Contribution shall
be void ab initio. The Managing General Partner shall withhold its consent to
the making of an additional Capital Contribution, unless it has satisfied
itself (by seeking advice of legal counsel or otherwise) that the making of the
additional Capital Contribution will not result, directly or indirectly, in the
Partnership being treated as an investment company under section 721(b) of the
Code.
(c) A Partner shall not receive from the Managing
General Partner or out of Partnership Property, and the Managing General
Partner and the Partnership shall not return to a Partner, any part of his
Capital Contribution, except as set forth in Articles VIII and IX of this
Agreement and such distribution is determined to be a return of a Partner's
Capital Contribution, and then only if all liabilities of the Partnership,
except liabilities to the Partners on account of their Capital Contributions,
have been paid or there remains property of the Partnership sufficient to pay
them. The Partnership shall not pay interest on Capital Contributions, and a
Partner may demand and receive only cash in return for his Capital
Contribution, except to the extent provided for in Articles VIII and IX of this
Agreement or unless the Liquidator (as defined in section 32) decides to
distribute Partnership property in kind upon the dissolution, winding-up, and
termination of the Partnership, or unless the distribution of property to a
Partner is unanimously approved by the Partners. Each Partner, by signing this
-7-
<PAGE> 9
Agreement or a counterpart of it, consents to all distributions authorized by
this Agreement and releases all other Partners from all liability to both him
and the Partnership for all distributions made in accordance with this
Agreement.
10. Capital Account.
(a) The Managing General Partner shall establish and
maintain a Capital Account for each Partner in the Partnership's books of
account. Capital Accounts shall be maintained and adjusted in accordance with
generally accepted accounting principles. Consistent with these capital
account maintenance rules, the Managing General Partner shall credit to each
Partner's Capital Account the amounts of the Partner's Capital Contributions
and any Profits allocated to the Partner. The Managing General Partner shall
charge to or deduct from each Partner's Capital Account the amounts of all
distributions (in cash or other property) to the Partner and any Losses
allocated to the Partner. If any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferror to the extent it relates to the
transferred interest.
(b) The provisions of this section and the other
provisions of this Agreement pertaining to the maintenance of Capital Accounts
are intended to comply with Treasury Regulation Section 1.704-1(b) (or any
successor provision thereto), and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Managing General Partner
determines that it is prudent to modify the manner in which the Capital
Accounts are computed in order to comply with such Regulations, provided that
it is not likely to have a material effect on the amounts distributable to any
Partner without such Partner's consent and upon receipt of an opinion of tax
counsel to the Partnership concluding that such modification will be given
effect for federal income tax purposes, the Managing General Partner may make
such modification.
(c) The Managing General Partner shall revalue the
Partnership's property (based on its fair market value as of the moment
immediately preceding the relevant event) and shall adjust Capital Accounts to
take into account any resulting Profit or Loss (determined as if the
Partnership sold all its property for cash equal to the property's fair market
value) upon the occurrence of either of the following events: (1) the making by
any Partner of any non-Pro Rata additional Capital Contribution, (2) the
partial or complete withdrawal of a Partner's Partnership Interest, or (3) the
admission of a Partner.
11. Expenses Paid by Partners. Any Partnership expense
reasonably paid by any Partner on behalf of the Partnership is an indebtedness
of the Partnership to the Partner and does not increase the Partner's
Partnership Interest or Percentage Interest. The Partnership shall reimburse
the Partner as soon as practicable and may pay interest on the indebtedness.
12. Loans by Partners. The Managing General Partner may borrow
money on behalf of the Partnership from any Partner in such amounts and for
such purposes as it considers necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership.
-8-
<PAGE> 10
Each loan to the Partnership by a Partner (excluding reimbursable expenses)
shall be evidenced by a promissory note or similar instrument of the
Partnership, may be secured by a lien on the Property, may bear interest at a
rate determined by agreement between such Partner and the Managing General
Partner and may be subject to such other terms and conditions as are agreed to
by such Partner and the Managing General Partner. The Partnership may prepay
each loan from a Partner in whole or in part, at any time and from time to
time, without premium or penalty.
ARTICLE IV
PROFITS AND LOSSES AND TAXABLE INCOME AND TAXABLE LOSS
13. Allocations
(a) Allocation of Profits and Losses.
(1) Profits and Losses of the Partnership shall
be allocated Pro Rata among the Partners.
(2) Profits and Losses of the Partnership shall
be determined for each fiscal year of the Partnership in accordance with the
method of accounting required or permitted to be used for federal income tax
purposes, with such exceptions thereto as are set forth in this Agreement, and
otherwise in accordance with generally accepted accounting principles applied
in a consistent manner.
(b) Allocation of Taxable Income and Taxable Loss.
(1) Except as otherwise provided in this
section 13(b), allocations of tax items among the Partners shall be consistent
with corresponding book (Profits and Losses) items (if any). For tax purposes,
Profits and Losses, or any item thereof, shall be appropriately adjusted to
reflect Taxable Income and Taxable Loss, or any item thereof, as determined
under the Code and shall be allocated among the Partners in such a manner as to
comply with the provisions of the Code and Regulations thereunder (including,
if necessary, the "minimum gain chargeback provisions" of the Regulations under
Section 704 of the Code). For example, any gain or loss recognized by the
Partnership with respect to property contributed to the Partnership by a
Partner shall be shared among the Partners so as to take account of the
variation, if any, between the basis of the property to the Partnership and its
fair market value at the time of contribution or revaluation, whichever is
applicable, so as to comply with the requirements of Section 704 of the Code.
Thus, for example, if a Partner contributes property to the Partnership whose
agreed fair market value exceeds its adjusted basis in the hands of the
contributing Partner ("built-in gain"), and there have been no events giving
rise to a revaluation, built-in gain with respect to such contributed property
shall first be allocated to such contributing Partner when the Partnership
recognizes gain upon a disposition of such contributed property, but not in an
amount in excess of such built-in gain; the remaining balance of such
recognized gain, if any,
-9-
<PAGE> 11
shall be allocated among the Partners as set forth herein. The allocation of
built-in gain to a contributing Partner shall not increase such Partner's
Capital Account, because such gain was already taken into account when the
built-in gain property was contributed to the Partnership. A Partner who
contributes property other than cash shall provide the Managing General Partner
with information necessary to verify the contributing Partner's adjusted tax
basis in the items of property contributed by him to the Partnership.
(2) Generally, except as provided in section
13(b)(i), Taxable Income and Taxable Loss (and each such income and loss item)
shall be allocated Pro Rata among the Partners. In the event, however, that
non-Pro Rata distributions of property are made to a Partner or the net
proceeds from the sale of property are distributed non-Pro Rata to a Partner,
Taxable Income and Taxable Loss derived from such distributions or sales shall
be allocated 100% to such Partner, subject only to such modifications as are
necessary to comply with Section 704 of the Code.
ARTICLE V
DISTRIBUTIONS, WITHDRAWALS AND LOANS
14. Distributions.
(a) Cash Flow Distributions. Cash Flow shall be
distributed Pro Rata among the Partners. Notwithstanding the foregoing, if the
Partners unanimously agree, the Partnership may distribute Cash Flow
attributable to a sale of property in a non-Pro Rata manner.
(b) Partial or Complete Withdrawal by a Partner From the
Partnership.
(1) In the event of a partial or complete
withdrawal of a Partner from the Partnership pursuant to Article VIII, the
Managing General Partner shall, as promptly as is reasonably possible,
distribute to the Partner his Pro Rata share of the Marketable Securities
previously contributed by such Partner to the Partnership, cash and other
readily divisible assets of the Partnership. The withdrawing Partner shall
also be entitled to receive cash equal in value to his Pro Rata share of the
fair market value (as reasonably determined by the Managing General Partner) of
any non-readily divisible assets owned by the Partnership. The Managing
General Partner shall, as promptly as possible, distribute this additional
amount of cash, if any, to the withdrawing Partner. Cash distributions to the
withdrawing Partner shall be reduced by such Partner's Pro Rata share of the
liabilities of the Partnership and by any expenses incurred by the Partnership
with respect to the withdrawal of the Partner.
(2) A Partner may request that all or a portion
of the Marketable Securities subject to the requested withdrawal be sold by the
Partnership and the net proceeds (after selling and other expenses) distributed
as directed by him. In the event that the Managing
-10-
<PAGE> 12
General Partner is unable to sell these Marketable Securities, it shall
distribute them to the Partner, unless it is notified by the Partner to cancel
the withdrawal.
(3) The Managing General Partner shall not be
required to distribute to the requesting Partner any assets that the
Partnership is legally restricted or prohibited from distributing to the
Partner, unless steps can be taken to remove the restriction or prohibition; in
which case the requesting Partner shall be charged with the expense of removing
such restriction or prohibition. Any distribution hereunder shall also be
subject to the limitations set forth in sections 9(c) and 15, respectively.
(c) Liquidating Distributions. The net proceeds from
liquidation of the Partnership's assets pursuant to its dissolution,
winding-up, and termination shall be distributed, and all Profits and Losses
resulting from the liquidation of the Partnership property shall be allocated,
among the Partners in the proportions and orders of priority specified in this
section 14(c).
(i) The Liquidator shall distribute the net
proceeds from liquidation of the Partnership's assets as follows:
(1) FIRST: To pay all the liabilities
of the Partnership that are then due and payable, except for both Capital
Contributions of Partners and liabilities to the Partners, in the order of
priority required by Florida law; then
(2) SECOND: To establish any reasonable
reserve that the Liquidator may determine is required for unpaid, future, or
contingent liabilities or obligations of the Partnership; then
(3) THIRD: To pay all liabilities of
the Partnership to the Partners, pro rata according to the amounts of their
respective liabilities; then
(4) FOURTH: To the Partners to the
extent of any positive balances in their Capital Accounts, Pro Rata according
to the amounts of their respective positive balances; and then
(5) FIFTH: Any remaining net proceeds
shall be distributed Pro Rata among the Partners.
(ii) Any Profits and Losses and Taxable Income
and Taxable Loss resulting from the disposition of the Partnership's assets in
the process of liquidation shall be allocated among the Partners in the manner
provided in section 13. Any property distributed in kind in the liquidation
shall be valued and treated as if the property were sold and the cash proceeds
were distributed. The Profits and Losses arising from the constructive sale of
the property described in the preceding sentence shall be allocated among the
Partners in the manner provided in section 13.
-11-
<PAGE> 13
15. Limitation on Distributions to Partners. A Partner may
receive distributions from the Partnership only to the extent the Partnership's
total assets exceed its total liabilities, other than liabilities to the
Partners on account of their Capital Contributions.
ARTICLE VI
AUTHORITY, DUTIES, AND LIABILITIES OF PARTNERS
16. Duties of Managing General Partner. The Managing General
Partner shall manage the affairs of the Partnership, shall apply itself
diligently for the Partnership, and shall devote to the Partnership such time
as is necessary and appropriate to manage the business of the Partnership. The
Managing General Partner is not required to devote all its business time to the
Partnership, and it may engage in other business ventures and employment,
including those in competition with the Partnership. In the performance of its
duties, the Managing General Partner may hire employees and agents of the
Partnership and generally shall supervise and direct all the daily operations
of the Partnership.
17. Managing General Partner's Fees and Expenses.
(a) Fees to Managing General Partner. In consideration
for performing services described herein, the Managing General Partner may be
paid a fee to be agreed upon by a Majority in Interest. Such fees shall be
deemed earned when the services have been performed and, regardless of when
paid, shall be non-executory from the date earned and shall be the obligation
of the Partnership from and after that date.
(b) Expenses. Except as otherwise provided herein, the
Partnership shall pay all expenses of the Partnership (which expenses may be
either billed directly to the Partnership or reimbursed to the Managing General
Partner) which may include, but are not limited to: (i) all costs of borrowed
money, taxes and assessments on the Property and other taxes applicable to the
Partnership; (ii) all costs for goods and materials, whether purchased by the
Partnership directly or by the Managing General Partner on behalf of the
Partnership; (iii) legal, audit, accounting, brokerage and other professional
fees; (iv) fees and expenses paid to independent contractors, mortgage bankers,
brokers, insurance brokers and other agents; (v) expenses of organizing,
revising, amending, converting, modifying or terminating the Partnership; (vi)
expenses in connection with distributions made by the Partnership to, and
communications and bookkeeping work necessary in maintaining relations with,
Partners; (vii) expenses in connection with preparing and mailing reports to
Partners; (viii) costs of any accounting, statistical or bookkeeping equipment
necessary for the maintenance of the books and records of the Partnership; (ix)
the cost of preparation and dissemination of informational material and
documentation relating to the Partnership; (x) except with respect to
litigation solely among the Partners as such, costs incurred in connection with
any litigation in which the Partnership is involved, as well as in the
examination, investigation or other proceedings,
-12-
<PAGE> 14
conducted against the Partnership by any regulatory agency, including legal and
accounting fees incurred in connection therewith; (xi) costs of any computer
services or equipment or services of personnel used for or by the Partnership;
and (xii) expenses of professionals employed by the Partnership in connection
with any of the foregoing, including attorneys, accountants and appraisers.
18. Authority of Managing General Partner. The Managing General
Partner may bind the Partnership to do all acts that are necessary,
appropriate, or incidental to the accomplishment of the purposes of the
Partnership. Any person dealing with the Partnership or the Managing General
Partner may rely on a certificate signed by the Managing General Partner as to
the identity of any Partner, the existence or absence of any fact or condition
that is necessary to permit action by either the Partnership or the Managing
General Partner or germane in any other way to the affairs of the Partnership,
and the persons who are authorized to execute and deliver any documents or
instruments of or on behalf of the Partnership. Without limiting the
generality of the foregoing, the Managing General Partner is specifically
authorized to do the following:
(a) to negotiate and enter into leases and agreements
with land or building owners or other Persons, and to incur obligations for,
and on behalf of, the Partnership in connection with Partnership business;
(b) to borrow money on behalf of the Partnership and, as
security therefor, to encumber the property;
(c) to prepay, in whole or in part, refinance, increase,
modify or extend any obligation affecting the property;
(d) to sell, exchange, convey and lease the property;
(e) to employ from time to time, at the expense of the
Partnership, other Persons required for the operation and management of the
Partnership business, including accountants, attorneys and others, who may be
Partners, on such terms and for such compensation as the Managing General
Partner determines to be reasonable and this may include Persons which are
Affiliates;
(f) to pay all attorney's and accountant's fees and
other costs incurred in connection with the formation of the Partnership
business and the completion of all steps necessary or advisable for the
Partnership to comply with applicable laws;
(g) to assume responsibilities imposed on the Managing
General Partner by the Act;
-13-
<PAGE> 15
(h) to compromise, arbitrate or otherwise adjust claims
in favor of or against the Partnership and to carry such insurance as the
Managing General Partner considers advisable;
(i) to exercise the voting rights associated with the
securities and other Property owned by the Partnership;
(j) to commence or defend litigation with respect to the
Partnership or any assets of the Partnership as the Managing General Partner
considers advisable, at the expense of the Partnership;
(k) to make, execute, acknowledge and deliver documents
of transfer and conveyance and any other instruments that may be necessary or
appropriate to carry out its powers; and
(l) to do all such acts and take all such proceedings
and execute all such rights and privileges, although not specifically mentioned
herein, as the Managing General Partner considers necessary to conduct the
business of the Partnership and to carry out the purposes of the Partnership.
Notwithstanding the foregoing, the Managing General Partner shall not
take any of the following actions without the consent of a Majority in
Interest:
(1) assign all or any part of the property for the
benefit of its creditors or confess a judgment against the Partnership;
(2) take any action in contravention of the Act, the
certificate of limited partnership or this Agreement;
(3) sell, lease, transfer, assign, pledge or encumber a
substantial portion (10% or more) in value of the property of the Partnership
(except with respect to transactions to which section 28 or section 32
applies); or
(4) admit a Person as a Partner of the Partnership.
19. Dealing with Affiliates. The Managing General Partner may
employ and enter into contracts and other arrangements with any Person,
including an Affiliate, and may obligate the Partnership to pay reasonable
compensation for services rendered by such Persons on terms that, in the
judgment of the Managing General Partner, are not less favorable to the
Partnership than would be available from an unrelated party.
20. Indemnification of General Partners. The Managing General
Partner need not secure the performance of its duties by bond or otherwise. A
General Partner is not liable, responsible, or accountable in damages or
otherwise to any Partner or to the Partnership for any
-14-
<PAGE> 16
act taken or omission made in good faith on behalf of the Partnership and in a
manner that such General Partner reasonably believes to be within the scope of
the authority granted to it by this Agreement and in the best interest of the
Partnership, except for gross negligence or willful misconduct. Any loss,
expense (including attorneys' fees) or damage incurred by a General Partner by
reason of any act or omission by it in good faith on behalf of the Partnership
and in a manner that it reasonably believes to be within the scope of the
authority granted to it by this Agreement and in the best interest of the
Partnership (but not, in any event, any loss, expense or damage incurred by a
General Partner by reason of gross negligence or willful misconduct) shall be
paid to the indemnified General Partner from the Partnership's assets, to the
extent available.
21. Liability of Non-Managing General Partner. The non-managing
General Partners are not liable to any other Partner for the gross negligence
or willful misconduct of the Managing General Partner.
22. Authority of Non-Managing General Partner. The non-managing
General Partners shall not participate in the management of, or have any
control over, the business or policies of the Partnership, except as required
by the Act or permitted by section 18, and shall not transact any business in
the name of the Partnership. Unless required by the Act, a non-managing
general partner shall not sign any agreement, document or instrument in the
name of the Partnership or otherwise make commitments on behalf of the
Partnership.
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS
23. General Partners. Subject to section 24, a General Partner
may make an Assignment, directly or indirectly, of all or any part of its
Partnership Interest. However, an Assignment does not relieve such General
Partner of its obligations and liabilities under this Agreement, or constitute
the assignee a General Partner, or confer on the assignee any Partnership
Rights. Subject to section 24, and only if a Majority in Interest consents, a
General Partner may make an Assignment of both its Partnership Interest and its
Partnership Rights if the assignee assumes in writing all such General
Partner's obligations and liabilities under this Agreement and if all the
applicable requirements of section 25 are satisfied. Upon compliance with the
immediately preceding sentence, an assignee of such General Partner has all the
rights and powers granted to such General Partner under this Agreement and has
all the obligations and liabilities of such General Partner under this
Agreement.
24. Restriction on Transfer. Notwithstanding any other
provision of this Agreement, an assignment of a Partnership Interest shall not
be made, and consent thereto shall be withheld:
-15-
<PAGE> 17
(a) Unless the Managing General Partner has satisfied
itself (by seeking advice of legal counsel or otherwise, with any resulting
Partnership expense to be reimbursed by the assignor) that the assignment will
not have any significant adverse tax effect upon the Partnership or the other
Partners;
(b) Unless the Managing General Partner has satisfied
itself (by advice of legal counsel, with any resulting Partnership expense to
be reimbursed by the assignor) that the proposed assignment may be made without
registration under any applicable securities law; and it will not violate any
applicable securities law (including investor suitability standards);
(c) If the Assignment is sought to be made to:
(i) a minor or incompetent, except if made by
will or intestate succession, or
(ii) to a Person which is not an Affiliate.
25. Admission of Substitute Partner. Subject to the other
provisions of this Agreement, an assignee of a Partnership Interest may be
admitted as a Partner and granted Partnership Rights only if:
(a) the Assignment is made pursuant to a written
instrument in a form satisfactory to the Managing General Partner and specifies
the intention of the assignor that the assignee be substituted as a Partner;
(b) the Managing General Partner consents to the
admission by executing two counterparts of this Agreement that evidences the
Partnership Rights of the assignee, and if the assignee is to be admitted as a
General Partner a Majority in Interest consent to the admission;
(c) the assignee accepts, signs and agrees to be bound
by this Agreement, by executing two counterparts of this Agreement, including
an amended EXHIBIT A, and such other documents or instruments as the Managing
General Partner requires to effect the admission of the assignee as a Partner;
(d) the assignee provides the Managing General Partner
with evidence satisfactory to it of the assignee's authority to become a
Partner under the terms of this Agreement;
(e) the assignee pays all filing, publication and other
costs (including reasonable attorneys' fees) incurred by either the Partnership
or the Managing General Partner in connection with the admission and
substitution of the assignee as a Partner.
-16-
<PAGE> 18
Notwithstanding an assignee's satisfaction of any or all of the
conditions specified above, the Managing General Partner, in its absolute
discretion, may refuse to consent to the assignee's admission as a Partner, in
which event the assignee will not obtain any Partnership Rights, but will
retain only the rights of an assignee under section 23.
26. Rights of Partner After Assignment and Substitution. Upon
the Assignment of all his Partnership Interest, and the admission of a
substitute partner, a Partner shall cease to be a Partner and to have any
Partnership Rights.
27. Allocations and Distributions After Assignment. For the
purposes of allocations of Profits and Losses, Taxable Income or Taxable Loss,
and distributions, an Assignment of a Partnership Interest is effective as to
the Partnership, and shall be reflected in the records of the Partnership, as
of the date that the Managing General Partner receives written notice of the
Assignment. The Taxable Income or Taxable Loss, Profits and Losses and cash
and other distributions in respect of the assigned Partnership Interest with
respect to the fiscal year in which the Assignment of the Partnership Interest
occurs shall be divided between the assignor and the assignee according to the
method provided to the Managing General Partner by the assignor and the
assignee, so long as such method is permitted under the Code and does not
adversely affect the other Partners or the Partnership from a tax or economic
perspective. The method of allocation shall be provided to the Managing
General Partner in the written notice of the Assignment. Any additional costs
for computing the allocations hereunder shall be paid by the assignor or
assignee, as the case may be. The written notice referred to above shall also
contain information as to whether the assignor or assignee shall be responsible
for the payment of such additional cost, if any.
ARTICLE VIII
RETIREMENT, WITHDRAWAL, OR REMOVAL OF PARTNERS
28. Withdrawal of Non-Managing General Partner and Limited
Partners.
(a) A non-managing General Partner and a Limited Partner
may, at any time, partially withdraw his Partnership Interest from the
Partnership by providing written notice thereof to the Managing General
Partner. The Managing General Partner shall promptly send a copy of such
notice to all other Partners. Within thirty (30) days after the receipt of
such written notice from a Partner, the Managing General Partner shall make the
appropriate distributions to the Partner in partial or complete redemption of
his Partnership Interest as set forth in section 14(b).
(b) A partial withdrawal by a Partner shall be made in
increments of one-tenth (1/10th) of one percent (1%) of a Percentage Interest.
The written notice of withdrawal from a Partner to the Managing General Partner
must state whether the withdrawal is a partial or complete withdrawal and, if a
partial withdrawal, must state the Percentage Interest that is
-17-
<PAGE> 19
being withdrawn. A Partner shall not make a partial withdrawal that will
result in his remaining Percentage Interest becoming less than one-tenth
(1/10th) of one percent (1%) immediately after the withdrawal.
(c) The Managing General Partner agrees that it will
fully cooperate to the extent permitted by law to accomplish a withdrawal
requested by a non-managing General Partner and a Limited Partner hereunder.
It also agrees that it will not take any action that will obstruct or render
impossible the application of this section 28 (such as to pledge the
Partnership's Marketable Securities as collateral to creditors of the
Partnership), unless such action is essential to accomplish the purposes of the
Partnership.
(d) The partial withdrawal of a non-managing General
Partner or a Limited Partner does not dissolve or terminate the Partnership
unless there is only one Partner then remaining. The remaining Partners shall
amend this Agreement to reflect the partial or complete withdrawal of the
Partner from the Partnership, if and to the extent necessary.
(e) Upon the giving of the notice of withdrawal pursuant to
Paragraph (a), and upon the dissolution of the Partnership, the voting rights
with respect to any Marketable Securities allocable to the Percentage Interest
being withdrawn shall be vested in the withdrawing Partner or Partners, and the
Partnership shall have no voting rights with respect to such stock.
29. Retirement or Withdrawal of General Partner. The Managing
General Partner may not withdraw any part of its General Partnership Interest.
The Retirement of the Managing General Partner shall dissolve the Partnership.
Notwithstanding the foregoing or anything else in this Agreement to the
contrary, a merger, consolidation, or reorganization of the Managing General
Partner, or a sale of all or substantially all its assets that includes its
Partnership Interest, is not a Retirement of such Managing General Partner if
the resulting, surviving or acquiring Person is an Affiliate and becomes
substituted as the Managing General Partner of the Partnership. The resulting,
surviving or acquiring Person is substituted as the Managing General Partner
without further act if it gives notice of the substitution to the Partners
before the effective date of the merger, consolidation, reorganization or sale.
Each Partner consents to the admission and substitution of such substitute
Managing General Partner pursuant to this section 29, and no further consent or
approval of any Partner is required.
30. Rights of Partner After Retirement or Withdrawal. A Partner
ceases to have any Partnership Rights upon his Retirement or complete
withdrawal from the Partnership. However, until the appropriate distributions,
if any, are made to a Retired or withdrawn Partner for his Partnership
Interest, the Retired or withdrawn Partner is entitled to receive the
allocations of Profits and Losses, Taxable Income or Taxable Loss and all
distributions referred to in section 14 applicable to his Partnership Interest.
-18-
<PAGE> 20
ARTICLE IX
DISSOLUTION
31. Events of Dissolution. The Partnership shall be terminated
and dissolved upon:
(a) the expiration of its term;
(b) the vote of a Majority in Interest to dissolve the
Partnership;
(c) the Partnership being adjudicated insolvent or
bankrupt;
(d) the Retirement of the Managing General Partner;
(e) the death of Lowell Paxson; or
(f) the sale of all or substantially all of the
Partnership's Property.
32. Winding-Up and Distributions. Upon the dissolution of the
Partnership pursuant to section 31, the winding-up of the Partnership's
business and the liquidation and distribution of Partnership assets must be
carried out with due diligence and in a timely manner, and consistent with both
the requirements of applicable law and the following provisions of this
section:
(a) The Managing General Partner shall be responsible
for taking all actions relating to the winding-up, liquidation, and
distribution of assets of the Partnership, unless its Retirement causes the
dissolution, in which case the fiscal agent, liquidator, or receiver appointed
(without judicial action) by a Majority in Interest shall be so responsible.
The Managing General Partner, or the appointed fiscal agent, liquidator, or
receiver, is referred to in this Agreement as the "Liquidator." A non-managing
General Partner can be appointed to be the Liquidator. The Liquidator shall
file all certificates or notices of the dissolution of the Partnership as
required by law. Upon the complete liquidation and distribution of the
Partnership assets, the Partnership shall terminate, and the Liquidator shall
execute, acknowledge, and cause to be filed all certificates and notices
required by law to terminate the Partnership.
(b) The Liquidator shall proceed without unnecessary
delay to sell and otherwise liquidate the Partnership's assets. Unless
directed otherwise by a Majority in Interest, all Marketable Securities, cash
and other readily divisible or fungible assets of the Partnership shall be
distributed directly to the Partners in the manner set forth in section
14(c)(i). The Liquidator shall promptly sell the other assets of the
Partnership unless it determines that an immediate sale of part or all of such
assets would cause undue loss to the Partners. In such case, the Liquidator,
to avoid such loss, may defer the liquidation of the Partnership assets for
-19-
<PAGE> 21
a reasonable time, except for those liquidations that are necessary to satisfy
the debts and liabilities of the Partnership to persons and parties other than
the Partners. The Liquidator shall distribute the proceeds from the
liquidation of the Partnership's assets as provided in section 14(c).
(c) Upon the dissolution of the Partnership pursuant to
section 31, the Liquidator shall cause the accountants for the Partnership to
prepare within ninety (90) days after the occurrence of the event of
dissolution, and immediately thereafter shall furnish to each Partner, a
statement setting forth the assets and liabilities of the Partnership as of the
date of its dissolution. The Liquidator, promptly following the complete
liquidation and distribution of the Partnership's assets, shall cause the
Partnership's accountants to prepare, and the Liquidator shall furnish to each
person who is a Partner immediately before the dissolution, a statement showing
the manner in which the Partnership assets were liquidated and distributed.
33. Distribution of Liquidation Proceeds and Assets and
Allocation of Gains and Losses. The net proceeds from liquidation of the
Partnership's assets and the unliquidated Property of the Partnership shall be
distributed, and all Profits and Losses resulting from the liquidation of the
Partnership shall be allocated, among the Partners in the proportions and
orders of priority specified in section 14(c).
34. Limitation of Liability of Partners. Upon the dissolution
of the Partnership and the distribution of the net liquidation proceeds
pursuant to section 31 and section 14(c), each Partner shall look solely to the
assets of the Partnership for the payment of his unreturned Capital
Contributions, and if the Partnership's assets remaining after the payment or
discharge of the debts and liabilities of the Partnership are insufficient to
pay the full amount of the unreturned Capital Contributions of each Partner,
the Partner shall have no recourse or claim against any Partner or the
Partnership with respect to its unreturned Capital Contributions, except for
claims for fraud, gross negligence, or breach of fiduciary duty.
35. Waiver of Right of Partition of Assets. Each Partner, and
for his heirs, successors, and assigns, waives his right to the partition of
the assets of the Partnership upon the dissolution and liquidation of the
Partnership.
ARTICLE X
ACCOUNTING YEAR, BOOKS, RECORDS, AND REPORTS
36. Books and Records. The Managing General Partner shall
maintain at the principal office of the Partnership a complete and accurate set
of books of records and accounts, in which it shall make full and complete
entries of all dealings or transactions relating to the Partnership's business
and where it shall keep all supporting documentation of transactions with
respect to the conduct of the Partnership's business. Each Partner or his duly
authorized representative, upon five days' advance notice to the Managing
General Partner, may examine
-20-
<PAGE> 22
during normal business hours the books of the Partnership and all other records
and information concerning the operation of the Partnership.
37. Reports. If requested by a Partner at least 30 days prior
to the end of a quarter, within 60 days after the end of each fiscal quarter in
each fiscal year of the Partnership, the Managing General Partner shall cause
to be prepared and sent to each Partner a balance sheet, income statement and
cash flow statement of the Partnership for and as of the end of that fiscal
quarter, in each case unaudited but accompanied by a report of the activities
of the Partnership for that quarter. Within 90 days after the end of each
fiscal year of the Partnership, the Managing General Partner shall cause to be
prepared and sent to each Partner a financial report consisting of (a) a
balance sheet as of the end of the fiscal year; (b) statements of income,
partner's equity, and changes in financial position for the fiscal year; (c) if
requested by a Partner, the opinion of the Partnership's certified public
accountant concerning the foregoing financial statements; (d) a summary of the
Partnership's activities for the fiscal year; (e) a statement showing the
distributions to each Partner during the fiscal year and identifying any
distributions which constitute a return of Capital Contribution; and (f) a
statement showing the amount of Taxable Income or Taxable Loss, and listing
each item of income, gain, loss, deduction, or credit allocated or charged
against the Partner for federal and state income tax purposes.
38. Bank Accounts. The Managing General Partner shall maintain
the bank accounts of the Partnership in such financial institutions as the
Managing General Partner considers appropriate. The Managing General Partner
shall make or permit withdrawals from the Partnership's bank accounts on the
signature of the Managing General Partner.
39. Tax Elections. The Partnership shall file an election under
Section 754 of the Code, relating to the optional adjustment to the basis of
partnership property, at the first time it is permitted to do so after the
beginning of the term of this Partnership. The Managing General Partner shall
make or waive, at its discretion, all other tax elections required or permitted
to be made by the Partnership under the Code.
40. Accounting Method and Fiscal Year. The Managing General
Partner shall maintain the Partnership records and books of accounts in
accordance with the method of accounting required or permitted to be used for
federal income tax purposes, with such modifications as are set forth in this
Agreement, and otherwise in accordance with generally accepted accounting
principles consistently applied. The fiscal year of the Partnership is the
calendar year.
ARTICLE XI
GENERAL PROVISIONS
41. Partnership Contracts. The Managing General Partner may
enter into agreements and contracts on behalf of the Partnership only if they
are in writing and clearly
-21-
<PAGE> 23
indicate to the other parties that the Partnership is a general partnership of
which the Managing General Partner is a general partner.
42. Conveyances. Subject to section 18, the Managing General
Partner may sign any deed, mortgage, lease, bill of sale, security agreement,
pledge, contract or other instrument or commitment purporting to convey or
encumber any of the Partnership's Property or any interest therein, whether now
or subsequently owned or leased at any time by the Partnership, and no other
signature is required.
43. Notices. To be effective, a notice required or permitted by
this Agreement must be in writing, or by telegram, telex or telecopy if
promptly confirmed in writing. A notice is given when delivered or, if mailed,
when deposited in a United States postal service letterbox to be sent by
first-class, postage-prepaid, certified mail, with return receipt requested
(whether or not the sender receives the return receipt), and addressed, if to a
Partner, at his registered address listed on EXHIBIT A and, if to the Managing
General Partner or the Partnership, to the attention of such Managing General
Partner at the Partnership's principal business office.
44. Consents. Any consent required by this Agreement may be
given as follows:
(a) by a writing given by the consenting Partner and
received by the Managing General Partner or other appropriate recipient at or
before the occurrence of the action or other thing for which the consent was
solicited, unless the consent is nullified by:
(i) A writing from the consenting Partner that
is received by the Managing General Partner before the occurrence of the action
or other thing for which the consent was solicited; or
(ii) the negative vote by the consenting Partner
at any meeting called for the purpose of considering the action or other thing.
(b) by the affirmative vote of the consenting Partner at
any meeting called for the purpose of considering the action or other thing for
which the Partner's consent was solicited.
45. Meetings. The Managing General Partner may call meetings of
the Partners for any purpose, at any time. The Managing General Partner shall
call a meeting of the Partners within 30 days after he receives from a Majority
in Interest a written request for a meeting, stating the purpose of the
requested meeting and the matters proposed for consideration. Meetings of the
Partners may be held at such time, date and place as the Managing General
Partner designates. The Managing General Partner shall give notice of any
meeting of the Partners not less than ten nor more than 60 days before the date
of the meeting, to each Partner at his registered address listed on EXHIBIT A.
The notice shall state the time, date and place of the meeting, the purpose of
the meeting and the Partner at whose direction or request the
-22-
<PAGE> 24
meeting is called. If a meeting is adjourned to another time or place, notice
of the adjourned meeting is not required if the time and place of the
adjournment is announced at the called meeting. The presence in person or by
proxy of a Majority in Interest constitutes a quorum at a meeting. Any notice
of a meeting required by this section may be waived in writing at, before or
after the meeting and shall be deemed to be waived by each Partner who is
present in person or by proxy at the meeting. Only those persons who are
Partners at the close of business on the day before the meeting are entitled to
vote at the meeting. Any Partner entitled to vote at a meeting may authorize
any person to act for him by written proxy if a copy of the proxy is delivered
to the Managing General Partner before the commencement of the meeting. To be
effective, a proxy must be signed by the Partner (and, if applicable, each
co-owner) or his duly appointed attorney-in-fact, and no proxy shall be valid
for more than 11 months after its date. A proxy is revocable at the pleasure
of the Partner granting it.
46. Binding Effect; Counterparts. The covenants and agreements
contained in this Agreement are binding on, and inure to the benefit of, the
legal and personal representatives, heirs, successors and permitted assignees
of the parties to this Agreement. The parties may execute this Agreement in
any number of counterparts, each of which will be an original, but all of which
together will constitute one and the same agreement.
47. Choice of Law. This Agreement and the rights and
obligations of the Partners under it are governed by, and construed and
enforced in accordance with, the laws of Florida.
48. Complete Agreement; Modification. This Agreement contains
the final, complete and exclusive expression of the understanding among the
Partners with respect to the Partnership and its purposes and objectives and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them. Except to admit a new or a substitute Partner or to
reflect the withdrawal or Retirement of a Partner, this Agreement and every
provision of it may be modified or amended only by an agreement in writing
signed by or on behalf of all Partners.
49. Evidence of Partnership Interests. The Partnership Interest
of each Partner is evidenced exclusively by a counterpart of this Agreement
(including EXHIBIT A) that has been signed and dated by the Managing General
Partner.
50. Tax Matters Partner. The Managing General Partner or its
designee shall be the "tax matters partner" of the Partnership for federal
income tax purposes. If the Managing General Partner ceases to act as the
Managing General Partner of the Partnership, the successor Managing General
Partner (if any), shall be designated the tax matters partner. Pursuant to
Section 6223(c)(2) of the Code, upon receipt of notice from the Internal
Revenue Service of the beginning of an administrative proceeding with respect
to the Partnership, the Managing General Partner, as the tax matters partner,
shall furnish the Internal Revenue Service with the names, addresses, and
Percentage Interests of each of the Partners. The Managing General Partner
agrees not to enter into a settlement agreement pursuant to Section 6224 of the
Code without
-23-
<PAGE> 25
providing at least 30 days advance written notice to each Partner. As tax
matters partner, the Managing General Partner shall have absolute discretion
regarding whether to seek judicial review of any administrative determination
and, if it determines to seek judicial review of Internal Revenue Service
action pursuant to Section 6226 of the Code, then the Managing General Partner
shall select the judicial forum for such review. The tax matters partner shall
receive no compensation for its services as such. The Partnership shall bear
all third party costs and expenses incurred by the tax matters partner in
performing its duties as such. Nothing herein shall be construed to restrict
the Partnership from engaging an accounting firm or law firm to assist the tax
matters partner in discharging its duties hereunder.
-24-
<PAGE> 26
51. Gender and Number. As used in this Agreement, the masculine
gender includes the feminine and neuter, and the singular includes the plural.
52. Title. Title to any property acquired by the Partnership
shall be taken in the name of the Partnership.
-25-
<PAGE> 27
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of each Partner as of the date written beside his name.
General Partner
PAXSON ENTERPRISES, INC.
By /s/ Lowell W. Paxson
-----------------------------------
President
Limited Partner
/s/ Lowell W. Paxson
-----------------------------------
Lowell W. Paxson
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED and SWORN to before me on behalf of PAXSON ENTERPRISES, INC., a
Nevada corporation, as General Partner, by Lowell W. Paxson, its President,
this 25th day of September, 1991.
/s/ Joanie Bender
-----------------------------------
Notary Public, State of Florida
My Commission Expires:
(Affix Notarial Seal)
STATE OF FLORIDA
COUNTY OF Pinellas
-26-
<PAGE> 28
SUBSCRIBED and SWORN to before me on by LOWELL PAXSON as Limited Partner,
this 25th day of September, 1991.
/s/ Joanie Bender
-------------------------------
Notary Public, State of Florida
My Commission Expires:
(Affix Notarial Seal)
-27-
<PAGE> 29
EXHIBIT A
<TABLE>
<CAPTION>
General Partners Contribution Percentage Interest
- ---------------- ------------ -------------------
<S> <C> <C>
Paxson Enterprises, Inc. 5%
c/o Lowell W. Paxson
700 Spottis Woode Lane
Clearwater, Florida 34616
Limited Partners
- ----------------
Lowell W. Paxson 95%
700 Spottis Woode Lane
Clearwater, Florida 34616
</TABLE>
-28-
<PAGE> 30
AMENDMENT NUMBER 1 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF JACKSONVILLE, LIMITED PARTNERSHIP
This Amendment Number 1 to Agreement of Limited Partnership of Paxson
Broadcasting of Jacksonville, Limited Partnership ("Amendment") is effective as
of the 1st day of January, 1992, by and between PAXSON ENTERPRISES, INC., a
Nevada corporation, as the General Partner and LOWELL PAXSON, as a Limited
Partner. The parties hereby agree as follows:
1. Amendment to Definitions. The following definition should be
added to Section 1 following the definition of the term "Act:"
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital
Account as of the end of the relevant fiscal year, after giving effect
to the following adjustments:
(i) Credit to such Capital Account any amount which such
Partner is obligated to restore (pursuant to the terms of a promissory
note or otherwise) or is deemed to be obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Regulations and shall be interpreted consistently therewith."
2. Amendment to Section 9. Section 9 is amended by inserting
the following subsections (d) and (e) at the end thereof:
"(d) Any payments made by the Limited Partner as a guarantor
of obligations of the Partnership shall be treated as additional
Capital Contributions to the Partnership."
"(e) Notwithstanding any provision in this Agreement to the
contrary, if any Partner's Capital Account has a deficit balance
("Deficit Capital Account Balance") upon liquidation of the
Partnership (after giving effect to all contributions, distributions,
and allocations for all taxable years, including the year in which
such liquidation occurs), such Partner shall contribute to the Capital
of the Partnership the amount necessary to restore such deficit
balance to 0 in
-1-
<PAGE> 31
accordance with Regulations Section 1.704-1(b)(2)(ii)(d); provided,
however, that a Partner's obligation to restore such Deficit Capital
Account Balance shall not exceed the amount of the Partnership's
liability under the Credit and Guaranty Agreement among Paxson
Broadcasting of Miami, Limited Partnership, Paxson Broadcasting of
Orlando, Limited Partnership, Paxson Broadcasting of Jacksonville,
Limited Partnership, and Paxson Broadcasting of Tampa, Limited
Partnership, and Citibank, N.A. (the "Credit Agreement")."
3. Amendment to Section 13. Section 13 is amended by inserting
the following provisions as subsections (c) and (d) thereof:
"(c) Losses. The Losses allocated pursuant to Sections
13(a) and 13(b) hereof shall not exceed the maximum amount of Losses
that can be so allocated without causing any Partner who is not a
General Partner to have an Adjusted Capital Account Deficit at the end
of any fiscal year. In the event some but not all of the Partners who
are not General Partners would have Adjusted Capital Account Deficits
as a consequence of an allocation of Losses pursuant to Section 13(a)
or Section 13(b), the limitation set forth in this Section 13(c) shall
be applied on a Partner by Partner basis so as to allocate the maximum
permissible Loss to each Partner who is not a General Partner under
Section 1.704-1(b)(2)(ii)(d) of the Regulations. All Losses in excess
of the limitation set forth in this Section 13(c) shall be allocated
to the General Partner.
(d) Special Allocations. The following special
allocations shall be made in the following order:
(1) Qualified Income Offset. In the event any
Partner who is not a General Partner unexpectedly receives any
adjustments, allocations, or distributions described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations,
the Adjusted Capital Account Deficit of such Partner as quickly as
possible, provided that an allocation pursuant to this Section
13(d)(1) shall be made if and only to the extent that such Partner
would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section 13 have been tentatively made
as if this Section 13(d)(1) were not in the Agreement.
(2) Gross Income Allocation. In the event any
Partner who is not a General Partner has a deficit Capital Account at
the end of any Partnership fiscal year that is in excess of the sum of
(i) the amount such Partner is obligated to restore (pursuant to the
terms of a promissory note or otherwise), and (ii) the amount such
Partner is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5),
-2-
<PAGE> 32
each such Partner shall be specially allocated items of Partnership
income and gain in the amount of such excess as quickly as possible,
provided that an allocation pursuant to this Section 13(d)(2) shall be
made if and only to the extent that such Partner would have a deficit
Capital Account in excess of such sum after all other allocations
provided for in this Section 13 have been tentatively made as if
Section 13(d)(1) hereof and this Section 13(d)(2) were not in the
Agreement."
4. Amendment to Section 34. Section 34 is amended by adding the
following provisions to the end of such section:
"Notwithstanding anything to the contrary contained herein, each
Limited Partner hereby waives his or her right to seek indemnity from
the General Partner for any losses he or she might suffer under this
Partnership Agreement or under any ancillary agreements related to the
business of the Partnership including any personal guarantees of the
liabilities of the Partnership. Further, each Limited Partner hereby
waives his or her right to recover from the Partnership, as primary
obligor, any amounts such Limited Partner becomes liable to pay or
pays pursuant to any agreements related to the business of the
Partnership including any personal guarantees of the liabilities of
the Partnership."
-3-
<PAGE> 33
5. Ratification and Confirmation. The Agreement as hereby
amended is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 1
on this 30 day of December, 1992.
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ Martha Chapman By: /s/ Lowell W. Paxson
- ------------------------ ---------------------------------
Its President
-----------------------------
/s/ William L. Watson
- ------------------------
LIMITED PARTNER:
/s/ Martha Chapman By: /s/ Lowell W. Paxson
- ------------------------ ---------------------------------
Lowell Paxson
/s/ William L. Watson
- ------------------------
-4-
<PAGE> 34
AMENDMENT NUMBER 2 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF JACKSONVILLE, LIMITED PARTNERSHIP
This Amendment Number 2 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Broadcasting of
Jacksonville, Limited Partnership ("Amendment") is effective as of the 29th
day of March, 1993, by and between PAXSON ENTERPRISES, INC., a Nevada
corporation, as the General Partner and LOWELL PAXSON, as a Limited Partner.
The parties hereby agree as follows:
1. Assignment. The definition of "Assignment" in Article I,
Section 1 of the Partnership Agreement is amended in its entirety to read as
follows:
"`Assignment' means a sale, exchange, gift, pledge, transfer
or disposition of any kind whatsoever and, in the case of a
Person that is not an individual, it includes the sale,
exchange, pledge, transfer or disposition of a majority of
either voting control or the equity interests in such Person;
provided, however, that an "Assignment" does not include a
pledge of, or a grant of a security interest in, a Partnership
Interest, Partnership Rights, or the majority of either voting
control or the equity interests in any Person, which pledge or
security interest is given or granted for the purpose of
securing an obligation of the Partnership or any Partner or
any Person owning an equity interest in a Partner, provided
that the giving or grant of such pledge or security interest
is approved by the Managing General Partner."
2. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 18401 U.S. Highway
19 North, Clearwater, Florida 34624."
3. Purposes of Partnership; Authorized Acts. Article II,
subsection 7.A.(a)(i) of the Partnership Agreement is amended to read as
follows:
"acquire, operate, manage and perform all matters necessary
and attendant to the operation of one or more radio stations
in the State of Florida,".
4. Power to Guarantee Obligations of Others. Article II,
subsection 7.B. of the Partnership Agreement is amended by redesignating
clauses (g) and (h) as clauses (h) and (i), respectively, and inserting the
following as clause (g):
-1-
<PAGE> 35
"(g) guarantee the debts and obligations of any Partner and
secure the same by a mortgage, pledge, security interest or
other liens upon the property of the Partnership, any part
thereof, any interest therein, or any improvements thereto;".
5. Section 49 of the Partnership Agreement, entitled "Evidence of
Partnership Interests," is hereby deleted in its entirety, and Sections 50, 51,
and 52 of the Partnership Agreement are renumbered as Sections 49, 50, and 51
respectively.
6. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 2
on this 29th day of March, 1993.
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ Martha Chapman By: /s/ Lowell W. Paxson
- ------------------------ -------------------------------
Its President
-----------------------
/s/ William L. Watson
- ------------------------
LIMITED PARTNER:
/s/ Martha Chapman /s/ Lowell Paxson
- --------------------------- ------------------------------
Lowell Paxson
/s/ William L. Watson
- ---------------------------
-2-
<PAGE> 36
LIMITED PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This Limited Partnership Interests Assignment Agreement (the
"Agreement") is dated December 15, 1993 (the "Effective Date"), among Paxson
Communications of Florida, Inc. (the "General Partner"), Lowell W. Paxson (the
"First Assignor Limited Partner"), Second Crystal Diamond, L. P., a Nevada
limited partnership (the "First Assignee"), Paxson Communications Corp. (the
"Second Assignee"), and Paxson Communications LP, Inc. (the "Assignee Limited
Partner"). Capitalized terms used herein and not ascribed a definition have
the meaning assigned to them by the Partnership Agreement to which they
pertain.
BACKGROUND
The General Partner and the First Assignor Limited Partner are
partners in the limited partnerships listed in Exhibit "A" (the "Partnerships").
The First Assignor Limited Partner wishes to transfer his limited partnership
interests in those Partnerships to the First Assignee and the First Assignee
wishes to immediately assign such limited partnership interests to the Second
Assignee and the Second Assignee wishes to immediately assign such limited
partnership interests to the Assignee Limited Partner. The First Assignor
Limited Partner and the First and Second Assignees also wish to have the
Assignee Limited Partner admitted as a Limited Partner in the respective
Partnerships and granted Partnership Rights in the respective Partnerships. The
Assignee Limited Partner agrees to accept the assignment of the limited
partnership interests and to be admitted as a Limited Partner in accordance with
the Limited Partnership Agreements listed in Exhibit "A" (the "Partnership
Agreements"). The General Partner as general partner for each of the
Partnerships consents to the assignment of the limited partnership interests and
the admission and substitution of the Assignee Limited Partner as a Limited
Partner under the respective Partnership Agreements. Pursuant to Chapter 620,
Florida Statutes, the Partnerships will continue uninterrupted with substitute
partners and the assignment of the limited partnership interests will not cause
a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to the
Partnership Agreements and Section 620.152, Florida Statutes, the First
Assignor Limited Partner assigns all of its limited partnership interests in
the Partnerships to the First Assignee. The First Assignee accepts the
assignment of all of the limited partnership interests. Pursuant to the
Partnership Agreements and Section 620.152, Florida Statutes, the First
Assignee assigns all of its limited partnership interests in the Partnerships
to the Second Assignee. The Second Assignee accepts the assignment of all of
the limited partnership interests. Pursuant to the Partnership Agreements and
Section 620.152, Florida Statutes, the Second Assignee assigns all of its
limited partnership interests in the Partnerships to the Assignee Limited
Partner. The Assignee Limited Partner accepts the assignment of all of the
limited partnership interests.
2. Admission of Assignee Limited Partner and Withdrawal
of Assignor Limited Partner. On the Effective Date, the Assignee Limited
Partner is admitted as a Limited Partner
1
<PAGE> 37
pursuant to the respective Partnership Agreement for such Partnerships and the
First Assignor Limited Partner has withdrawn as a Limited Partner from each of
the Partnerships.
3. Assignee Limited Partner's Acceptance of Admission.
By executing this Agreement, the Assignee Limited Partner accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements.
The parties agree that the Assignee Limited Partner's execution of this
Agreement shall satisfy the requirements of Sections 23, 24 and 25 of the
respective Partnership Agreements.
4. General Partner's Consent. The General Partner
consents to the assignment of the limited partnership interests to the Assignee
Limited Partner and the admission of the Assignee Limited Partner as a Limited
Partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the limited partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of First Assignor Limited Partner, General Partner, First
Assignee, Second Assignee and Assignee Limited Partner agree and acknowledge
that (i) First Assignor Limited Partner's limited partnership interests in each
of the Partnerships are subject to the lien and security interest of Banque
Paribas, as Agent on behalf of the Lenders (the "Agent"), under the Loan
Documents (as defined in that certain Credit Agreement dated as of March 30,
1993 by and among Banque Paribas, the Lenders identified therein and each of
the Station Partnerships) and (ii) the assignment of the limited partnership
interests in the Partnerships by First Limited Partner Assignor to First
Assignee, by First Assignee to Second Assignee, and by Second Assignee to
Assignee Limited Partner, are made subject to such continuing lien and security
interest of Agent under the Loan Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute one
agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding among the parties and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them.
2
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON COMMUNICATIONS OF FLORIDA, INC., as
General Partner of each of the Partnerships
By:/s/ Lowell W. Paxson
--------------------------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
--------------------------------------------
Lowell W. Paxson, First Assignor Limited
Partner for each Partnership
SECOND CRYSTAL DIAMOND, L. P., a Nevada
limited partnership, First Assignee
By: /s/ Lowell W. Paxson
--------------------------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS CORP., As Second
Assignee
By: /s/ Lowell W. Paxson
--------------------------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS LP, INC., as Assignee
Limited Partner for each Partnership
By: /s/ Lowell W. Paxson
--------------------------------------------
Lowell W. Paxson, President
3
<PAGE> 39
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment
Number 1 to the Agreement of Limited Partnership of Paxson
Broadcasting of Jacksonville, Limited Partnership dated January 1,
1992, and Amendment Number 2 to the Agreement of Limited Partnership
of Paxson Broadcasting of Jacksonville, Limited Partnership dated
March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Tampa,
dated June 27, 1991, and Amendment Number 2 to the Agreement of
Limited Partnership of Paxson Broadcasting of Tampa, dated April 27,
1992, and Amendment Number 3 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated January 1,
1992, and Amendment Number 4 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated March 29,
1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Miami, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson Broadcasting
of Miami, dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Orlando, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson Broadcasting
of Orlando, Limited Partnership.
4
<PAGE> 40
GENERAL PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This is a General Partnership Interests Assignment Agreement
(the "Agreement") dated December 15, 1993 (the "Effective Date"). It is among
Paxson Enterprises, Inc. (the "General Partner Assignor"), Paxson
Communications Corp. (the "First Assignee"), Paxson Communications of Florida,
Inc. (the "General Partner Assignee"), and Lowell L. Paxson (the "Nonassigning
Limited Partner") in respect of the Limited Partnerships listed in Exhibit "A"
(the "Station Partnerships"). It is also among the General Partner Assignee,
the First Assignee, the General Partner Assignee and the Station Partnerships
in their capacities as a limited partner (each a "License Limited Partner") in
their respective Limited Partnerships listed in Exhibit "B" (the "License
Partnerships," and together with the Station Partnerships, the "Partnerships").
Capitalized terms used herein and not ascribed a definition have the meaning
assigned to them by the Partnership Agreement to which the term pertains.
BACKGROUND
The General Partner Assignor and the Nonassigning Limited
Partner are partners in the Station Partnerships. The General Partner Assignor
and the License Limited Partners are the partners in the License Partnerships.
The General Partner Assignor wishes to transfer each of its general partnership
interests in the Station Partnerships and the License Partnerships to the First
Assignee in exchange for certain of its common stock and the First Assignee
wishes to immediately assign such general partnership interests to the General
Partner Assignee in exchange for all of the capital stock of the General
Partner Assignee. The General Partner Assignor and the First Assignee also
wish to have the General Partner Assignee admitted as a Partner and granted
partnership rights in each of the Partnerships. The General Partner Assignee
agrees to accept the assignment of the general partnership interests and to be
admitted as a General Partner in the respective Partnerships pursuant to the
Partnership Agreements identified in Exhibit "A" and "B", respectively (the
"Partnership Agreements"). The Nonassigning Limited Partner as the limited
partner in each of the Station Partnerships and each of the License Limited
Partners as the limited partner in the respective License Partnerships hereby
consent to the assignment of the general partnership interests and admission of
the General Partner Assignee as the general partner in their respective
Partnerships pursuant to the terms of this Agreement and the Partnership
Agreements. Pursuant to Chapter 620, Florida Statutes, the Partnerships will
continue uninterrupted and the assignment of the general partnership interests
will not cause a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to
Section 23 of each of the Partnership Agreements and Section 620.152, Florida
Statutes, the General Partner Assignor assigns all of its general partnership
interests in the Partnerships to the First Assignee. The First Assignee
accepts the assignment of all of the general partnership interests. Pursuant
to Section 23 of each of the Partnership Agreements and Section 620.152,
Florida Statutes, the First Assignee assigns all of its general partnership
interests in the Partnerships to the General Partner Assignee. The General
Partner Assignee accepts the assignment of all of the general partnership
interests.
1
<PAGE> 41
2. Admission of General Partner Assignee and Withdrawal
of General Partner Assignor. On the Effective Date, the General Partner
Assignee is admitted as a general partner under the respective Partnership
Agreement and the General Partner Assignor has withdrawn from each of the
Partnerships.
3. General Partner Assignee's Acceptance of Admission.
By executing this Agreement, the General Partner Assignee accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements
and shall become the Managing General Partner of each of the Partnerships. The
parties agree that the General Partner Assignee's execution of this Agreement
shall satisfy the requirement of Sections 23, 24 and 25 of the respective
Partnership Agreements.
4. Limited Partner's Consent. Each of the Nonassigning
Limited Partner and the License Limited Partners consent to the assignment of
the general partnership interest by the General Partner of their respective
Partnership and to the admission of the General Partner Assignee as a general
partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the general partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of General Partner Assignor, First Assignee, General Partner
Assignee, Nonassigning Limited Partner and the License Limited Partners agree
and acknowledge that (i) General Partner Assignor's general partnership
interests in each of the Partnerships are subject to the lien and security
interest of Banque Paribas, as Agent on behalf of the Lenders (the "Agent"),
under the Loan Documents (as defined in that certain Credit Agreement dated as
of March 30, 1993 by and among Banque Paribas, the Lenders identified therein
and each of the Station Partnerships) and (ii) the assignment of the general
partnership interests in the Partnerships by General Partner Assignor to First
Assignee, and by First Assignee to General Partner Assignee, are made subject
to such continuing lien and security interest of Agent under the Loan
Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute one
agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding
2
<PAGE> 42
among the parties and supersedes any prior or contemporaneous agreement or
representation, oral or written, by any of them.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON ENTERPRISES, INC., as General
Partner Assignor and as Withdrawing
General Partner of each Partner
By: /s/ Lowell W. Paxson
-----------------------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
-----------------------------------------
Lowell W. Paxson, Nonassigning Limited
Partner
PAXSON COMMUNICATIONS CORPORATION, First
Assignee
By: /s/ Lowell W. Paxson
-----------------------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS OF FLORIDA, INC.,
as General Partner Assignee and
successor General Partner of each
Partnership
By: /s/ Lowell W. Paxson
-----------------------------------------
Lowell W. Paxson, President
3
<PAGE> 43
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment
Number 1 to the Agreement of Limited Partnership of Paxson Broadcasting
of Jacksonville, Limited Partnership dated January 1, 1992, and
Amendment Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Jacksonville, Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Tampa,
dated June 27, 1991, and Amendment Number 2 to the Agreement of
Limited Partnership of Paxson Broadcasting of Tampa, dated April 27,
1992, and Amendment Number 3 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated January 1,
1992, and Amendment Number 4 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated March 29,
1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of Miami,
Limited Partnership, dated January 1, 1992, and Amendment Number 2 to the
Agreement of Limited Partnership of Paxson Broadcasting of Miami, dated
March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of Orlando,
Limited Partnership, dated January 1, 1992, and Amendment Number 2 to the
Agreement of Limited Partnership of Paxson Broadcasting of Orlando,
Limited Partnership.
4
<PAGE> 44
EXHIBIT "B"
Limited Partnerships
Agreement of Limited Partnership of Jacksonville License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Jacksonville, Licensed
Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Tampa License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Tampa, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Miami License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Miami, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Orlando License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Orlando, Licensed Limited
Partnership dated March 29, 1993.
5
<PAGE> 45
AMENDMENT NUMBER 3 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF JACKSONVILLE, LIMITED PARTNERSHIP
This Amendment Number 3 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Broadcasting of
Jacksonville, Limited Partnership ("Amendment") is effective as of the 19th
day of September, 1995, by and between PAXSON COMMUNICATIONS OF FLORIDA, INC.,
a Florida corporation, as the General Partner and PAXSON COMMUNICATIONS LP,
INC., as a Limited Partner. The parties hereby agree as follows:
1. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 601 Clearwater Park
Road, West Palm Beach, Florida 33401."
2. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 3
on this 19th day of September, 1995.
WITNESSES: GENERAL PARTNER:
PAXSON COMMUNICATIONS OF FLORIDA, INC.
/s/ Lori Closson By: /s/ William L. Watson
- -------------------------- --------------------------------
Its Secretary
----------------------------
/s/ Desire Malky
- --------------------------
LIMITED PARTNER:
PAXSON COMMUNICATIONS LP, INC.
/s/ Lori Closson By: /s/ William L. Watson
- -------------------------- ----------------------------------------
Its Secretary
------------------------------------
1
<PAGE> 1
EXHIBIT 3.12.1
<PAGE> 2
EXHIBIT 3.12.1
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF MIAMI, LIMITED PARTNERSHIP
This Agreement of Limited Partnership
("Agreement") is entered into and shall be effective as of the 18th day of
November, 1991, by and between Paxson Enterprises, Inc., a Nevada Corporation,
as the General Partner and Lowell Paxson, as a Limited Partner, pursuant to the
provisions of the Florida Uniform Limited Partnership Act, on the following
terms and conditions:
ARTICLE I.
FORM AND INTERPRETATION
1. Definitions. The following capitalized terms, as used in
this Agreement and in the attached exhibits, which constitute a part of this
Agreement, have the meanings ascribed to them below and include the plural as
well as the singular number:
"Act" means the Florida Uniform Limited Partnership Act, as amended,
or any subsequent Florida law concerning partnerships that are enacted in
substitution for the Act.
"Affiliate" of a Partner means (1) another Partner of the
Partnership; (2) a legal or personal representative of any Partner; (3) the
Partner's lineal descendants and spouse (other than a spouse who is legally
separated from the Partner under a decree of divorce or separate maintenance);
(4) a trustee of a trust for the benefit of any Person referred to in clause
(1), (2) or (3); (5) a Person, other than an individual, of which 80% or more
of the voting or equity interests is owned directly or indirectly by a Partner
and/or one or more of the Persons referred to in clauses (1) through (4); (6) a
Person owning 80% or more of the voting or equity interests of a Partner that
is not an individual; or (7) a Person other than an individual, 80% or more of
the voting or equity interests of which is owned by the same Person that owns
80% or more of the voting or equity interests of a Partner that is not an
individual.
"Agreement" means this Limited Partnership Agreement as originally
executed and as subsequently amended or supplemented from time to time in
accordance with section 48.
"Assignment" means a sale, exchange, gift, pledge, transfer or
disposition of any kind whatsoever and, in the case of a Person that is not an
individual, it includes the sale, exchange, pledge, transfer or disposition of
a majority of either voting control or the equity interests in such Person.
"Bankruptcy" means taking advantage of any bankruptcy or insolvency
act (including the Bankruptcy Reform Act of 1978 or similar law, and also any
proceeding under state or local insolvency or debtor relief laws), or a final
adjudication of insolvency or an assignment of a major portion of a Person's
assets for the benefit of creditors.
"Capital Account" has the meaning set forth in section 10.
1
<PAGE> 3
"Capital Contribution" means the total amount of cash, securities and
other property contributed by a Partner to the equity of the Partnership, or
agreed to be contributed by a Partner to the equity of the Partnership,
pursuant to section 9(a), and reduced by any return of capital to the Partner
within the meaning of section 9(c). Any reference in this Agreement to the
Capital Contribution of either a Partner or an assignee of a Partner shall
include the Capital Contribution of any prior Partner to whose Partnership
Interest the then existing Partner or assignee succeeded.
"Cash Flow" means the excess of cash derived by the Partnership from
all sources, including from capital contributions, loans, sales of securities
and other activities, (but excluding cash derived from the winding-up and
liquidation of the Partnership pursuant to section 32) over the sum of all cash
disbursements, including repayments of loans from Partners, loans to Partners
from the Partnership, and distributions to Partners pursuant to section 14(a)
or (b) (but excluding disbursements pursuant to section 14(c)), plus a
reasonable allowance for reserves for repairs, investments in Property
(including Marketable Securities), replacements, contingencies and anticipated
obligations (including debt service, capital improvements and replacements to
the extent not funded by reserves) as reasonably determined by the Managing
General Partner. Notwithstanding the preceding sentence, in determining the
reasonable allowance for reserves, the Managing General Partner shall reduce
such allowance to the extent necessary to ensure that annual distributions of
Cash Flow to each Partner will be in an amount at least equal to the annual
income tax liability (exclusive of income tax liability resulting from a
transaction pursuant to section 14(b) or (c)) of each such Partner (determined
assuming that the maximum possible income tax rate is applicable) resulting
from the allocation to the Partner of his share of the Partnership's Taxable
Income and Taxable Loss.
"Code" means the Internal Revenue Code of 1986, as amended, or any
subsequent federal law concerning income taxes that is enacted in substitution
for the Code.
"General Partner" means any Person admitted as a general partner in
accordance with this Agreement.
"General Partnership Interest" means the Partnership Interest of a
General Partner, in his capacity as a General Partner.
"Limited Partner" means those Persons who are signatories to this
Agreement as limited partners; and all other Persons who shall be admitted to
the Partnership as limited partners.
"Majority in Interest", when used in regard to the degree of consent,
approval or agreement required among the Partners, means Partners whose
aggregate Capital Account balances constitute over 50% of the total aggregate
Capital Account balances of all owners of Partnership Interests then
outstanding.
"Managing General Partner" means the Person designated in this
Agreement as the general partner responsible for management of the affairs of
the Partnership and thereafter any Person which becomes a general partner
responsible for management of the affairs of the Partnership pursuant to this
Agreement, in the Person's capacity as a managing general partner of the
Partnership. Initially, the Managing General Partner shall be Paxson
Enterprises, Inc.
2
<PAGE> 4
"Marketable Securities" means securities, including stock, which are
traded on an established securities market, whether or not registered under the
Securities Act of 1933.
"Partner" means each Person which is a General Partner or a Limited
Partner.
"Partnership" means the PAXSON BROADCASTING OF MIAMI, LIMITED
PARTNERSHIP, the Florida limited partnership formed in accordance with the Act
pursuant to this Agreement.
"Partnership Interest" includes only a Partner's Capital Contribution
and right to receive his Percentage Interest and excludes Partnership Rights.
"Partnership Rights" excludes the Partnership Interest of a Partner,
and includes, in addition to other rights provided in this Agreement, the
rights provided to him by the Act except to the extent expressly modified by
this Agreement.
"Percentage Interest" means a Partner's percentage share (as
initially stated opposite such Partner's name on EXHIBIT A as amended from time
to time), of the Profits and Losses, Taxable Income or Taxable Loss, cash and
other distributions and liquidation proceeds of the Partnership all subject to
and interpreted in accordance with the terms of this Agreement. The Percentage
Interests of Partners shall be proportionate to the Capital Accounts of the
Partnership at all times so that, for example, if a Partner's Capital Account
is 100 and the aggregate of all Capital Accounts is 1000, the Partner's
Percentage Interest in the Partnership is 10%. In the event of a change among
the Partners in the Percentage Interests in the Partnership during the year,
the Partnership shall use a closing-of-the-books method with respect to such
change or changes in Percentage Interests in computing a Partner's share of
Profits and Losses, Taxable Income and Taxable Losses, and entitlement to
distributions during such year.
"Person" means any individual and any general or limited partnership,
corporation, estate, joint venture, trust, business trust, cooperative,
association or other organization or entity.
"Profits and Losses" means the annual net income or loss of the
Partnership determined on a generally accepted accounting principles basis, as
disclosed on the annual financial statements of the Partnership.
"Property" means any real, personal, tangible or intangible property
contributed by a Partner to the equity of the Partnership or otherwise acquired
by the Partnership.
"Pro Rata" means in the proportion that the Percentage Interest of
each Partner bears to the total Percentage Interests of all the Partners.
"Retirement" means the death, Bankruptcy, adjudication of
incompetency as determined by a court of appropriate jurisdiction, dissolution
and liquidation or termination of existence, merger or consolidation (except as
provided in section 29) of a Partner, or the sale, lease or other disposition
of all or substantially all the property of a Partner (except as provided in
section 29).
3
<PAGE> 5
"Taxable Income or Taxable Loss" means the net income or loss of the
Partnership for federal income tax purposes, as determined at the close of the
Partnership's fiscal year by the accountants employed by the Partnership to
prepare its income tax returns.
2. Captions and Certain Terms. The titles and captions
preceding the text of the articles and sections of this Agreement are solely
for convenience of reference and neither constitute a part of this Agreement
nor affect its meaning, interpretation, or effect. The words "hereby,"
"herein," "hereof," "hereto," "hereunder," and terms of similar import refer to
this Agreement as a whole and not to any particular article, section,
subsection or other part of this Agreement.
3. Severability. If any article, section or other provision of
this Agreement, or its application, is held to be invalid, illegal or
unenforceable in any respect or for any reason, the remainder of this Agreement
and the application of such article, section or other provision to a person or
circumstance with respect to which it is valid, legal and enforceable is not
affected.
4. Limitation of Grant. Nothing in this Agreement, whether
express or implied, is intended or may be construed to confer upon, or to grant
to, any creditor or any other Person (other than the Partners and their legal
and personal representatives, heirs, successors and permitted assignees) any
right, remedy or claim under or because of this Agreement or any covenant,
condition or stipulation of it.
ARTICLE II
ORGANIZATION OF PARTNERSHIP
1. Formation, Name, Office and Registered Agent. The
Partnership is organized as of the date of this Agreement and the signatories
to this Agreement constitute the members of this partnership under the Act as
of the date hereof. The rights and obligations of the Partners are determined
by the Act, except as otherwise expressly provided in this Agreement. The name
of the Partnership is "PAXSON BROADCASTING OF MIAMI, LIMITED PARTNERSHIP."
The recordkeeping office of the Partnership is located at 700 Spottis Woode
Lane, Clearwater, Florida 34616. The principal business office of the
Partnership is located at 50 West Liberty Street, Reno, Nevada 89501. The
Managing General Partner may change the name of the Partnership or the location
of its principal business office at any time and from time to time by giving
written notice of such change to each Partner.
2. Term of Partnership. The term of the Partnership shall
continue until the earlier of (i) December 31, 2066, or (ii) the death or
adjudication of incompetency as determined by a court of appropriate
jurisdiction of Lowell Paxson, unless the Partnership is earlier dissolved and
terminated under this Agreement.
3. Purposes of Partnership; Authorized Acts.
A. (a) Purposes of the partnership are to
(i) acquire, operate, manage and perform all matters necessary
and attendant to the operation of one or more radio stations
in Duval County, Florida,
4
<PAGE> 6
(ii) invest in, own, sell, acquire, manage and exercise the
voting rights associated with Marketable Securities,
(iii) acquire, hold, sell, own, improve, develop or lease other
types of real and personal property, and
(iv) engage in any other lawful activity for profit approved by
an affirmative vote of a Majority in Interest.
(a) Notwithstanding Section 7, unless unanimously approved by the
Partners, the Partnership shall not engage in any activity(ies) which
would result, based upon opinion of tax counsel, in the
characterization of the Partnership as an investment company as that
term is used in Section 721(b) or any successor provision of the
Code.
B. In furtherance of its purposes, but subject to every other provision of
this Agreement, the Partnership is authorized to do the following:
(a) acquire by purchase, lease or otherwise, any real or
personal, tangible or intangible property that may be necessary, convenient or
incidental to the accomplishment of the purposes of the Partnership;
(b) construct, operate, maintain, finance, improve, own,
sell, convey, exchange, assign, mortgage or lease any property (or a part
thereof) as may be necessary, convenient or incidental to the accomplishment of
the purposes of the Partnership;
(c) borrow money and issue evidences of indebtedness in
furtherance of any purpose of the Partnership and secure the same by a
mortgage, pledge, security interest or other liens on the property, any part
thereof, any interest therein or on any improvements thereto;
(d) prepay, in whole or in part, refinance, increase,
renew, modify or extend any indebtedness of the Partnership and, in connection
therewith, extend, renew or modify any mortgage, pledge, security interest or
other lien affecting any property;
(e) invest and reinvest the assets of the Partnership
in, and purchase, acquire, hold, sell, transfer and exchange securities of all
kinds;
(f) lend money to Partners;
(g) exercise the voting rights associated with property
owned by the Partnership; and
(h) enter into any activity and perform and carry out
any contract in connection with, or necessary or incidental to, the
accomplishment of the purposes of the Partnership.
4. Co-Ownership of Partnership Interests. Any consent required
of a Partner shall require the action or vote of each Person (or in such other
manner as such Persons have designated in writing to the Partnership) having an
interest in such Partnership Interest, with a majority approval needed for
consent. On the death of a co-owner of a Partnership Interest held
5
<PAGE> 7
in either joint tenancy with right of survivorship or tenancy by the entirety,
the Partnership Interest is owned solely by the survivor as a Partner, and not
as an assignee. The Partnership need not (although it may) recognize the death
of a co-owner of a Partnership Interest until the Managing General Partner
receives notice of the death. A co-owner of a Partnership Interest may sever
the tenancy by giving to the Managing General Partner notice to that effect,
and signed by the co-owner requesting the severance in the case of a joint
tenancy, and by both co-owners in the case of a tenancy by the entirety. Upon
receipt of the notice and the certificate evidencing the Partnership Interest
owned by the co-owners, the Managing General Partner shall cause the
Partnership Interest to be allocated as directed by the co-owners and shall
indicate on the Partnership records such allocation. In absence of joint
direction, the interests shall be allocated between the owners as the severed
ownership interests would be valued for federal estate tax purposes.
ARTICLE III
PARTNERSHIP CAPITAL
1. Capital Contributions.
(a) Upon executing this Agreement, each Partner shall
make or has made a Capital Contribution in the amount and of the type, and
initially shall have a Percentage Interest equal to the percentage, set forth
opposite his name on EXHIBIT A. Partners may make (but Limited Partners are not
required to make) additional Capital Contributions at such time and in such
amount as they in their sole discretion shall determine but only if the
Managing General Partner and a Majority in Interest consent to such additional
Capital Contributions. Upon the assignment of any Partnership Interest, the
making of an additional Capital Contribution or any return of a Capital
Contribution, or any substitution of a Partner, EXHIBIT A shall be amended to
accurately reflect the name, address, Capital Contribution and Percentage
Interest of each Partner.
(b) Notwithstanding (a) above, no Capital Contributions
shall be made or permitted by any Partner which would result, directly or
indirectly, in the Partnership being treated as an investment company under
section 721(b) of the Code, and any such attempted Capital Contribution shall
be void ab initio. The Managing General Partner shall withhold its consent to
the making of an additional Capital Contribution, unless it has satisfied
itself (by seeking advice of legal counsel or otherwise) that the making of the
additional Capital Contribution will not result, directly or indirectly, in the
Partnership being treated as an investment company under section 721(b) of the
Code.
(c) A Partner shall not receive from the Managing
General Partner or out of Partnership Property, and the Managing General
Partner and the Partnership shall not return to a Partner, any part of his
Capital Contribution, except as set forth in Articles VIII and IX of this
Agreement and such distribution is determined to be a return of a Partner's
Capital Contribution, and then only if all liabilities of the Partnership,
except liabilities to the Partners on account of their Capital Contributions,
have been paid or there remains property of the Partnership sufficient to pay
them. The Partnership shall not pay interest on Capital Contributions, and a
Partner may demand and receive only cash in return for his Capital
Contribution, except to the extent provided for in Articles VIII and IX of this
Agreement or unless the Liquidator (as
6
<PAGE> 8
defined in section 32) decides to distribute Partnership property in kind upon
the dissolution, winding-up, and termination of the Partnership, or unless the
distribution of property to a Partner is unanimously approved by the Partners.
Each Partner, by signing this Agreement or a counterpart of it, consents to all
distributions authorized by this Agreement and releases all other Partners from
all liability to both him and the Partnership for all distributions made in
accordance with this Agreement.
2. Capital Account.
(a) The Managing General Partner shall establish and
maintain a Capital Account for each Partner in the Partnership's books of
account. Capital Accounts shall be maintained and adjusted in accordance with
generally accepted accounting principles. Consistent with these capital
account maintenance rules, the Managing General Partner shall credit to each
Partner's Capital Account the amounts of the Partner's Capital Contributions
and any Profits allocated to the Partner. The Managing General Partner shall
charge to or deduct from each Partner's Capital Account the amounts of all
distributions (in cash or other property) to the Partner and any Losses
allocated to the Partner. If any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferror to the extent it relates to the
transferred interest.
(b) The provisions of this section and the other
provisions of this Agreement pertaining to the maintenance of Capital Accounts
are intended to comply with Treasury Regulation Section 1.704-1(b) (or any
successor provision thereto), and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Managing General Partner
determines that it is prudent to modify the manner in which the Capital
Accounts are computed in order to comply with such Regulations, provided that
it is not likely to have a material effect on the amounts distributable to any
Partner without such Partner's consent and upon receipt of an opinion of tax
counsel to the Partnership concluding that such modification will be given
effect for federal income tax purposes, the Managing General Partner may make
such modification.
(c) The Managing General Partner shall revalue the
Partnership's property (based on its fair market value as of the moment
immediately preceding the relevant event) and shall adjust Capital Accounts to
take into account any resulting Profit or Loss (determined as if the
Partnership sold all its property for cash equal to the property's fair market
value) upon the occurrence of either of the following events: (1) the making by
any Partner of any non-Pro Rata additional Capital Contribution, (2) the
partial or complete withdrawal of a Partner's Partnership Interest, or (3) the
admission of a Partner.
11. Expenses Paid by Partners. Any Partnership expense
reasonably paid by any Partner on behalf of the Partnership is an indebtedness
of the Partnership to the Partner and does not increase the Partner's
Partnership Interest or Percentage Interest. The Partnership shall reimburse
the Partner as soon as practicable and may pay interest on the indebtedness.
12. Loans by Partners. The Managing General Partner may borrow
money on behalf of the Partnership from any Partner in such amounts and for
such purposes as it considers necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership. Each loan to the
Partnership by a Partner (excluding reimbursable expenses) shall be evidenced
by a promissory note or similar instrument of the Partnership, may be secured
by a lien on the
7
<PAGE> 9
Property, may bear interest at a rate determined by agreement between such
Partner and the Managing General Partner and may be subject to such other terms
and conditions as are agreed to by such Partner and the Managing General
Partner. The Partnership may prepay each loan from a Partner in whole or in
part, at any time and from time to time, without premium or penalty.
ARTICLE IV
PROFITS AND LOSSES AND TAXABLE INCOME AND TAXABLE LOSS
1. Allocations
(a) Allocation of Profits and Losses.
(1) Profits and Losses of the Partnership shall
be allocated Pro Rata among the Partners.
(2) Profits and Losses of the Partnership shall
be determined for each fiscal year of the Partnership in accordance with the
method of accounting required or permitted to be used for federal income tax
purposes, with such exceptions thereto as are set forth in this Agreement, and
otherwise in accordance with generally accepted accounting principles applied
in a consistent manner.
(b) Allocation of Taxable Income and Taxable Loss.
(1) Except as otherwise provided in this
section 13(b), allocations of tax items among the Partners shall be consistent
with corresponding book (Profits and Losses) items (if any). For tax purposes,
Profits and Losses, or any item thereof, shall be appropriately adjusted to
reflect Taxable Income and Taxable Loss, or any item thereof, as determined
under the Code and shall be allocated among the Partners in such a manner as to
comply with the provisions of the Code and Regulations thereunder (including,
if necessary, the "minimum gain chargeback provisions" of the Regulations under
Section 704 of the Code). For example, any gain or loss recognized by the
Partnership with respect to property contributed to the Partnership by a
Partner shall be shared among the Partners so as to take account of the
variation, if any, between the basis of the property to the Partnership and its
fair market value at the time of contribution or revaluation, whichever is
applicable, so as to comply with the requirements of Section 704 of the Code.
Thus, for example, if a Partner contributes property to the Partnership whose
agreed fair market value exceeds its adjusted basis in the hands of the
contributing Partner ("built-in gain"), and there have been no events giving
rise to a revaluation, built-in gain with respect to such contributed property
shall first be allocated to such contributing Partner when the Partnership
recognizes gain upon a disposition of such contributed property, but not in an
amount in excess of such built-in gain; the remaining balance of such
recognized gain, if any, shall be allocated among the Partners as set forth
herein. The allocation of built-in gain to a contributing Partner shall not
increase such Partner's Capital Account, because such gain was already taken
into account when the built-in gain property was contributed to the
Partnership. A Partner who contributes property other than cash shall provide
the Managing General Partner with information necessary to verify the
contributing Partner's adjusted tax basis in the items of property contributed
by him to the Partnership.
8
<PAGE> 10
(2) Generally, except as provided in section
13(b)(i), Taxable Income and Taxable Loss (and each such income and loss item)
shall be allocated Pro Rata among the Partners. In the event, however, that
non-Pro Rata distributions of property are made to a Partner or the net
proceeds from the sale of property are distributed non-Pro Rata to a Partner,
Taxable Income and Taxable Loss derived from such distributions or sales shall
be allocated 100% to such Partner, subject only to such modifications as are
necessary to comply with Section 704 of the Code.
ARTICLE V
DISTRIBUTIONS, WITHDRAWALS AND LOANS
1. Distributions.
(a) Cash Flow Distributions. Cash Flow shall be
distributed Pro Rata among the Partners. Notwithstanding the foregoing, if the
Partners unanimously agree, the Partnership may distribute Cash Flow
attributable to a sale of property in a non-Pro Rata manner.
(b) Partial or Complete Withdrawal by a Partner From the
Partnership.
(1) In the event of a partial or complete
withdrawal of a Partner from the Partnership pursuant to Article VIII, the
Managing General Partner shall, as promptly as is reasonably possible,
distribute to the Partner his Pro Rata share of the Marketable Securities
previously contributed by such Partner to the Partnership, cash and other
readily divisible assets of the Partnership. The withdrawing Partner shall
also be entitled to receive cash equal in value to his Pro Rata share of the
fair market value (as reasonably determined by the Managing General Partner) of
any non-readily divisible assets owned by the Partnership. The Managing
General Partner shall, as promptly as possible, distribute this additional
amount of cash, if any, to the withdrawing Partner. Cash distributions to the
withdrawing Partner shall be reduced by such Partner's Pro Rata share of the
liabilities of the Partnership and by any expenses incurred by the Partnership
with respect to the withdrawal of the Partner.
(2) A Partner may request that all or a portion
of the Marketable Securities subject to the requested withdrawal be sold by the
Partnership and the net proceeds (after selling and other expenses) distributed
as directed by him. In the event that the Managing General Partner is unable
to sell these Marketable Securities, it shall distribute them to the Partner,
unless it is notified by the Partner to cancel the withdrawal.
(3) The Managing General Partner shall not be
required to distribute to the requesting Partner any assets that the
Partnership is legally restricted or prohibited from distributing to the
Partner, unless steps can be taken to remove the restriction or prohibition; in
which case the requesting Partner shall be charged with the expense of removing
such restriction or prohibition. Any distribution hereunder shall also be
subject to the limitations set forth in sections 9(c) and 15, respectively.
(c) Liquidating Distributions. The net proceeds from
liquidation of the Partnership's assets pursuant to its dissolution,
winding-up, and termination shall be distributed, and all Profits and Losses
resulting from the liquidation of the Partnership property shall be
9
<PAGE> 11
allocated, among the Partners in the proportions and orders of priority
specified in this section 14(c).
(i) The Liquidator shall distribute the net
proceeds from liquidation of the Partnership's assets as follows:
(1) FIRST: To pay all the liabilities
of the Partnership that are then due and payable, except for both Capital
Contributions of Partners and liabilities to the Partners, in the order of
priority required by Florida law; then
(2) SECOND: To establish any reasonable
reserve that the Liquidator may determine is required for unpaid, future, or
contingent liabilities or obligations of the Partnership; then
(3) THIRD: To pay all liabilities of
the Partnership to the Partners, pro rata according to the amounts of their
respective liabilities; then
(4) FOURTH: To the Partners to the
extent of any positive balances in their Capital Accounts, Pro Rata according
to the amounts of their respective positive balances; and then
(5) FIFTH: Any remaining net proceeds
shall be distributed Pro Rata among the Partners.
(ii) Any Profits and Losses and Taxable Income
and Taxable Loss resulting from the disposition of the Partnership's assets in
the process of liquidation shall be allocated among the Partners in the manner
provided in section 13. Any property distributed in kind in the liquidation
shall be valued and treated as if the property were sold and the cash proceeds
were distributed. The Profits and Losses arising from the constructive sale of
the property described in the preceding sentence shall be allocated among the
Partners in the manner provided in section 13.
2. Limitation on Distributions to Partners. A Partner may
receive distributions from the Partnership only to the extent the Partnership's
total assets exceed its total liabilities, other than liabilities to the
Partners on account of their Capital Contributions.
ARTICLE VI
AUTHORITY, DUTIES, AND LIABILITIES OF PARTNERS
1. Duties of Managing General Partner. The Managing General
Partner shall manage the affairs of the Partnership, shall apply itself
diligently for the Partnership, and shall devote to the Partnership such time
as is necessary and appropriate to manage the business of the Partnership. The
Managing General Partner is not required to devote all its business time to the
Partnership, and it may engage in other business ventures and employment,
including those in competition with the Partnership. In the performance of its
duties, the Managing
10
<PAGE> 12
General Partner may hire employees and agents of the Partnership and generally
shall supervise and direct all the daily operations of the Partnership.
2. Managing General Partner's Fees and Expenses.
(a) Fees to Managing General Partner. In consideration
for performing services described herein, the Managing General Partner may be
paid a fee to be agreed upon by a Majority in Interest. Such fees shall be
deemed earned when the services have been performed and, regardless of when
paid, shall be non-executory from the date earned and shall be the obligation
of the Partnership from and after that date.
(b) Expenses. Except as otherwise provided herein, the
Partnership shall pay all expenses of the Partnership (which expenses may be
either billed directly to the Partnership or reimbursed to the Managing General
Partner) which may include, but are not limited to: (i) all costs of borrowed
money, taxes and assessments on the Property and other taxes applicable to the
Partnership; (ii) all costs for goods and materials, whether purchased by the
Partnership directly or by the Managing General Partner on behalf of the
Partnership; (iii) legal, audit, accounting, brokerage and other professional
fees; (iv) fees and expenses paid to independent contractors, mortgage bankers,
brokers, insurance brokers and other agents; (v) expenses of organizing,
revising, amending, converting, modifying or terminating the Partnership; (vi)
expenses in connection with distributions made by the Partnership to, and
communications and bookkeeping work necessary in maintaining relations with,
Partners; (vii) expenses in connection with preparing and mailing reports to
Partners; (viii) costs of any accounting, statistical or bookkeeping equipment
necessary for the maintenance of the books and records of the Partnership; (ix)
the cost of preparation and dissemination of informational material and
documentation relating to the Partnership; (x) except with respect to
litigation solely among the Partners as such, costs incurred in connection with
any litigation in which the Partnership is involved, as well as in the
examination, investigation or other proceedings, conducted against the
Partnership by any regulatory agency, including legal and accounting fees
incurred in connection therewith; (xi) costs of any computer services or
equipment or services of personnel used for or by the Partnership; and (xii)
expenses of professionals employed by the Partnership in connection with any of
the foregoing, including attorneys, accountants and appraisers.
3. Authority of Managing General Partner. The Managing General
Partner may bind the Partnership to do all acts that are necessary,
appropriate, or incidental to the accomplishment of the purposes of the
Partnership. Any person dealing with the Partnership or the Managing General
Partner may rely on a certificate signed by the Managing General Partner as to
the identity of any Partner, the existence or absence of any fact or condition
that is necessary to permit action by either the Partnership or the Managing
General Partner or germane in any other way to the affairs of the Partnership,
and the persons who are authorized to execute and deliver any documents or
instruments of or on behalf of the Partnership. Without limiting the
generality of the foregoing, the Managing General Partner is specifically
authorized to do the following:
(a) to negotiate and enter into leases and agreements
with land or building owners or other Persons, and to incur obligations for,
and on behalf of, the Partnership in connection with Partnership business;
11
<PAGE> 13
(b) to borrow money on behalf of the Partnership and, as
security therefor, to encumber the property;
(c) to prepay, in whole or in part, refinance, increase,
modify or extend any obligation affecting the property;
(d) to sell, exchange, convey and lease the property;
(e) to employ from time to time, at the expense of the
Partnership, other Persons required for the operation and management of the
Partnership business, including accountants, attorneys and others, who may be
Partners, on such terms and for such compensation as the Managing General
Partner determines to be reasonable and this may include Persons which are
Affiliates;
(f) to pay all attorney's and accountant's fees and
other costs incurred in connection with the formation of the Partnership
business and the completion of all steps necessary or advisable for the
Partnership to comply with applicable laws;
(g) to assume responsibilities imposed on the Managing
General Partner by the Act;
(h) to compromise, arbitrate or otherwise adjust claims
in favor of or against the Partnership and to carry such insurance as the
Managing General Partner considers advisable;
(i) to exercise the voting rights associated with the
securities and other Property owned by the Partnership;
(j) to commence or defend litigation with respect to the
Partnership or any assets of the Partnership as the Managing General Partner
considers advisable, at the expense of the Partnership;
(k) to make, execute, acknowledge and deliver documents
of transfer and conveyance and any other instruments that may be necessary or
appropriate to carry out its powers; and
(l) to do all such acts and take all such proceedings
and execute all such rights and privileges, although not specifically mentioned
herein, as the Managing General Partner considers necessary to conduct the
business of the Partnership and to carry out the purposes of the Partnership.
Notwithstanding the foregoing, the Managing General Partner shall not
take any of the following actions without the consent of a Majority in
Interest:
(1) assign all or any part of the property for the
benefit of its creditors or confess a judgment against the Partnership;
(2) take any action in contravention of the Act, the
certificate of limited partnership or this Agreement;
12
<PAGE> 14
(3) sell, lease, transfer, assign, pledge or encumber a
substantial portion (10% or more) in value of the property of the Partnership
(except with respect to transactions to which section 28 or section 32
applies); or
(4) admit a Person as a Partner of the Partnership.
4. Dealing with Affiliates. The Managing General Partner may
employ and enter into contracts and other arrangements with any Person,
including an Affiliate, and may obligate the Partnership to pay reasonable
compensation for services rendered by such Persons on terms that, in the
judgment of the Managing General Partner, are not less favorable to the
Partnership than would be available from an unrelated party.
5. Indemnification of General Partners. The Managing General
Partner need not secure the performance of its duties by bond or otherwise. A
General Partner is not liable, responsible, or accountable in damages or
otherwise to any Partner or to the Partnership for any act taken or omission
made in good faith on behalf of the Partnership and in a manner that such
General Partner reasonably believes to be within the scope of the authority
granted to it by this Agreement and in the best interest of the Partnership,
except for gross negligence or willful misconduct. Any loss, expense
(including attorneys' fees) or damage incurred by a General Partner by reason
of any act or omission by it in good faith on behalf of the Partnership and in
a manner that it reasonably believes to be within the scope of the authority
granted to it by this Agreement and in the best interest of the Partnership
(but not, in any event, any loss, expense or damage incurred by a General
Partner by reason of gross negligence or willful misconduct) shall be paid to
the indemnified General Partner from the Partnership's assets, to the extent
available.
6. Liability of Non-Managing General Partner. The non-managing
General Partners are not liable to any other Partner for the gross negligence
or willful misconduct of the Managing General Partner.
7. Authority of Non-Managing General Partner. The non-managing
General Partners shall not participate in the management of, or have any
control over, the business or policies of the Partnership, except as required
by the Act or permitted by section 18, and shall not transact any business in
the name of the Partnership. Unless required by the Act, a non-managing
general partner shall not sign any agreement, document or instrument in the
name of the Partnership or otherwise make commitments on behalf of the
Partnership.
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS
1. General Partners. Subject to section 24, a General Partner
may make an Assignment, directly or indirectly, of all or any part of its
Partnership Interest. However, an Assignment does not relieve such General
Partner of its obligations and liabilities under this Agreement, or constitute
the assignee a General Partner, or confer on the assignee any Partnership
Rights. Subject to section 24, and only if a Majority in Interest consents, a
General Partner may make an Assignment of both its Partnership Interest and its
Partnership Rights if the assignee assumes in writing all such General
Partner's obligations and liabilities under this
13
<PAGE> 15
Agreement and if all the applicable requirements of section 25 are satisfied.
Upon compliance with the immediately preceding sentence, an assignee of such
General Partner has all the rights and powers granted to such General Partner
under this Agreement and has all the obligations and liabilities of such
General Partner under this Agreement.
2. Restriction on Transfer. Notwithstanding any other
provision of this Agreement, an assignment of a Partnership Interest shall not
be made, and consent thereto shall be withheld:
(a) Unless the Managing General Partner has satisfied
itself (by seeking advice of legal counsel or otherwise, with any resulting
Partnership expense to be reimbursed by the assignor) that the assignment will
not have any significant adverse tax effect upon the Partnership or the other
Partners;
(b) Unless the Managing General Partner has satisfied
itself (by advice of legal counsel, with any resulting Partnership expense to
be reimbursed by the assignor) that the proposed assignment may be made without
registration under any applicable securities law; and it will not violate any
applicable securities law (including investor suitability standards);
(c) If the Assignment is sought to be made to:
(i) a minor or incompetent, except if made by
will or intestate succession, or
(ii) to a Person which is not an Affiliate.
3. Admission of Substitute Partner. Subject to the other
provisions of this Agreement, an assignee of a Partnership Interest may be
admitted as a Partner and granted Partnership Rights only if:
(a) the Assignment is made pursuant to a written
instrument in a form satisfactory to the Managing General Partner and specifies
the intention of the assignor that the assignee be substituted as a Partner;
(b) the Managing General Partner consents to the
admission by executing two counterparts of this Agreement that evidences the
Partnership Rights of the assignee, and if the assignee is to be admitted as a
General Partner a Majority in Interest consent to the admission;
(c) the assignee accepts, signs and agrees to be bound
by this Agreement, by executing two counterparts of this Agreement, including
an amended EXHIBIT A, and such other documents or instruments as the Managing
General Partner requires to effect the admission of the assignee as a Partner;
(d) the assignee provides the Managing General Partner
with evidence satisfactory to it of the assignee's authority to become a
Partner under the terms of this Agreement;
(e) the assignee pays all filing, publication and other
costs (including reasonable attorneys' fees) incurred by either the Partnership
or the Managing General Partner in connection with the admission and
substitution of the assignee as a Partner.
14
<PAGE> 16
Notwithstanding an assignee's satisfaction of any or all of the
conditions specified above, the Managing General Partner, in its absolute
discretion, may refuse to consent to the assignee's admission as a Partner, in
which event the assignee will not obtain any Partnership Rights, but will
retain only the rights of an assignee under section 23.
4. Rights of Partner After Assignment and Substitution. Upon
the Assignment of all his Partnership Interest, and the admission of a
substitute partner, a Partner shall cease to be a Partner and to have any
Partnership Rights.
5. Allocations and Distributions After Assignment. For the
purposes of allocations of Profits and Losses, Taxable Income or Taxable Loss,
and distributions, an Assignment of a Partnership Interest is effective as to
the Partnership, and shall be reflected in the records of the Partnership, as
of the date that the Managing General Partner receives written notice of the
Assignment. The Taxable Income or Taxable Loss, Profits and Losses and cash
and other distributions in respect of the assigned Partnership Interest with
respect to the fiscal year in which the Assignment of the Partnership Interest
occurs shall be divided between the assignor and the assignee according to the
method provided to the Managing General Partner by the assignor and the
assignee, so long as such method is permitted under the Code and does not
adversely affect the other Partners or the Partnership from a tax or economic
perspective. The method of allocation shall be provided to the Managing
General Partner in the written notice of the Assignment. Any additional costs
for computing the allocations hereunder shall be paid by the assignor or
assignee, as the case may be. The written notice referred to above shall also
contain information as to whether the assignor or assignee shall be responsible
for the payment of such additional cost, if any.
ARTICLE VIII
RETIREMENT, WITHDRAWAL, OR REMOVAL OF PARTNERS
1. Withdrawal of Non-Managing General Partner and Limited
Partners.
(a) A non-managing General Partner and a Limited Partner
may, at any time, partially withdraw his Partnership Interest from the
Partnership by providing written notice thereof to the Managing General
Partner. The Managing General Partner shall promptly send a copy of such
notice to all other Partners. Within thirty (30) days after the receipt of
such written notice from a Partner, the Managing General Partner shall make the
appropriate distributions to the Partner in partial or complete redemption of
his Partnership Interest as set forth in section 14(b).
(b) A partial withdrawal by a Partner shall be made in
increments of one-tenth (1/10th) of one percent (1%) of a Percentage Interest.
The written notice of withdrawal from a Partner to the Managing General Partner
must state whether the withdrawal is a partial or complete withdrawal and, if a
partial withdrawal, must state the Percentage Interest that is being withdrawn.
A Partner shall not make a partial withdrawal that will result in his remaining
Percentage Interest becoming less than one-tenth (1/10th) of one percent (1%)
immediately after the withdrawal.
15
<PAGE> 17
(c) The Managing General Partner agrees that it will
fully cooperate to the extent permitted by law to accomplish a withdrawal
requested by a non-managing General Partner and a Limited Partner hereunder.
It also agrees that it will not take any action that will obstruct or render
impossible the application of this section 28 (such as to pledge the
Partnership's Marketable Securities as collateral to creditors of the
Partnership), unless such action is essential to accomplish the purposes of the
Partnership.
(d) The partial withdrawal of a non-managing General
Partner or a Limited Partner does not dissolve or terminate the Partnership
unless there is only one Partner then remaining. The remaining Partners shall
amend this Agreement to reflect the partial or complete withdrawal of the
Partner from the Partnership, if and to the extent necessary.
(e) Upon the giving of the notice of withdrawal pursuant to
Paragraph (a), and upon the dissolution of the Partnership, the voting rights
with respect to any Marketable Securities allocable to the Percentage Interest
being withdrawn shall be vested in the withdrawing Partner or Partners, and the
Partnership shall have no voting rights with respect to such stock.
2. Retirement or Withdrawal of General Partner. The Managing
General Partner may not withdraw any part of its General Partnership Interest.
The Retirement of the Managing General Partner shall dissolve the Partnership.
Notwithstanding the foregoing or anything else in this Agreement to the
contrary, a merger, consolidation, or reorganization of the Managing General
Partner, or a sale of all or substantially all its assets that includes its
Partnership Interest, is not a Retirement of such Managing General Partner if
the resulting, surviving or acquiring Person is an Affiliate and becomes
substituted as the Managing General Partner of the Partnership. The resulting,
surviving or acquiring Person is substituted as the Managing General Partner
without further act if it gives notice of the substitution to the Partners
before the effective date of the merger, consolidation, reorganization or sale.
Each Partner consents to the admission and substitution of such substitute
Managing General Partner pursuant to this section 29, and no further consent or
approval of any Partner is required.
3. Rights of Partner After Retirement or Withdrawal. A Partner
ceases to have any Partnership Rights upon his Retirement or complete
withdrawal from the Partnership. However, until the appropriate distributions,
if any, are made to a Retired or withdrawn Partner for his Partnership
Interest, the Retired or withdrawn Partner is entitled to receive the
allocations of Profits and Losses, Taxable Income or Taxable Loss and all
distributions referred to in section 14 applicable to his Partnership Interest.
ARTICLE IX
DISSOLUTION
1. Events of Dissolution. The Partnership shall be terminated
and dissolved upon:
(a) the expiration of its term;
(b) the vote of a Majority in Interest to dissolve the
Partnership;
(c) the Partnership being adjudicated insolvent or
bankrupt;
16
<PAGE> 18
(d) the Retirement of the Managing General Partner;
(e) the death of Lowell Paxson; or
(f) the sale of all or substantially all of the
Partnership's Property.
2. Winding-Up and Distributions. Upon the dissolution of the
Partnership pursuant to section 31, the winding-up of the Partnership's
business and the liquidation and distribution of Partnership assets must be
carried out with due diligence and in a timely manner, and consistent with both
the requirements of applicable law and the following provisions of this
section:
(a) The Managing General Partner shall be responsible
for taking all actions relating to the winding-up, liquidation, and
distribution of assets of the Partnership, unless its Retirement causes the
dissolution, in which case the fiscal agent, liquidator, or receiver appointed
(without judicial action) by a Majority in Interest shall be so responsible.
The Managing General Partner, or the appointed fiscal agent, liquidator, or
receiver, is referred to in this Agreement as the "Liquidator." A non-managing
General Partner can be appointed to be the Liquidator. The Liquidator shall
file all certificates or notices of the dissolution of the Partnership as
required by law. Upon the complete liquidation and distribution of the
Partnership assets, the Partnership shall terminate, and the Liquidator shall
execute, acknowledge, and cause to be filed all certificates and notices
required by law to terminate the Partnership.
(b) The Liquidator shall proceed without unnecessary
delay to sell and otherwise liquidate the Partnership's assets. Unless
directed otherwise by a Majority in Interest, all Marketable Securities, cash
and other readily divisible or fungible assets of the Partnership shall be
distributed directly to the Partners in the manner set forth in section
14(c)(i). The Liquidator shall promptly sell the other assets of the
Partnership unless it determines that an immediate sale of part or all of such
assets would cause undue loss to the Partners. In such case, the Liquidator,
to avoid such loss, may defer the liquidation of the Partnership assets for a
reasonable time, except for those liquidations that are necessary to satisfy
the debts and liabilities of the Partnership to persons and parties other than
the Partners. The Liquidator shall distribute the proceeds from the
liquidation of the Partnership's assets as provided in section 14(c).
(c) Upon the dissolution of the Partnership pursuant to
section 31, the Liquidator shall cause the accountants for the Partnership to
prepare within ninety (90) days after the occurrence of the event of
dissolution, and immediately thereafter shall furnish to each Partner, a
statement setting forth the assets and liabilities of the Partnership as of the
date of its dissolution. The Liquidator, promptly following the complete
liquidation and distribution of the Partnership's assets, shall cause the
Partnership's accountants to prepare, and the Liquidator shall furnish to each
person who is a Partner immediately before the dissolution, a statement showing
the manner in which the Partnership assets were liquidated and distributed.
3. Distribution of Liquidation Proceeds and Assets and
Allocation of Gains and Losses. The net proceeds from liquidation of the
Partnership's assets and the unliquidated Property of the Partnership shall be
distributed, and all Profits and Losses resulting
17
<PAGE> 19
from the liquidation of the Partnership shall be allocated, among the Partners
in the proportions and orders of priority specified in section 14(c).
4. Limitation of Liability of Partners. Upon the dissolution
of the Partnership and the distribution of the net liquidation proceeds
pursuant to section 31 and section 14(c), each Partner shall look solely to the
assets of the Partnership for the payment of his unreturned Capital
Contributions, and if the Partnership's assets remaining after the payment or
discharge of the debts and liabilities of the Partnership are insufficient to
pay the full amount of the unreturned Capital Contributions of each Partner,
the Partner shall have no recourse or claim against any Partner or the
Partnership with respect to its unreturned Capital Contributions, except for
claims for fraud, gross negligence, or breach of fiduciary duty.
5. Waiver of Right of Partition of Assets. Each Partner, and
for his heirs, successors, and assigns, waives his right to the partition of
the assets of the Partnership upon the dissolution and liquidation of the
Partnership.
ARTICLE X
ACCOUNTING YEAR, BOOKS, RECORDS, AND REPORTS
1. Books and Records. The Managing General Partner shall
maintain at the principal office of the Partnership a complete and accurate set
of books of records and accounts, in which it shall make full and complete
entries of all dealings or transactions relating to the Partnership's business
and where it shall keep all supporting documentation of transactions with
respect to the conduct of the Partnership's business. Each Partner or his duly
authorized representative, upon five days' advance notice to the Managing
General Partner, may examine during normal business hours the books of the
Partnership and all other records and information concerning the operation of
the Partnership.
2. Reports. If requested by a Partner at least 30 days prior
to the end of a quarter, within 60 days after the end of each fiscal quarter in
each fiscal year of the Partnership, the Managing General Partner shall cause
to be prepared and sent to each Partner a balance sheet, income statement and
cash flow statement of the Partnership for and as of the end of that fiscal
quarter, in each case unaudited but accompanied by a report of the activities
of the Partnership for that quarter. Within 90 days after the end of each
fiscal year of the Partnership, the Managing General Partner shall cause to be
prepared and sent to each Partner a financial report consisting of (a) a
balance sheet as of the end of the fiscal year; (b) statements of income,
partner's equity, and changes in financial position for the fiscal year; (c) if
requested by a Partner, the opinion of the Partnership's certified public
accountant concerning the foregoing financial statements; (d) a summary of the
Partnership's activities for the fiscal year; (e) a statement showing the
distributions to each Partner during the fiscal year and identifying any
distributions which constitute a return of Capital Contribution; and (f) a
statement showing the amount of Taxable Income or Taxable Loss, and listing
each item of income, gain, loss, deduction, or credit allocated or charged
against the Partner for federal and state income tax purposes.
3. Bank Accounts. The Managing General Partner shall maintain
the bank accounts of the Partnership in such financial institutions as the
Managing General Partner considers
18
<PAGE> 20
appropriate. The Managing General Partner shall make or permit withdrawals
from the Partnership's bank accounts on the signature of the Managing General
Partner.
4. Tax Elections. The Partnership shall file an election under
Section 754 of the Code, relating to the optional adjustment to the basis of
partnership property, at the first time it is permitted to do so after the
beginning of the term of this Partnership. The Managing General Partner shall
make or waive, at its discretion, all other tax elections required or permitted
to be made by the Partnership under the Code.
5. Accounting Method and Fiscal Year. The Managing General
Partner shall maintain the Partnership records and books of accounts in
accordance with the method of accounting required or permitted to be used for
federal income tax purposes, with such modifications as are set forth in this
Agreement, and otherwise in accordance with generally accepted accounting
principles consistently applied. The fiscal year of the Partnership is the
calendar year.
ARTICLE XI
GENERAL PROVISIONS
1. Partnership Contracts. The Managing General Partner may
enter into agreements and contracts on behalf of the Partnership only if they
are in writing and clearly indicate to the other parties that the Partnership
is a general partnership of which the Managing General Partner is a general
partner.
2. Conveyances. Subject to section 18, the Managing General
Partner may sign any deed, mortgage, lease, bill of sale, security agreement,
pledge, contract or other instrument or commitment purporting to convey or
encumber any of the Partnership's Property or any interest therein, whether now
or subsequently owned or leased at any time by the Partnership, and no other
signature is required.
3. Notices. To be effective, a notice required or permitted by
this Agreement must be in writing, or by telegram, telex or telecopy if
promptly confirmed in writing. A notice is given when delivered or, if mailed,
when deposited in a United States postal service letterbox to be sent by
first-class, postage-prepaid, certified mail, with return receipt requested
(whether or not the sender receives the return receipt), and addressed, if to a
Partner, at his registered address listed on EXHIBIT A and, if to the Managing
General Partner or the Partnership, to the attention of such Managing General
Partner at the Partnership's principal business office.
4. Consents. Any consent required by this Agreement may be
given as follows:
(a) by a writing given by the consenting Partner and
received by the Managing General Partner or other appropriate recipient at or
before the occurrence of the action or other thing for which the consent was
solicited, unless the consent is nullified by:
(i) A writing from the consenting Partner that
is received by the Managing General Partner before the occurrence of the action
or other thing for which the consent was solicited; or
19
<PAGE> 21
(ii) the negative vote by the consenting Partner
at any meeting called for the purpose of considering the action or other thing.
(b) by the affirmative vote of the consenting Partner at
any meeting called for the purpose of considering the action or other thing for
which the Partner's consent was solicited.
5. Meetings. The Managing General Partner may call meetings of
the Partners for any purpose, at any time. The Managing General Partner shall
call a meeting of the Partners within 30 days after he receives from a Majority
in Interest a written request for a meeting, stating the purpose of the
requested meeting and the matters proposed for consideration. Meetings of the
Partners may be held at such time, date and place as the Managing General
Partner designates. The Managing General Partner shall give notice of any
meeting of the Partners not less than ten nor more than 60 days before the date
of the meeting, to each Partner at his registered address listed on EXHIBIT A.
The notice shall state the time, date and place of the meeting, the purpose of
the meeting and the Partner at whose direction or request the meeting is
called. If a meeting is adjourned to another time or place, notice of the
adjourned meeting is not required if the time and place of the adjournment is
announced at the called meeting. The presence in person or by proxy of a
Majority in Interest constitutes a quorum at a meeting. Any notice of a
meeting required by this section may be waived in writing at, before or after
the meeting and shall be deemed to be waived by each Partner who is present in
person or by proxy at the meeting. Only those persons who are Partners at the
close of business on the day before the meeting are entitled to vote at the
meeting. Any Partner entitled to vote at a meeting may authorize any person to
act for him by written proxy if a copy of the proxy is delivered to the
Managing General Partner before the commencement of the meeting. To be
effective, a proxy must be signed by the Partner (and, if applicable, each
co-owner) or his duly appointed attorney-in-fact, and no proxy shall be valid
for more than 11 months after its date. A proxy is revocable at the pleasure
of the Partner granting it.
6. Binding Effect; Counterparts. The covenants and agreements
contained in this Agreement are binding on, and inure to the benefit of, the
legal and personal representatives, heirs, successors and permitted assignees
of the parties to this Agreement. The parties may execute this Agreement in
any number of counterparts, each of which will be an original, but all of which
together will constitute one and the same agreement.
7. Choice of Law. This Agreement and the rights and
obligations of the Partners under it are governed by, and construed and
enforced in accordance with, the laws of Florida.
8. Complete Agreement; Modification. This Agreement contains
the final, complete and exclusive expression of the understanding among the
Partners with respect to the Partnership and its purposes and objectives and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them. Except to admit a new or a substitute Partner or to
reflect the withdrawal or Retirement of a Partner, this Agreement and every
provision of it may be modified or amended only by an agreement in writing
signed by or on behalf of all Partners.
9. Evidence of Partnership Interests. The Partnership Interest
of each Partner is evidenced exclusively by a counterpart of this Agreement
(including EXHIBIT A) that has been signed and dated by the Managing General
Partner.
20
<PAGE> 22
10. Tax Matters Partner. The Managing General Partner or its
designee shall be the "tax matters partner" of the Partnership for federal
income tax purposes. If the Managing General Partner ceases to act as the
Managing General Partner of the Partnership, the successor Managing General
Partner (if any), shall be designated the tax matters partner. Pursuant to
Section 6223(c)(2) of the Code, upon receipt of notice from the Internal
Revenue Service of the beginning of an administrative proceeding with respect
to the Partnership, the Managing General Partner, as the tax matters partner,
shall furnish the Internal Revenue Service with the names, addresses, and
Percentage Interests of each of the Partners. The Managing General Partner
agrees not to enter into a settlement agreement pursuant to Section 6224 of the
Code without providing at least 30 days advance written notice to each Partner.
As tax matters partner, the Managing General Partner shall have absolute
discretion regarding whether to seek judicial review of any administrative
determination and, if it determines to seek judicial review of Internal Revenue
Service action pursuant to Section 6226 of the Code, then the Managing General
Partner shall select the judicial forum for such review. The tax matters
partner shall receive no compensation for its services as such. The
Partnership shall bear all third party costs and expenses incurred by the tax
matters partner in performing its duties as such. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm or law
firm to assist the tax matters partner in discharging its duties hereunder.
21
<PAGE> 23
11. Gender and Number. As used in this Agreement, the masculine
gender includes the feminine and neuter, and the singular includes the plural.
12. Title. Title to any property acquired by the Partnership
shall be taken in the name of the Partnership.
22
<PAGE> 24
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of each Partner as of the date written beside his name.
General Partner
PAXSON ENTERPRISES, INC.
By /s/ Lowell W. Paxson
-------------------------------------
President
Limited Partner
/s/ Lowell W. Paxson
-------------------------------------
Lowell W. Paxson
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED and SWORN to before me on behalf of PAXSON ENTERPRISES, INC., a
Nevada corporation, as General Partner, by Lowell W. Paxson , its President,
this 25th day of September, 1991.
/s/ Robert H. Shreffler
-------------------------------------
Notary Public, State of Florida
My Commission Expires:
(Affix Notarial Seal)
23
<PAGE> 25
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED and SWORN to before me on by LOWELL PAXSON as Limited Partner,
this 18th day of November, 1991.
/s/ Robert H. Shreffler
--------------------------------
Notary Public, State of Florida
My Commission Expires:
(Affix Notarial Seal)
24
<PAGE> 26
EXHIBIT A
<TABLE>
<CAPTION>
General Partners Contribution Percentage Interest
- ---------------- ------------ -------------------
<S> <C> <C>
Paxson Enterprises, Inc. 5%
c/o Lowell W. Paxson
700 Spottis Woode Lane
Clearwater, Florida 34616
Limited Partners
- ----------------
Lowell W. Paxson 95%
700 Spottis Woode Lane
Clearwater, Florida 34616
</TABLE>
25
<PAGE> 27
AMENDMENT NUMBER 1 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF MIAMI, LIMITED PARTNERSHIP
This Amendment Number 1 to Agreement of Limited Partnership of Paxson
Broadcasting of Miami, Limited Partnership ("Amendment") is effective as of
the 1st day of January, 1992, by and between PAXSON ENTERPRISES, INC., a Nevada
corporation, as the General Partner and LOWELL PAXSON, as a Limited Partner.
The parties hereby agree as follows:
1. Amendment to Definitions. The following definition should be
added to Section 1 following the definition of the term "Act:"
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital
Account as of the end of the relevant fiscal year, after giving effect
to the following adjustments:
(i) Credit to such Capital Account any amount which such
Partner is obligated to restore (pursuant to the terms of a promissory
note or otherwise) or is deemed to be obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Regulations and shall be interpreted consistently therewith."
2. Amendment to Section 9. Section 9 is amended by inserting
the following subsections (d) and (e) at the end thereof:
"(d) Any payments made by the Limited Partner as a guarantor
of obligations of the Partnership shall be treated as additional
Capital Contributions to the Partnership."
"(e) Notwithstanding any provision in this Agreement to the
contrary, if any Partner's Capital Account has a deficit balance
("Deficit Capital Account Balance") upon liquidation of the
Partnership (after giving effect to all contributions, distributions,
and allocations for all taxable years, including the year in which
such liquidation occurs), such Partner shall contribute to the Capital
of the Partnership the amount necessary to restore such deficit
balance to 0 in accordance with Regulations Section
1.704-1(b)(2)(ii)(d); provided, however, that a Partner's obligation
to restore such Deficit Capital Account Balance shall not exceed the
amount of the Partnership's liability under the Credit and Guaranty
Agreement among Paxson Broadcasting of Miami, Limited Partnership,
Paxson Broadcasting of Orlando, Limited Partnership, Paxson
Broadcasting of
1
<PAGE> 28
Jacksonville, Limited Partnership, and Paxson Broadcasting of Tampa,
Limited Partnership, and Citibank, N.A. (the "Credit Agreement")."
3. Amendment to Section 13. Section 13 is amended by inserting
the following provisions as subsections (c) and (d) thereof:
"(c) Losses. The Losses allocated pursuant to Sections
13(a) and 13(b) hereof shall not exceed the maximum amount of Losses
that can be so allocated without causing any Partner who is not a
General Partner to have an Adjusted Capital Account Deficit at the end
of any fiscal year. In the event some but not all of the Partners who
are not General Partners would have Adjusted Capital Account Deficits
as a consequence of an allocation of Losses pursuant to Section 13(a)
or Section 13(b), the limitation set forth in this Section 13(c) shall
be applied on a Partner by Partner basis so as to allocate the maximum
permissible Loss to each Partner who is not a General Partner under
Section 1.704-1(b)(2)(ii)(d) of the Regulations. All Losses in excess
of the limitation set forth in this Section 13(c) shall be allocated
to the General Partner.
(d) Special Allocations. The following special
allocations shall be made in the following order:
(1) Qualified Income Offset. In the event any
Partner who is not a General Partner unexpectedly receives any
adjustments, allocations, or distributions described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations,
the Adjusted Capital Account Deficit of such Partner as quickly as
possible, provided that an allocation pursuant to this Section
13(d)(1) shall be made if and only to the extent that such Partner
would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Section 13 have been tentatively made
as if this Section 13(d)(1) were not in the Agreement.
(2) Gross Income Allocation. In the event any
Partner who is not a General Partner has a deficit Capital Account at
the end of any Partnership fiscal year that is in excess of the sum of
(i) the amount such Partner is obligated to restore (pursuant to the
terms of a promissory note or otherwise), and (ii) the amount such
Partner is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5), each such Partner shall be specially allocated items of
Partnership income and gain in the amount of such excess as quickly as
possible, provided that an allocation pursuant to this Section
13(d)(2) shall be made if and only to the extent that such Partner
would have a deficit Capital Account in excess of such sum after all
other allocations provided for in this Section 13 have been
tentatively made as if Section 13(d)(1) hereof and this Section
13(d)(2) were not in the Agreement."
4. Amendment to Section 34. Section 34 is amended by adding the
following provisions to the end of such section:
2
<PAGE> 29
"Notwithstanding anything to the contrary contained herein, each
Limited Partner hereby waives his or her right to seek indemnity from
the General Partner for any losses he or she might suffer under this
Partnership Agreement or under any ancillary agreements related to the
business of the Partnership including any personal guarantees of the
liabilities of the Partnership. Further, each Limited Partner hereby
waives his or her right to recover from the Partnership, as primary
obligor, any amounts such Limited Partner becomes liable to pay or
pays pursuant to any agreements related to the business of the
Partnership including any personal guarantees of the liabilities of
the Partnership."
3
<PAGE> 30
5. Ratification and Confirmation. The Agreement as hereby
amended is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 1
on this 30 day of December, 1992.
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ Martha Chapman By: /s/ Lowell W. Paxson
- ------------------------ ------------------------
Its President
--------------------
/s/ William L. Watson
- ------------------------
LIMITED PARTNER:
/s/ Martha Chapman /s/ Lowell Paxson
- ------------------------ ------------------------
Lowell Paxson
/s/ William L. Watson
- ------------------------
4
<PAGE> 31
AMENDMENT NUMBER 2 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF MIAMI, LIMITED PARTNERSHIP
This Amendment Number 2 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Broadcasting of Miami,
Limited Partnership ("Amendment") is effective as of the 29th day of March,
1993, by and between PAXSON ENTERPRISES, INC., a Nevada corporation, as the
General Partner and LOWELL PAXSON, as a Limited Partner. The parties hereby
agree as follows:
1. Assignment. The definition of "Assignment" in Article I,
Section 1 of the Partnership Agreement is amended in its entirety to read as
follows:
"`Assignment' means a sale, exchange, gift, pledge, transfer
or disposition of any kind whatsoever and, in the case of a
Person that is not an individual, it includes the sale,
exchange, pledge, transfer or disposition of a majority of
either voting control or the equity interests in such Person;
provided, however, that an "Assignment" does not include a
pledge of, or a grant of a security interest in, a Partnership
Interest, Partnership Rights, or the majority of either voting
control or the equity interests in any Person, which pledge or
security interest is given or granted for the purpose of
securing an obligation of the Partnership or any Partner or
any Person owning an equity interest in a Partner, provided
that the giving or grant of such pledge or security interest
is approved by the Managing General Partner."
2. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 18401 U.S. Highway
19 North, Clearwater, Florida 34624."
3. Purposes of Partnership; Authorized Acts. Article II,
subsection 7.A.(a)(i) of the Partnership Agreement is amended to read as
follows:
"acquire, operate, manage and perform all matters necessary
and attendant to the operation of one or more radio stations
in the State of Florida,".
4. Power to Guarantee Obligations of Others. Article II,
subsection 7.B. of the Partnership Agreement is amended by redesignating
clauses (g) and (h) as clauses (h) and (i), respectively, and inserting the
following as clause (g):
"(g) guarantee the debts and obligations of any Partner and
secure the same by a mortgage, pledge, security interest or
other liens upon the property of the Partnership, any part
thereof, any interest therein, or any improvements thereto;".
1
<PAGE> 32
5. Section 49 of the Partnership Agreement, entitled "Evidence of
Partnership Interests," is hereby deleted in its entirety, and Sections 50, 51,
and 52 of the Partnership Agreement are renumbered as Sections 49, 50, and 51
respectively.
6. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 2
on this _____ day of March, 1993.
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ Martha Chapman By: /s/ Lowell W. Paxson
- ------------------------ ------------------------
Its President
--------------------
/s/ William Watson
- ------------------------
LIMITED PARTNER:
/s/ Martha Chapman By: /s/ Lowell W. Paxson
- ------------------------ ------------------------
Lowell Paxson
/s/ William Watson
- ------------------------
2
<PAGE> 33
LIMITED PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This Limited Partnership Interests Assignment Agreement (the
"Agreement") is dated December 15, 1993 (the "Effective Date"), among Paxson
Communications of Florida, Inc. (the "General Partner"), Lowell W. Paxson (the
"First Assignor Limited Partner"), Second Crystal Diamond, L. P., a Nevada
limited partnership (the "First Assignee"), Paxson Communications Corp. (the
"Second Assignee"), and Paxson Communications LP, Inc. (the "Assignee Limited
Partner"). Capitalized terms used herein and not ascribed a definition have
the meaning assigned to them by the Partnership Agreement to which they
pertain.
BACKGROUND
The General Partner and the First Assignor Limited Partner are
partners in the limited partnerships listed in Exhibit "A" (the
"Partnerships"). The First Assignor Limited Partner wishes to transfer his
limited partnership interests in those Partnerships to the First Assignee and
the First Assignee wishes to immediately assign such limited partnership
interests to the Second Assignee and the Second Assignee wishes to immediately
assign such limited partnership interests to the Assignee Limited Partner. The
First Assignor Limited Partner and the First and Second Assignees also wish to
have the Assignee Limited Partner admitted as a Limited Partner in the
respective Partnerships and granted Partnership Rights in the respective
Partnerships. The Assignee Limited Partner agrees to accept the assignment of
the limited partnership interests and to be admitted as a Limited Partner in
accordance with the Limited Partnership Agreements listed in Exhibit "A" (the
"Partnership Agreements"). The General Partner as general partner for each of
the Partnerships consents to the assignment of the limited partnership
interests and the admission and substitution of the Assignee Limited Partner as
a Limited Partner under the respective Partnership Agreements. Pursuant to
Chapter 620, Florida Statutes, the Partnerships will continue uninterrupted
with substitute partners and the assignment of the limited partnership
interests will not cause a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to the
Partnership Agreements and Section 620.152, Florida Statutes, the First
Assignor Limited Partner assigns all of its limited partnership interests in
the Partnerships to the First Assignee. The First Assignee accepts the
assignment of all of the limited partnership interests. Pursuant to the
Partnership Agreements and Section 620.152, Florida Statutes, the First
Assignee assigns all of its limited partnership interests in the Partnerships
to the Second Assignee. The Second Assignee accepts the assignment of all of
the limited partnership interests. Pursuant to the Partnership Agreements and
Section 620.152, Florida Statutes, the Second Assignee assigns all of its
limited partnership interests in the Partnerships to the Assignee Limited
Partner. The Assignee Limited Partner accepts the assignment of all of the
limited partnership interests.
2. Admission of Assignee Limited Partner and Withdrawal
of Assignor Limited Partner. On the Effective Date, the Assignee Limited
Partner is admitted as a Limited Partner
1
<PAGE> 34
pursuant to the respective Partnership Agreement for such Partnerships and the
First Assignor Limited Partner has withdrawn as a Limited Partner from each of
the Partnerships.
3. Assignee Limited Partner's Acceptance of Admission.
By executing this Agreement, the Assignee Limited Partner accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements.
The parties agree that the Assignee Limited Partner's execution of this
Agreement shall satisfy the requirements of Sections 23, 24 and 25 of the
respective Partnership Agreements.
4. General Partner's Consent. The General Partner
consents to the assignment of the limited partnership interests to the Assignee
Limited Partner and the admission of the Assignee Limited Partner as a Limited
Partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the limited partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of First Assignor Limited Partner, General Partner, First
Assignee, Second Assignee and Assignee Limited Partner agree and acknowledge
that (i) First Assignor Limited Partner's limited partnership interests in each
of the Partnerships are subject to the lien and security interest of Banque
Paribas, as Agent on behalf of the Lenders (the "Agent"), under the Loan
Documents (as defined in that certain Credit Agreement dated as of March 30,
1993 by and among Banque Paribas, the Lenders identified therein and each of
the Station Partnerships) and (ii) the assignment of the limited partnership
interests in the Partnerships by First Limited Partner Assignor to First
Assignee, by First Assignee to Second Assignee, and by Second Assignee to
Assignee Limited Partner, are made subject to such continuing lien and security
interest of Agent under the Loan Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute one
agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding among the parties and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them.
2
<PAGE> 35
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON COMMUNICATIONS OF FLORIDA,
INC., as General Partner of each of
the Partnerships
By: /s/ Lowell W. Paxson
---------------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
------------------------------------
Lowell W. Paxson, First Assignor
Limited Partner for each Partnership
SECOND CRYSTAL DIAMOND, L. P., a
Nevada limited partnership, First
Assignee
By: /s/ Lowell W. Paxson
------------------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS CORP., As
Second Assignee
By: /s/ Lowell W. Paxson
------------------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS LP, INC., as
Assignee Limited Partner for each
Partnership
By: /s/ Lowell W. Paxson
------------------------------------
Lowell W. Paxson, President
3
<PAGE> 36
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Jacksonville, Limited Partnership dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson Broadcasting
of Jacksonville, Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Tampa,
dated June 27, 1991, and Amendment Number 2 to the Agreement of Limited
Partnership of Paxson Broadcasting of Tampa, dated April 27, 1992, and
Amendment Number 3 to the Agreement of Limited Partnership of Paxson
Broadcasting of Tampa, Limited Partnership, dated January 1, 1992, and
Amendment Number 4 to the Agreement of Limited Partnership of Paxson
Broadcasting of Tampa, Limited Partnership, dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of Miami,
Limited Partnership, dated January 1, 1992, and Amendment Number 2 to the
Agreement of Limited Partnership of Paxson Broadcasting of Miami, dated
March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of Orlando,
Limited Partnership, dated January 1, 1992, and Amendment Number 2 to the
Agreement of Limited Partnership of Paxson Broadcasting of Orlando,
Limited Partnership.
4
<PAGE> 37
GENERAL PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This is a General Partnership Interests Assignment Agreement
(the "Agreement") dated December 15, 1993 (the "Effective Date"). It is among
Paxson Enterprises, Inc. (the "General Partner Assignor"), Paxson
Communications Corp. (the "First Assignee"), Paxson Communications of Florida,
Inc. (the "General Partner Assignee"), and Lowell L. Paxson (the "Nonassigning
Limited Partner") in respect of the Limited Partnerships listed in Exhibit "A"
(the "Station Partnerships"). It is also among the General Partner Assignee,
the First Assignee, the General Partner Assignee and the Station Partnerships
in their capacities as a limited partner (each a "License Limited Partner") in
their respective Limited Partnerships listed in Exhibit "B" (the "License
Partnerships," and together with the Station Partnerships, the "Partnerships").
Capitalized terms used herein and not ascribed a definition have the meaning
assigned to them by the Partnership Agreement to which the term pertains.
BACKGROUND
The General Partner Assignor and the Nonassigning Limited
Partner are partners in the Station Partnerships. The General Partner Assignor
and the License Limited Partners are the partners in the License Partnerships.
The General Partner Assignor wishes to transfer each of its general partnership
interests in the Station Partnerships and the License Partnerships to the First
Assignee in exchange for certain of its common stock and the First Assignee
wishes to immediately assign such general partnership interests to the General
Partner Assignee in exchange for all of the capital stock of the General
Partner Assignee. The General Partner Assignor and the First Assignee also
wish to have the General Partner Assignee admitted as a Partner and granted
partnership rights in each of the Partnerships. The General Partner Assignee
agrees to accept the assignment of the general partnership interests and to be
admitted as a General Partner in the respective Partnerships pursuant to the
Partnership Agreements identified in Exhibit "A" and "B", respectively (the
"Partnership Agreements"). The Nonassigning Limited Partner as the limited
partner in each of the Station Partnerships and each of the License Limited
Partners as the limited partner in the respective License Partnerships hereby
consent to the assignment of the general partnership interests and admission of
the General Partner Assignee as the general partner in their respective
Partnerships pursuant to the terms of this Agreement and the Partnership
Agreements. Pursuant to Chapter 620, Florida Statutes, the Partnerships will
continue uninterrupted and the assignment of the general partnership interests
will not cause a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to
Section 23 of each of the Partnership Agreements and Section 620.152, Florida
Statutes, the General Partner Assignor assigns all of its general partnership
interests in the Partnerships to the First Assignee. The First Assignee
accepts the assignment of all of the general partnership interests. Pursuant
to Section 23 of each of the Partnership Agreements and Section 620.152,
Florida Statutes, the First Assignee assigns all of its general partnership
interests in the Partnerships to the General Partner Assignee. The General
Partner Assignee accepts the assignment of all of the general partnership
interests.
1
<PAGE> 38
2. Admission of General Partner Assignee and Withdrawal
of General Partner Assignor. On the Effective Date, the General Partner
Assignee is admitted as a general partner under the respective Partnership
Agreement and the General Partner Assignor has withdrawn from each of the
Partnerships.
3. General Partner Assignee's Acceptance of Admission.
By executing this Agreement, the General Partner Assignee accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements
and shall become the Managing General Partner of each of the Partnerships. The
parties agree that the General Partner Assignee's execution of this Agreement
shall satisfy the requirement of Sections 23, 24 and 25 of the respective
Partnership Agreements.
4. Limited Partner's Consent. Each of the Nonassigning
Limited Partner and the License Limited Partners consent to the assignment of
the general partnership interest by the General Partner of their respective
Partnership and to the admission of the General Partner Assignee as a general
partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the general partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of General Partner Assignor, First Assignee, General Partner
Assignee, Nonassigning Limited Partner and the License Limited Partners agree
and acknowledge that (i) General Partner Assignor's general partnership
interests in each of the Partnerships are subject to the lien and security
interest of Banque Paribas, as Agent on behalf of the Lenders (the "Agent"),
under the Loan Documents (as defined in that certain Credit Agreement dated as
of March 30, 1993 by and among Banque Paribas, the Lenders identified therein
and each of the Station Partnerships) and (ii) the assignment of the general
partnership interests in the Partnerships by General Partner Assignor to First
Assignee, and by First Assignee to General Partner Assignee, are made subject
to such continuing lien and security interest of Agent under the Loan
Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute one
agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding
2
<PAGE> 39
among the parties and supersedes any prior or contemporaneous agreement or
representation, oral or written, by any of them.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON ENTERPRISES, INC., as General
Partner Assignor and as Withdrawing
General Partner of each Partner
By: /s/ Lowell W. Paxson
-------------------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
-------------------------------------
Lowell W. Paxson, Nonassigning
Limited Partner
PAXSON COMMUNICATIONS CORPORATION,
First Assignee
By: /s/ Lowell W. Paxson
-------------------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS OF FLORIDA,
INC., as General Partner Assignee and
successor General Partner of each
Partnership
By: /s/ Lowell W. Paxson
-------------------------------------
Lowell W. Paxson, President
3
<PAGE> 40
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment
Number 1 to the Agreement of Limited Partnership of Paxson Broadcasting
of Jacksonville, Limited Partnership dated January 1, 1992, and
Amendment Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Jacksonville, Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Tampa,
dated June 27, 1991, and Amendment Number 2 to the Agreement of
Limited Partnership of Paxson Broadcasting of Tampa, dated April 27,
1992, and Amendment Number 3 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated January 1,
1992, and Amendment Number 4 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated March 29,
1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Miami, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson Broadcasting
of Miami, dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Orlando, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson Broadcasting
of Orlando, Limited Partnership.
4
<PAGE> 41
EXHIBIT "B"
Limited Partnerships
Agreement of Limited Partnership of Jacksonville License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Jacksonville, Licensed
Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Tampa License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Tampa, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Miami License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Miami, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Orlando License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Orlando, Licensed Limited
Partnership dated March 29, 1993.
5
<PAGE> 42
AMENDMENT NUMBER 3 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF MIAMI, LIMITED PARTNERSHIP
This Amendment Number 3 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Broadcasting of Miami,
Limited Partnership ("Amendment") is effective as of the 19th day of
September, 1995, by and between PAXSON COMMUNICATIONS OF FLORIDA, INC., a
Florida corporation, as the General Partner and PAXSON COMMUNICATIONS LP, INC.,
as a Limited Partner. The parties hereby agree as follows:
1. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 601 Clearwater Park
Road, West Palm Beach, Florida 33401."
2. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 3
on this 19th day of September, 1995.
WITNESSES: GENERAL PARTNER:
PAXSON COMMUNICATIONS OF FLORIDA,
INC.
/s/ Lorie Closson By: /s/ William Watson
- -------------------------- -------------------------------
Its Secretary
--------------------
/s/ Desire Malky
- --------------------------
LIMITED PARTNER:
PAXSON COMMUNICATIONS LP, INC.
/s/ Lorie Closson By: /s/ William Watson
- -------------------------- -------------------------------
Its Secretary
--------------------
1
<PAGE> 1
EXHIBIT 3.13.1
<PAGE> 2
EXHIBIT 3.13.1
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF ORLANDO, LIMITED PARTNERSHIP
This Agreement of Limited Partnership ("Agreement") is entered into
and shall be effective as of the 18th day of November, 1991, by and between
Paxson Enterprises, Inc., a Nevada Corporation, as the General Partner and
Lowell Paxson, as a Limited Partner, pursuant to the provisions of the Florida
Uniform Limited Partnership Act, on the following terms and conditions:
ARTICLE I.
FORM AND INTERPRETATION
1. Definitions. The following capitalized terms, as used in
this Agreement and in the attached exhibits, which constitute a part of this
Agreement, have the meanings ascribed to them below and include the plural as
well as the singular number:
"Act" means the Florida Uniform Limited Partnership Act, as amended,
or any subsequent Florida law concerning partnerships that are enacted in
substitution for the Act.
"Affiliate" of a Partner means (1) another Partner of the
Partnership; (2) a legal or personal representative of any Partner; (3) the
Partner's lineal descendants and spouse (other than a spouse who is legally
separated from the Partner under a decree of divorce or separate maintenance);
(4) a trustee of a trust for the benefit of any Person referred to in clause
(1), (2) or (3); (5) a Person, other than an individual, of which 80% or more
of the voting or equity interests is owned directly or indirectly by a Partner
and/or one or more of the Persons referred to in clauses (1) through (4); (6) a
Person owning 80% or more of the voting or equity interests of a Partner that
is not an individual; or (7) a Person other than an individual, 80% or more of
the voting or equity interests of which is owned by the same Person that owns
80% or more of the voting or equity interests of a Partner that is not an
individual.
"Agreement" means this Limited Partnership Agreement as originally
executed and as subsequently amended or supplemented from time to time in
accordance with section 48.
"Assignment" means a sale, exchange, gift, pledge, transfer or
disposition of any kind whatsoever and, in the case of a Person that is not an
individual, it includes the sale, exchange, pledge, transfer or disposition of
a majority of either voting control or the equity interests in such Person.
<PAGE> 3
"Bankruptcy" means taking advantage of any bankruptcy or insolvency
act (including the Bankruptcy Reform Act of 1978 or similar law, and also any
proceeding under state or local insolvency or debtor relief laws), or a final
adjudication of insolvency or an assignment of a major portion of a Person's
assets for the benefit of creditors.
"Capital Account" has the meaning set forth in section 10.
"Capital Contribution" means the total amount of cash, securities and
other property contributed by a Partner to the equity of the Partnership, or
agreed to be contributed by a Partner to the equity of the Partnership,
pursuant to section 9(a), and reduced by any return of capital to the Partner
within the meaning of section 9(c). Any reference in this Agreement to the
Capital Contribution of either a Partner or an assignee of a Partner shall
include the Capital Contribution of any prior Partner to whose Partnership
Interest the then existing Partner or assignee succeeded.
"Cash Flow" means the excess of cash derived by the Partnership from
all sources, including from capital contributions, loans, sales of securities
and other activities, (but excluding cash derived from the winding-up and
liquidation of the Partnership pursuant to section 32) over the sum of all cash
disbursements, including repayments of loans from Partners, loans to Partners
from the Partnership, and distributions to Partners pursuant to section 14(a)
or (b) (but excluding disbursements pursuant to section 14(c)), plus a
reasonable allowance for reserves for repairs, investments in Property
(including Marketable Securities), replacements, contingencies and anticipated
obligations (including debt service, capital improvements and replacements to
the extent not funded by reserves) as reasonably determined by the Managing
General Partner. Notwithstanding the preceding sentence, in determining the
reasonable allowance for reserves, the Managing General Partner shall reduce
such allowance to the extent necessary to ensure that annual distributions of
Cash Flow to each Partner will be in an amount at least equal to the annual
income tax liability (exclusive of income tax liability resulting from a
transaction pursuant to section 14(b) or (c)) of each such Partner (determined
assuming that the maximum possible income tax rate is applicable) resulting
from the allocation to the Partner of his share of the Partnership's Taxable
Income and Taxable Loss.
"Code" means the Internal Revenue Code of 1986, as amended, or any
subsequent federal law concerning income taxes that is enacted in substitution
for the Code.
"General Partner" means any Person admitted as a general partner in
accordance with this Agreement.
2
<PAGE> 4
"General Partnership Interest" means the Partnership Interest of a
General Partner, in his capacity as a General Partner.
"Limited Partner" means those Persons who are signatories to this
Agreement as limited partners; and all other Persons who shall be admitted to
the Partnership as limited partners.
"Majority in Interest", when used in regard to the degree of consent,
approval or agreement required among the Partners, means Partners whose
aggregate Capital Account balances constitute over 50% of the total aggregate
Capital Account balances of all owners of Partnership Interests then
outstanding.
"Managing General Partner" means the Person designated in this
Agreement as the general partner responsible for management of the affairs of
the Partnership and thereafter any Person which becomes a general partner
responsible for management of the affairs of the Partnership pursuant to this
Agreement, in the Person's capacity as a managing general partner of the
Partnership. Initially, the Managing General Partner shall be Paxson
Enterprises, Inc.
"Marketable Securities" means securities, including stock, which are
traded on an established securities market, whether or not registered under the
Securities Act of 1933.
"Partner" means each Person which is a General Partner or a Limited
Partner.
"Partnership" means the PAXSON BROADCASTING OF ORLANDO, LIMITED
PARTNERSHIP, the Florida limited partnership formed in accordance with the Act
pursuant to this Agreement.
"Partnership Interest" includes only a Partner's Capital Contribution
and right to receive his Percentage Interest and excludes Partnership Rights.
"Partnership Rights" excludes the Partnership Interest of a Partner,
and includes, in addition to other rights provided in this Agreement, the
rights provided to him by the Act except to the extent expressly modified by
this Agreement.
"Percentage Interest" means a Partner's percentage share (as
initially stated opposite such Partner's name on EXHIBIT A as amended from time
to time), of the Profits and Losses, Taxable Income or Taxable Loss, cash and
other distributions and liquidation proceeds of the Partnership all subject to
and interpreted in accordance with the terms of this Agreement. The Percentage
Interests of Partners shall be proportionate to the Capital Accounts of the
Partnership at all times so that, for
3
<PAGE> 5
example, if a Partner's Capital Account is 100 and the aggregate of all Capital
Accounts is 1000, the Partner's Percentage Interest in the Partnership is 10%.
In the event of a change among the Partners in the Percentage Interests in the
Partnership during the year, the Partnership shall use a closing-of-the-books
method with respect to such change or changes in Percentage Interests in
computing a Partner's share of Profits and Losses, Taxable Income and Taxable
Losses, and entitlement to distributions during such year.
"Person" means any individual and any general or limited partnership,
corporation, estate, joint venture, trust, business trust, cooperative,
association or other organization or entity.
"Profits and Losses" means the annual net income or loss of the
Partnership determined on a generally accepted accounting principles basis, as
disclosed on the annual financial statements of the Partnership.
"Property" means any real, personal, tangible or intangible property
contributed by a Partner to the equity of the Partnership or otherwise acquired
by the Partnership.
"Pro Rata" means in the proportion that the Percentage Interest of
each Partner bears to the total Percentage Interests of all the Partners.
"Retirement" means the death, Bankruptcy, adjudication of
incompetency as determined by a court of appropriate jurisdiction, dissolution
and liquidation or termination of existence, merger or consolidation (except as
provided in section 29) of a Partner, or the sale, lease or other disposition
of all or substantially all the property of a Partner (except as provided in
section 29).
"Taxable Income or Taxable Loss" means the net income or loss of the
Partnership for federal income tax purposes, as determined at the close of the
Partnership's fiscal year by the accountants employed by the Partnership to
prepare its income tax returns.
2. Captions and Certain Terms. The titles and captions
preceding the text of the articles and sections of this Agreement are solely
for convenience of reference and neither constitute a part of this Agreement
nor affect its meaning, interpretation, or effect. The words "hereby,"
"herein," "hereof," "hereto," "hereunder," and terms of similar import refer to
this Agreement as a whole and not to any particular article, section,
subsection or other part of this Agreement.
3. Severability. If any article, section or other provision of
this Agreement, or its application, is held to be
4
<PAGE> 6
invalid, illegal or unenforceable in any respect or for any reason, the
remainder of this Agreement and the application of such article, section or
other provision to a person or circumstance with respect to which it is valid,
legal and enforceable is not affected.
4. Limitation of Grant. Nothing in this Agreement, whether
express or implied, is intended or may be construed to confer upon, or to grant
to, any creditor or any other Person (other than the Partners and their legal
and personal representatives, heirs, successors and permitted assignees) any
right, remedy or claim under or because of this Agreement or any covenant,
condition or stipulation of it.
ARTICLE II
ORGANIZATION OF PARTNERSHIP
5. Formation, Name, Office and Registered Agent. The
Partnership is organized as of the date of this Agreement and the signatories
to this Agreement constitute the members of this partnership under the Act as
of the date hereof. The rights and obligations of the Partners are determined
by the Act, except as otherwise expressly provided in this Agreement. The name
of the Partnership is "PAXSON BROADCASTING OF ORLANDO, LIMITED PARTNERSHIP."
The recordkeeping office of the Partnership is located at 700 Spottis Woode
Lane, Clearwater, Florida 34616. The principal business office of the
Partnership is located at 50 West Liberty Street, Reno, Nevada 89501. The
Managing General Partner may change the name of the Partnership or the location
of its principal business office at any time and from time to time by giving
written notice of such change to each Partner.
6. Term of Partnership. The term of the Partnership shall
continue until the earlier of (i) December 31, 2066, or (ii) the death or
adjudication of incompetency as determined by a court of appropriate
jurisdiction of Lowell Paxson, unless the Partnership is earlier dissolved and
terminated under this Agreement.
7. Purposes of Partnership; Authorized Acts.
A. (a) Purposes of the partnership are to
(i) acquire, operate, manage and perform all matters necessary
and attendant to the operation of one or more radio stations
in Duval County, Florida,
(ii) invest in, own, sell, acquire, manage and exercise the
voting rights associated with Marketable Securities,
5
<PAGE> 7
(iii) acquire, hold, sell, own, improve, develop or lease other
types of real and personal property, and
(iv) engage in any other lawful activity for profit approved by
an affirmative vote of a Majority in Interest.
(i) Notwithstanding Section 7, unless unanimously approved by the
Partners, the Partnership shall not engage in any activity(ies) which
would result, based upon opinion of tax counsel, in the
characterization of the Partnership as an investment company as that
term is used in Section 721(b) or any successor provision of the
Code.
B. In furtherance of its purposes, but subject to every other provision of
this Agreement, the Partnership is authorized to do the following:
(a) acquire by purchase, lease or otherwise, any real or
personal, tangible or intangible property that may be necessary, convenient or
incidental to the accomplishment of the purposes of the Partnership;
(b) construct, operate, maintain, finance, improve, own,
sell, convey, exchange, assign, mortgage or lease any property (or a part
thereof) as may be necessary, convenient or incidental to the accomplishment of
the purposes of the Partnership;
(c) borrow money and issue evidences of indebtedness in
furtherance of any purpose of the Partnership and secure the same by a
mortgage, pledge, security interest or other liens on the property, any part
thereof, any interest therein or on any improvements thereto;
(d) prepay, in whole or in part, refinance, increase,
renew, modify or extend any indebtedness of the Partnership and, in connection
therewith, extend, renew or modify any mortgage, pledge, security interest or
other lien affecting any property;
(e) invest and reinvest the assets of the Partnership
in, and purchase, acquire, hold, sell, transfer and exchange securities of all
kinds;
(f) lend money to Partners;
(g) exercise the voting rights associated with property
owned by the Partnership; and
6
<PAGE> 8
(h) enter into any activity and perform and carry out
any contract in connection with, or necessary or incidental to, the
accomplishment of the purposes of the Partnership.
8. Co-Ownership of Partnership Interests. Any consent required
of a Partner shall require the action or vote of each Person (or in such other
manner as such Persons have designated in writing to the Partnership) having an
interest in such Partnership Interest, with a majority approval needed for
consent. On the death of a co-owner of a Partnership Interest held in either
joint tenancy with right of survivorship or tenancy by the entirety, the
Partnership Interest is owned solely by the survivor as a Partner, and not as
an assignee. The Partnership need not (although it may) recognize the death of
a co-owner of a Partnership Interest until the Managing General Partner
receives notice of the death. A co-owner of a Partnership Interest may sever
the tenancy by giving to the Managing General Partner notice to that effect,
and signed by the co-owner requesting the severance in the case of a joint
tenancy, and by both co-owners in the case of a tenancy by the entirety. Upon
receipt of the notice and the certificate evidencing the Partnership Interest
owned by the co-owners, the Managing General Partner shall cause the
Partnership Interest to be allocated as directed by the co-owners and shall
indicate on the Partnership records such allocation. In absence of joint
direction, the interests shall be allocated between the owners as the severed
ownership interests would be valued for federal estate tax purposes.
ARTICLE III
PARTNERSHIP CAPITAL
9. Capital Contributions.
(a) Upon executing this Agreement, each Partner shall
make or has made a Capital Contribution in the amount and of the type, and
initially shall have a Percentage Interest equal to the percentage, set forth
opposite his name on EXHIBIT A. Partners may make (but Limited Partners are not
required to make) additional Capital Contributions at such time and in such
amount as they in their sole discretion shall determine but only if the
Managing General Partner and a Majority in Interest consent to such additional
Capital Contributions. Upon the assignment of any Partnership Interest, the
making of an additional Capital Contribution or any return of a Capital
Contribution, or any substitution of a Partner, EXHIBIT A shall be amended to
accurately reflect the name, address, Capital Contribution and Percentage
Interest of each Partner.
(b) Notwithstanding (a) above, no Capital Contributions
shall be made or permitted by any Partner which would
7
<PAGE> 9
result, directly or indirectly, in the Partnership being treated as an
investment company under section 721(b) of the Code, and any such attempted
Capital Contribution shall be void ab initio. The Managing General Partner
shall withhold its consent to the making of an additional Capital Contribution,
unless it has satisfied itself (by seeking advice of legal counsel or
otherwise) that the making of the additional Capital Contribution will not
result, directly or indirectly, in the Partnership being treated as an
investment company under section 721(b) of the Code.
(c) A Partner shall not receive from the Managing
General Partner or out of Partnership Property, and the Managing General
Partner and the Partnership shall not return to a Partner, any part of his
Capital Contribution, except as set forth in Articles VIII and IX of this
Agreement and such distribution is determined to be a return of a Partner's
Capital Contribution, and then only if all liabilities of the Partnership,
except liabilities to the Partners on account of their Capital Contributions,
have been paid or there remains property of the Partnership sufficient to pay
them. The Partnership shall not pay interest on Capital Contributions, and a
Partner may demand and receive only cash in return for his Capital
Contribution, except to the extent provided for in Articles VIII and IX of this
Agreement or unless the Liquidator (as defined in section 32) decides to
distribute Partnership property in kind upon the dissolution, winding-up, and
termination of the Partnership, or unless the distribution of property to a
Partner is unanimously approved by the Partners. Each Partner, by signing this
Agreement or a counterpart of it, consents to all distributions authorized by
this Agreement and releases all other Partners from all liability to both him
and the Partnership for all distributions made in accordance with this
Agreement.
10. Capital Account.
(a) The Managing General Partner shall establish and
maintain a Capital Account for each Partner in the Partnership's books of
account. Capital Accounts shall be maintained and adjusted in accordance with
generally accepted accounting principles. Consistent with these capital
account maintenance rules, the Managing General Partner shall credit to each
Partner's Capital Account the amounts of the Partner's Capital Contributions
and any Profits allocated to the Partner. The Managing General Partner shall
charge to or deduct from each Partner's Capital Account the amounts of all
distributions (in cash or other property) to the Partner and any Losses
allocated to the Partner. If any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferror to the extent it relates to the
transferred interest.
8
<PAGE> 10
(b) The provisions of this section and the other
provisions of this Agreement pertaining to the maintenance of Capital Accounts
are intended to comply with Treasury Regulation Section 1.704-1(b) (or any
successor provision thereto), and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Managing General Partner
determines that it is prudent to modify the manner in which the Capital
Accounts are computed in order to comply with such Regulations, provided that
it is not likely to have a material effect on the amounts distributable to any
Partner without such Partner's consent and upon receipt of an opinion of tax
counsel to the Partnership concluding that such modification will be given
effect for federal income tax purposes, the Managing General Partner may make
such modification.
(c) The Managing General Partner shall revalue the
Partnership's property (based on its fair market value as of the moment
immediately preceding the relevant event) and shall adjust Capital Accounts to
take into account any resulting Profit or Loss (determined as if the
Partnership sold all its property for cash equal to the property's fair market
value) upon the occurrence of either of the following events: (1) the making by
any Partner of any non-Pro Rata additional Capital Contribution, (2) the
partial or complete withdrawal of a Partner's Partnership Interest, or (3) the
admission of a Partner.
11. Expenses Paid by Partners. Any Partnership expense
reasonably paid by any Partner on behalf of the Partnership is an indebtedness
of the Partnership to the Partner and does not increase the Partner's
Partnership Interest or Percentage Interest. The Partnership shall reimburse
the Partner as soon as practicable and may pay interest on the indebtedness.
12. Loans by Partners. The Managing General Partner may borrow
money on behalf of the Partnership from any Partner in such amounts and for
such purposes as it considers necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership. Each loan to the
Partnership by a Partner (excluding reimbursable expenses) shall be evidenced
by a promissory note or similar instrument of the Partnership, may be secured
by a lien on the Property, may bear interest at a rate determined by agreement
between such Partner and the Managing General Partner and may be subject to
such other terms and conditions as are agreed to by such Partner and the
Managing General Partner. The Partnership may prepay each loan from a Partner
in whole or in part, at any time and from time to time, without premium or
penalty.
9
<PAGE> 11
ARTICLE IV
PROFITS AND LOSSES AND TAXABLE INCOME AND TAXABLE LOSS
13. Allocations
(a) Allocation of Profits and Losses.
(1) Profits and Losses of the Partnership shall
be allocated Pro Rata among the Partners.
(2) Profits and Losses of the Partnership shall
be determined for each fiscal year of the Partnership in accordance with the
method of accounting required or permitted to be used for federal income tax
purposes, with such exceptions thereto as are set forth in this Agreement, and
otherwise in accordance with generally accepted accounting principles applied
in a consistent manner.
(b) Allocation of Taxable Income and Taxable Loss.
(1) Except as otherwise provided in this
section 13(b), allocations of tax items among the Partners shall be consistent
with corresponding book (Profits and Losses) items (if any). For tax purposes,
Profits and Losses, or any item thereof, shall be appropriately adjusted to
reflect Taxable Income and Taxable Loss, or any item thereof, as determined
under the Code and shall be allocated among the Partners in such a manner as to
comply with the provisions of the Code and Regulations thereunder (including,
if necessary, the "minimum gain chargeback provisions" of the Regulations under
Section 704 of the Code). For example, any gain or loss recognized by the
Partnership with respect to property contributed to the Partnership by a
Partner shall be shared among the Partners so as to take account of the
variation, if any, between the basis of the property to the Partnership and its
fair market value at the time of contribution or revaluation, whichever is
applicable, so as to comply with the requirements of Section 704 of the Code.
Thus, for example, if a Partner contributes property to the Partnership whose
agreed fair market value exceeds its adjusted basis in the hands of the
contributing Partner ("built-in gain"), and there have been no events giving
rise to a revaluation, built-in gain with respect to such contributed property
shall first be allocated to such contributing Partner when the Partnership
recognizes gain upon a disposition of such contributed property, but not in an
amount in excess of such built-in gain; the remaining balance of such
recognized gain, if any, shall be allocated among the Partners as set forth
herein. The allocation of built-in gain to a contributing Partner shall not
increase such Partner's Capital Account, because such gain was already taken
into account when the built-in gain property was contributed to the
Partnership. A Partner who contributes property other than cash shall provide
the Managing General Partner with
10
<PAGE> 12
information necessary to verify the contributing Partner's adjusted tax basis
in the items of property contributed by him to the Partnership.
(2) Generally, except as provided in section
13(b)(i), Taxable Income and Taxable Loss (and each such income and loss item)
shall be allocated Pro Rata among the Partners. In the event, however, that
non-Pro Rata distributions of property are made to a Partner or the net
proceeds from the sale of property are distributed non-Pro Rata to a Partner,
Taxable Income and Taxable Loss derived from such distributions or sales shall
be allocated 100% to such Partner, subject only to such modifications as are
necessary to comply with Section 704 of the Code.
ARTICLE V
DISTRIBUTIONS, WITHDRAWALS AND LOANS
14. Distributions.
(a) Cash Flow Distributions. Cash Flow shall be
distributed Pro Rata among the Partners. Notwithstanding the foregoing, if the
Partners unanimously agree, the Partnership may distribute Cash Flow
attributable to a sale of property in a non-Pro Rata manner.
(b) Partial or Complete Withdrawal by a Partner From the
Partnership.
(1) In the event of a partial or complete
withdrawal of a Partner from the Partnership pursuant to Article VIII, the
Managing General Partner shall, as promptly as is reasonably possible,
distribute to the Partner his Pro Rata share of the Marketable Securities
previously contributed by such Partner to the Partnership, cash and other
readily divisible assets of the Partnership. The withdrawing Partner shall
also be entitled to receive cash equal in value to his Pro Rata share of the
fair market value (as reasonably determined by the Managing General Partner) of
any non-readily divisible assets owned by the Partnership. The Managing
General Partner shall, as promptly as possible, distribute this additional
amount of cash, if any, to the withdrawing Partner. Cash distributions to the
withdrawing Partner shall be reduced by such Partner's Pro Rata share of the
liabilities of the Partnership and by any expenses incurred by the Partnership
with respect to the withdrawal of the Partner.
(2) A Partner may request that all or a portion
of the Marketable Securities subject to the requested withdrawal be sold by the
Partnership and the net proceeds (after selling and other expenses) distributed
as directed by him. In the
11
<PAGE> 13
event that the Managing General Partner is unable to sell these Marketable
Securities, it shall distribute them to the Partner, unless it is notified by
the Partner to cancel the withdrawal.
(3) The Managing General Partner shall not be
required to distribute to the requesting Partner any assets that the
Partnership is legally restricted or prohibited from distributing to the
Partner, unless steps can be taken to remove the restriction or prohibition; in
which case the requesting Partner shall be charged with the expense of removing
such restriction or prohibition. Any distribution hereunder shall also be
subject to the limitations set forth in sections 9(c) and 15, respectively.
(c) Liquidating Distributions. The net proceeds from
liquidation of the Partnership's assets pursuant to its dissolution,
winding-up, and termination shall be distributed, and all Profits and Losses
resulting from the liquidation of the Partnership property shall be allocated,
among the Partners in the proportions and orders of priority specified in this
section 14(c).
(i) The Liquidator shall distribute the net
proceeds from liquidation of the Partnership's assets as follows:
(1) FIRST: To pay all the liabilities
of the Partnership that are then due and payable, except for both Capital
Contributions of Partners and liabilities to the Partners, in the order of
priority required by Florida law; then
(2) SECOND: To establish any reasonable
reserve that the Liquidator may determine is required for unpaid, future, or
contingent liabilities or obligations of the Partnership; then
(3) THIRD: To pay all liabilities of
the Partnership to the Partners, pro rata according to the amounts of their
respective liabilities; then
(4) FOURTH: To the Partners to the
extent of any positive balances in their Capital Accounts, Pro Rata according
to the amounts of their respective positive balances; and then
(5) FIFTH: Any remaining net proceeds
shall be distributed Pro Rata among the Partners.
(ii) Any Profits and Losses and Taxable Income
and Taxable Loss resulting from the disposition of the Partnership's assets in
the process of liquidation shall be allocated among the Partners in the manner
provided in section 13. Any property distributed in kind in the liquidation
shall be valued and treated as if the property were sold and the cash proceeds
were
12
<PAGE> 14
distributed. The Profits and Losses arising from the constructive sale of the
property described in the preceding sentence shall be allocated among the
Partners in the manner provided in section 13.
15. Limitation on Distributions to Partners. A Partner may
receive distributions from the Partnership only to the extent the Partnership's
total assets exceed its total liabilities, other than liabilities to the
Partners on account of their Capital Contributions.
ARTICLE VI
AUTHORITY, DUTIES, AND LIABILITIES OF PARTNERS
16. Duties of Managing General Partner. The Managing General
Partner shall manage the affairs of the Partnership, shall apply itself
diligently for the Partnership, and shall devote to the Partnership such time
as is necessary and appropriate to manage the business of the Partnership. The
Managing General Partner is not required to devote all its business time to the
Partnership, and it may engage in other business ventures and employment,
including those in competition with the Partnership. In the performance of its
duties, the Managing General Partner may hire employees and agents of the
Partnership and generally shall supervise and direct all the daily operations
of the Partnership.
17. Managing General Partner's Fees and Expenses.
(a) Fees to Managing General Partner. In consideration
for performing services described herein, the Managing General Partner may be
paid a fee to be agreed upon by a Majority in Interest. Such fees shall be
deemed earned when the services have been performed and, regardless of when
paid, shall be non-executory from the date earned and shall be the obligation
of the Partnership from and after that date.
(b) Expenses. Except as otherwise provided herein, the
Partnership shall pay all expenses of the Partnership (which expenses may be
either billed directly to the Partnership or reimbursed to the Managing General
Partner) which may include, but are not limited to: (i) all costs of borrowed
money, taxes and assessments on the Property and other taxes applicable to the
Partnership; (ii) all costs for goods and materials, whether purchased by the
Partnership directly or by the Managing General Partner on behalf of the
Partnership; (iii) legal, audit, accounting, brokerage and other professional
fees; (iv) fees and expenses paid to independent contractors, mortgage bankers,
brokers, insurance brokers and other agents; (v) expenses of organizing,
revising, amending, converting, modifying or terminating the Partnership; (vi)
expenses in connection with
13
<PAGE> 15
distributions made by the Partnership to, and communications and bookkeeping
work necessary in maintaining relations with, Partners; (vii) expenses in
connection with preparing and mailing reports to Partners; (viii) costs of any
accounting, statistical or bookkeeping equipment necessary for the maintenance
of the books and records of the Partnership; (ix) the cost of preparation and
dissemination of informational material and documentation relating to the
Partnership; (x) except with respect to litigation solely among the Partners as
such, costs incurred in connection with any litigation in which the Partnership
is involved, as well as in the examination, investigation or other proceedings,
conducted against the Partnership by any regulatory agency, including legal and
accounting fees incurred in connection therewith; (xi) costs of any computer
services or equipment or services of personnel used for or by the Partnership;
and (xii) expenses of professionals employed by the Partnership in connection
with any of the foregoing, including attorneys, accountants and appraisers.
18. Authority of Managing General Partner. The Managing General
Partner may bind the Partnership to do all acts that are necessary,
appropriate, or incidental to the accomplishment of the purposes of the
Partnership. Any person dealing with the Partnership or the Managing General
Partner may rely on a certificate signed by the Managing General Partner as to
the identity of any Partner, the existence or absence of any fact or condition
that is necessary to permit action by either the Partnership or the Managing
General Partner or germane in any other way to the affairs of the Partnership,
and the persons who are authorized to execute and deliver any documents or
instruments of or on behalf of the Partnership. Without limiting the
generality of the foregoing, the Managing General Partner is specifically
authorized to do the following:
(a) to negotiate and enter into leases and agreements
with land or building owners or other Persons, and to incur obligations for,
and on behalf of, the Partnership in connection with Partnership business;
(b) to borrow money on behalf of the Partnership and, as
security therefor, to encumber the property;
(c) to prepay, in whole or in part, refinance, increase,
modify or extend any obligation affecting the property;
(d) to sell, exchange, convey and lease the property;
(e) to employ from time to time, at the expense of the
Partnership, other Persons required for the operation and management of the
Partnership business, including accountants, attorneys and others, who may be
Partners, on such terms and for
14
<PAGE> 16
such compensation as the Managing General Partner determines to be reasonable
and this may include Persons which are Affiliates;
(f) to pay all attorney's and accountant's fees and
other costs incurred in connection with the formation of the Partnership
business and the completion of all steps necessary or advisable for the
Partnership to comply with applicable laws;
(g) to assume responsibilities imposed on the Managing
General Partner by the Act;
(h) to compromise, arbitrate or otherwise adjust claims
in favor of or against the Partnership and to carry such insurance as the
Managing General Partner considers advisable;
(i) to exercise the voting rights associated with the
securities and other Property owned by the Partnership;
(j) to commence or defend litigation with respect to the
Partnership or any assets of the Partnership as the Managing General Partner
considers advisable, at the expense of the Partnership;
(k) to make, execute, acknowledge and deliver documents
of transfer and conveyance and any other instruments that may be necessary or
appropriate to carry out its powers; and
(l) to do all such acts and take all such proceedings
and execute all such rights and privileges, although not specifically mentioned
herein, as the Managing General Partner considers necessary to conduct the
business of the Partnership and to carry out the purposes of the Partnership.
Notwithstanding the foregoing, the Managing General Partner shall not
take any of the following actions without the consent of a Majority in
Interest:
(1) assign all or any part of the property for the
benefit of its creditors or confess a judgment against the Partnership;
(2) take any action in contravention of the Act, the
certificate of limited partnership or this Agreement;
(3) sell, lease, transfer, assign, pledge or encumber a
substantial portion (10% or more) in value of the property of the Partnership
(except with respect to transactions to which section 28 or section 32
applies); or
(4) admit a Person as a Partner of the Partnership.
15
<PAGE> 17
19. Dealing with Affiliates. The Managing General Partner may
employ and enter into contracts and other arrangements with any Person,
including an Affiliate, and may obligate the Partnership to pay reasonable
compensation for services rendered by such Persons on terms that, in the
judgment of the Managing General Partner, are not less favorable to the
Partnership than would be available from an unrelated party.
20. Indemnification of General Partners. The Managing General
Partner need not secure the performance of its duties by bond or otherwise. A
General Partner is not liable, responsible, or accountable in damages or
otherwise to any Partner or to the Partnership for any act taken or omission
made in good faith on behalf of the Partnership and in a manner that such
General Partner reasonably believes to be within the scope of the authority
granted to it by this Agreement and in the best interest of the Partnership,
except for gross negligence or willful misconduct. Any loss, expense
(including attorneys' fees) or damage incurred by a General Partner by reason
of any act or omission by it in good faith on behalf of the Partnership and in
a manner that it reasonably believes to be within the scope of the authority
granted to it by this Agreement and in the best interest of the Partnership
(but not, in any event, any loss, expense or damage incurred by a General
Partner by reason of gross negligence or willful misconduct) shall be paid to
the indemnified General Partner from the Partnership's assets, to the extent
available.
21. Liability of Non-Managing General Partner. The non-managing
General Partners are not liable to any other Partner for the gross negligence
or willful misconduct of the Managing General Partner.
22. Authority of Non-Managing General Partner. The non-managing
General Partners shall not participate in the management of, or have any
control over, the business or policies of the Partnership, except as required
by the Act or permitted by section 18, and shall not transact any business in
the name of the Partnership. Unless required by the Act, a non-managing
general partner shall not sign any agreement, document or instrument in the
name of the Partnership or otherwise make commitments on behalf of the
Partnership.
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS
23. General Partners. Subject to section 24, a General Partner
may make an Assignment, directly or indirectly, of all or any part of its
Partnership Interest. However, an Assignment does not relieve such General
Partner of its obligations and liabilities under this Agreement, or constitute
the assignee a General Partner,
16
<PAGE> 18
or confer on the assignee any Partnership Rights. Subject to section 24, and
only if a Majority in Interest consents, a General Partner may make an
Assignment of both its Partnership Interest and its Partnership Rights if the
assignee assumes in writing all such General Partner's obligations and
liabilities under this Agreement and if all the applicable requirements of
section 25 are satisfied. Upon compliance with the immediately preceding
sentence, an assignee of such General Partner has all the rights and powers
granted to such General Partner under this Agreement and has all the
obligations and liabilities of such General Partner under this Agreement.
24. Restriction on Transfer. Notwithstanding any other
provision of this Agreement, an assignment of a Partnership Interest shall not
be made, and consent thereto shall be withheld:
(a) Unless the Managing General Partner has satisfied
itself (by seeking advice of legal counsel or otherwise, with any resulting
Partnership expense to be reimbursed by the assignor) that the assignment will
not have any significant adverse tax effect upon the Partnership or the other
Partners;
(b) Unless the Managing General Partner has satisfied
itself (by advice of legal counsel, with any resulting Partnership expense to
be reimbursed by the assignor) that the proposed assignment may be made without
registration under any applicable securities law; and it will not violate any
applicable securities law (including investor suitability standards);
(c) If the Assignment is sought to be made to:
(i) a minor or incompetent, except if made by
will or intestate succession, or
(ii) to a Person which is not an Affiliate.
25. Admission of Substitute Partner. Subject to the other
provisions of this Agreement, an assignee of a Partnership Interest may be
admitted as a Partner and granted Partnership Rights only if:
(a) the Assignment is made pursuant to a written
instrument in a form satisfactory to the Managing General Partner and specifies
the intention of the assignor that the assignee be substituted as a Partner;
(b) the Managing General Partner consents to the
admission by executing two counterparts of this Agreement that evidences the
Partnership Rights of the assignee, and if the assignee is to be admitted as a
General Partner a Majority in Interest consent to the admission;
17
<PAGE> 19
(c) the assignee accepts, signs and agrees to be bound
by this Agreement, by executing two counterparts of this Agreement, including
an amended EXHIBIT A, and such other documents or instruments as the Managing
General Partner requires to effect the admission of the assignee as a Partner;
(d) the assignee provides the Managing General Partner
with evidence satisfactory to it of the assignee's authority to become a
Partner under the terms of this Agreement;
(e) the assignee pays all filing, publication and other
costs (including reasonable attorneys' fees) incurred by either the Partnership
or the Managing General Partner in connection with the admission and
substitution of the assignee as a Partner.
Notwithstanding an assignee's satisfaction of any or all of the
conditions specified above, the Managing General Partner, in its absolute
discretion, may refuse to consent to the assignee's admission as a Partner, in
which event the assignee will not obtain any Partnership Rights, but will
retain only the rights of an assignee under section 23.
26. Rights of Partner After Assignment and Substitution. Upon
the Assignment of all his Partnership Interest, and the admission of a
substitute partner, a Partner shall cease to be a Partner and to have any
Partnership Rights.
27. Allocations and Distributions After Assignment. For the
purposes of allocations of Profits and Losses, Taxable Income or Taxable Loss,
and distributions, an Assignment of a Partnership Interest is effective as to
the Partnership, and shall be reflected in the records of the Partnership, as
of the date that the Managing General Partner receives written notice of the
Assignment. The Taxable Income or Taxable Loss, Profits and Losses and cash
and other distributions in respect of the assigned Partnership Interest with
respect to the fiscal year in which the Assignment of the Partnership Interest
occurs shall be divided between the assignor and the assignee according to the
method provided to the Managing General Partner by the assignor and the
assignee, so long as such method is permitted under the Code and does not
adversely affect the other Partners or the Partnership from a tax or economic
perspective. The method of allocation shall be provided to the Managing
General Partner in the written notice of the Assignment. Any additional costs
for computing the allocations hereunder shall be paid by the assignor or
assignee, as the case may be. The written notice referred to above shall also
contain information as to whether the assignor or assignee shall be responsible
for the payment of such additional cost, if any.
18
<PAGE> 20
ARTICLE VIII
RETIREMENT, WITHDRAWAL, OR REMOVAL OF PARTNERS
28. Withdrawal of Non-Managing General Partner and Limited
Partners.
(a) A non-managing General Partner and a Limited Partner
may, at any time, partially withdraw his Partnership Interest from the
Partnership by providing written notice thereof to the Managing General
Partner. The Managing General Partner shall promptly send a copy of such
notice to all other Partners. Within thirty (30) days after the receipt of
such written notice from a Partner, the Managing General Partner shall make the
appropriate distributions to the Partner in partial or complete redemption of
his Partnership Interest as set forth in section 14(b).
(b) A partial withdrawal by a Partner shall be made in
increments of one-tenth (1/10th) of one percent (1%) of a Percentage Interest.
The written notice of withdrawal from a Partner to the Managing General Partner
must state whether the withdrawal is a partial or complete withdrawal and, if a
partial withdrawal, must state the Percentage Interest that is being withdrawn.
A Partner shall not make a partial withdrawal that will result in his remaining
Percentage Interest becoming less than one-tenth (1/10th) of one percent (1%)
immediately after the withdrawal.
(c) The Managing General Partner agrees that it will
fully cooperate to the extent permitted by law to accomplish a withdrawal
requested by a non-managing General Partner and a Limited Partner hereunder.
It also agrees that it will not take any action that will obstruct or render
impossible the application of this section 28 (such as to pledge the
Partnership's Marketable Securities as collateral to creditors of the
Partnership), unless such action is essential to accomplish the purposes of the
Partnership.
(d) The partial withdrawal of a non-managing General
Partner or a Limited Partner does not dissolve or terminate the Partnership
unless there is only one Partner then remaining. The remaining Partners shall
amend this Agreement to reflect the partial or complete withdrawal of the
Partner from the Partnership, if and to the extent necessary.
(e) Upon the giving of the notice of withdrawal pursuant to
Paragraph (a), and upon the dissolution of the Partnership, the voting rights
with respect to any Marketable Securities allocable to the Percentage Interest
being withdrawn shall be vested in the withdrawing Partner or Partners, and the
Partnership shall have no voting rights with respect to such stock.
19
<PAGE> 21
29. Retirement or Withdrawal of General Partner. The Managing
General Partner may not withdraw any part of its General Partnership Interest.
The Retirement of the Managing General Partner shall dissolve the Partnership.
Notwithstanding the foregoing or anything else in this Agreement to the
contrary, a merger, consolidation, or reorganization of the Managing General
Partner, or a sale of all or substantially all its assets that includes its
Partnership Interest, is not a Retirement of such Managing General Partner if
the resulting, surviving or acquiring Person is an Affiliate and becomes
substituted as the Managing General Partner of the Partnership. The resulting,
surviving or acquiring Person is substituted as the Managing General Partner
without further act if it gives notice of the substitution to the Partners
before the effective date of the merger, consolidation, reorganization or sale.
Each Partner consents to the admission and substitution of such substitute
Managing General Partner pursuant to this section 29, and no further consent or
approval of any Partner is required.
30. Rights of Partner After Retirement or Withdrawal. A Partner
ceases to have any Partnership Rights upon his Retirement or complete
withdrawal from the Partnership. However, until the appropriate distributions,
if any, are made to a Retired or withdrawn Partner for his Partnership
Interest, the Retired or withdrawn Partner is entitled to receive the
allocations of Profits and Losses, Taxable Income or Taxable Loss and all
distributions referred to in section 14 applicable to his Partnership Interest.
ARTICLE IX
DISSOLUTION
31. Events of Dissolution. The Partnership shall be terminated
and dissolved upon:
(a) the expiration of its term;
(b) the vote of a Majority in Interest to dissolve the
Partnership;
(c) the Partnership being adjudicated insolvent or
bankrupt;
(d) the Retirement of the Managing General Partner;
(e) the death of Lowell Paxson; or
(f) the sale of all or substantially all of the
Partnership's Property.
20
<PAGE> 22
32. Winding-Up and Distributions. Upon the dissolution of the
Partnership pursuant to section 31, the winding-up of the Partnership's
business and the liquidation and distribution of Partnership assets must be
carried out with due diligence and in a timely manner, and consistent with both
the requirements of applicable law and the following provisions of this
section:
(a) The Managing General Partner shall be responsible
for taking all actions relating to the winding-up, liquidation, and
distribution of assets of the Partnership, unless its Retirement causes the
dissolution, in which case the fiscal agent, liquidator, or receiver appointed
(without judicial action) by a Majority in Interest shall be so responsible.
The Managing General Partner, or the appointed fiscal agent, liquidator, or
receiver, is referred to in this Agreement as the "Liquidator." A non-managing
General Partner can be appointed to be the Liquidator. The Liquidator shall
file all certificates or notices of the dissolution of the Partnership as
required by law. Upon the complete liquidation and distribution of the
Partnership assets, the Partnership shall terminate, and the Liquidator shall
execute, acknowledge, and cause to be filed all certificates and notices
required by law to terminate the Partnership.
(b) The Liquidator shall proceed without unnecessary
delay to sell and otherwise liquidate the Partnership's assets. Unless
directed otherwise by a Majority in Interest, all Marketable Securities, cash
and other readily divisible or fungible assets of the Partnership shall be
distributed directly to the Partners in the manner set forth in section
14(c)(i). The Liquidator shall promptly sell the other assets of the
Partnership unless it determines that an immediate sale of part or all of such
assets would cause undue loss to the Partners. In such case, the Liquidator,
to avoid such loss, may defer the liquidation of the Partnership assets for a
reasonable time, except for those liquidations that are necessary to satisfy
the debts and liabilities of the Partnership to persons and parties other than
the Partners. The Liquidator shall distribute the proceeds from the
liquidation of the Partnership's assets as provided in section 14(c).
(c) Upon the dissolution of the Partnership pursuant to
section 31, the Liquidator shall cause the accountants for the Partnership to
prepare within ninety (90) days after the occurrence of the event of
dissolution, and immediately thereafter shall furnish to each Partner, a
statement setting forth the assets and liabilities of the Partnership as of the
date of its dissolution. The Liquidator, promptly following the complete
liquidation and distribution of the Partnership's assets, shall cause the
Partnership's accountants to prepare, and the Liquidator shall furnish to each
person who is a Partner immediately before the dissolution, a statement showing
the manner in which the Partnership assets were liquidated and distributed.
21
<PAGE> 23
33. Distribution of Liquidation Proceeds and Assets and
Allocation of Gains and Losses. The net proceeds from liquidation of the
Partnership's assets and the unliquidated Property of the Partnership shall be
distributed, and all Profits and Losses resulting from the liquidation of the
Partnership shall be allocated, among the Partners in the proportions and
orders of priority specified in section 14(c).
34. Limitation of Liability of Partners. Upon the dissolution
of the Partnership and the distribution of the net liquidation proceeds
pursuant to section 31 and section 14(c), each Partner shall look solely to the
assets of the Partnership for the payment of his unreturned Capital
Contributions, and if the Partnership's assets remaining after the payment or
discharge of the debts and liabilities of the Partnership are insufficient to
pay the full amount of the unreturned Capital Contributions of each Partner,
the Partner shall have no recourse or claim against any Partner or the
Partnership with respect to its unreturned Capital Contributions, except for
claims for fraud, gross negligence, or breach of fiduciary duty.
35. Waiver of Right of Partition of Assets. Each Partner, and
for his heirs, successors, and assigns, waives his right to the partition of
the assets of the Partnership upon the dissolution and liquidation of the
Partnership.
ARTICLE X
ACCOUNTING YEAR, BOOKS, RECORDS, AND REPORTS
36. Books and Records. The Managing General Partner shall
maintain at the principal office of the Partnership a complete and accurate set
of books of records and accounts, in which it shall make full and complete
entries of all dealings or transactions relating to the Partnership's business
and where it shall keep all supporting documentation of transactions with
respect to the conduct of the Partnership's business. Each Partner or his duly
authorized representative, upon five days' advance notice to the Managing
General Partner, may examine during normal business hours the books of the
Partnership and all other records and information concerning the operation of
the Partnership.
37. Reports. If requested by a Partner at least 30 days prior
to the end of a quarter, within 60 days after the end of each fiscal quarter in
each fiscal year of the Partnership, the Managing General Partner shall cause
to be prepared and sent to each Partner a balance sheet, income statement and
cash flow statement of the Partnership for and as of the end of that fiscal
quarter, in each case unaudited but accompanied by a report of the activities
of the Partnership for that quarter. Within 90 days after the end of each
fiscal year of the Partnership, the Managing
22
<PAGE> 24
General Partner shall cause to be prepared and sent to each Partner a financial
report consisting of (a) a balance sheet as of the end of the fiscal year; (b)
statements of income, partner's equity, and changes in financial position for
the fiscal year; (c) if requested by a Partner, the opinion of the
Partnership's certified public accountant concerning the foregoing financial
statements; (d) a summary of the Partnership's activities for the fiscal year;
(e) a statement showing the distributions to each Partner during the fiscal
year and identifying any distributions which constitute a return of Capital
Contribution; and (f) a statement showing the amount of Taxable Income or
Taxable Loss, and listing each item of income, gain, loss, deduction, or credit
allocated or charged against the Partner for federal and state income tax
purposes.
38. Bank Accounts. The Managing General Partner shall maintain
the bank accounts of the Partnership in such financial institutions as the
Managing General Partner considers appropriate. The Managing General Partner
shall make or permit withdrawals from the Partnership's bank accounts on the
signature of the Managing General Partner.
39. Tax Elections. The Partnership shall file an election under
Section 754 of the Code, relating to the optional adjustment to the basis of
partnership property, at the first time it is permitted to do so after the
beginning of the term of this Partnership. The Managing General Partner shall
make or waive, at its discretion, all other tax elections required or permitted
to be made by the Partnership under the Code.
40. Accounting Method and Fiscal Year. The Managing General
Partner shall maintain the Partnership records and books of accounts in
accordance with the method of accounting required or permitted to be used for
federal income tax purposes, with such modifications as are set forth in this
Agreement, and otherwise in accordance with generally accepted accounting
principles consistently applied. The fiscal year of the Partnership is the
calendar year.
ARTICLE XI
GENERAL PROVISIONS
41. Partnership Contracts. The Managing General Partner may
enter into agreements and contracts on behalf of the Partnership only if they
are in writing and clearly indicate to the other parties that the Partnership
is a general partnership of which the Managing General Partner is a general
partner.
42. Conveyances. Subject to section 18, the Managing General
Partner may sign any deed, mortgage, lease, bill of sale, security agreement,
pledge, contract or other instrument or commitment purporting to convey or
encumber any of the
23
<PAGE> 25
Partnership's Property or any interest therein, whether now or subsequently
owned or leased at any time by the Partnership, and no other signature is
required.
43. Notices. To be effective, a notice required or permitted by
this Agreement must be in writing, or by telegram, telex or telecopy if
promptly confirmed in writing. A notice is given when delivered or, if mailed,
when deposited in a United States postal service letterbox to be sent by
first-class, postage-prepaid, certified mail, with return receipt requested
(whether or not the sender receives the return receipt), and addressed, if to a
Partner, at his registered address listed on EXHIBIT A and, if to the Managing
General Partner or the Partnership, to the attention of such Managing General
Partner at the Partnership's principal business office.
44. Consents. Any consent required by this Agreement may be
given as follows:
(a) by a writing given by the consenting Partner and
received by the Managing General Partner or other appropriate recipient at or
before the occurrence of the action or other thing for which the consent was
solicited, unless the consent is nullified by:
(i) A writing from the consenting Partner that
is received by the Managing General Partner before the occurrence of the action
or other thing for which the consent was solicited; or
(ii) the negative vote by the consenting Partner
at any meeting called for the purpose of considering the action or other thing.
(b) by the affirmative vote of the consenting Partner at
any meeting called for the purpose of considering the action or other thing for
which the Partner's consent was solicited.
45. Meetings. The Managing General Partner may call meetings of
the Partners for any purpose, at any time. The Managing General Partner shall
call a meeting of the Partners within 30 days after he receives from a Majority
in Interest a written request for a meeting, stating the purpose of the
requested meeting and the matters proposed for consideration. Meetings of the
Partners may be held at such time, date and place as the Managing General
Partner designates. The Managing General Partner shall give notice of any
meeting of the Partners not less than ten nor more than 60 days before the date
of the meeting, to each Partner at his registered address listed on EXHIBIT A.
The notice shall state the time, date and place of the meeting, the purpose of
the meeting and the Partner at whose direction or request the
24
<PAGE> 26
meeting is called. If a meeting is adjourned to another time or place, notice
of the adjourned meeting is not required if the time and place of the
adjournment is announced at the called meeting. The presence in person or by
proxy of a Majority in Interest constitutes a quorum at a meeting. Any notice
of a meeting required by this section may be waived in writing at, before or
after the meeting and shall be deemed to be waived by each Partner who is
present in person or by proxy at the meeting. Only those persons who are
Partners at the close of business on the day before the meeting are entitled to
vote at the meeting. Any Partner entitled to vote at a meeting may authorize
any person to act for him by written proxy if a copy of the proxy is delivered
to the Managing General Partner before the commencement of the meeting. To be
effective, a proxy must be signed by the Partner (and, if applicable, each
co-owner) or his duly appointed attorney-in-fact, and no proxy shall be valid
for more than 11 months after its date. A proxy is revocable at the pleasure
of the Partner granting it.
46. Binding Effect; Counterparts. The covenants and agreements
contained in this Agreement are binding on, and inure to the benefit of, the
legal and personal representatives, heirs, successors and permitted assignees
of the parties to this Agreement. The parties may execute this Agreement in
any number of counterparts, each of which will be an original, but all of which
together will constitute one and the same agreement.
47. Choice of Law. This Agreement and the rights and
obligations of the Partners under it are governed by, and construed and
enforced in accordance with, the laws of Florida.
48. Complete Agreement; Modification. This Agreement contains
the final, complete and exclusive expression of the understanding among the
Partners with respect to the Partnership and its purposes and objectives and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them. Except to admit a new or a substitute Partner or to
reflect the withdrawal or Retirement of a Partner, this Agreement and every
provision of it may be modified or amended only by an agreement in writing
signed by or on behalf of all Partners.
49. Evidence of Partnership Interests. The Partnership Interest
of each Partner is evidenced exclusively by a counterpart of this Agreement
(including EXHIBIT A) that has been signed and dated by the Managing General
Partner.
50. Tax Matters Partner. The Managing General Partner or its
designee shall be the "tax matters partner" of the Partnership for federal
income tax purposes. If the Managing General Partner ceases to act as the
Managing General Partner of the Partnership, the successor Managing General
Partner (if any), shall be designated the tax matters partner. Pursuant to
Section 6223(c)(2) of the Code, upon receipt of notice from the
25
<PAGE> 27
Internal Revenue Service of the beginning of an administrative proceeding with
respect to the Partnership, the Managing General Partner, as the tax matters
partner, shall furnish the Internal Revenue Service with the names, addresses,
and Percentage Interests of each of the Partners. The Managing General Partner
agrees not to enter into a settlement agreement pursuant to Section 6224 of the
Code without providing at least 30 days advance written notice to each Partner.
As tax matters partner, the Managing General Partner shall have absolute
discretion regarding whether to seek judicial review of any administrative
determination and, if it determines to seek judicial review of Internal Revenue
Service action pursuant to Section 6226 of the Code, then the Managing General
Partner shall select the judicial forum for such review. The tax matters
partner shall receive no compensation for its services as such. The
Partnership shall bear all third party costs and expenses incurred by the tax
matters partner in performing its duties as such. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm or law
firm to assist the tax matters partner in discharging its duties hereunder.
26
<PAGE> 28
51. Gender and Number. As used in this Agreement, the masculine
gender includes the feminine and neuter, and the singular includes the plural.
52. Title. Title to any property acquired by the Partnership
shall be taken in the name of the Partnership.
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of each Partner as of the date written beside his name.
General Partner
PAXSON ENTERPRISES, INC.
By /S/ Lowell W. Paxson
---------------------------------
President
Limited Partner
/S/ Lowell W. Paxson
------------------------------------
Lowell W. Paxson
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED and SWORN to before me on behalf of PAXSON ENTERPRISES,
INC., a Nevada corporation, as General Partner, by Lowell W. Paxson , its
President, this 25th day of September, 1991.
/s/ Joanie L. Bender
-------------------------------------
Notary Public, State of Florida
My Commission Expires:
(Affix Notarial Seal)
27
<PAGE> 29
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED and SWORN to before me on by LOWELL PAXSON as Limited
Partner, this 18th day of November, 1991.
/s/ Joanie L. Bender
-------------------------------
Notary Public, State of Florida
My Commission Expires:
(Affix Notarial Seal)
28
<PAGE> 30
EXHIBIT A
<TABLE>
<CAPTION>
General Partners Contribution Percentage Interest
- ---------------- ------------ -------------------
<S> <C> <C>
Paxson Enterprises, Inc. 5%
c/o Lowell W. Paxson
700 Spottis Woode Lane
Clearwater, Florida 34616
Limited Partners
- ----------------
Lowell W. Paxson 95%
700 Spottis Woode Lane
Clearwater, Florida 34616
</TABLE>
29
<PAGE> 31
AMENDMENT NUMBER 1 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF ORLANDO, LIMITED PARTNERSHIP
This Amendment Number 1 to Agreement of Limited Partnership of Paxson
Broadcasting of Orlando, Limited Partnership ("Amendment") is effective as of
the 1st day of January, 1992, by and between PAXSON ENTERPRISES, INC., a Nevada
corporation, as the General Partner and LOWELL PAXSON, as a Limited Partner.
The parties hereby agree as follows:
1. Amendment to Definitions. The following definition should be
added to Section 1 following the definition of the term "Act:"
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital
Account as of the end of the relevant fiscal year, after giving effect
to the following adjustments:
(i) Credit to such Capital Account any amount which such
Partner is obligated to restore (pursuant to the terms of a promissory
note or otherwise) or is deemed to be obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Regulations and shall be interpreted consistently therewith."
2. Amendment to Section 9. Section 9 is amended by inserting
the following subsections (d) and (e) at the end thereof:
"(d) Any payments made by the Limited Partner as a guarantor
of obligations of the Partnership shall be treated as additional
Capital Contributions to the Partnership."
"(e) Notwithstanding any provision in this Agreement to the
contrary, if any Partner's Capital Account has a deficit balance
("Deficit Capital Account Balance") upon liquidation of the
Partnership (after giving effect to all contributions, distributions,
and allocations for all taxable years, including the year in
1
<PAGE> 32
which such liquidation occurs), such Partner shall contribute to the
Capital of the Partnership the amount necessary to restore such
deficit balance to 0 in accordance with Regulations Section
1.704-1(b)(2)(ii)(d); provided, however, that a Partner's obligation
to restore such Deficit Capital Account Balance shall not exceed the
amount of the Partnership's liability under the Credit and Guaranty
Agreement among Paxson Broadcasting of Miami, Limited Partnership,
Paxson Broadcasting of Orlando, Limited Partnership, Paxson
Broadcasting of Jacksonville, Limited Partnership, and Paxson
Broadcasting of Tampa, Limited Partnership, and Citibank, N.A. (the
"Credit Agreement")."
3. Amendment to Section 13. Section 13 is amended by inserting
the following provisions as subsections (c) and (d) thereof:
"(c) Losses. The Losses allocated pursuant to Sections
13(a) and 13(b) hereof shall not exceed the maximum amount of Losses
that can be so allocated without causing any Partner who is not a
General Partner to have an Adjusted Capital Account Deficit at the end
of any fiscal year. In the event some but not all of the Partners who
are not General Partners would have Adjusted Capital Account Deficits
as a consequence of an allocation of Losses pursuant to Section 13(a)
or Section 13(b), the limitation set forth in this Section 13(c) shall
be applied on a Partner by Partner basis so as to allocate the maximum
permissible Loss to each Partner who is not a General Partner under
Section 1.704-1(b)(2)(ii)(d) of the Regulations. All Losses in excess
of the limitation set forth in this Section 13(c) shall be allocated
to the General Partner.
(d) Special Allocations. The following special
allocations shall be made in the following order:
(1) Qualified Income Offset. In the event any
Partner who is not a General Partner unexpectedly receives any adjustments,
allocations, or distributions described in Regulations Section 1.704-
1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items
of Partnership income and gain shall be specially allocated to each such
Partner in an amount and manner sufficient to eliminate, to the extent required
by the Regulations, the Adjusted Capital Account Deficit of such Partner as
quickly as possible, provided that an allocation pursuant to this Section
13(d)(1) shall be made if and only to the extent that such Partner would have
an Adjusted Capital Account Deficit after all other allocations provided for in
this Section 13 have been
2
<PAGE> 33
tentatively made as if this Section 13(d)(1) were not in the Agreement.
(2) Gross Income Allocation. In the event any
Partner who is not a General Partner has a deficit Capital Account at
the end of any Partnership fiscal year that is in excess of the sum of
(i) the amount such Partner is obligated to restore (pursuant to the
terms of a promissory note or otherwise), and (ii) the amount such
Partner is deemed to be obligated to restore pursuant to the
penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5), each such Partner shall be specially allocated items of
Partnership income and gain in the amount of such excess as quickly as
possible, provided that an allocation pursuant to this Section
13(d)(2) shall be made if and only to the extent that such Partner
would have a deficit Capital Account in excess of such sum after all
other allocations provided for in this Section 13 have been
tentatively made as if Section 13(d)(1) hereof and this Section
13(d)(2) were not in the Agreement."
4. Amendment to Section 34. Section 34 is amended by adding the
following provisions to the end of such section:
"Notwithstanding anything to the contrary contained herein, each
Limited Partner hereby waives his or her right to seek indemnity from
the General Partner for any losses he or she might suffer under this
Partnership Agreement or under any ancillary agreements related to the
business of the Partnership including any personal guarantees of the
liabilities of the Partnership. Further, each Limited Partner hereby
waives his or her right to recover from the Partnership, as primary
obligor, any amounts such Limited Partner becomes liable to pay or
pays pursuant to any agreements related to the business of the
Partnership including any personal guarantees of the liabilities of
the Partnership."
3
<PAGE> 34
5. Ratification and Confirmation. The Agreement as hereby
amended is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number
1 on this 30 day of December, 1992.
- --- -----
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ Martha Chapona By: /s/ Lowell W. Paxson
- ------------------------------ ----------------------------------
/s/ William L. Watson
- ------------------------------
LIMITED PARTNER:
/s/ Martha Chapona /s/ Lowell W. Paxson
- ------------------------------ --------------------------------
Lowell Paxson
/s/ William L. Watson
- ------------------------------
4
<PAGE> 35
AMENDMENT NUMBER 2 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF ORLANDO, LIMITED PARTNERSHIP
This Amendment Number 2 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Broadcasting of Orlando,
Limited Partnership ("Amendment") is effective as of the 29th day of March,
1993, by and between PAXSON ENTERPRISES, INC., a Nevada corporation, as the
General Partner and LOWELL PAXSON, as a Limited Partner. The parties hereby
agree as follows:
1. Assignment. The definition of "Assignment" in Article I,
Section 1 of the Partnership Agreement is amended in its entirety to read as
follows:
"`Assignment' means a sale, exchange, gift, pledge, transfer
or disposition of any kind whatsoever and, in the case of a
Person that is not an individual, it includes the sale,
exchange, pledge, transfer or disposition of a majority of
either voting control or the equity interests in such Person;
provided, however, that an "Assignment" does not include a
pledge of, or a grant of a security interest in, a Partnership
Interest, Partnership Rights, or the majority of either voting
control or the equity interests in any Person, which pledge or
security interest is given or granted for the purpose of
securing an obligation of the Partnership or any Partner or
any Person owning an equity interest in a Partner, provided
that the giving or grant of such pledge or security interest
is approved by the Managing General Partner."
2. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 18401 U.S. Highway
19 North, Clearwater, Florida 34624."
3. Purposes of Partnership; Authorized Acts. Article II,
subsection 7.A.(a)(i) of the Partnership Agreement is amended to read as
follows:
"acquire, operate, manage and perform all matters necessary
and attendant to the operation of one or more radio stations
in the State of Florida,".
1
<PAGE> 36
4. Power to Guarantee Obligations of Others. Article II,
subsection 7.B. of the Partnership Agreement is amended by redesignating
clauses (g) and (h) as clauses (h) and (i), respectively, and inserting the
following as clause (g):
"(g) guarantee the debts and obligations of any Partner and
secure the same by a mortgage, pledge, security interest or
other liens upon the property of the Partnership, any part
thereof, any interest therein, or any improvements thereto;".
5. Section 49 of the Partnership Agreement, entitled "Evidence of
Partnership Interests," is hereby deleted in its entirety, and Sections 50, 51,
and 52 of the Partnership Agreement are renumbered as Sections 49, 50, and 51
respectively.
6. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 2
on this 29th day of March, 1993.
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ Martha Chapman By: /s/ Lowell Paxson
- ------------------------ ------------------------------
Its President
--------------------------
/s/ William L. Watson
- ------------------------
LIMITED PARTNER:
/s/ Martha Chapman /s/ Lowell Paxson
- ------------------------ --------------------------
Lowell Paxson
/s/ William L. Watson
- ------------------------
2
<PAGE> 37
LIMITED PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This Limited Partnership Interests Assignment Agreement (the
"Agreement") is dated December 15, 1993 (the "Effective Date"), among Paxson
Communications of Florida, Inc. (the "General Partner"), Lowell W. Paxson (the
"First Assignor Limited Partner"), Second Crystal Diamond, L. P., a Nevada
limited partnership (the "First Assignee"), Paxson Communications Corp. (the
"Second Assignee"), and Paxson Communications LP, Inc. (the "Assignee Limited
Partner"). Capitalized terms used herein and not ascribed a definition have
the meaning assigned to them by the Partnership Agreement to which they
pertain.
BACKGROUND
The General Partner and the First Assignor Limited Partner are
partners in the limited partnerships listed in Exhibit "A" (the
"Partnerships"). The First Assignor Limited Partner wishes to transfer his
limited partnership interests in those Partnerships to the First Assignee and
the First Assignee wishes to immediately assign such limited partnership
interests to the Second Assignee and the Second Assignee wishes to immediately
assign such limited partnership interests to the Assignee Limited Partner. The
First Assignor Limited Partner and the First and Second Assignees also wish to
have the Assignee Limited Partner admitted as a Limited Partner in the
respective Partnerships and granted Partnership Rights in the respective
Partnerships. The Assignee Limited Partner agrees to accept the assignment of
the limited partnership interests and to be admitted as a Limited Partner in
accordance with the Limited Partnership Agreements listed in Exhibit "A" (the
"Partnership Agreements"). The General Partner as general partner for each of
the Partnerships consents to the assignment of the limited partnership
interests and the admission and substitution of the Assignee Limited Partner as
a Limited Partner under the respective Partnership Agreements. Pursuant to
Chapter 620, Florida Statutes, the Partnerships will continue uninterrupted
with substitute partners and the assignment of the limited partnership
interests will not cause a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to the
Partnership Agreements and Section 620.152, Florida Statutes, the First
Assignor Limited Partner assigns all of its limited partnership interests in
the
Partnerships to the First Assignee. The First Assignee accepts the assignment
of all of the limited partnership interests. Pursuant to the Partnership
Agreements and Section 620.152, Florida Statutes, the First Assignee assigns
all of its limited partnership interests in the Partnerships to the Second
Assignee. The Second Assignee accepts the assignment of all of the limited
partnership interests. Pursuant to the Partnership Agreements and Section
620.152, Florida Statutes, the Second Assignee assigns all of its
1
<PAGE> 38
limited partnership interests in the Partnerships to the Assignee Limited
Partner. The Assignee Limited Partner accepts the assignment of all of the
limited partnership interests.
2. Admission of Assignee Limited Partner and Withdrawal
of Assignor Limited Partner. On the Effective Date, the Assignee Limited
Partner is admitted as a Limited Partner pursuant to the respective Partnership
Agreement for such Partnerships and the First Assignor Limited Partner has
withdrawn as a Limited Partner from each of the Partnerships.
3. Assignee Limited Partner's Acceptance of Admission.
By executing this Agreement, the Assignee Limited Partner accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements.
The parties agree that the Assignee Limited Partner's execution of this
Agreement shall satisfy the requirements of Sections 23, 24 and 25 of the
respective Partnership Agreements.
4. General Partner's Consent. The General Partner
consents to the assignment of the limited partnership interests to the Assignee
Limited Partner and the admission of the Assignee Limited Partner as a Limited
Partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the limited partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of First Assignor Limited Partner, General Partner, First
Assignee, Second Assignee and Assignee Limited Partner agree and acknowledge
that (i) First Assignor Limited Partner's limited partnership interests in each
of the Partnerships are subject to the lien and security interest of Banque
Paribas, as Agent on behalf of the Lenders (the "Agent"), under the Loan
Documents (as defined in that certain Credit Agreement dated as of March 30,
1993 by and among Banque Paribas, the Lenders identified therein and each of
the Station Partnerships) and (ii) the assignment of the limited partnership
interests in the Partnerships by First Limited Partner Assignor to First
Assignee, by First Assignee to Second Assignee, and by Second Assignee to
Assignee Limited Partner, are made subject to such continuing lien and security
interest of Agent under the Loan Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute one
agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding among the
2
<PAGE> 39
parties and supersedes any prior or contemporaneous agreement or
representation, oral or written, by any of them.
3
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON COMMUNICATIONS OF FLORIDA,
INC., as General Partner of each
of the Partnerships
By:/s/ Lowell W. Paxson
------------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
---------------------------------
Lowell W. Paxson, First Assignor
Limited Partner for each Partnership
SECOND CRYSTAL DIAMOND, L. P., a
Nevada limited partnership, First
Assignee
By: /s/ Lowell W. Paxson
-----------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS CORP., As
Second Assignee
By: /s/ Lowell W. Paxson
-----------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS LP, INC., as
Assignee Limited Partner for each
Partnership
By: /s/ Lowell W. Paxson
-----------------------------
Lowell W. Paxson, President
4
<PAGE> 41
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment
Number 1 to the Agreement of Limited Partnership of Paxson
Broadcasting of Jacksonville, Limited Partnership dated January 1,
1992, and Amendment Number 2 to the Agreement of Limited Partnership
of Paxson Broadcasting of Jacksonville, Limited Partnership dated
March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Tampa,
dated June 27, 1991, and Amendment Number 2 to the Agreement of
Limited Partnership of Paxson Broadcasting of Tampa, dated April 27,
1992, and Amendment Number 3 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated January 1,
1992, and Amendment Number 4 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated March 29,
1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Miami, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Miami, dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Orlando, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Orlando, Limited Partnership.
5
<PAGE> 42
GENERAL PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This is a General Partnership Interests Assignment Agreement
(the "Agreement") dated December 15, 1993 (the "Effective Date"). It is among
Paxson Enterprises, Inc. (the "General Partner Assignor"), Paxson
Communications Corp. (the "First Assignee"), Paxson Communications of Florida,
Inc. (the "General Partner Assignee"), and Lowell L. Paxson (the "Nonassigning
Limited Partner") in respect of the Limited Partnerships listed in Exhibit "A"
(the "Station Partnerships"). It is also among the General Partner Assignee,
the First Assignee, the General Partner Assignee and the Station Partnerships
in their capacities as a limited partner (each a "License Limited Partner") in
their respective Limited Partnerships listed in Exhibit "B" (the "License
Partnerships," and together with the Station Partnerships, the "Partnerships").
Capitalized terms used herein and not ascribed a definition have the meaning
assigned to them by the Partnership Agreement to which the term pertains.
BACKGROUND
The General Partner Assignor and the Nonassigning Limited
Partner are partners in the Station Partnerships. The General Partner Assignor
and the License Limited Partners are the partners in the License Partnerships.
The General Partner Assignor wishes to transfer each of its general partnership
interests in the Station Partnerships and the License Partnerships to the First
Assignee in exchange for certain of its common stock and the First Assignee
wishes to immediately assign such general partnership interests to the General
Partner Assignee in exchange for all of the capital stock of the General
Partner Assignee. The General Partner Assignor and the First Assignee also
wish to have the General Partner Assignee admitted as a Partner and granted
partnership rights in each of the Partnerships. The General Partner Assignee
agrees to accept the assignment of the general partnership interests and to be
admitted as a General Partner in the respective Partnerships pursuant to the
Partnership Agreements identified in Exhibit "A" and "B", respectively (the
"Partnership Agreements"). The Nonassigning Limited Partner as the limited
partner in each of the Station Partnerships and each of the License Limited
Partners as the limited partner in the respective License Partnerships hereby
consent to the assignment of the general partnership interests and admission of
the General Partner Assignee as the general partner in their respective
Partnerships pursuant to the terms of this Agreement and the Partnership
Agreements. Pursuant to Chapter 620, Florida Statutes, the Partnerships will
continue uninterrupted and the assignment of the general partnership interests
will not cause a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to
Section 23 of each of the Partnership Agreements and Section 620.152, Florida
Statutes, the General Partner Assignor assigns all of its
1
<PAGE> 43
general partnership interests in the Partnerships to the First Assignee. The
First Assignee accepts the assignment of all of the general partnership
interests. Pursuant to Section 23 of each of the Partnership Agreements and
Section 620.152, Florida Statutes, the First Assignee assigns all of its
general partnership interests in the Partnerships to the General Partner
Assignee. The General Partner Assignee accepts the assignment of all of the
general partnership interests.
2. Admission of General Partner Assignee and Withdrawal
of General Partner Assignor. On the Effective Date, the General Partner
Assignee is admitted as a general partner under the respective Partnership
Agreement and the General Partner Assignor has withdrawn from each of the
Partnerships.
3. General Partner Assignee's Acceptance of Admission.
By executing this Agreement, the General Partner Assignee accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements
and shall become the Managing General Partner of each of the Partnerships. The
parties agree that the General Partner Assignee's execution of this Agreement
shall satisfy the requirement of Sections 23, 24 and 25 of the respective
Partnership Agreements.
4. Limited Partner's Consent. Each of the Nonassigning
Limited Partner and the License Limited Partners consent to the assignment of
the general partnership interest by the General Partner of their respective
Partnership and to the admission of the General Partner Assignee as a general
partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the general partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of General Partner Assignor, First Assignee, General Partner
Assignee, Nonassigning Limited Partner and the License Limited Partners agree
and acknowledge that (i) General Partner Assignor's general partnership
interests in each of the Partnerships are subject to the lien and security
interest of Banque Paribas, as Agent on behalf of the Lenders (the "Agent"),
under the Loan Documents (as defined in that certain Credit Agreement dated as
of March 30, 1993 by and among Banque Paribas, the Lenders identified therein
and each of the Station Partnerships) and (ii) the assignment of the general
partnership interests in the Partnerships by General Partner Assignor to First
Assignee, and by First Assignee to General Partner Assignee, are made subject
to such continuing lien and security interest of Agent under the Loan
Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute
2
<PAGE> 44
one agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding
3
<PAGE> 45
among the parties and supersedes any prior or contemporaneous agreement or
representation, oral or written, by any of them.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON ENTERPRISES, INC., as General Partner Assignor and as Withdrawing
General Partner of each Partner
By: /s/ Lowell W. Paxson
-----------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
--------------------------------
Lowell W. Paxson, Nonassigning
Limited Partner
PAXSON COMMUNICATIONS CORPORATION,
By: /s/ Lowell W. Paxson
-----------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS OF FLORIDA,
INC., as General Partner and
successor General Partner of
each Partnership
By: /s/ Lowell W. Paxson
-----------------------------
Lowell W. Paxson, President
4
<PAGE> 46
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment
Number 1 to the Agreement of Limited Partnership of Paxson
Broadcasting of Jacksonville, Limited Partnership dated January 1,
1992, and Amendment Number 2 to the Agreement of Limited Partnership
of Paxson Broadcasting of Jacksonville, Limited Partnership dated
March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Tampa,
dated June 27, 1991, and Amendment Number 2 to the Agreement of
Limited Partnership of Paxson Broadcasting of Tampa, dated April 27,
1992, and Amendment Number 3 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated January 1,
1992, and Amendment Number 4 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated March 29,
1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Miami, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Miami, dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Orlando, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Orlando, Limited Partnership.
5
<PAGE> 47
EXHIBIT "B"
Limited Partnerships
Agreement of Limited Partnership of Jacksonville License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Jacksonville, Licensed
Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Tampa License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Tampa, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Miami License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Miami, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Orlando License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Orlando, Licensed Limited
Partnership dated March 29, 1993.
6
<PAGE> 48
AMENDMENT NUMBER 3 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF ORLANDO, LIMITED PARTNERSHIP
This Amendment Number 3 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Broadcasting of Orlando,
Limited Partnership ("Amendment") is effective as of the ___ day of September,
1995, by and between PAXSON COMMUNICATIONS OF FLORIDA, INC., a Florida
corporation, as the General Partner and PAXSON COMMUNICATIONS LP, INC., as a
Limited Partner. The parties hereby agree as follows:
1. Partnership Office. The fifth sentence of Article II, Section
5 of the Partnership Agreement is amended to read as follows: "The principal
business office of the Partnership is located at 601 Clearwater Park Road, West
Palm Beach, Florida 33401."
2. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 3
on this 19th day of September, 1995.
WITNESSES: GENERAL PARTNER:
PAXSON COMMUNICATIONS OF FLORIDA,
INC.
/s/ Lorie Closson By: /s/ William L. Watson
- -------------------------- -------------------------------
Its Secretary
---------------------------
/s/ Desire Malky
- --------------------------
LIMITED PARTNER:
PAXSON COMMUNICATIONS LP, INC.
/s/ Lorie Closson By: /s/ William L. Watson
- -------------------------- ------------------------------
Its Secretary
--------------------------
1
<PAGE> 1
EXHIBIT 3.14.1
<PAGE> 2
EXHIBIT 3.14.1
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF TAMPA, LIMITED PARTNERSHIP
This Agreement of Limited Partnership ("Agreement") is entered into
and shall be effective as of the 27th day of June, 1991, by and between Paxson
Enterprises, Inc., a Nevada Corporation, as the General Partner and Lowell
Paxson, as a Limited Partner, pursuant to the provisions of the Florida Uniform
Limited Partnership Act, on the following terms and conditions:
ARTICLE I.
FORM AND INTERPRETATION
10. Definitions. The following capitalized terms, as used in
this Agreement and in the attached exhibits, which constitute a part of this
Agreement, have the meanings ascribed to them below and include the plural as
well as the singular number:
"Act" means the Florida Uniform Limited Partnership Act, as
amended, or any subsequent Florida law concerning partnerships that are enacted
in substitution for the Act.
"Affiliate" of a Partner means (1) another Partner of the
Partnership; (2) a legal or personal representative of any Partner; (3) the
Partner's lineal descendants and spouse (other than a spouse who is legally
separated from the Partner under a decree of divorce or separate maintenance);
(4) a trustee of a trust for the benefit of any Person referred to in clause
(1), (2) or (3); (5) a Person, other than an individual, of which 80% or more
of the voting or equity interests is owned directly or indirectly by a Partner
and/or one or more of the Persons referred to in clauses (1) through (4); (6) a
Person owning 80% or more of the voting or equity interests of a Partner that
is not an individual; or (7) a Person other than an individual, 80% or more of
the voting or equity interests of which is owned by the same Person that owns
80% or more of the voting or equity interests of a Partner that is not an
individual.
"Agreement" means this Limited Partnership Agreement as
originally executed and as subsequently amended or supplemented from time to
time in accordance with section 48.
"Assignment" means a sale, exchange, gift, pledge, transfer or
disposition of any kind whatsoever and, in the case of a Person that is not an
individual, it includes the sale, exchange, pledge, transfer or disposition of
a majority of either voting control or the equity interests in such Person.
"Bankruptcy" means taking advantage of any bankruptcy or
insolvency act (including the Bankruptcy Reform Act of 1978 or similar law, and
also any proceeding under state or local insolvency or debtor relief laws), or
a final adjudication of
1
<PAGE> 3
insolvency or an assignment of a major portion of a Person's assets for the
benefit of creditors.
"Capital Account" has the meaning set forth in section 10.
"Capital Contribution" means the total amount of cash, securities
and other property contributed by a Partner to the equity of the Partnership,
or agreed to be contributed by a Partner to the equity of the Partnership,
pursuant to section 9(a), and reduced by any return of capital to the Partner
within the meaning of section 9(c). Any reference in this Agreement to the
Capital Contribution of either a Partner or an assignee of a Partner shall
include the Capital Contribution of any prior Partner to whose Partnership
Interest the then existing Partner or assignee succeeded.
"Cash Flow" means the excess of cash derived by the Partnership
from all sources, including from capital contributions, loans, sales of
securities and other activities, (but excluding cash derived from the
winding-up and liquidation of the Partnership pursuant to section 32) over the
sum of all cash disbursements, including repayments of loans from Partners,
loans to Partners from the Partnership, and distributions to Partners pursuant
to section 14(a) or (b) (but excluding disbursements pursuant to section
14(c)), plus a reasonable allowance for reserves for repairs, investments in
Property (including Marketable Securities), replacements, contingencies and
anticipated obligations (including debt service, capital improvements and
replacements to the extent not funded by reserves) as reasonably determined by
the Managing General Partner. Notwithstanding the preceding sentence, in
determining the reasonable allowance for reserves, the Managing General Partner
shall reduce such allowance to the extent necessary to ensure that annual
distributions of Cash Flow to each Partner will be in an amount at least equal
to the annual income tax liability (exclusive of income tax liability resulting
from a transaction pursuant to section 14(b) or (c)) of each such Partner
(determined assuming that the maximum possible income tax rate is applicable)
resulting from the allocation to the Partner of his share of the Partnership's
Taxable Income and Taxable Loss.
"Code" means the Internal Revenue Code of 1986, as amended, or
any subsequent federal law concerning income taxes that is enacted in
substitution for the Code.
"General Partner" means any Person admitted as a general partner
in accordance with this Agreement.
"General Partnership Interest" means the Partnership Interest of
a General Partner, in his capacity as a General Partner.
"Limited Partner" means those Persons who are signatories to this
Agreement as limited partners; and all other Persons who shall be admitted to
the Partnership, as limited partners.
"Majority in Interest", when used in regard to the degree of
consent, approval or agreement required among the Partners, means Partners
whose aggregate Capital Account balances constitute
2
<PAGE> 4
over 50% of the total aggregate Capital Account balances of all owners of
Partnership Interests then outstanding.
"Managing General Partner" means the Person designated in this
Agreement as the general partner responsible for management of the affairs of
the Partnership and thereafter any Person which becomes a general partner
responsible for management of the affairs of the Partnership pursuant to this
Agreement, in the Person's capacity as a managing general partner of the
Partnership. Initially, the Managing General Partner shall be Paxson
Enterprises, Inc.
"Marketable Securities" means securities, including stock, which
are traded on an established securities market, whether or not registered under
the Securities Act of 1933.
"Partner" means each Person which is a General Partner or a
Limited Partner.
"Partnership" means the PAXSON BROADCASTING OF TAMPA, LIMITED
PARTNERSHIP, the Florida limited partnership formed in accordance with the Act
pursuant to this Agreement.
"Partnership Interest" includes only a Partner's Capital
Contribution and right to receive his Percentage Interest and excludes
Partnership Rights.
"Partnership Rights" excludes the Partnership Interest of a
Partner, and includes, in addition to other rights provided in this Agreement,
the rights provided to him by the Act except to the extent expressly modified
by this Agreement.
"Percentage Interest" means a Partner's percentage share (as
initially stated opposite such Partner's name on EXHIBIT A as amended from time
to time), of the Profits and Losses, Taxable Income or Taxable Loss, cash and
other distributions and liquidation proceeds of the Partnership all subject to
and interpreted in accordance with the terms of this Agreement. The Percentage
Interests of Partners shall be proportionate to the Capital Accounts of the
Partnership at all times so that, for example, if a Partner's Capital Account
is 100 and the aggregate of all Capital Accounts is 1000, the Partner's
Percentage Interest in the Partnership is 10%. In the event of a change among
the Partners in the Percentage Interests in the Partnership during the year,
the Partnership shall use a closing-of-the-books method with respect to such
change or changes in Percentage Interests in computing a Partner's share of
Profits and Losses, Taxable Income and Taxable Losses, and entitlement to
distributions during such year.
"Person" means any individual and any general or limited
partnership, corporation, estate, joint venture, trust, business trust,
cooperative, association or other organization or entity.
"Profits and Losses" means the annual net income or loss of the
Partnership determined on a generally accepted accounting principles basis, as
disclosed on the annual financial statements of the Partnership.
3
<PAGE> 5
"Property" means any real, personal, tangible or intangible
property contributed by a Partner to the equity of the Partnership or otherwise
acquired by the Partnership.
"Pro Rata" means in the proportion that the Percentage Interest
of each Partner bears to the total Percentage Interests of all the Partners.
"Retirement" means the death, Bankruptcy, adjudication of
incompetency as determined by a court of appropriate jurisdiction, dissolution
and liquidation or termination of existence, merger or consolidation (except as
provided in section 29) of a Partner, or the sale, lease or other disposition
of all or substantially all the property of a Partner (except as provided in
section 29).
"Taxable Income or Taxable Loss" means the net income or loss of
the Partnership for federal income tax purposes, as determined at the close of
the Partnership's fiscal year by the accountants employed by the Partnership to
prepare its income tax returns.
11. Captions and Certain Terms. The titles and captions
preceding the text of the articles and sections of this Agreement are solely
for convenience of reference and neither constitute a part of this Agreement
nor affect its meaning, interpretation, or effect. The words "hereby,"
"herein," "hereof," "hereto," "hereunder," and terms of similar import refer to
this Agreement as a whole and not to any particular article, section,
subsection or other part of this Agreement.
12. Severability. If any article, section or other provision
of this Agreement, or its application, is held to be invalid, illegal or
unenforceable in any respect or for any reason, the remainder of this Agreement
and the application of such article, section or other provision to a person or
circumstance with respect to which it is valid, legal and enforceable is not
affected.
13. Limitation of Grant. Nothing in this Agreement, whether
express or implied, is intended or may be construed to confer upon, or to grant
to, any creditor or any other Person (other than the Partners and their legal
and personal representatives, heirs, successors and permitted assignees) any
right, remedy or claim under or because of this Agreement or any covenant,
condition or stipulation of it.
ARTICLE II
ORGANIZATION OF PARTNERSHIP
14. Formation, Name, Office and Registered Agent. The
Partnership is organized as of the date of this Agreement and the signatories
to this Agreement constitute the members of this partnership under the Act as
of the date hereof. The rights and obligations of the Partners are determined
by the Act, except as otherwise expressly provided in this Agreement. The name
of the Partnership is "PAXSON BROADCASTING OF TAMPA, LIMITED
4
<PAGE> 6
PARTNERSHIP." The recordkeeping office of the Partnership is located at 700
Spottis Woode Lane, Clearwater, Florida 34616. The principal business office
of the Partnership is located at 50 West Liberty Street, Reno, Nevada 89501.
The Managing General Partner may change the name of the Partnership or the
location of its principal business office at any time and from time to time by
giving written notice of such change to each Partner.
15. Term of Partnership. The term of the Partnership shall
continue until the earlier of (i) December 31, 2066, or (ii) the death or
adjudication of incompetency as determined by a court of appropriate
jurisdiction of Lowell Paxson, unless the Partnership is earlier dissolved and
terminated under this Agreement.
16. Purposes of Partnership; Authorized Acts.
A. (a) Purposes of the partnership are to
(i) acquire, operate, manage and perform all matters
necessary and attendant to the operation of one or more
radio stations in Hillsborough County, Florida,
(ii) invest in, own, sell, acquire, manage and exercise the
voting rights associated with Marketable Securities,
(iii) acquire, hold, sell, own, improve, develop or lease other
types of real and personal property, and
(iv) engage in any other lawful activity for profit approved
by an affirmative vote of a Majority in Interest.
(b) Notwithstanding Section 7, unless unanimously approved by the
Partners, the Partnership shall not engage in any activity(ies)
which would result, based upon opinion of tax counsel, in the
characterization of the Partnership as an investment company as
that term is used in Section 721(b) or any successor provision of
the Code.
B. In furtherance of its purposes, but subject to every other provision of
this Agreement, the Partnership is authorized to do the following:
(a) acquire by purchase, lease or otherwise, any
real or personal, tangible or intangible property that may be necessary,
convenient or incidental to the accomplishment of the purposes of the
Partnership;
(b) construct, operate, maintain, finance, improve,
own, sell, convey, exchange, assign, mortgage or lease any property (or a part
thereof) as may be necessary, convenient or incidental to the accomplishment of
the purposes of the Partnership;
(c) borrow money and issue evidences of indebtedness
in furtherance of any purpose of the Partnership and secure the same by a
mortgage, pledge, security interest or other liens on the
5
<PAGE> 7
property, any part thereof, any interest therein or on any improvements
thereto;
(d) prepay, in whole or in part, refinance,
increase, renew, modify or extend any indebtedness of the Partnership and, in
connection therewith, extend, renew or modify any mortgage, pledge, security
interest or other lien affecting any property;
(e) invest and reinvest the assets of the
Partnership in, and purchase, acquire, hold, sell, transfer and exchange
securities of all kinds;
(f) lend money to Partners;
(g) exercise the voting rights associated with
property owned by the Partnership; and
(h) enter into any activity and perform and carry
out any contract in connection with, or necessary or incidental to, the
accomplishment of the purposes of the Partnership.
1793. Co-Ownership of Partnership Interests. Any consent
required of a Partner shall require the action or vote of each Person (or in
such other manner as such Persons have designated in writing to the
Partnership) having an interest in such Partnership Interest, with a majority
approval needed for consent. On the death of a co-owner of a Partnership
Interest held in either joint tenancy with right of survivorship or tenancy by
the entirety, the Partnership Interest is owned solely by the survivor as a
Partner, and not as an assignee. The Partnership need not (although it may)
recognize the death of a co-owner of a Partnership Interest until the Managing
General Partner receives notice of the death. A co-owner of a Partnership
Interest may sever the tenancy by giving to the Managing General Partner notice
to that effect, and signed by the co-owner requesting the severance in the case
of a joint tenancy, and by both co-owners in the case of a tenancy by the
entirety. Upon receipt of the notice and the certificate evidencing the
Partnership Interest owned by the co-owners, the Managing General Partner shall
cause the Partnership Interest to be allocated as directed by the co-owners and
shall indicate on the Partnership records such allocation. In absence of joint
direction, the interests shall be allocated between the owners as the severed
ownership interests would be valued for federal estate tax purposes.
ARTICLE III
PARTNERSHIP CAPITAL
1794. Capital Contributions.
(a) Upon executing this Agreement, each Partner
shall make or has made a Capital Contribution in the amount and of the type,
and initially shall have a Percentage Interest equal to the percentage, set
forth opposite his name on EXHIBIT A. Partners may make (but Limited Partners
are not required to make) additional Capital Contributions at such time and in
such amount as they in
6
<PAGE> 8
their sole discretion shall determine but only if the Managing General Partner
and a Majority in Interest consent to such additional Capital Contributions.
Upon the assignment of any Partnership Interest, the making of an additional
Capital Contribution or any return of a Capital Contribution, or any
substitution of a Partner, EXHIBIT A shall be amended to accurately reflect the
name, address, Capital Contribution and Percentage Interest of each Partner.
(b) Notwithstanding (a) above, no Capital
Contributions shall be made or permitted by any Partner which would result,
directly or indirectly, in the Partnership being treated as an investment
company under section 721(b) of the Code, and any such attempted Capital
Contribution shall be void ab initio. The Managing General Partner shall
withhold its consent to the making of an additional Capital Contribution,
unless it has satisfied itself (by seeking advice of legal counsel or
otherwise) that the making of the additional Capital Contribution will not
result, directly or indirectly, in the Partnership being treated as an
investment company under section 721(b) of the Code.
(c) A Partner shall not receive from the Managing
General Partner or out of Partnership Property, and the Managing General
Partner and the Partnership shall not return to a Partner, any part of his
Capital Contribution, except as set forth in Articles VIII and IX of this
Agreement and such distribution is determined to be a return of a Partner's
Capital Contribution, and then only if all liabilities of the Partnership,
except liabilities to the Partners on account of their Capital Contributions,
have been paid or there remains property of the Partnership sufficient to pay
them. The Partnership shall not pay interest on Capital Contributions, and a
Partner may demand and receive only cash in return for his Capital
Contribution, except to the extent provided for in Articles VIII and IX of this
Agreement or unless the Liquidator (as defined in section 32) decides to
distribute Partnership property in kind upon the dissolution, winding-up, and
termination of the Partnership, or unless the distribution of property to a
Partner is unanimously approved by the Partners. Each Partner, by signing this
Agreement or a counterpart of it, consents to all distributions authorized by
this Agreement and releases all other Partners from all liability to both him
and the Partnership for all distributions made in accordance with this
Agreement.
1795. Capital Account.
(a) The Managing General Partner shall establish and
maintain a Capital Account for each Partner in the Partnership's books of
account. Capital Accounts shall be maintained and adjusted in accordance with
generally accepted accounting principles. Consistent with these capital
account maintenance rules, the Managing General Partner shall credit to each
Partner's Capital Account the amounts of the Partner's Capital Contributions
and any Profits allocated to the Partner. The Managing General Partner shall
charge to or deduct from each Partner's Capital Account the amounts of all
distributions (in cash or other property) to the Partner and any Losses
allocated to the Partner. If any interest in the Partnership is transferred in
accordance
7
<PAGE> 9
with the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferror to the extent it relates to the transferred
interest.
(b) The provisions of this section and the other
provisions of this Agreement pertaining to the maintenance of Capital Accounts
are intended to comply with Treasury Regulation Section 1.704-1(b) (or any
successor provision thereto), and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Managing General Partner
determines that it is prudent to modify the manner in which the Capital
Accounts are computed in order to comply with such Regulations, provided that
it is not likely to have a material effect on the amounts distributable to any
Partner without such Partner's consent and upon receipt of an opinion of tax
counsel to the Partnership concluding that such modification will be given
effect for federal income tax purposes, the Managing General Partner may make
such modification.
(c) The Managing General Partner shall revalue the
Partnership's property (based on its fair market value as of the moment
immediately preceding the relevant event) and shall adjust Capital Accounts to
take into account any resulting Profit or Loss (determined as if the
Partnership sold all its property for cash equal to the property's fair market
value) upon the occurrence of either of the following events: (1) the making by
any Partner of any non-Pro Rata additional Capital Contribution, (2) the
partial or complete withdrawal of a Partner's Partnership Interest, or (3) the
admission of a Partner.
1796. Expenses Paid by Partners. Any Partnership expense
reasonably paid by any Partner on behalf of the Partnership is an indebtedness
of the Partnership to the Partner and does not increase the Partner's
Partnership Interest or Percentage Interest. The Partnership shall reimburse
the Partner as soon as practicable and may pay interest on the indebtedness.
1797. Loans by Partners. The Managing General Partner may
borrow money on behalf of the Partnership from any Partner in such amounts and
for such purposes as it considers necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership. Each loan to the
Partnership by a Partner (excluding reimbursable expenses) shall be evidenced
by a promissory note or similar instrument of the Partnership, may be secured
by a lien on the Property, may bear interest at a rate determined by agreement
between such Partner and the Managing General Partner and may be subject to
such other terms and conditions as are agreed to by such Partner and the
Managing General Partner. The Partnership may prepay each loan from a Partner
in whole or in part, at any time and from time to time, without premium or
penalty.
8
<PAGE> 10
ARTICLE IV
PROFITS AND LOSSES AND TAXABLE INCOME AND TAXABLE LOSS
1798. Allocations
(a) Allocation of Profits and Losses.
(1) Profits and Losses of the Partnership
shall be allocated Pro Rata among the Partners.
(2) Profits and Losses of the Partnership
shall be determined for each fiscal year of the Partnership in accordance with
the method of accounting required or permitted to be used for federal income
tax purposes, with such exceptions thereto as are set forth in this Agreement,
and otherwise in accordance with generally accepted accounting principles
applied in a consistent manner.
(b) Allocation of Taxable Income and Taxable Loss.
(1) Except as otherwise provided in this
section 13(b), allocations of tax items among the Partners shall be consistent
with corresponding book (Profits and Losses) items (if any). For tax purposes,
Profits and Losses, or any item thereof, shall be appropriately adjusted to
reflect Taxable Income and Taxable Loss, or any item thereof, as determined
under the Code and shall be allocated among the Partners in such a manner as to
comply with the provisions of the Code and Regulations thereunder (including,
if necessary, the "minimum gain chargeback provisions" of the Regulations under
Section 704 of the Code). For example, any gain or loss recognized by the
Partnership with respect to property contributed to the Partnership by a
Partner shall be shared among the Partners so as to take account of the
variation, if any, between the basis of the property to the Partnership and its
fair market value at the time of contribution or revaluation, whichever is
applicable, so as to comply with the requirements of Section 704 of the Code.
Thus, for example, if a Partner contributes property to the Partnership whose
agreed fair market value exceeds its adjusted basis in the hands of the
contributing Partner ("built-in gain"), and there have been no events giving
rise to a revaluation, built-in gain with respect to such contributed property
shall first be allocated to such contributing Partner when the Partnership
recognizes gain upon a disposition of such contributed property, but not in an
amount in excess of such built-in gain; the remaining balance of such
recognized gain, if any, shall be allocated among the Partners as set forth
herein. The allocation of built-in gain to a contributing Partner shall not
increase such Partner's Capital Account, because such gain was already taken
into account when the built-in gain property was contributed to the
Partnership. A Partner who contributes property other than cash shall provide
the Managing General Partner with information necessary to verify the
contributing Partner's adjusted tax basis in the items of property contributed
by him to the Partnership.
(2) Generally, except as provided in section
13(b)(i), Taxable Income and Taxable Loss (and each such
9
<PAGE> 11
income and loss item) shall be allocated Pro Rata among the Partners. In the
event, however, that non-Pro Rata distributions of property are made to a
Partner or the net proceeds from the sale of property are distributed non-Pro
Rata to a Partner, Taxable Income and Taxable Loss derived from such
distributions or sales shall be allocated 100% to such Partner, subject only to
such modifications as are necessary to comply with Section 704 of the Code.
ARTICLE V
DISTRIBUTIONS, WITHDRAWALS AND LOANS
1799. Distributions.
(a) Cash Flow Distributions. Cash Flow shall be
distributed Pro Rata among the Partners. Notwithstanding the foregoing, if the
Partners unanimously agree, the Partnership may distribute Cash Flow
attributable to a sale of property in a non-Pro Rata manner.
(b) Partial or Complete Withdrawal by a Partner From
the Partnership.
(1) In the event of a partial or complete
withdrawal of a Partner from the Partnership pursuant to Article VIII, the
Managing General Partner shall, as promptly as is reasonably possible,
distribute to the Partner his Pro Rata share of the Marketable Securities
previously contributed by such Partner to the Partnership, cash and other
readily divisible assets of the Partnership. The withdrawing Partner shall
also be entitled to receive cash equal in value to his Pro Rata share of the
fair market value (as reasonably determined by the Managing General Partner) of
any non-readily divisible assets owned by the Partnership. The Managing
General Partner shall, as promptly as possible, distribute this additional
amount of cash, if any, to the withdrawing Partner. Cash distributions to the
withdrawing Partner shall be reduced by such Partner's Pro Rata share of the
liabilities of the Partnership and by any expenses incurred by the Partnership
with respect to the withdrawal of the Partner.
(2) A Partner may request that all or a
portion of the Marketable Securities subject to the requested withdrawal be
sold by the Partnership and the net proceeds (after selling and other expenses)
distributed as directed by him. In the event that the Managing General Partner
is unable to sell these Marketable Securities, it shall distribute them to the
Partner, unless it is notified by the Partner to cancel the withdrawal.
(3) The Managing General Partner shall not be
required to distribute to the requesting Partner any assets that the
Partnership is legally restricted or prohibited from distributing to the
Partner, unless steps can be taken to remove the restriction or prohibition; in
which case the requesting Partner shall be charged with the expense of removing
such restriction or prohibition. Any distribution hereunder shall also
10
<PAGE> 12
be subject to the limitations set forth in sections 9(c) and 15, respectively.
(c) Liquidating Distributions. The net proceeds
from liquidation of the Partnership's assets pursuant to its dissolution,
winding-up, and termination shall be distributed, and all Profits and Losses
resulting from the liquidation of the Partnership property shall be allocated,
among the Partners in the proportions and orders of priority specified in this
section 14(c).
(i) The Liquidator shall distribute the net
proceeds from liquidation of the Partnership's assets as follows:
(1) FIRST: To pay all the
liabilities of the Partnership that are then due and payable, except for both
Capital Contributions of Partners and liabilities to the Partners, in the order
of priority required by Florida law; then
(2) SECOND: To establish any
reasonable reserve that the Liquidator may determine is required for unpaid,
future, or contingent liabilities or obligations of the Partnership; then
(3) THIRD: To pay all liabilities
of the Partnership to the Partners, pro rata according to the amounts of their
respective liabilities; then
(4) FOURTH: To the Partners to the
extent of any positive balances in their Capital Accounts, Pro Rata according
to the amounts of their respective positive balances; and then
(5) FIFTH: Any remaining net
proceeds shall be distributed Pro Rata among the Partners.
(ii) Any Profits and Losses and Taxable
Income and Taxable Loss resulting from the disposition of the Partnership's
assets in the process of liquidation shall be allocated among the Partners in
the manner provided in section 13. Any property distributed in kind in the
liquidation shall be valued and treated as if the property were sold and the
cash proceeds were distributed. The Profits and Losses arising from the
constructive sale of the property described in the preceding sentence shall be
allocated among the Partners in the manner provided in section 13.
3585. Limitation on Distributions to Partners. A Partner may
receive distributions from the Partnership only to the extent the Partnership's
total assets exceed its total liabilities, other than liabilities to the
Partners on account of their Capital Contributions.
ARTICLE VI
AUTHORITY, DUTIES, AND LIABILITIES OF PARTNERS
3586. Duties of Managing General Partner. The Managing General
Partner shall manage the affairs of the Partnership, shall apply itself
diligently for the Partnership, and shall devote to
11
<PAGE> 13
the Partnership such time as is necessary and appropriate to manage the
business of the Partnership. The Managing General Partner is not required to
devote all its business time to the Partnership, and it may engage in other
business ventures and employment, including those in competition with the
Partnership. In the performance of its duties, the Managing General Partner
may hire employees and agents of the Partnership and generally shall supervise
and direct all the daily operations of the Partnership.
3587. Managing General Partner's Fees and Expenses.
(a) Fees to Managing General Partner. In
consideration for performing services described herein, the Managing General
Partner may be paid a fee to be agreed upon by a Majority in Interest. Such
fees shall be deemed earned when the services have been performed and,
regardless of when paid, shall be non-executory from the date earned and shall
be the obligation of the Partnership from and after that date.
(b) Expenses. Except as otherwise provided herein,
the Partnership shall pay all expenses of the Partnership (which expenses may
be either billed directly to the Partnership or reimbursed to the Managing
General Partner) which may include, but are not limited to: (i) all costs of
borrowed money, taxes and assessments on the Property and other taxes
applicable to the Partnership; (ii) all costs for goods and materials, whether
purchased by the Partnership directly or by the Managing General Partner on
behalf of the Partnership; (iii) legal, audit, accounting, brokerage and other
professional fees; (iv) fees and expenses paid to independent contractors,
mortgage bankers, brokers, insurance brokers and other agents; (v) expenses of
organizing, revising, amending, converting, modifying or terminating the
Partnership; (vi) expenses in connection with distributions made by the
Partnership to, and communications and bookkeeping work necessary in
maintaining relations with, Partners; (vii) expenses in connection with
preparing and mailing reports to Partners; (viii) costs of any accounting,
statistical or bookkeeping equipment necessary for the maintenance of the books
and records of the Partnership; (ix) the cost of preparation and dissemination
of informational material and documentation relating to the Partnership; (x)
except with respect to litigation solely among the Partners as such, costs
incurred in connection with any litigation in which the Partnership is
involved, as well as in the examination, investigation or other proceedings,
conducted against the Partnership by any regulatory agency, including legal and
accounting fees incurred in connection therewith; (xi) costs of any computer
services or equipment or services of personnel used for or by the Partnership;
and (xii) expenses of professionals employed by the Partnership in connection
with any of the foregoing, including attorneys, accountants and appraisers.
3588. Authority of Managing General Partner. The Managing
General Partner may bind the Partnership to do all acts that are necessary,
appropriate, or incidental to the accomplishment of the purposes of the
Partnership. Any person dealing with the Partnership or the Managing General
Partner may rely on a certificate signed by the Managing General Partner as to
the identity of any Partner, the existence or absence of any fact
12
<PAGE> 14
or condition that is necessary to permit action by either the Partnership or
the Managing General Partner or germane in any other way to the affairs of the
Partnership, and the persons who are authorized to execute and deliver any
documents or instruments of or on behalf of the Partnership. Without limiting
the generality of the foregoing, the Managing General Partner is specifically
authorized to do the following:
(a) to negotiate and enter into leases and
agreements with land or building owners or other Persons, and to incur
obligations for, and on behalf of, the Partnership in connection with
Partnership business;
(b) to borrow money on behalf of the Partnership
and, as security therefor, to encumber the property;
(c) to prepay, in whole or in part, refinance,
increase, modify or extend any obligation affecting the property;
(d) to sell, exchange, convey and lease the property;
(e) to employ from time to time, at the expense of
the Partnership, other Persons required for the operation and management of the
Partnership business, including accountants, attorneys and others, who may be
Partners, on such terms and for such compensation as the Managing General
Partner determines to be reasonable and this may include Persons which are
Affiliates;
(f) to pay all attorney's and accountant's fees and
other costs incurred in connection with the formation of the Partnership
business and the completion of all steps necessary or advisable for the
Partnership to comply with applicable laws;
(g) to assume the responsibilities imposed on the
Managing General Partner by the Act;
(h) to compromise, arbitrate or otherwise adjust
claims in favor of or against the Partnership and to carry such insurance as
the Managing General Partner considers advisable;
(i) to exercise the voting rights associated with
the securities and other Property owned by the Partnership;
(j) to commence or defend litigation with respect to
the Partnership or any assets of the Partnership as the Managing General
Partner considers advisable, at the expense of the Partnership;
(k) to make, execute, acknowledge and deliver
documents of transfer and conveyance and any other instruments that may be
necessary or appropriate to carry out its powers; and
(l) to do all such acts and take all such
proceedings and execute all such rights and privileges, although not
specifically mentioned herein, as the Managing General Partner considers
necessary to conduct the business of the Partnership and to carry out the
purposes of the Partnership.
13
<PAGE> 15
Notwithstanding the foregoing, the Managing General Partner shall
not take any of the following actions without the consent of a Majority in
Interest:
(1) assign all or any part of the property for the
benefit of its creditors or confess a judgment against the Partnership;
(2) take any action in contravention of the Act, the
certificate of limited partnership or this Agreement;
(3) sell, lease, transfer, assign, pledge or
encumber a substantial portion (10% or more) in value of the property of the
Partnership (except with respect to transactions to which section 28 or section
32 applies); or
(4) admit a Person as a Partner of the Partnership.
4609. Dealing with Affiliates. The Managing General Partner
may employ and enter into contracts and other arrangements with any Person,
including an Affiliate, and may obligate the Partnership to pay reasonable
compensation for services rendered by such Persons on terms that, in the
judgment of the Managing General Partner, are not less favorable to the
Partnership than would be available from an unrelated party.
4610. Indemnification of General Partners. The Managing
General Partner need not secure the performance of its duties by bond or
otherwise. A General Partner is not liable, responsible, or accountable in
damages or otherwise to any Partner or to the Partnership for any act taken or
omission made in good faith on behalf of the Partnership and in a manner that
such General Partner reasonably believes to be within the scope of the
authority granted to it by this Agreement and in the best interest of the
Partnership, except for gross negligence or willful misconduct. Any loss,
expense (including attorneys' fees) or damage incurred by a General Partner by
reason of any act or omission by it in good faith on behalf of the Partnership
and in a manner that it reasonably believes to be within the scope of the
authority granted to it by this Agreement and in the best interest of the
Partnership (but not, in any event, any loss, expense or damage incurred by a
General Partner by reason of gross negligence or willful misconduct) shall be
paid to the indemnified General Partner from the Partnership's assets, to the
extent available.
4611. Liability of Non-Managing General Partner. The
non-managing General Partners are not liable to any other Partner for the gross
negligence or willful misconduct of the Managing General Partner.
4612. Authority of Non-Managing General Partner. The
non-managing General Partners shall not participate in the management of, or
have any control over, the business or policies of the Partnership, except as
required by the Act or permitted by section 18, and shall not transact any
business in the name of the Partnership. Unless required by the Act, a
non-managing general partner shall not sign any agreement, document or
instrument in the
14
<PAGE> 16
name of the Partnership or otherwise make commitments on behalf of the
Partnership.
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS
4613. General Partners. Subject to section 24, a General
Partner may make an Assignment, directly or indirectly, of all or any part of
its Partnership Interest. However, an Assignment does not relieve such General
Partner of its obligations and liabilities under this Agreement, or constitute
the assignee a General Partner, or confer on the assignee any Partnership
Rights. Subject to section 24, and only if a Majority in Interest consents, a
General Partner may make an Assignment of both its Partnership Interest and its
Partnership Rights if the assignee assumes in writing all such General
Partner's obligations and liabilities under this Agreement and if all the
applicable requirements of section 25 are satisfied. Upon compliance with the
immediately preceding sentence, an assignee of such General Partner has all the
rights and powers granted to such General Partner under this Agreement and has
all the obligations and liabilities of such General Partner under this
Agreement.
4614. Restriction on Transfer. Notwithstanding any other
provision of this Agreement, an assignment of a Partnership Interest shall not
be made, and consent thereto shall be withheld:
(a) Unless the Managing General Partner has
satisfied itself (by seeking advice of legal counsel or otherwise, with any
resulting Partnership expense to be reimbursed by the assignor) that the
assignment will not have any significant adverse tax effect upon the
Partnership or the other Partners;
(b) Unless the Managing General Partner has
satisfied itself (by advice of legal counsel, with any resulting Partnership
expense to be reimbursed by the assignor) that the proposed assignment may be
made without registration under any applicable securities law; and it will not
violate any applicable securities law (including investor suitability
standards);
(c) If the Assignment is sought to be made to:
(i) a minor or incompetent, except if made
by will or intestate succession, or
(ii) to a Person which is not an Affiliate.
4615. Admission of Substitute Partner. Subject to the other
provisions of this Agreement, an assignee of a Partnership Interest may be
admitted as a Partner and granted Partnership Rights only if:
(a) the Assignment is made pursuant to a written
instrument in a form satisfactory to the Managing General Partner and specifies
the intention of the assignor that the assignee be substituted as a Partner;
15
<PAGE> 17
(b) the Managing General Partner consents to the
admission by executing two counterparts of this Agreement that evidences the
Partnership Rights of the assignee, and if the assignee is to be admitted as a
General Partner a Majority in Interest consent to the admission;
(c) the assignee accepts, signs and agrees to be
bound by this Agreement, by executing two counterparts of this Agreement,
including an amended EXHIBIT A, and such other documents or instruments as the
Managing General Partner requires to effect the admission of the assignee as a
Partner;
(d) the assignee provides the Managing General
Partner with evidence satisfactory to it of the assignee's authority to become
a Partner under the terms of this Agreement;
(e) the assignee pays all filing, publication and
other costs (including reasonable attorneys' fees) incurred by either the
Partnership or the Managing General Partner in connection with the admission
and substitution of the assignee as a Partner.
Notwithstanding an assignee's satisfaction of any or all of the
conditions specified above, the Managing General Partner, in its absolute
discretion, may refuse to consent to the assignee's admission as a Partner, in
which event the assignee will not obtain any Partnership Rights, but will
retain only the rights of an assignee under section 23.
4616. Rights of Partner After Assignment and Substitution.
Upon the Assignment of all his Partnership Interest, and the admission of a
substitute partner, a Partner shall cease to be a Partner and to have any
Partnership Rights.
4617. Allocations and Distributions After Assignment. For the
purposes of allocations of Profits and Losses, Taxable Income or Taxable Loss,
and distributions, an Assignment of a Partnership Interest is effective as to
the Partnership, and shall be reflected in the records of the Partnership, as
of the date that the Managing General Partner receives written notice of the
Assignment. The Taxable Income or Taxable Loss, Profits and Losses and cash
and other distributions in respect of the assigned Partnership Interest with
respect to the fiscal year in which the Assignment of the Partnership Interest
occurs shall be divided between the assignor and the assignee according to the
method provided to the Managing General Partner by the assignor and the
assignee, so long as such method is permitted under the Code and does not
adversely affect the other Partners or the Partnership from a tax or economic
perspective. The method of allocation shall be provided to the Managing
General Partner in the written notice of the Assignment. Any additional costs
for computing the allocations hereunder shall be paid by the assignor or
assignee, as the case may be. The written notice referred to above shall also
contain information as to whether the assignor or assignee shall be responsible
for the payment of such additional cost, if any.
16
<PAGE> 18
ARTICLE VIII
RETIREMENT, WITHDRAWAL, OR REMOVAL OF PARTNERS
4618. Withdrawal of Non-Managing General Partner and Limited
Partners.
(a) A non-managing General Partner and a Limited
Partner may, at any time, partially withdraw his Partnership Interest from the
Partnership by providing written notice thereof to the Managing General
Partner. The Managing General Partner shall promptly send a copy of such
notice to all other Partners. Within thirty (30) days after the receipt of
such written notice from a Partner, the Managing General Partner shall make the
appropriate distributions to the Partner in partial or complete redemption of
his Partnership Interest as set forth in section 14(b).
(b) A partial withdrawal by a Partner shall be made
in increments of one-tenth (1/10th) of one percent (1%) of a Percentage
Interest. The written notice of withdrawal from a Partner to the Managing
General Partner must state whether the withdrawal is a partial or complete
withdrawal and, if a partial withdrawal, must state the Percentage Interest
that is being withdrawn. A Partner shall not make a partial withdrawal that
will result in his remaining Percentage Interest becoming less than one-tenth
(1/10th) of one percent (1%) immediately after the withdrawal.
(c) The Managing General Partner agrees that it will
fully cooperate to the extent permitted by law to accomplish a withdrawal
requested by a non-managing General Partner and a Limited Partner hereunder.
It also agrees that it will not take any action that will obstruct or render
impossible the application of this section 28 (such as to pledge the
Partnership's Marketable Securities as collateral to creditors of the
Partnership), unless such action is essential to accomplish the purposes of the
Partnership.
(d) The partial withdrawal of a non-managing General
Partner or a Limited Partner does not dissolve or terminate the Partnership
unless there is only one Partner then remaining. The remaining Partners shall
amend this Agreement to reflect the partial or complete withdrawal of the
Partner from the Partnership, if and to the extent necessary.
(e) Upon the giving of the notice of withdrawal pursuant
to Paragraph (a), and upon the dissolution of the Partnership, the voting
rights with respect to any Marketable Securities allocable to the Percentage
Interest being withdrawn shall be vested in the withdrawing Partner or
Partners, and the Partnership shall have no voting rights with respect to such
stock.
4619. Retirement or Withdrawal of General Partner. The
Managing General Partner may not withdraw any part of its General Partnership
Interest. The Retirement of the Managing General Partner shall dissolve the
Partnership. Notwithstanding the foregoing or anything else in this Agreement
to the contrary, a
17
<PAGE> 19
merger, consolidation, or reorganization of the Managing General Partner, or a
sale of all or substantially all its assets that includes its Partnership
Interest, is not a Retirement of such Managing General Partner if the
resulting, surviving or acquiring Person is an Affiliate and becomes
substituted as the Managing General Partner of the Partnership. The resulting,
surviving or acquiring Person is substituted as the Managing General Partner
without further act if it gives notice of the substitution to the Partners
before the effective date of the merger, consolidation, reorganization or sale.
Each Partner consents to the admission and substitution of such substitute
Managing General Partner pursuant to this section 29, and no further consent or
approval of any Partner is required.
4620. Rights of Partner After Retirement or Withdrawal. A
Partner ceases to have any Partnership Rights upon his Retirement or complete
withdrawal from the Partnership. However, until the appropriate distributions,
if any, are made to a Retired or withdrawn Partner for his Partnership
Interest, the Retired or withdrawn Partner is entitled to receive the
allocations of Profits and Losses, Taxable Income or Taxable Loss and all
distributions referred to in section 14 applicable to his Partnership Interest.
ARTICLE IX
DISSOLUTION
4621. Events of Dissolution. The Partnership shall be
terminated and dissolved upon:
(a) the expiration of its term;
(b) the vote of a Majority in Interest to dissolve
the Partnership;
(c) the Partnership being adjudicated insolvent or
bankrupt;
(d) the Retirement of the Managing General Partner;
(e) the death of Lowell Paxson; or
(f) the sale of all or substantially all of the
Partnership's Property.
4622. Winding-Up and Distributions. Upon the dissolution of
the Partnership pursuant to section 31, the winding-up of the Partnership's
business and the liquidation and distribution of Partnership assets must be
carried out with due diligence and in a timely manner, and consistent with both
the requirements of applicable law and the following provisions of this
section:
(a) The Managing General Partner shall be
responsible for taking all actions relating to the winding-up, liquidation, and
distribution of assets of the Partnership, unless its Retirement causes the
dissolution, in which case the fiscal agent, liquidator,
18
<PAGE> 20
or receiver appointed (without judicial action) by a Majority in Interest shall
be so responsible. The Managing General Partner, or the appointed fiscal
agent, liquidator, or receiver, is referred to in this Agreement as the
"Liquidator." A non-managing General Partner can be appointed to be the
Liquidator. The Liquidator shall file all certificates or notices of the
dissolution of the Partnership as required by law. Upon the complete
liquidation and distribution of the Partnership assets, the Partnership shall
terminate, and the Liquidator shall execute, acknowledge, and cause to be filed
all certificates and notices required by law to terminate the Partnership.
(b) The Liquidator shall proceed without unnecessary
delay to sell and otherwise liquidate the Partnership's assets. Unless
directed otherwise by a Majority in Interest, all Marketable Securities, cash
and other readily divisible or fungible assets of the Partnership shall be
distributed directly to the Partners in the manner set forth in section
14(c)(i). The Liquidator shall promptly sell the other assets of the
Partnership unless it determines that an immediate sale of part or all of such
assets would cause undue loss to the Partners. In such case, the Liquidator,
to avoid such loss, may defer the liquidation of the Partnership assets for a
reasonable time, except for those liquidations that are necessary to satisfy
the debts and liabilities of the Partnership to persons and parties other than
the Partners. The Liquidator shall distribute the proceeds from the
liquidation of the Partnership's assets as provided in section 14(c).
(c) Upon the dissolution of the Partnership pursuant
to section 31, the Liquidator shall cause the accountants for the Partnership
to prepare within ninety (90) days after the occurrence of the event of
dissolution, and immediately thereafter shall furnish to each Partner, a
statement setting forth the assets and liabilities of the Partnership as of the
date of its dissolution. The Liquidator, promptly following the complete
liquidation and distribution of the Partnership's assets, shall cause the
Partnership's accountants to prepare, and the Liquidator shall furnish to each
person who is a Partner immediately before the dissolution, a statement showing
the manner in which the Partnership assets were liquidated and distributed.
4623. Distribution of Liquidation Proceeds and Assets and
Allocation of Gains and Losses. The net proceeds from liquidation of the
Partnership's assets and the unliquidated Property of the Partnership shall be
distributed, and all Profits and Losses resulting from the liquidation of the
Partnership shall be allocated, among the Partners in the proportions and
orders of priority specified in section 14(c).
4624. Limitation of Liability of Partners. Upon the
dissolution of the Partnership and the distribution of the net liquidation
proceeds pursuant to section 31 and section 14(c), each Partner shall look
solely to the assets of the Partnership for the payment of his unreturned
Capital Contributions, and if the Partnership's assets remaining after the
payment or discharge of the debts and liabilities of the Partnership are
insufficient to pay the full amount of the unreturned Capital Contributions of
each
19
<PAGE> 21
Partner, the Partner shall have no recourse or claim against any Partner or the
Partnership with respect to its unreturned Capital Contributions, except for
claims for fraud, gross negligence, or breach of fiduciary duty.
4625. Waiver of Right of Partition of Assets. Each Partner,
and for his heirs, successors, and assigns, waives his right to the partition
of the assets of the Partnership upon the dissolution and liquidation of the
Partnership.
ARTICLE X
ACCOUNTING YEAR, BOOKS, RECORDS, AND REPORTS
4626. Books and Records. The Managing General Partner shall
maintain at the principal office of the Partnership a complete and accurate set
of books of records and accounts, in which it shall make full and complete
entries of all dealings or transactions relating to the Partnership's business
and where it shall keep all supporting documentation of transactions with
respect to the conduct of the Partnership's business. Each Partner or his duly
authorized representative, upon five days' advance notice to the Managing
General Partner, may examine during normal business hours the books of the
Partnership and all other records and information concerning the operation of
the Partnership.
4627. Reports. If requested by a Partner at least 30 days
prior to the end of a quarter, within 60 days after the end of each fiscal
quarter in each fiscal year of the Partnership, the Managing General Partner
shall cause to be prepared and sent to each Partner a balance sheet, income
statement and cash flow statement of the Partnership for and as of the end of
that fiscal quarter, in each case unaudited but accompanied by a report of the
activities of the Partnership for that quarter. Within 90 days after the end
of each fiscal year of the Partnership, the Managing General Partner shall
cause to be prepared and sent to each Partner a financial report consisting of
(a) a balance sheet as of the end of the fiscal year; (b) statements of income,
partner's equity, and changes in financial position for the fiscal year; (c) if
requested by a Partner, the opinion of the Partnership's certified public
accountant concerning the foregoing financial statements; (d) a summary of the
Partnership's activities for the fiscal year; (e) a statement showing the
distributions to each Partner during the fiscal year and identifying any
distributions which constitute a return of Capital Contribution; and (f) a
statement showing the amount of Taxable Income or Taxable Loss, and listing
each item of income, gain, loss, deduction, or credit allocated or charged
against the Partner for federal and state income tax purposes.
4628. Bank Accounts. The Managing General Partner shall
maintain the bank accounts of the Partnership in such financial institutions as
the Managing General Partner considers appropriate. The Managing General
Partner shall make or permit withdrawals from the Partnership's bank accounts
on the signature of the Managing General Partner.
20
<PAGE> 22
4629. Tax Elections. The Partnership shall file an election
under Section 754 of the Code, relating to the optional adjustment to the basis
of partnership property, at the first time it is permitted to do so after the
beginning of the term of this Partnership. The Managing General Partner shall
make or waive, at its discretion, all other tax elections required or permitted
to be made by the Partnership under the Code.
4630. Accounting Method and Fiscal Year. The Managing General
Partner shall maintain the Partnership records and books of accounts in
accordance with the method of accounting required or permitted to be used for
federal income tax purposes, with such modifications as are set forth in this
Agreement, and otherwise in accordance with generally accepted accounting
principles consistently applied. The fiscal year of the Partnership is the
calendar year.
ARTICLE XI
GENERAL PROVISIONS
4631. Partnership Contracts. The Managing General Partner may
enter into agreements and contracts on behalf of the Partnership only if they
are in writing and clearly indicate to the other parties that the Partnership
is a general partnership of which the Managing General Partner is a general
partner.
4632. Conveyances. Subject to section 18, the Managing General
Partner may sign any deed, mortgage, lease, bill of sale, security agreement,
pledge, contract or other instrument or commitment purporting to convey or
encumber any of the Partnership's Property or any interest therein, whether now
or subsequently owned or leased at any time by the Partnership, and no other
signature is required.
4633. Notices. To be effective, a notice required or permitted
by this Agreement must be in writing, or by telegram, telex or telecopy if
promptly confirmed in writing. A notice is given when delivered or, if mailed,
when deposited in a United States postal service letterbox to be sent by
first-class, postage-prepaid, certified mail, with return receipt requested
(whether or not the sender receives the return receipt), and addressed, if to a
Partner, at his registered address listed on EXHIBIT A and, if to the Managing
General Partner or the Partnership, to the attention of such Managing General
Partner at the Partnership's principal business office.
4634. Consents. Any consent required by this Agreement may be
given as follows:
(a) by a writing given by the consenting Partner and
received by the Managing General Partner or other appropriate recipient at or
before the occurrence of the action or other thing for which the consent was
solicited, unless the consent is nullified by:
(i) A writing from the consenting Partner
that is received by the Managing General Partner before the occurrence
21
<PAGE> 23
of the action or other thing for which the consent was solicited; or
(ii) the negative vote by the consenting
Partner at any meeting called for the purpose of considering the action or
other thing.
(b) by the affirmative vote of the consenting
Partner at any meeting called for the purpose of considering the action or
other thing for which the Partner's consent was solicited.
4635. Meetings. The Managing General Partner may call meetings
of the Partners for any purpose, at any time. The Managing General Partner
shall call a meeting of the Partners within 30 days after he receives from a
Majority in Interest a written request for a meeting, stating the purpose of
the requested meeting and the matters proposed for consideration. Meetings of
the Partners may be held at such time, date and place as the Managing General
Partner designates. The Managing General Partner shall give notice of any
meeting of the Partners not less than ten nor more than 60 days before the date
of the meeting, to each Partner at his registered address listed on EXHIBIT A.
The notice shall state the time, date and place of the meeting, the purpose of
the meeting and the Partner at whose direction or request the meeting is
called. If a meeting is adjourned to another time or place, notice of the
adjourned meeting is not required if the time and place of the adjournment is
announced at the called meeting. The presence in person or by proxy of a
Majority in Interest constitutes a quorum at a meeting. Any notice of a
meeting required by this section may be waived in writing at, before or after
the meeting and shall be deemed to be waived by each Partner who is present in
person or by proxy at the meeting. Only those persons who are Partners at the
close of business on the day before the meeting are entitled to vote at the
meeting. Any Partner entitled to vote at a meeting may authorize any person to
act for him by written proxy if a copy of the proxy is delivered to the
Managing General Partner before the commencement of the meeting. To be
effective, a proxy must be signed by the Partner (and, if applicable, each
co-owner) or his duly appointed attorney-in-fact, and no proxy shall be valid
for more than 11 months after its date. A proxy is revocable at the pleasure
of the Partner granting it.
4636. Binding Effect; Counterparts. The covenants and
agreements contained in this Agreement are binding on, and inure to the benefit
of, the legal and personal representatives, heirs, successors and permitted
assignees of the parties to this Agreement. The parties may execute this
Agreement in any number of counterparts, each of which will be an original, but
all of which together will constitute one and the same agreement.
4637. Choice of Law. This Agreement and the rights and
obligations of the Partners under it are governed by, and construed and
enforced in accordance with, the laws of Florida.
4638. Complete Agreement; Modification. This Agreement
contains the final, complete and exclusive expression of the understanding
among the Partners with respect to the Partnership and its purposes and
objectives and supersedes any prior or
22
<PAGE> 24
contemporaneous agreement or representation, oral or written, by any of them.
Except to admit a new or a substitute Partner or to reflect the withdrawal or
Retirement of a Partner, this Agreement and every provision of it may be
modified or amended only by an agreement in writing signed by or on behalf of
all Partners.
4639. Evidence of Partnership Interests. The Partnership
Interest of each Partner is evidenced exclusively by a counterpart of this
Agreement (including EXHIBIT A) that has been signed and dated by the Managing
General Partner.
4640. Tax Matters Partner. The Managing General Partner or its
designee shall be the "tax matters partner" of the Partnership for federal
income tax purposes. If the Managing General Partner ceases to act as the
Managing General Partner of the Partnership, the successor Managing General
Partner (if any), shall be designated the tax matters partner. Pursuant to
Section 6223(c)(2) of the Code, upon receipt of notice from the Internal
Revenue Service of the beginning of an administrative proceeding with respect
to the Partnership, the Managing General Partner, as the tax matters partner,
shall furnish the Internal Revenue Service with the names, addresses, and
Percentage Interests of each of the Partners. The Managing General Partner
agrees not to enter into a settlement agreement pursuant to Section 6224 of the
Code without providing at least 30 days advance written notice to each Partner.
As tax matters partner, the Managing General Partner shall have absolute
discretion regarding whether to seek judicial review of any administrative
determination and, if it determines to seek judicial review of Internal Revenue
Service action pursuant to Section 6226 of the Code, then the Managing General
Partner shall select the judicial forum for such review. The tax matters
partner shall receive no compensation for its services as such. The
Partnership shall bear all third party costs and expenses incurred by the tax
matters partner in performing its duties as such. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm or law
firm to assist the tax matters partner in discharging its duties hereunder.
4641. Gender and Number. As used in this Agreement, the
masculine gender includes the feminine and neuter, and the singular includes
the plural.
4642. Title. Title to any property acquired by the Partnership
shall be taken in the name of the Partnership.
IN WITNESS WHEREOF, this Agreement has been executed by or on
behalf of each Partner as of the date written beside his name.
General Partner
PAXSON ENTERPRISES, INC.
By /s/ Lowell W. Paxson
------------------------------
President
Limited Partner
/s/ Lowell W. Paxson
--------------------------------
Lowell W. Paxson
23
<PAGE> 25
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED and SWORN to before me on behalf of PAXSON ENTERPRISES, INC., a
Nevada corporation, as General Partner,
by Lowell W. Paxson, its President, this 25th day of September, 1991.
/s/ Robert Shreffler
---------------------------------
Notary Public, State of Florida
(Affix Notarial Seal) My Commission Expires:
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED and SWORN to before me by LOWELL W. PAXSON, as Limited Partner,
this 25th day of September, 1991.
/s/ Robert Shreffler
--------------------------------------
Notary Public, State of Florida
(Affix Notarial Seal) My Commission Expires:
24
<PAGE> 26
EXHIBIT A
<TABLE>
<CAPTION>
General Partners Contribution Percentage Interest
- ---------------- ------------ -------------------
<S> <C> <C>
Paxson Enterprises, Inc. 5%
c/o Lowell W. Paxson
700 Spottis Woode Lane
Clearwater, Florida 34616
Limited Partners
- ----------------
Lowell W. Paxson 95%
700 Spottis Woode Lane
Clearwater, Florida 34616
</TABLE>
25
<PAGE> 27
AMENDMENT NUMBER 1 TO THE AGREEMENT OF LIMITED
LIMITED PARTNERSHIP OF PAXSON BROADCASTING OF TAMPA,
DATED JUNE 27, 1991
Paxson Enterprises, Inc., a Nevada corporation, as the
withdrawing General Partner ("Enterprises"), Paxson Tampa, Inc., a Florida
corporation, as successor General Partner, and Lowell W. Paxson as Limited
Partner execute this Amendment Number 1 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, effective as of June 27,
1991 (the "Agreement"), and agree as follows:
1. Assignment of General Partnership Interest and
Admission of Substitute Partner
Enterprises hereby resigns as the General Partner of Paxson
Broadcasting of Tampa, Limited Partnership (the "Partnership") and assigns all
of its right, title and interest in the Partnership, as General Partner, to
Paxson Tampa, Inc. Subject to the provisions of the Act, including Florida
Statutes Section Section 620.64 and 620.76(7), and in accordance with the
provisions of Section 25 of the Agreement, Paxson Tampa, Inc. accepts and
assumes all of the terms and provisions of the Agreement, specifically assumes
all of the obligations and covenants of Enterprises under the Agreement, and
acknowledges and agrees that it is the successor General Partner to
Enterprises. Lowell Paxson hereby approves Paxson Tampa, Inc. as successor
General Partner.
2. Integration of Execution
By its execution of this Amendment Number 1, and the execution
of two counterparts of the Agreement by Paxson Tampa, Inc., Paxson Tampa, Inc.
shall be deemed to have executed, in its capacity as successor General Partner,
the Agreement, as amended hereby, all in accordance with the provisions of
Sections 25 and 48 of the Agreement.
3. Reconstitution
To the extent required pursuant to Section 29 of the
Agreement, execution of this Amendment shall automatically reconstitute the
Partnership pursuant to Section 29.
4. No Adjustments to Capital Accounts
Paxson Tampa, Inc. and Lowell Paxson acknowledge and agree
that there shall be no adjustments to the Capital Accounts as a consequence of
the assignment by Enterprises of its interest in the Partnership to Paxson
Tampa, Inc., the resignation of Enterprises and the substitution of Paxson
Tampa, Inc. as General Partner.
5. Amendment to Exhibit A
Exhibit A to the Agreement is amended and replaced by the new
Exhibit A attached hereto which provides that the General Partner is Paxson
Tampa, Inc.
1
<PAGE> 28
6. Effective Date
The amendments to the Agreement added by this Amendment Number
1 shall be effective on the date signed below.
7. Ratification and Confirmation
The Agreement as hereby amended is ratified and confirmed in
all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment
Number 1 on this 17th day of December, 1991.
WITNESSES: PAXSON ENTERPRISES, INC.
/s/ William L. Watson By: /s/ Lowell W. Paxson
- ------------------------ --------------------------
/s/ Arthur Tek
- ------------------------
PAXSON TAMPA, INC.
/s/ William L. Watson By: /s/ Lowell W. Paxson
- ------------------------ ---------------------------
/s/ Arthur Tek
- ------------------------
/s/ William L. Watson /s/ Lowell W. Paxson
- ------------------------ -----------------------------
Lowell W. Paxson
/s/ Arthur Tek
- ------------------------
2
<PAGE> 29
AMENDMENT NUMBER 2 TO THE AGREEMENT OF
LIMITED PARTNERSHIP OF PAXSON BROADCASTING OF TAMPA
Paxson Tampa, Inc., a Florida corporation, as the withdrawing
General Partner ("TPA, Inc."), Paxson Enterprises, Inc., a Nevada corporation
("Enterprises"), as successor General Partner, and Lowell W. Paxson as Limited
Partner execute this Amendment Number 2 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, effective as of April 20,
1992 (the "Agreement"), and agree as follows:
1. Assignment of General Partnership Interest and
Admission of Substitute Partner
TPA, Inc. hereby resigns as the General Partner of Paxson
Broadcasting of Tampa, Limited Partnership (the "Partnership") and assigns all
of its right, title and interest in the Partnership, as General Partner, to
Enterprises. Subject to the provisions of the Act, including Florida Statutes
Section Section 620.64 and 620.76(7), and in accordance with the provisions of
Section 25 of the Agreement, Enterprises accepts and assumes all of the terms
and provisions of the Agreement, specifically assumes all of the obligations
and covenants of TPA, Inc. under the Agreement, and acknowledges and agrees
that it is the successor General Partner to TPA, Inc. Lowell Paxson hereby
approves Enterprises as successor General Partner.
2. Integration of Execution
By its execution of this Amendment Number 2, Enterprises shall
be deemed to have executed, in its capacity as successor General Partner, the
Agreement, as amended hereby, all in accordance with the provisions of Sections
25 and 48 of the Agreement.
3. Reconstitution
To the extent required pursuant to Section 29 of the
Agreement, execution of this Amendment shall automatically reconstitute the
Partnership pursuant to Section 29.
4. No Adjustments to Capital Accounts
Enterprises and Lowell Paxson acknowledge and agree that there
shall be no adjustments to the Capital Accounts as a consequence of the
assignment by TPA, Inc. of its interest in the Partnership to Enterprises, the
resignation of TPA, Inc. and the substitution of Enterprises as General
Partner.
1
<PAGE> 30
5. Amendment to Exhibit A
Exhibit A to the Agreement is amended and replaced by the new
Exhibit A attached hereto which provides that the General Partner is
Enterprises.
6. Effective Date
The amendments to the Agreement added by this Amendment Number
2 shall be effective on the date signed below.
7. Ratification and Confirmation
The Agreement as hereby amended is ratified and confirmed in
all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment
Number 2 on this 20th day of April, 1992.
PAXSON ENTERPRISES, INC.
By: /s/ Lowell W. Paxson
------------------------
PAXSON TAMPA, INC.
By: /s/ Lowell W. Paxson
---------------------------
/s/ Lowell W. Paxson
---------------------------
Lowell W. Paxson
2
<PAGE> 31
AMENDMENT NUMBER 3 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF TAMPA, LIMITED PARTNERSHIP
This Amendment Number 3 to the Agreement of Limited Partnership of
Paxson Broadcasting of Tampa, Limited Partnership ("Amendment") is effective as
of the 1st day of January, 1992, by and between PAXSON ENTERPRISES, INC., a
Nevada corporation, as the General Partner and LOWELL PAXSON, as a Limited
Partner. The parties hereby agree as follows:
1. Amendment to Definitions. The following definition should be
added to Section 1 following the definition of the term "Act:"
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital
Account as of the end of the relevant fiscal year, after giving effect
to the following adjustments:
(i) Credit to such Capital Account any amount which such
Partner is obligated to restore (pursuant to the terms of a promissory
note or otherwise) or is deemed to be obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Regulations and shall be interpreted consistently therewith."
2. Amendment to Section 9. Section 9 is amended by inserting
the following subsections (d) and (e) at the end thereof:
"(d) Any payments made by the Limited Partner as a guarantor
of obligations of the Partnership shall be treated as additional
Capital Contributions to the Partnership."
"(e) Notwithstanding any provision in this Agreement to the
contrary, if any Partner's Capital Account has a deficit balance
("Deficit Capital Account Balance") upon liquidation of the
Partnership (after giving effect to all contributions, distributions,
and allocations for all taxable years, including the year in which
such liquidation occurs), such Partner shall contribute to the Capital
of the Partnership the amount necessary to restore such deficit
balance to 0 in accordance with Regulations Section
1.704-1(b)(2)(ii)(d); provided, however, that a Partner's obligation
to restore
1
<PAGE> 32
such Deficit Capital Account Balance shall not exceed the amount of
the Partnership's liability under the Credit and Guaranty Agreement
among Paxson Broadcasting of Miami, Limited Partnership, Paxson
Broadcasting of Orlando, Limited Partnership, Paxson Broadcasting of
Jacksonville, Limited Partnership, and Paxson Broadcasting of Tampa,
Limited Partnership, and Citibank, N.A. (the "Credit Agreement")."
3. Amendment to Section 13. Section 13 is amended by inserting
the following provisions as subsections (c) and (d) thereof:
"(c) Losses. The Losses allocated pursuant to Sections
13(a) and 13(b) hereof shall not exceed the maximum amount of Losses
that can be so allocated without causing any Partner who is not a
General Partner to have an Adjusted Capital Account Deficit at the end
of any fiscal year. In the event some but not all of the Partners who
are not General Partners would have Adjusted Capital Account Deficits
as a consequence of an allocation of Losses pursuant to Section 13(a)
or Section 13(b), the limitation set forth in this Section 13(c) shall
be applied on a Partner by Partner basis so as to allocate the maximum
permissible Loss to each Partner who is not a General Partner under
Section 1.704-1(b)(2)(ii)(d) of the Regulations. All Losses in excess
of the limitation set forth in this Section 13(c) shall be allocated
to the General Partner.
(d) Special Allocations. The following special
allocations shall be made in the following order:
(1) Qualified Income Offset. In the event any Partner
who is not a General Partner unexpectedly receives any adjustments,
allocations, or distributions described in Regulations Section
1.704-1(b)(2)(ii)(d)(4), 1.704- 1(b)(2)(ii)(d)(5), or
1.704-1(b)(2)(ii)(d)(6), items of Partnership income and gain shall be
specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the
Adjusted Capital Account Deficit of such Partner as quickly as
possible, provided that an allocation pursuant to this Section 13(d)(1)
shall be made if and only to the extent that such Partner would have an
Adjusted Capital Account Deficit after all other allocations provided
for in this Section 13 have been tentatively made as if this Section
13(d)(1) were not in the Agreement.
(2) Gross Income Allocation. In the event any Partner
who is not a General Partner has a deficit Capital Account at the end
of any Partnership fiscal year that is in excess of the sum of (i) the
amount such Partner is obligated to restore (pursuant to the terms of a
promissory note or otherwise), and (ii) the amount such Partner is
deemed to be obligated to restore pursuant to the penultimate sentences
of Regulations Sections 1.704-2(g)(1) and 1.704-
2
<PAGE> 33
2(i)(5), each such Partner shall be specially allocated items of
Partnership income and gain in the amount of such excess as quickly as
possible, provided that an allocation pursuant to this Section 13(d)(2)
shall be made if and only to the extent that such Partner would have a
deficit Capital Account in excess of such sum after all other
allocations provided for in this Section 13 have been tentatively made
as if Section 13(d)(1) hereof and this Section 13(d)(2) were not in
the Agreement."
4. Amendment to Section 34. Section 34 is amended by adding the
following provisions to the end of such section:
"Notwithstanding anything to the contrary contained herein, each
Limited Partner hereby waives his or her right to seek indemnity from
the General Partner for any losses he or she might suffer under this
Partnership Agreement or under any ancillary agreements related to the
business of the Partnership including any personal guarantees of the
liabilities of the Partnership. Further, each Limited Partner hereby
waives his or her right to recover from the Partnership, as primary
obligor, any amounts such Limited Partner becomes liable to pay or
pays pursuant to any agreements related to the business of the
Partnership including any personal guarantees of the liabilities of
the Partnership."
3
<PAGE> 34
5. Ratification and Confirmation. The Agreement as hereby
amended is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 3
on this 4th day of January, 1993.
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ Martha Chapman By: /s/ Lowell Paxson
- ------------------------ ------------------------------
/s/ William L. Watson
- ------------------------
LIMITED PARTNER:
/s/ Martha Chapman /s/ Lowell Paxson
- ------------------------ ------------------------
Lowell Paxson
/s/ William L. Watson
- ------------------------
4
<PAGE> 35
AMENDMENT NUMBER 4 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF TAMPA LIMITED PARTNERSHIP
This Amendment Number 4 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Broadcasting of Tampa
Limited Partnership ("Amendment") is effective as of the 29th day of March,
1993, by and between PAXSON ENTERPRISES, INC., a Nevada corporation, as the
General Partner and Lowell W. Paxson, as a Limited Partner. The parties hereby
agree as follows:
1. Assignment. The definition of "Assignment" in Article I,
Section 1 of the Partnership Agreement is amended in its entirety to read as
follows:
"`Assignment' means a sale, exchange, gift, pledge, transfer
or disposition of any kind whatsoever and, in the case of a
Person that is not an individual, it includes the sale,
exchange, pledge, transfer or disposition of a majority of
either voting control or the equity interests in such Person;
provided, however, that an "Assignment" does not include a
pledge of, or a grant of a security interest in, a Partnership
Interest, Partnership Rights, or the majority of either voting
control or the equity interests in any Person, which pledge or
security interest is given or granted for the purpose of
securing an obligation of the Partnership or any Partner or
any Person owning an equity interest in a Partner, provided
that the giving or grant of such pledge or security interest
is approved by the Managing General Partner."
2. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 18401 U.S. Highway
19 North, Clearwater, Florida 34624."
3. Purposes of Partnership; Authorized Acts. Article II,
subsection 7.A.(a)(i) of the Partnership Agreement is amended to read as
follows:
"acquire, operate, manage and perform all matters necessary
and attendant to the operation of one or more radio stations
in the State of Florida,".
4. Power to Guarantee Obligations of Others. Article II,
subsection 7.B. of the Partnership Agreement is amended by redesignating
clauses (g) and (h) as clauses (h) and (i), respectively, and inserting the
following as clause (g):
1
<PAGE> 36
"(g) guarantee the debts and obligations of any Partner and
secure the same by a mortgage, pledge, security interest or
other liens upon the property of the Partnership, any part
thereof, any interest therein, or any improvements thereto;".
5. Section 49 of the Partnership Agreement, entitled "Evidence of
Partnership Interests," is hereby deleted in its entirety, and Sections 50, 51,
and 52 of the Partnership Agreement are renumbered as Sections 49, 50, and 51
respectively.
6. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 2
on this 29th day of March, 1993.
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ Arthur Tek By: /s/ Lowell W. Paxson
- ------------------------ -----------------------------
Its President
-------------------------
/s/ William L. Watson
- ------------------------
LIMITED PARTNER:
PAXSON BROADCASTING OF ORLANDO,
LIMITED PARTNERSHIP, By Paxson
Enterprises, Inc. its General
Partner
/s/ Arthur Tek /s/ Lowell W. Paxson
- ------------------------ --------------------------
Lowell Paxson, President
/s/ William L. Watson
- ------------------------
2
<PAGE> 37
LIMITED PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This Limited Partnership Interests Assignment Agreement (the
"Agreement") is dated December 15, 1993 (the "Effective Date"), among Paxson
Communications of Florida, Inc. (the "General Partner"), Lowell W. Paxson (the
"First Assignor Limited Partner"), Second Crystal Diamond, L. P., a Nevada
limited partnership (the "First Assignee"), Paxson Communications Corp. (the
"Second Assignee"), and Paxson Communications LP, Inc. (the "Assignee Limited
Partner"). Capitalized terms used herein and not ascribed a definition have
the meaning assigned to them by the Partnership Agreement to which they
pertain.
BACKGROUND
The General Partner and the First Assignor Limited Partner are
partners in the limited partnerships listed in Exhibit "A" (the
"Partnerships"). The First Assignor Limited Partner wishes to transfer his
limited partnership interests in those Partnerships to the First Assignee and
the First Assignee wishes to immediately assign such limited partnership
interests to the Second Assignee and the Second Assignee wishes to immediately
assign such limited partnership interests to the Assignee Limited Partner. The
First Assignor Limited Partner and the First and Second Assignees also wish to
have the Assignee Limited Partner admitted as a Limited Partner in the
respective Partnerships and granted Partnership Rights in the respective
Partnerships. The Assignee Limited Partner agrees to accept the assignment of
the limited partnership interests and to be admitted as a Limited Partner in
accordance with the Limited Partnership Agreements listed in Exhibit "A" (the
"Partnership Agreements"). The General Partner as general partner for each of
the Partnerships consents to the assignment of the limited partnership
interests and the admission and substitution of the Assignee Limited Partner as
a Limited Partner under the respective Partnership Agreements. Pursuant to
Chapter 620, Florida Statutes, the Partnerships will continue uninterrupted
with substitute partners and the assignment of the limited partnership
interests will not cause a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to the
Partnership Agreements and Section 620.152, Florida Statutes, the First
Assignor Limited Partner assigns all of its limited partnership interests in
the
Partnerships to the First Assignee. The First Assignee accepts the assignment
of all of the limited partnership interests. Pursuant to the Partnership
Agreements and Section 620.152, Florida Statutes, the First Assignee assigns
all of its limited partnership interests in the Partnerships to the Second
Assignee. The Second Assignee accepts the assignment of all of the limited
partnership interests. Pursuant to the Partnership Agreements and Section
620.152, Florida Statutes, the Second Assignee assigns all of its
1
<PAGE> 38
limited partnership interests in the Partnerships to the Assignee Limited
Partner. The Assignee Limited Partner accepts the assignment of all of the
limited partnership interests.
2. Admission of Assignee Limited Partner and Withdrawal
of Assignor Limited Partner. On the Effective Date, the Assignee Limited
Partner is admitted as a Limited Partner pursuant to the respective Partnership
Agreement for such Partnerships and the First Assignor Limited Partner has
withdrawn as a Limited Partner from each of the Partnerships.
3. Assignee Limited Partner's Acceptance of Admission.
By executing this Agreement, the Assignee Limited Partner accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements.
The parties agree that the Assignee Limited Partner's execution of this
Agreement shall satisfy the requirements of Sections 23, 24 and 25 of the
respective Partnership Agreements.
4. General Partner's Consent. The General Partner
consents to the assignment of the limited partnership interests to the Assignee
Limited Partner and the admission of the Assignee Limited Partner as a Limited
Partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the limited partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of First Assignor Limited Partner, General Partner, First
Assignee, Second Assignee and Assignee Limited Partner agree and acknowledge
that (i) First Assignor Limited Partner's limited partnership interests in each
of the Partnerships are subject to the lien and security interest of Banque
Paribas, as Agent on behalf of the Lenders (the "Agent"), under the Loan
Documents (as defined in that certain Credit Agreement dated as of March 30,
1993 by and among Banque Paribas, the Lenders identified therein and each of
the Station Partnerships) and (ii) the assignment of the limited partnership
interests in the Partnerships by First Limited Partner Assignor to First
Assignee, by First Assignee to Second Assignee, and by Second Assignee to
Assignee Limited Partner, are made subject to such continuing lien and security
interest of Agent under the Loan Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute one
agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding among the
2
<PAGE> 39
parties and supersedes any prior or contemporaneous agreement or
representation, oral or written, by any of them.
3
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON COMMUNICATIONS OF FLORIDA,
INC., as General Partner of each
of the Partnerships
By:/s/ Lowell W. Paxson
-------------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
---------------------------------
Lowell W. Paxson, First Assignor
Limited Partner for each Partnership
SECOND CRYSTAL DIAMOND, L. P., a
Nevada limited partnership,
First Assignee
By: /s/ Lowell W. Paxson
------------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS CORP., As
Second Assignee
By: /s/ Lowell W. Paxson
-----------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS LP, INC., as
Assignee Limited Partner for each
Partnership
By: /s/ Lowell W. Paxson
------------------------------
Lowell W. Paxson, President
4
<PAGE> 41
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment
Number 1 to the Agreement of Limited Partnership of Paxson
Broadcasting of Jacksonville, Limited Partnership dated January 1,
1992, and Amendment Number 2 to the Agreement of Limited Partnership
of Paxson Broadcasting of Jacksonville, Limited Partnership dated
March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Tampa,
dated June 27, 1991, and Amendment Number 2 to the Agreement of
Limited Partnership of Paxson Broadcasting of Tampa, dated April 27,
1992, and Amendment Number 3 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated January 1,
1992, and Amendment Number 4 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated March 29,
1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Miami, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Miami, dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Orlando, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Orlando, Limited Partnership.
5
<PAGE> 42
GENERAL PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This is a General Partnership Interests Assignment Agreement
(the "Agreement") dated December 15, 1993 (the "Effective Date"). It is among
Paxson Enterprises, Inc. (the "General Partner Assignor"), Paxson
Communications Corp. (the "First Assignee"), Paxson Communications of Florida,
Inc. (the "General Partner Assignee"), and Lowell L. Paxson (the "Nonassigning
Limited Partner") in respect of the Limited Partnerships listed in Exhibit "A"
(the "Station Partnerships"). It is also among the General Partner Assignee,
the First Assignee, the General Partner Assignee and the Station Partnerships
in their capacities as a limited partner (each a "License Limited Partner") in
their respective Limited Partnerships listed in Exhibit "B" (the "License
Partnerships," and together with the Station Partnerships, the "Partnerships").
Capitalized terms used herein and not ascribed a definition have the meaning
assigned to them by the Partnership Agreement to which the term pertains.
BACKGROUND
The General Partner Assignor and the Nonassigning Limited
Partner are partners in the Station Partnerships. The General Partner Assignor
and the License Limited Partners are the partners in the License Partnerships.
The General Partner Assignor wishes to transfer each of its general partnership
interests in the Station Partnerships and the License Partnerships to the First
Assignee in exchange for certain of its common stock and the First Assignee
wishes to immediately assign such general partnership interests to the General
Partner Assignee in exchange for all of the capital stock of the General
Partner Assignee. The General Partner Assignor and the First Assignee also
wish to have the General Partner Assignee admitted as a Partner and granted
partnership rights in each of the Partnerships. The General Partner Assignee
agrees to accept the assignment of the general partnership interests and to be
admitted as a General Partner in the respective Partnerships pursuant to the
Partnership Agreements identified in Exhibit "A" and "B", respectively (the
"Partnership Agreements"). The Nonassigning Limited Partner as the limited
partner in each of the Station Partnerships and each of the License Limited
Partners as the limited partner in the respective License Partnerships hereby
consent to the assignment of the general partnership interests and admission of
the General Partner Assignee as the general partner in their respective
Partnerships pursuant to the terms of this Agreement and the Partnership
Agreements. Pursuant to Chapter 620, Florida Statutes, the Partnerships will
continue uninterrupted and the assignment of the general partnership interests
will not cause a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to
Section 23 of each of the Partnership Agreements and Section 620.152, Florida
Statutes, the General Partner Assignor assigns all of its
1
<PAGE> 43
general partnership interests in the Partnerships to the First Assignee. The
First Assignee accepts the assignment of all of the general partnership
interests. Pursuant to Section 23 of each of the Partnership Agreements and
Section 620.152, Florida Statutes, the First Assignee assigns all of its
general partnership interests in the Partnerships to the General Partner
Assignee. The General Partner Assignee accepts the assignment of all of the
general partnership interests.
2. Admission of General Partner Assignee and Withdrawal
of General Partner Assignor. On the Effective Date, the General Partner
Assignee is admitted as a general partner under the respective Partnership
Agreement and the General Partner Assignor has withdrawn from each of the
Partnerships.
3. General Partner Assignee's Acceptance of Admission.
By executing this Agreement, the General Partner Assignee accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements
and shall become the Managing General Partner of each of the Partnerships. The
parties agree that the General Partner Assignee's execution of this Agreement
shall satisfy the requirement of Sections 23, 24 and 25 of the respective
Partnership Agreements.
4. Limited Partner's Consent. Each of the Nonassigning
Limited Partner and the License Limited Partners consent to the assignment of
the general partnership interest by the General Partner of their respective
Partnership and to the admission of the General Partner Assignee as a general
partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the general partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of General Partner Assignor, First Assignee, General Partner
Assignee, Nonassigning Limited Partner and the License Limited Partners agree
and acknowledge that (i) General Partner Assignor's general partnership
interests in each of the Partnerships are subject to the lien and security
interest of Banque Paribas, as Agent on behalf of the Lenders (the "Agent"),
under the Loan Documents (as defined in that certain Credit Agreement dated as
of March 30, 1993 by and among Banque Paribas, the Lenders identified therein
and each of the Station Partnerships) and (ii) the assignment of the general
partnership interests in the Partnerships by General Partner Assignor to First
Assignee, and by First Assignee to General Partner Assignee, are made subject
to such continuing lien and security interest of Agent under the Loan
Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute
2
<PAGE> 44
one agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding
3
<PAGE> 45
among the parties and supersedes any prior or contemporaneous agreement or
representation, oral or written, by any of them.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON ENTERPRISES, INC., as
General Partner Assignor and as
Withdrawing General Partner of each
Partner
By: /s/ Lowell W. Paxson
-----------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
---------------------------------
Lowell W. Paxson, Nonassigning
Limited Partner
PAXSON COMMUNICATIONS CORPORATION,
First Assignee
By: /s/ Lowell W. Paxson
------------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS OF FLORIDA,
INC., as General Partner Assignee
and successor General Partner of
each Partnership
By: /s/ Lowell W. Paxson
------------------------------
Lowell W. Paxson, President
4
<PAGE> 46
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment
Number 1 to the Agreement of Limited Partnership of Paxson
Broadcasting of Jacksonville, Limited Partnership dated January 1,
1992, and Amendment Number 2 to the Agreement of Limited Partnership
of Paxson Broadcasting of Jacksonville, Limited Partnership dated
March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Tampa,
dated June 27, 1991, and Amendment Number 2 to the Agreement of
Limited Partnership of Paxson Broadcasting of Tampa, dated April 27,
1992, and Amendment Number 3 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated January 1,
1992, and Amendment Number 4 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated March 29,
1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Miami, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Miami, dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Orlando, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Orlando, Limited Partnership.
5
<PAGE> 47
EXHIBIT "B"
Limited Partnerships
Agreement of Limited Partnership of Jacksonville License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Jacksonville, Licensed
Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Tampa License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Tampa, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Miami License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Miami, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Orlando License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Orlando, Licensed Limited
Partnership dated March 29, 1993.
6
<PAGE> 48
AMENDMENT NUMBER 5 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON BROADCASTING OF TAMPA, LIMITED PARTNERSHIP
This Amendment Number 5 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Broadcasting of Tampa,
Limited Partnership ("Amendment") is effective as of the ___ day of September,
1995, by and between PAXSON COMMUNICATIONS OF FLORIDA, INC., a Florida
corporation, as the General Partner and PAXSON COMMUNICATIONS LP, INC., as a
Limited Partner. The parties hereby agree as follows:
1. Partnership Office. The fifth sentence of Article II, Section
5 of the Partnership Agreement is amended to read as follows: "The principal
business office of the Partnership is located at 601 Clearwater Park Road, West
Palm Beach, Florida 33401."
2. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 5
on this 19th day of September, 1995.
WITNESSES: GENERAL PARTNER:
PAXSON COMMUNICATIONS OF FLORIDA,
INC.
/s/ Lorie Closson By: /s/ William L. Watson
- -------------------------- -------------------------------
Its Secretary
---------------------
/s/ Desire Malky
- --------------------------
LIMITED PARTNER:
PAXSON COMMUNICATIONS LP, INC.
/s/ Lorie Closson By: /s/ William L. Watson
- -------------------------- -------------------------------
Its Secretary
---------------------
1
<PAGE> 1
EXHIBIT 3.15.1
<PAGE> 2
EXHIBIT 3.15.1
AGREEMENT OF LIMITED PARTNERSHIP OF
TAMPA LICENSE LIMITED PARTNERSHIP
This Agreement of Limited Partnership ("Agreement") is entered into
and shall be effective as of the 10th day of March, 1993, by and between Paxson
Enterprises, Inc., a Nevada Corporation, as the General Partner and Paxson
Broadcasting of Tampa, Limited Partnership, as a Limited Partner, pursuant to
the provisions of the Florida Uniform Limited Partnership Act, on the following
terms and conditions:
ARTICLE I.
FORM AND INTERPRETATION
1. Definitions. The following capitalized terms, as used in
this Agreement and in the attached exhibits, which constitute a part of this
Agreement, have the meanings ascribed to them below and include the plural as
well as the singular number:
"Act" means the Florida Uniform Limited Partnership Act, as amended,
or any subsequent Florida law concerning partnerships that are enacted in
substitution for the Act.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amount
which such Partner is obligated to restore (pursuant to the
terms of a promissory note or otherwise) or is deemed to be
obligated to restore pursuant to the penultimate sentences
of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items
described in Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6) of the
Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
"Affiliate" of a Partner means (1) another Partner of the
Partnership; (2) a legal or personal representative of any Partner; (3) the
Partner's lineal descendants and spouse (other than a spouse who is legally
separated from the Partner under a decree of divorce or separate maintenance);
(4) a trustee of a trust for the benefit of any Person referred to in clause
(1), (2)
<PAGE> 3
or (3); (5) a Person, other than an individual, of which 80% or more of the
voting or equity interests is owned directly or indirectly by a Partner and/or
one or more of the Persons referred to in clauses (1) through (4); (6) a Person
owning 80% or more of the voting or equity interests of a Partner that is not
an individual; or (7) a Person other than an individual, 80% or more of the
voting or equity interests of which is owned by the same Person that owns 80%
or more of the voting or equity interests of a Partner that is not an
individual.
"Agreement" means this Limited Partnership Agreement as originally
executed and as subsequently amended or supplemented from time to time in
accordance with section 48.
"Assignment" means a sale, exchange, gift, pledge, transfer or
disposition of any kind whatsoever and, in the case of a Person that is not an
individual, it includes the sale, exchange, pledge, transfer or disposition of
a majority of either voting control or the equity interests in such Person.
"Bankruptcy" means taking advantage of any bankruptcy or insolvency
act (including the Bankruptcy Reform Act of 1978 or similar law, and also any
proceeding under state or local insolvency or debtor relief laws), or a final
adjudication of insolvency or an assignment of a major portion of a Person's
assets for the benefit of creditors.
"Capital Account" has the meaning set forth in section 10.
"Capital Contribution" means the total amount of cash, securities and
other property contributed by a Partner to the equity of the Partnership, or
agreed to be contributed by a Partner to the equity of the Partnership,
pursuant to section 9(a), and reduced by any return of capital to the Partner
within the meaning of section 9(c). Any reference in this Agreement to the
Capital Contribution of either a Partner or an assignee of a Partner shall
include the Capital Contribution of any prior Partner to whose Partnership
Interest the then existing Partner or assignee succeeded.
"Cash Flow" means the excess of cash derived by the Partnership from
all sources, including from capital contributions, loans, sales of securities
and other activities, (but excluding cash derived from the winding-up and
liquidation of the Partnership pursuant to section 32) over the sum of all cash
disbursements, including repayments of loans from Partners, loans to Partners
from the Partnership, and distributions to Partners pursuant to section 14(a)
or (b) (but excluding disbursements pursuant to section 14(c)), plus a
reasonable allowance for reserves for repairs, investments in Property
(including Marketable Securities), replacements, contingencies and anticipated
obligations (including
2
<PAGE> 4
debt service, capital improvements and replacements to the extent not funded by
reserves) as reasonably determined by the Managing General Partner.
Notwithstanding the preceding sentence, in determining the reasonable allowance
for reserves, the Managing General Partner shall reduce such allowance to the
extent necessary to ensure that annual distributions of Cash Flow to each
Partner will be in an amount at least equal to the annual income tax liability
(exclusive of income tax liability resulting from a transaction pursuant to
section 14(b) or (c)) of each such Partner (determined assuming that the
maximum possible income tax rate is applicable) resulting from the allocation
to the Partner of his share of the Partnership's Taxable Income and Taxable
Loss.
"Code" means the Internal Revenue Code of 1986, as amended, or any
subsequent federal law concerning income taxes that is enacted in substitution
for the Code.
"General Partner" means any Person admitted as a general partner in
accordance with this Agreement.
"General Partnership Interest" means the Partnership Interest of a
General Partner, in his capacity as a General Partner.
"Limited Partner" means those Persons who are signatories to this
Agreement as limited partners; and all other Persons who shall be admitted to
the Partnership as limited partners.
"Majority in Interest", when used in regard to the degree of consent,
approval or agreement required among the Partners, means Partners whose
aggregate Capital Account balances constitute over 50% of the total aggregate
Capital Account balances of all owners of Partnership Interests then
outstanding.
"Managing General Partner" means the Person designated in this
Agreement as the general partner responsible for management of the affairs of
the Partnership and thereafter any Person which becomes a general partner
responsible for management of the affairs of the Partnership pursuant to this
Agreement, in the Person's capacity as a managing general partner of the
Partnership. Initially, the Managing General Partner shall be Paxson
Enterprises, Inc.
"Marketable Securities" means securities, including stock, which are
traded on an established securities market, whether or not registered under the
Securities Act of 1933.
"Partner" means each Person which is a General Partner or a Limited
Partner.
3
<PAGE> 5
"Partnership" means TAMPA LICENSE LIMITED PARTNERSHIP, the Florida
limited partnership formed in accordance with the Act pursuant to this
Agreement.
"Partnership Interest" includes only a Partner's Capital Contribution
and right to receive his Percentage Interest and excludes Partnership Rights.
"Partnership Rights" excludes the Partnership Interest of a Partner,
and includes, in addition to other rights provided in this Agreement, the
rights provided to him by the Act except to the extent expressly modified by
this Agreement.
"Percentage Interest" means a Partner's percentage share (as
initially stated opposite such Partner's name on EXHIBIT A as amended from time
to time), of the Profits and Losses, Taxable Income or Taxable Loss, cash and
other distributions and liquidation proceeds of the Partnership all subject to
and interpreted in accordance with the terms of this Agreement. The Percentage
Interests of Partners shall be proportionate to the Capital Accounts of the
Partnership at all times so that, for example, if a Partner's Capital Account
is 100 and the aggregate of all Capital Accounts is 1000, the Partner's
Percentage Interest in the Partnership is 10%. In the event of a change among
the Partners in the Percentage Interests in the Partnership during the year,
the Partnership shall use a closing-of-the-books method with respect to such
change or changes in Percentage Interests in computing a Partner's share of
Profits and Losses, Taxable Income and Taxable Losses, and entitlement to
distributions during such year.
"Person" means any individual and any general or limited partnership,
corporation, estate, joint venture, trust, business trust, cooperative,
association or other organization or entity.
"Profits and Losses" means the annual net income or loss of the
Partnership determined on a generally accepted accounting principles basis, as
disclosed on the annual financial statements of the Partnership.
"Property" means any real, personal, tangible or intangible property
contributed by a Partner to the equity of the Partnership or otherwise acquired
by the Partnership.
"Pro Rata" means in the proportion that the Percentage Interest of
each Partner bears to the total Percentage Interests of all the Partners.
"Retirement" means the death, Bankruptcy, adjudication of
incompetency as determined by a court of appropriate jurisdiction, dissolution
and liquidation or termination of existence, merger or consolidation (except as
provided in
4
<PAGE> 6
section 29) of a Partner, or the sale, lease or other disposition of all or
substantially all the property of a Partner (except as provided in section 29).
"Taxable Income or Taxable Loss" means the net income or loss of the
Partnership for federal income tax purposes, as determined at the close of the
Partnership's fiscal year by the accountants employed by the Partnership to
prepare its income tax returns.
2. Captions and Certain Terms. The titles and captions
preceding the text of the articles and sections of this Agreement are solely
for convenience of reference and neither constitute a part of this Agreement
nor affect its meaning, interpretation, or effect. The words "hereby,"
"herein," "hereof," "hereto," "hereunder," and terms of similar import refer to
this Agreement as a whole and not to any particular article, section,
subsection or other part of this Agreement.
3. Severability. If any article, section or other provision of
this Agreement, or its application, is held to be invalid, illegal or
unenforceable in any respect or for any reason, the remainder of this Agreement
and the application of such article, section or other provision to a person or
circumstance with respect to which it is valid, legal and enforceable is not
affected.
4. Limitation of Grant. Nothing in this Agreement, whether
express or implied, is intended or may be construed to confer upon, or to grant
to, any creditor or any other Person (other than the Partners and their legal
and personal representatives, heirs, successors and permitted assignees) any
right, remedy or claim under or because of this Agreement or any covenant,
condition or stipulation of it.
ARTICLE II
ORGANIZATION OF PARTNERSHIP
5. Formation, Name, Office and Registered Agent. The
Partnership is organized as of the date of this Agreement and the signatories
to this Agreement constitute the members of this partnership under the Act as
of the date hereof. The rights and obligations of the Partners are determined
by the Act, except as otherwise expressly provided in this Agreement. The name
of the Partnership is "TAMPA LICENSE LIMITED PARTNERSHIP." The recordkeeping
office of the Partnership is located at 18401 U.S. Highway 19 North,
Clearwater, Florida 34624. The principal business office of the Partnership is
located at 50 West Liberty Street, Reno, Nevada 89501. The Managing General
Partner may change the name of the Partnership or the location of its principal
5
<PAGE> 7
business office at any time and from time to time by giving written notice of
such change to each Partner.
6. Term of Partnership. The term of the Partnership shall
continue until December 31, 2066, unless the Partnership is earlier dissolved
and terminated under this Agreement.
7. Purposes of Partnership; Authorized Acts.
A. (a) Purposes of the partnership are to
(i) acquire, operate, manage and perform all matters
necessary and attendant to the operation of one or
more radio stations in Florida,
(ii) invest in, own, sell, acquire, manage and exercise
the voting rights associated with Marketable
Securities,
(iii) acquire, hold, sell, own, improve, develop or lease
other types of real and personal property, and
(iv) engage in any other lawful activity for profit
approved by an affirmative vote of a Majority in
Interest.
(i) Notwithstanding Section 7, unless unanimously approved by
the Partners, the Partnership shall not engage in any
activity(ies) which would result, based upon opinion of tax
counsel, in the characterization of the Partnership as an
investment company as that term is used in Section 721(b) or
any successor provision of the Code.
B. In furtherance of its purposes, but subject to every other provision of
this Agreement, the Partnership is authorized to do the following:
(a) acquire by purchase, lease or otherwise,
any real or personal, tangible or intangible property that may be necessary,
convenient or incidental to the accomplishment of the purposes of the
Partnership;
(b) construct, operate, maintain, finance,
improve, own, sell, convey, exchange, assign, mortgage or lease any property
(or a part thereof) as may be necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership;
(c) borrow money and issue evidences of
indebtedness in furtherance of any purpose of the Partnership and secure the
same by a mortgage, pledge, security interest or other
6
<PAGE> 8
liens on the property, any part thereof, any interest therein or on any
improvements thereto;
(d) prepay, in whole or in part, refinance,
increase, renew, modify or extend any indebtedness of the Partnership and, in
connection therewith, extend, renew or modify any mortgage, pledge, security
interest or other lien affecting any property;
(e) invest and reinvest the assets of the
Partnership in, and purchase, acquire, hold, sell, transfer and exchange
securities of all kinds;
(f) lend money to Partners;
(g) exercise the voting rights associated with
property owned by the Partnership; and
(h) enter into any activity and perform and
carry out any contract in connection with, or necessary or incidental to, the
accomplishment of the purposes of the Partnership.
C. Notwithstanding any other provision of this Agreement, the
Partnership shall not transfer any Federal Communications Commission ("FCC")
licenses it may hold at any time to any party except in accordance with the
rules and policies of the FCC, and unless substantially all the operating
assets of the associated station in connection with which a particular license
is used, or control of the entity that holds such assets, is simultaneously
transferred to such party.
8. Co-Ownership of Partnership Interests. Any consent
required of a Partner shall require the action or vote of each Person (or in
such other manner as such Persons have designated in writing to the
Partnership) having an interest in such Partnership Interest, with a majority
approval needed for consent. On the death of a co-owner of a Partnership
Interest held in either joint tenancy with right of survivorship or tenancy by
the entirety, the Partnership Interest is owned solely by the survivor as a
Partner, and not as an assignee. The Partnership need not (although it may)
recognize the death of a co-owner of a Partnership Interest until the Managing
General Partner receives notice of the death. A co-owner of a Partnership
Interest may sever the tenancy by giving to the Managing General Partner notice
to that effect, and signed by the co-owner requesting the severance in the case
of a joint tenancy, and by both co-owners in the case of a tenancy by the
entirety. Upon receipt of the notice and the certificate evidencing the
Partnership Interest owned by the co-owners, the Managing General Partner shall
cause the Partnership Interest to be allocated as directed by the co-owners and
shall indicate on the Partnership records such allocation. In absence of joint
direction, the interests shall be allocated between the owners as
7
<PAGE> 9
the severed ownership interests would be valued for federal estate tax
purposes.
ARTICLE III
PARTNERSHIP CAPITAL
9. Capital Contributions.
(a) Upon executing this Agreement, each Partner shall
make or has made a Capital Contribution in the amount and of the type, and
initially shall have a Percentage Interest equal to the percentage, set forth
opposite his name on EXHIBIT A. Partners may make (but Limited Partners are not
required to make) additional Capital Contributions at such time and in such
amount as they in their sole discretion shall determine but only if the
Managing General Partner and a Majority in Interest consent to such additional
Capital Contributions. Upon the assignment of any Partnership Interest, the
making of an additional Capital Contribution or any return of a Capital
Contribution, or any substitution of a Partner, EXHIBIT A shall be amended to
accurately reflect the name, address, Capital Contribution and Percentage
Interest of each Partner.
(b) Notwithstanding (a) above, no Capital Contributions
shall be made or permitted by any Partner which would result, directly or
indirectly, in the Partnership being treated as an investment company under
section 721(b) of the Code, and any such attempted Capital Contribution shall
be void ab initio. The Managing General Partner shall withhold its consent to
the making of an additional Capital Contribution, unless it has satisfied
itself (by seeking advice of legal counsel or otherwise) that the making of the
additional Capital Contribution will not result, directly or indirectly, in the
Partnership being treated as an investment company under section 721(b) of the
Code.
(c) A Partner shall not receive from the Managing
General Partner or out of Partnership Property, and the Managing General
Partner and the Partnership shall not return to a Partner, any part of his
Capital Contribution, except as set forth in Articles VIII and IX of this
Agreement and such distribution is determined to be a return of a Partner's
Capital Contribution, and then only if all liabilities of the Partnership,
except liabilities to the Partners on account of their Capital Contributions,
have been paid or there remains property of the Partnership sufficient to pay
them. The Partnership shall not pay interest on Capital Contributions, and a
Partner may demand and receive only cash in return for his Capital
Contribution, except to the extent provided for in Articles VIII and IX of this
Agreement or unless the Liquidator (as defined in section 32) decides to
distribute Partnership property in kind upon the dissolution, winding-up, and
8
<PAGE> 10
termination of the Partnership, or unless the distribution of property to a
Partner is unanimously approved by the Partners. Each Partner, by signing this
Agreement or a counterpart of it, consents to all distributions authorized by
this Agreement and releases all other Partners from all liability to both him
and the Partnership for all distributions made in accordance with this
Agreement.
(d) Any payments made by the Limited Partner as a guarantor
of obligations of the Partnership shall be treated as additional Capital
Contributions to the Partnership.
(e) Notwithstanding any provision in this Agreement to the
contrary, if any Partner's Capital Account has a deficit balance ("Deficit
Capital Account Balance") upon liquidation of the Partnership (after giving
effect to all contributions, distributions, and allocations for all taxable
years, including the year in which such liquidation occurs), such Partner shall
contribute to the Capital of the Partnership the amount necessary to restore
such deficit balance to zero in accordance with Regulations Section
1.704-1(b)(2)(ii)(d).
10. Capital Account.
(a) The Managing General Partner shall establish and
maintain a Capital Account for each Partner in the Partnership's books of
account. Capital Accounts shall be maintained and adjusted in accordance with
generally accepted accounting principles. Consistent with these capital
account maintenance rules, the Managing General Partner shall credit to each
Partner's Capital Account the amounts of the Partner's Capital Contributions
and any Profits allocated to the Partner. The Managing General Partner shall
charge to or deduct from each Partner's Capital Account the amounts of all
distributions (in cash or other property) to the Partner and any Losses
allocated to the Partner. If any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferror to the extent it relates to the
transferred interest.
(b) The provisions of this section and the other
provisions of this Agreement pertaining to the maintenance of Capital Accounts
are intended to comply with Treasury Regulation Section 1.704-1(b) (or any
successor provision thereto), and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Managing General Partner
determines that it is prudent to modify the manner in which the Capital
Accounts are computed in order to comply with such Regulations, provided that
it is not likely to have a material effect on the amounts distributable to any
Partner without such Partner's consent and upon receipt of an opinion of tax
counsel to the Partnership concluding that such modification will be given
effect for federal
9
<PAGE> 11
income tax purposes, the Managing General Partner may make such modification.
(c) The Managing General Partner shall revalue the
Partnership's property (based on its fair market value as of the moment
immediately preceding the relevant event) and shall adjust Capital Accounts to
take into account any resulting Profit or Loss (determined as if the
Partnership sold all its property for cash equal to the property's fair market
value) upon the occurrence of either of the following events: (1) the making by
any Partner of any non-Pro Rata additional Capital Contribution, (2) the
partial or complete withdrawal of a Partner's Partnership Interest, or (3) the
admission of a Partner.
11. Expenses Paid by Partners. Any Partnership expense
reasonably paid by any Partner on behalf of the Partnership is an indebtedness
of the Partnership to the Partner and does not increase the Partner's
Partnership Interest or Percentage Interest. The Partnership shall reimburse
the Partner as soon as practicable and may pay interest on the indebtedness.
12. Loans by Partners. The Managing General Partner may borrow
money on behalf of the Partnership from any Partner in such amounts and for
such purposes as it considers necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership. Each loan to the
Partnership by a Partner (excluding reimbursable expenses) shall be evidenced
by a promissory note or similar instrument of the Partnership, may be secured
by a lien on the Property, may bear interest at a rate determined by agreement
between such Partner and the Managing General Partner and may be subject to
such other terms and conditions as are agreed to by such Partner and the
Managing General Partner. The Partnership may prepay each loan from a Partner
in whole or in part, at any time and from time to time, without premium or
penalty.
ARTICLE IV
PROFITS AND LOSSES AND TAXABLE INCOME AND TAXABLE LOSS
13. Allocations
(a) Allocation of Profits and Losses.
(1) Profits and Losses of the Partnership shall
be allocated Pro Rata among the Partners.
(2) Profits and Losses of the Partnership shall
be determined for each fiscal year of the Partnership in accordance with the
method of accounting required or permitted to be used for federal income tax
purposes, with such exceptions thereto as are set forth in this Agreement, and
otherwise in
10
<PAGE> 12
accordance with generally accepted accounting principles applied in a
consistent manner.
(b) Allocation of Taxable Income and Taxable Loss.
(1) Except as otherwise provided in this
section 13(b), allocations of tax items among the Partners shall be consistent
with corresponding book (Profits and Losses) items (if any). For tax purposes,
Profits and Losses, or any item thereof, shall be appropriately adjusted to
reflect Taxable Income and Taxable Loss, or any item thereof, as determined
under the Code and shall be allocated among the Partners in such a manner as to
comply with the provisions of the Code and Regulations thereunder (including,
if necessary, the "minimum gain chargeback provisions" of the Regulations under
Section 704 of the Code). For example, any gain or loss recognized by the
Partnership with respect to property contributed to the Partnership by a
Partner shall be shared among the Partners so as to take account of the
variation, if any, between the basis of the property to the Partnership and its
fair market value at the time of contribution or revaluation, whichever is
applicable, so as to comply with the requirements of Section 704 of the Code.
Thus, for example, if a Partner contributes property to the Partnership whose
agreed fair market value exceeds its adjusted basis in the hands of the
contributing Partner ("built-in gain"), and there have been no events giving
rise to a revaluation, built-in gain with respect to such contributed property
shall first be allocated to such contributing Partner when the Partnership
recognizes gain upon a disposition of such contributed property, but not in an
amount in excess of such built-in gain; the remaining balance of such
recognized gain, if any, shall be allocated among the Partners as set forth
herein. The allocation of built-in gain to a contributing Partner shall not
increase such Partner's Capital Account, because such gain was already taken
into account when the built-in gain property was contributed to the
Partnership. A Partner who contributes property other than cash shall provide
the Managing General Partner with information necessary to verify the
contributing Partner's adjusted tax basis in the items of property contributed
by him to the Partnership.
(2) Generally, except as provided in section
13(b)(i), Taxable Income and Taxable Loss (and each such income and loss item)
shall be allocated Pro Rata among the Partners. In the event, however, that
non-Pro Rata distributions of property are made to a Partner or the net
proceeds from the sale of property are distributed non-Pro Rata to a Partner,
Taxable Income and Taxable Loss derived from such distributions or sales shall
be allocated 100% to such Partner, subject only to such modifications as are
necessary to comply with Section 704 of the Code.
11
<PAGE> 13
(c) Losses. The Losses allocated pursuant to Sections
13(a) and 13(b) hereof shall not exceed the maximum amount of Losses that can
be so allocated without causing any Partner who is not a General Partner to
have an Adjusted Capital Account Deficit at the end of any fiscal year. In the
event some but not all of the Partners who are not General Partners would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 13(a) or Section 13(b), the limitation set forth in this
Section 13(c) shall be applied on a Partner by Partner basis so as to allocate
the maximum permissible Loss to each Partner who is not a General Partner under
Section 1.704-1(b)(2)(ii)(d) of the Regulations. All Losses in excess of the
limitation set forth in this Section 13(c) shall be allocated to the General
Partner.
(d) Special Allocations. The following special
allocations shall be made in the following order:
(1) Qualified Income Offset. In the event any Partner who is
not a General Partner unexpectedly receives any adjustments, allocations, or
distributions described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income and
gain shall be specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the
Adjusted Capital Account Deficit of such Partner as quickly as possible,
provided that an allocation pursuant to this Section 13(d)(1) shall be made if
and only to the extent that such Partner would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Section 13 have been
tentatively made as if this Section 13(d)(1) were not in the Agreement.
(2) Gross Income Allocation. In the event any Partner who is
not a General Partner has a deficit Capital Account at the end of any
Partnership fiscal year that is in excess of the sum of (i) the amount such
Partner is obligated to restore (pursuant to the terms of a promissory note or
otherwise), and (ii) the amount such Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially
allocated items of Partnership income and gain in the amount of such excess as
quickly as possible, provided that an allocation pursuant to this Section
13(d)(2) shall be made if and only to the extent that such Partner would have a
deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 13 have been tentatively made as if Section
13(d)(1) hereof and this Section 13(d)(2) were not in the Agreement."
12
<PAGE> 14
ARTICLE V
DISTRIBUTIONS, WITHDRAWALS AND LOANS
14. Distributions.
(a) Cash Flow Distributions. Cash Flow shall be
distributed Pro Rata among the Partners. Notwithstanding the foregoing, if the
Partners unanimously agree, the Partnership may distribute Cash Flow
attributable to a sale of property in a non-Pro Rata manner.
(b) Partial or Complete Withdrawal by a Partner From the
Partnership.
(1) In the event of a partial or complete
withdrawal of a Partner from the Partnership pursuant to Article VIII, the
Managing General Partner shall, as promptly as is reasonably possible,
distribute to the Partner his Pro Rata share of the Marketable Securities
previously contributed by such Partner to the Partnership, cash and other
readily divisible assets of the Partnership. The withdrawing Partner shall
also be entitled to receive cash equal in value to his Pro Rata share of the
fair market value (as reasonably determined by the Managing General Partner) of
any non-readily divisible assets owned by the Partnership. The Managing
General Partner shall, as promptly as possible, distribute this additional
amount of cash, if any, to the withdrawing Partner. Cash distributions to the
withdrawing Partner shall be reduced by such Partner's Pro Rata share of the
liabilities of the Partnership and by any expenses incurred by the Partnership
with respect to the withdrawal of the Partner.
(2) A Partner may request that all or a portion
of the Marketable Securities subject to the requested withdrawal be sold by the
Partnership and the net proceeds (after selling and other expenses) distributed
as directed by him. In the event that the Managing General Partner is unable
to sell these Marketable Securities, it shall distribute them to the Partner,
unless it is notified by the Partner to cancel the withdrawal.
(3) The Managing General Partner shall not be
required to distribute to the requesting Partner any assets that the
Partnership is legally restricted or prohibited from distributing to the
Partner, unless steps can be taken to remove the restriction or prohibition; in
which case the requesting Partner shall be charged with the expense of removing
such restriction or prohibition. Any distribution hereunder shall also be
subject to the limitations set forth in sections 9(c) and 15, respectively.
(c) Liquidating Distributions. The net proceeds from
liquidation of the Partnership's assets pursuant to its
13
<PAGE> 15
dissolution, winding-up, and termination shall be distributed, and all Profits
and Losses resulting from the liquidation of the Partnership property shall be
allocated, among the Partners in the proportions and orders of priority
specified in this section 14(c).
(i) The Liquidator shall distribute the net
proceeds from liquidation of the Partnership's assets as follows:
(1) FIRST: To pay all the liabilities
of the Partnership that are then due and payable, except for both Capital
Contributions of Partners and liabilities to the Partners, in the order of
priority required by Florida law; then
(2) SECOND: To establish any reasonable
reserve that the Liquidator may determine is required for unpaid, future, or
contingent liabilities or obligations of the Partnership; then
(3) THIRD: To pay all liabilities of
the Partnership to the Partners, pro rata according to the amounts of their
respective liabilities; then
(4) FOURTH: To the Partners to the
extent of any positive balances in their Capital Accounts, Pro Rata according
to the amounts of their respective positive balances; and then
(5) FIFTH: Any remaining net proceeds
shall be distributed Pro Rata among the Partners.
(ii) Any Profits and Losses and Taxable Income
and Taxable Loss resulting from the disposition of the Partnership's assets in
the process of liquidation shall be allocated among the Partners in the manner
provided in section 13. Any property distributed in kind in the liquidation
shall be valued and treated as if the property were sold and the cash proceeds
were distributed. The Profits and Losses arising from the constructive sale of
the property described in the preceding sentence shall be allocated among the
Partners in the manner provided in section 13.
15. Limitation on Distributions to Partners. A Partner may
receive distributions from the Partnership only to the extent the Partnership's
total assets exceed its total liabilities, other than liabilities to the
Partners on account of their Capital Contributions.
14
<PAGE> 16
ARTICLE VI
AUTHORITY, DUTIES, AND LIABILITIES OF PARTNERS
16. Duties of Managing General Partner. The Managing General
Partner shall manage the affairs of the Partnership, shall apply itself
diligently for the Partnership, and shall devote to the Partnership such time
as is necessary and appropriate to manage the business of the Partnership. The
Managing General Partner is not required to devote all its business time to the
Partnership, and it may engage in other business ventures and employment,
including those in competition with the Partnership. In the performance of its
duties, the Managing General Partner may hire employees and agents of the
Partnership and generally shall supervise and direct all the daily operations
of the Partnership.
17. Managing General Partner's Fees and Expenses.
(a) Fees to Managing General Partner. In consideration
for performing services described herein, the Managing General Partner may be
paid a fee to be agreed upon by a Majority in Interest. Such fees shall be
deemed earned when the services have been performed and, regardless of when
paid, shall be non-executory from the date earned and shall be the obligation
of the Partnership from and after that date.
(b) Expenses. Except as otherwise provided herein, the
Partnership shall pay all expenses of the Partnership (which expenses may be
either billed directly to the Partnership or reimbursed to the Managing General
Partner) which may include, but are not limited to: (i) all costs of borrowed
money, taxes and assessments on the Property and other taxes applicable to the
Partnership; (ii) all costs for goods and materials, whether purchased by the
Partnership directly or by the Managing General Partner on behalf of the
Partnership; (iii) legal, audit, accounting, brokerage and other professional
fees; (iv) fees and expenses paid to independent contractors, mortgage bankers,
brokers, insurance brokers and other agents; (v) expenses of organizing,
revising, amending, converting, modifying or terminating the Partnership; (vi)
expenses in connection with distributions made by the Partnership to, and
communications and bookkeeping work necessary in maintaining relations with,
Partners; (vii) expenses in connection with preparing and mailing reports to
Partners; (viii) costs of any accounting, statistical or bookkeeping equipment
necessary for the maintenance of the books and records of the Partnership; (ix)
the cost of preparation and dissemination of informational material and
documentation relating to the Partnership; (x) except with respect to
litigation solely among the Partners as such, costs incurred in connection with
any litigation in which the Partnership is involved, as well as in the
examination, investigation or other proceedings, conducted against the
Partnership by any regulatory agency, including legal and
15
<PAGE> 17
accounting fees incurred in connection therewith; (xi) costs of any computer
services or equipment or services of personnel used for or by the Partnership;
and (xii) expenses of professionals employed by the Partnership in connection
with any of the foregoing, including attorneys, accountants and appraisers.
18. Authority of Managing General Partner. The Managing General
Partner may bind the Partnership to do all acts that are necessary,
appropriate, or incidental to the accomplishment of the purposes of the
Partnership. Any person dealing with the Partnership or the Managing General
Partner may rely on a certificate signed by the Managing General Partner as to
the identity of any Partner, the existence or absence of any fact or condition
that is necessary to permit action by either the Partnership or the Managing
General Partner or germane in any other way to the affairs of the Partnership,
and the persons who are authorized to execute and deliver any documents or
instruments of or on behalf of the Partnership. Without limiting the
generality of the foregoing, the Managing General Partner is specifically
authorized to do the following:
(a) to negotiate and enter into leases and agreements
with land or building owners or other Persons, and to incur obligations for,
and on behalf of, the Partnership in connection with Partnership business;
(b) to borrow money on behalf of the Partnership and, as
security therefor, to encumber the property;
(c) to prepay, in whole or in part, refinance, increase,
modify or extend any obligation affecting the property;
(d) to sell, exchange, convey and lease the property;
(e) to employ from time to time, at the expense of the
Partnership, other Persons required for the operation and management of the
Partnership business, including accountants, attorneys and others, who may be
Partners, on such terms and for such compensation as the Managing General
Partner determines to be reasonable and this may include Persons which are
Affiliates;
(f) to pay all attorney's and accountant's fees and
other costs incurred in connection with the formation of the Partnership
business and the completion of all steps necessary or advisable for the
Partnership to comply with applicable laws;
(g) to assume responsibilities imposed on the Managing
General Partner by the Act;
16
<PAGE> 18
(h) to compromise, arbitrate or otherwise adjust claims
in favor of or against the Partnership and to carry such insurance as the
Managing General Partner considers advisable;
(i) to exercise the voting rights associated with the
securities and other Property owned by the Partnership;
(j) to commence or defend litigation with respect to the
Partnership or any assets of the Partnership as the Managing General Partner
considers advisable, at the expense of the Partnership;
(k) to make, execute, acknowledge and deliver documents
of transfer and conveyance and any other instruments that may be necessary or
appropriate to carry out its powers; and
(l) to do all such acts and take all such proceedings
and execute all such rights and privileges, although not specifically mentioned
herein, as the Managing General Partner considers necessary to conduct the
business of the Partnership and to carry out the purposes of the Partnership.
Notwithstanding the foregoing, the Managing General Partner shall not
take any of the following actions without the consent of a Majority in
Interest:
(1) assign all or any part of the property for the
benefit of its creditors or confess a judgment against the Partnership;
(2) take any action in contravention of the Act, the
certificate of limited partnership or this Agreement;
(3) sell, lease, transfer, assign, pledge or encumber a
substantial portion (10% or more) in value of the property of the Partnership
(except with respect to transactions to which section 28 or section 32
applies); or
(4) admit a Person as a Partner of the Partnership.
19. Dealing with Affiliates. The Managing General Partner may
employ and enter into contracts and other arrangements with any Person,
including an Affiliate, and may obligate the Partnership to pay reasonable
compensation for services rendered by such Persons on terms that, in the
judgment of the Managing General Partner, are not less favorable to the
Partnership than would be available from an unrelated party.
20. Indemnification of General Partners. The Managing General
Partner need not secure the performance of its duties by bond or otherwise. A
General Partner is not liable, responsible,
17
<PAGE> 19
or accountable in damages or otherwise to any Partner or to the Partnership for
any act taken or omission made in good faith on behalf of the Partnership and
in a manner that such General Partner reasonably believes to be within the
scope of the authority granted to it by this Agreement and in the best interest
of the Partnership, except for gross negligence or willful misconduct. Any
loss, expense (including attorneys' fees) or damage incurred by a General
Partner by reason of any act or omission by it in good faith on behalf of the
Partnership and in a manner that it reasonably believes to be within the scope
of the authority granted to it by this Agreement and in the best interest of
the Partnership (but not, in any event, any loss, expense or damage incurred by
a General Partner by reason of gross negligence or willful misconduct) shall be
paid to the indemnified General Partner from the Partnership's assets, to the
extent available.
21. Liability of Non-Managing General Partner. The non-managing
General Partners are not liable to any other Partner for the gross negligence
or willful misconduct of the Managing General Partner.
22. Authority of Non-Managing General Partner. The non-managing
General Partners shall not participate in the management of, or have any
control over, the business or policies of the Partnership, except as required
by the Act or permitted by section 18, and shall not transact any business in
the name of the Partnership. Unless required by the Act, a non-managing
general partner shall not sign any agreement, document or instrument in the
name of the Partnership or otherwise make commitments on behalf of the
Partnership.
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS
23. General Partners. Subject to section 24, a General Partner
may make an Assignment, directly or indirectly, of all or any part of its
Partnership Interest. However, an Assignment does not relieve such General
Partner of its obligations and liabilities under this Agreement, or constitute
the assignee a General Partner, or confer on the assignee any Partnership
Rights. Subject to section 24, and only if a Majority in Interest consents, a
General Partner may make an Assignment of both its Partnership Interest and its
Partnership Rights if the assignee assumes in writing all such General
Partner's obligations and liabilities under this Agreement and if all the
applicable requirements of section 25 are satisfied. Upon compliance with the
immediately preceding sentence, an assignee of such General Partner has all the
rights and powers granted to such General Partner under this Agreement and has
all the obligations and liabilities of such General Partner under this
Agreement.
18
<PAGE> 20
24. Restriction on Transfer. Notwithstanding any other
provision of this Agreement, an assignment of a Partnership Interest shall not
be made, and consent thereto shall be withheld:
(a) Unless the Managing General Partner has satisfied
itself (by seeking advice of legal counsel or otherwise, with any resulting
Partnership expense to be reimbursed by the assignor) that the assignment will
not have any significant adverse tax effect upon the Partnership or the other
Partners;
(b) Unless the Managing General Partner has satisfied
itself (by advice of legal counsel, with any resulting Partnership expense to
be reimbursed by the assignor) that the proposed assignment may be made without
registration under any applicable securities law; and it will not violate any
applicable securities law (including investor suitability standards);
(c) If the Assignment is sought to be made to:
(i) a minor or incompetent, except if made by
will or intestate succession, or
(ii) to a Person which is not an Affiliate.
25. Admission of Substitute Partner. Subject to the other
provisions of this Agreement, an assignee of a Partnership Interest may be
admitted as a Partner and granted Partnership Rights only if:
(a) the Assignment is made pursuant to a written
instrument in a form satisfactory to the Managing General Partner and specifies
the intention of the assignor that the assignee be substituted as a Partner;
(b) the Managing General Partner consents to the
admission by executing two counterparts of this Agreement that evidences the
Partnership Rights of the assignee, and if the assignee is to be admitted as a
General Partner a Majority in Interest consent to the admission;
(c) the assignee accepts, signs and agrees to be bound
by this Agreement, by executing two counterparts of this Agreement, including
an amended EXHIBIT A, and such other documents or instruments as the Managing
General Partner requires to effect the admission of the assignee as a Partner;
(d) the assignee provides the Managing General Partner
with evidence satisfactory to it of the assignee's authority to become a
Partner under the terms of this Agreement;
(e) the assignee pays all filing, publication and other
costs (including reasonable attorneys' fees) incurred by
19
<PAGE> 21
either the Partnership or the Managing General Partner in connection with the
admission and substitution of the assignee as a Partner.
Notwithstanding an assignee's satisfaction of any or all of the
conditions specified above, the Managing General Partner, in its absolute
discretion, may refuse to consent to the assignee's admission as a Partner, in
which event the assignee will not obtain any Partnership Rights, but will
retain only the rights of an assignee under section 23.
26. Rights of Partner After Assignment and Substitution. Upon
the Assignment of all his Partnership Interest, and the admission of a
substitute partner, a Partner shall cease to be a Partner and to have any
Partnership Rights.
27. Allocations and Distributions After Assignment. For the
purposes of allocations of Profits and Losses, Taxable Income or Taxable Loss,
and distributions, an Assignment of a Partnership Interest is effective as to
the Partnership, and shall be reflected in the records of the Partnership, as
of the date that the Managing General Partner receives written notice of the
Assignment. The Taxable Income or Taxable Loss, Profits and Losses and cash
and other distributions in respect of the assigned Partnership Interest with
respect to the fiscal year in which the Assignment of the Partnership Interest
occurs shall be divided between the assignor and the assignee according to the
method provided to the Managing General Partner by the assignor and the
assignee, so long as such method is permitted under the Code and does not
adversely affect the other Partners or the Partnership from a tax or economic
perspective. The method of allocation shall be provided to the Managing
General Partner in the written notice of the Assignment. Any additional costs
for computing the allocations hereunder shall be paid by the assignor or
assignee, as the case may be. The written notice referred to above shall also
contain information as to whether the assignor or assignee shall be responsible
for the payment of such additional cost, if any.
ARTICLE VIII
RETIREMENT, WITHDRAWAL, OR REMOVAL OF PARTNERS
28. Withdrawal of Non-Managing General Partner and Limited
Partners.
(a) A non-managing General Partner and a Limited Partner
may, at any time, partially withdraw his Partnership Interest from the
Partnership by providing written notice thereof to the Managing General
Partner. The Managing General Partner shall promptly send a copy of such
notice to all other Partners. Within thirty (30) days after the receipt of
such written notice
20
<PAGE> 22
from a Partner, the Managing General Partner shall make the appropriate
distributions to the Partner in partial or complete redemption of his
Partnership Interest as set forth in section 14(b).
(b) A partial withdrawal by a Partner shall be made in
increments of one-tenth (1/10th) of one percent (1%) of a Percentage Interest.
The written notice of withdrawal from a Partner to the Managing General Partner
must state whether the withdrawal is a partial or complete withdrawal and, if a
partial withdrawal, must state the Percentage Interest that is being withdrawn.
A Partner shall not make a partial withdrawal that will result in his remaining
Percentage Interest becoming less than one-tenth (1/10th) of one percent (1%)
immediately after the withdrawal.
(c) The Managing General Partner agrees that it will
fully cooperate to the extent permitted by law to accomplish a withdrawal
requested by a non-managing General Partner and a Limited Partner hereunder.
It also agrees that it will not take any action that will obstruct or render
impossible the application of this section 28 (such as to pledge the
Partnership's Marketable Securities as collateral to creditors of the
Partnership), unless such action is essential to accomplish the purposes of the
Partnership.
(d) The partial withdrawal of a non-managing General
Partner or a Limited Partner does not dissolve or terminate the Partnership
unless there is only one Partner then remaining. The remaining Partners shall
amend this Agreement to reflect the partial or complete withdrawal of the
Partner from the Partnership, if and to the extent necessary.
(e) Upon the giving of the notice of withdrawal pursuant to
Paragraph (a), and upon the dissolution of the Partnership, the voting rights
with respect to any Marketable Securities allocable to the Percentage Interest
being withdrawn shall be vested in the withdrawing Partner or Partners, and the
Partnership shall have no voting rights with respect to such stock.
29. Retirement or Withdrawal of General Partner. The Managing
General Partner may not withdraw any part of its General Partnership Interest.
The Retirement of the Managing General Partner shall dissolve the Partnership.
Notwithstanding the foregoing or anything else in this Agreement to the
contrary, a merger, consolidation, or reorganization of the Managing General
Partner, or a sale of all or substantially all its assets that includes its
Partnership Interest, is not a Retirement of such Managing General Partner if
the resulting, surviving or acquiring Person is an Affiliate and becomes
substituted as the Managing General Partner of the Partnership. The resulting,
surviving or acquiring Person is substituted as the Managing General Partner
21
<PAGE> 23
without further act if it gives notice of the substitution to the Partners
before the effective date of the merger, consolidation, reorganization or sale.
Each Partner consents to the admission and substitution of such substitute
Managing General Partner pursuant to this section 29, and no further consent or
approval of any Partner is required.
30. Rights of Partner After Retirement or Withdrawal. A Partner
ceases to have any Partnership Rights upon his Retirement or complete
withdrawal from the Partnership. However, until the appropriate distributions,
if any, are made to a Retired or withdrawn Partner for his Partnership
Interest, the Retired or withdrawn Partner is entitled to receive the
allocations of Profits and Losses, Taxable Income or Taxable Loss and all
distributions referred to in section 14 applicable to his Partnership Interest.
ARTICLE IX
DISSOLUTION
31. Events of Dissolution. The Partnership shall be terminated
and dissolved upon:
(a) the expiration of its term;
(b) the vote of a Majority in Interest to dissolve the
Partnership;
(c) the Partnership being adjudicated insolvent or
bankrupt;
(d) the Retirement of the Managing General Partner; or
(e) the sale of all or substantially all of the
Partnership's Property.
32. Winding-Up and Distributions. Upon the dissolution of the
Partnership pursuant to section 31, the winding-up of the Partnership's
business and the liquidation and distribution of Partnership assets must be
carried out with due diligence and in a timely manner, and consistent with both
the requirements of applicable law and the following provisions of this
section:
(a) The Managing General Partner shall be responsible
for taking all actions relating to the winding-up, liquidation, and
distribution of assets of the Partnership, unless its Retirement causes the
dissolution, in which case the fiscal agent, liquidator, or receiver appointed
(without judicial action) by a Majority in Interest shall be so responsible.
The Managing General Partner, or the appointed fiscal agent, liquidator, or
22
<PAGE> 24
receiver, is referred to in this Agreement as the "Liquidator." A non-managing
General Partner can be appointed to be the Liquidator. The Liquidator shall
file all certificates or notices of the dissolution of the Partnership as
required by law. Upon the complete liquidation and distribution of the
Partnership assets, the Partnership shall terminate, and the Liquidator shall
execute, acknowledge, and cause to be filed all certificates and notices
required by law to terminate the Partnership.
(b) The Liquidator shall proceed without unnecessary
delay to sell and otherwise liquidate the Partnership's assets. Unless
directed otherwise by a Majority in Interest, all Marketable Securities, cash
and other readily divisible or fungible assets of the Partnership shall be
distributed directly to the Partners in the manner set forth in section
14(c)(i). The Liquidator shall promptly sell the other assets of the
Partnership unless it determines that an immediate sale of part or all of such
assets would cause undue loss to the Partners. In such case, the Liquidator,
to avoid such loss, may defer the liquidation of the Partnership assets for a
reasonable time, except for those liquidations that are necessary to satisfy
the debts and liabilities of the Partnership to persons and parties other than
the Partners. The Liquidator shall distribute the proceeds from the
liquidation of the Partnership's assets as provided in section 14(c).
(c) Upon the dissolution of the Partnership pursuant to
section 31, the Liquidator shall cause the accountants for the Partnership to
prepare within ninety (90) days after the occurrence of the event of
dissolution, and immediately thereafter shall furnish to each Partner, a
statement setting forth the assets and liabilities of the Partnership as of the
date of its dissolution. The Liquidator, promptly following the complete
liquidation and distribution of the Partnership's assets, shall cause the
Partnership's accountants to prepare, and the Liquidator shall furnish to each
person who is a Partner immediately before the dissolution, a statement showing
the manner in which the Partnership assets were liquidated and distributed.
33. Distribution of Liquidation Proceeds and Assets and
Allocation of Gains and Losses. The net proceeds from liquidation of the
Partnership's assets and the unliquidated Property of the Partnership shall be
distributed, and all Profits and Losses resulting from the liquidation of the
Partnership shall be allocated, among the Partners in the proportions and
orders of priority specified in section 14(c).
34. Limitation of Liability of Partners. Upon the dissolution
of the Partnership and the distribution of the net liquidation proceeds
pursuant to section 31 and section 14(c), each Partner shall look solely to the
assets of the Partnership for the payment of his unreturned Capital
Contributions, and if the
23
<PAGE> 25
Partnership's assets remaining after the payment or discharge of the debts and
liabilities of the Partnership are insufficient to pay the full amount of the
unreturned Capital Contributions of each Partner, the Partner shall have no
recourse or claim against any Partner or the Partnership with respect to its
unreturned Capital Contributions, except for claims for fraud, gross
negligence, or breach of fiduciary duty. Notwithstanding anything to the
contrary contained herein, each Limited Partner hereby waives his or her right
to seek indemnity from the General Partner for any losses he or she might
suffer under this Partnership Agreement or under any ancillary agreements
related to the business of the Partnership including any personal guarantees of
the liabilities of the Partnership. Further, each Limited Partner hereby
waives his or her right to recover from the Partnership, as primary obligor,
any amounts such Limited Partner becomes liable to pay or pays pursuant to any
agreements related to the business of the Partnership including any personal
guarantees of the liabilities of the Partnership.
35. Waiver of Right of Partition of Assets. Each Partner, and
for his heirs, successors, and assigns, waives his right to the partition of
the assets of the Partnership upon the dissolution and liquidation of the
Partnership.
ARTICLE X
ACCOUNTING YEAR, BOOKS, RECORDS, AND REPORTS
36. Books and Records. The Managing General Partner shall
maintain at the principal office of the Partnership a complete and accurate set
of books of records and accounts, in which it shall make full and complete
entries of all dealings or transactions relating to the Partnership's business
and where it shall keep all supporting documentation of transactions with
respect to the conduct of the Partnership's business. Each Partner or his duly
authorized representative, upon five days' advance notice to the Managing
General Partner, may examine during normal business hours the books of the
Partnership and all other records and information concerning the operation of
the Partnership.
37. Reports. If requested by a Partner at least 30 days prior
to the end of a quarter, within 60 days after the end of each fiscal quarter in
each fiscal year of the Partnership, the Managing General Partner shall cause
to be prepared and sent to each Partner a balance sheet, income statement and
cash flow statement of the Partnership for and as of the end of that fiscal
quarter, in each case unaudited but accompanied by a report of the activities
of the Partnership for that quarter. Within 90 days after the end of each
fiscal year of the Partnership, the Managing General Partner shall cause to be
prepared and sent to each Partner a financial report consisting of (a) a
balance sheet as of the end
24
<PAGE> 26
of the fiscal year; (b) statements of income, partner's equity, and changes in
financial position for the fiscal year; (c) if requested by a Partner, the
opinion of the Partnership's certified public accountant concerning the
foregoing financial statements; (d) a summary of the Partnership's activities
for the fiscal year; (e) a statement showing the distributions to each Partner
during the fiscal year and identifying any distributions which constitute a
return of Capital Contribution; and (f) a statement showing the amount of
Taxable Income or Taxable Loss, and listing each item of income, gain, loss,
deduction, or credit allocated or charged against the Partner for federal and
state income tax purposes.
38. Bank Accounts. The Managing General Partner shall maintain
the bank accounts of the Partnership in such financial institutions as the
Managing General Partner considers appropriate. The Managing General Partner
shall make or permit withdrawals from the Partnership's bank accounts on the
signature of the Managing General Partner.
39. Tax Elections. The Partnership shall file an election under
Section 754 of the Code, relating to the optional adjustment to the basis of
partnership property, at the first time it is permitted to do so after the
beginning of the term of this Partnership. The Managing General Partner shall
make or waive, at its discretion, all other tax elections required or permitted
to be made by the Partnership under the Code.
40. Accounting Method and Fiscal Year. The Managing General
Partner shall maintain the Partnership records and books of accounts in
accordance with the method of accounting required or permitted to be used for
federal income tax purposes, with such modifications as are set forth in this
Agreement, and otherwise in accordance with generally accepted accounting
principles consistently applied. The fiscal year of the Partnership is the
calendar year.
ARTICLE XI
GENERAL PROVISIONS
41. Partnership Contracts. The Managing General Partner may
enter into agreements and contracts on behalf of the Partnership only if they
are in writing and clearly indicate to the other parties that the Partnership
is a general partnership of which the Managing General Partner is a general
partner.
42. Conveyances. Subject to section 18, the Managing General
Partner may sign any deed, mortgage, lease, bill of sale, security agreement,
pledge, contract or other instrument or commitment purporting to convey or
encumber any of the Partnership's Property or any interest therein, whether now
or
25
<PAGE> 27
subsequently owned or leased at any time by the Partnership, and no other
signature is required.
43. Notices. To be effective, a notice required or permitted by
this Agreement must be in writing, or by telegram, telex or telecopy if
promptly confirmed in writing. A notice is given when delivered or, if mailed,
when deposited in a United States postal service letterbox to be sent by
first-class, postage-prepaid, certified mail, with return receipt requested
(whether or not the sender receives the return receipt), and addressed, if to a
Partner, at his registered address listed on EXHIBIT A and, if to the Managing
General Partner or the Partnership, to the attention of such Managing General
Partner at the Partnership's principal business office.
44. Consents. Any consent required by this Agreement may be
given as follows:
(a) by a writing given by the consenting Partner and
received by the Managing General Partner or other appropriate recipient at or
before the occurrence of the action or other thing for which the consent was
solicited, unless the consent is nullified by:
(i) A writing from the consenting Partner that
is received by the Managing General Partner before the occurrence of the action
or other thing for which the consent was solicited; or
(ii) the negative vote by the consenting Partner
at any meeting called for the purpose of considering the action or other thing.
(b) by the affirmative vote of the consenting Partner at
any meeting called for the purpose of considering the action or other thing for
which the Partner's consent was solicited.
45. Meetings. The Managing General Partner may call meetings of
the Partners for any purpose, at any time. The Managing General Partner shall
call a meeting of the Partners within 30 days after he receives from a Majority
in Interest a written request for a meeting, stating the purpose of the
requested meeting and the matters proposed for consideration. Meetings of the
Partners may be held at such time, date and place as the Managing General
Partner designates. The Managing General Partner shall give notice of any
meeting of the Partners not less than ten nor more than 60 days before the date
of the meeting, to each Partner at his registered address listed on EXHIBIT A.
The notice shall state the time, date and place of the meeting, the purpose of
the meeting and the Partner at whose direction or request the meeting is
called. If a meeting is adjourned to another time or
26
<PAGE> 28
place, notice of the adjourned meeting is not required if the time and place of
the adjournment is announced at the called meeting. The presence in person or
by proxy of a Majority in Interest constitutes a quorum at a meeting. Any
notice of a meeting required by this section may be waived in writing at,
before or after the meeting and shall be deemed to be waived by each Partner
who is present in person or by proxy at the meeting. Only those persons who
are Partners at the close of business on the day before the meeting are
entitled to vote at the meeting. Any Partner entitled to vote at a meeting may
authorize any person to act for him by written proxy if a copy of the proxy is
delivered to the Managing General Partner before the commencement of the
meeting. To be effective, a proxy must be signed by the Partner (and, if
applicable, each co-owner) or his duly appointed attorney-in-fact, and no proxy
shall be valid for more than 11 months after its date. A proxy is revocable at
the pleasure of the Partner granting it.
46. Binding Effect; Counterparts. The covenants and agreements
contained in this Agreement are binding on, and inure to the benefit of, the
legal and personal representatives, heirs, successors and permitted assignees
of the parties to this Agreement. The parties may execute this Agreement in
any number of counterparts, each of which will be an original, but all of which
together will constitute one and the same agreement.
47. Choice of Law. This Agreement and the rights and
obligations of the Partners under it are governed by, and construed and
enforced in accordance with, the laws of Florida.
48. Complete Agreement; Modification. This Agreement contains
the final, complete and exclusive expression of the understanding among the
Partners with respect to the Partnership and its purposes and objectives and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them. Except to admit a new or a substitute Partner or to
reflect the withdrawal or Retirement of a Partner, this Agreement and every
provision of it may be modified or amended only by an agreement in writing
signed by or on behalf of all Partners.
49. Evidence of Partnership Interests. The Partnership Interest
of each Partner is evidenced exclusively by a counterpart of this Agreement
(including EXHIBIT A) that has been signed and dated by the Managing General
Partner.
50. Tax Matters Partner. The Managing General Partner or its
designee shall be the "tax matters partner" of the Partnership for federal
income tax purposes. If the Managing General Partner ceases to act as the
Managing General Partner of the Partnership, the successor Managing General
Partner (if any), shall be designated the tax matters partner. Pursuant to
Section 6223(c)(2) of the Code, upon receipt of notice from the Internal
Revenue Service of the beginning of an administrative
27
<PAGE> 29
proceeding with respect to the Partnership, the Managing General Partner, as
the tax matters partner, shall furnish the Internal Revenue Service with the
names, addresses, and Percentage Interests of each of the Partners. The
Managing General Partner agrees not to enter into a settlement agreement
pursuant to Section 6224 of the Code without providing at least 30 days advance
written notice to each Partner. As tax matters partner, the Managing General
Partner shall have absolute discretion regarding whether to seek judicial
review of any administrative determination and, if it determines to seek
judicial review of Internal Revenue Service action pursuant to Section 6226 of
the Code, then the Managing General Partner shall select the judicial forum for
such review. The tax matters partner shall receive no compensation for its
services as such. The Partnership shall bear all third party costs and
expenses incurred by the tax matters partner in performing its duties as such.
Nothing herein shall be construed to restrict the Partnership from engaging an
accounting firm or law firm to assist the tax matters partner in discharging
its duties hereunder.
51. Gender and Number. As used in this Agreement, the masculine
gender includes the feminine and neuter, and the singular includes the plural.
52. Title. Title to any property acquired by the Partnership
shall be taken in the name of the Partnership.
28
<PAGE> 30
IN WITNESS WHEREOF, this Agreement has been executed by or
on behalf of each Partner as of the date written beside his name.
General Partner
PAXSON ENTERPRISES, INC.
By /s/ Lowell W. Paxson
-------------------------------------
Lowell W. Paxson, President
Limited Partner
Paxson Broadcasting of Tampa,
Limited Partnership
By: Paxson Enterprises, Inc.,
General Partner
By: /s/ Lowell W. Paxson
-------------------------------------
Lowell W. Paxson, President
29
<PAGE> 31
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED TO AND SWORN BEFORE ME, on behalf of Paxson Enterprises,
Inc., a Nevada corporation, as General Partner, by Lowell W. Paxson, its
President, who is personally known to me/has produced _________________________
as identification and who did/did not take an boath, this 10th day of March,
1993.
(SEAL)
/s/ Michele Hansen
------------------------------------
Printed/Typed Name:Michele Hansen
Notary Public-State of Florida
Commission Number:
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED TO AND SWORN BEFORE ME, by Paxson Enterprises,
Inc., a Nevada corporation, as General Partner of Paxson Broadcasting of Tampa,
Limited Partnership, by Lowell W. Paxson, as Limited Partner, who is personally
known to me/has produced ____________________________ as identification and who
did/did not take an oath, this 10th day of March, 1993.
(SEAL)
/s/ Michele Hansen
------------------------------------
Printed/Typed Name:Michele Hansen
Notary Public-State of Florida
Commission Number:
30
<PAGE> 32
EXHIBIT A
<TABLE>
<CAPTION>
General Partners Contribution Percentage Interest
<S> <C> <C>
Paxson Enterprises, Inc. 5%
18401 U.S. Highway 19 North
Clearwater, Florida 34624
Limited Partners
Paxson Broadcasting of Tampa, 95%
Limited Partnership
18401 U.S. Highway 19 North
Clearwater, Florida 34624
</TABLE>
31
<PAGE> 33
AMENDMENT NUMBER 1 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON TAMPA LICENSE LIMITED PARTNERSHIP
This Amendment Number 1 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Tampa License Limited
Partnership ("Amendment") is effective as of the 29th day of March, 1993, by
and between PAXSON ENTERPRISES, INC., a Nevada corporation, as the General
Partner and LOWELL PAXSON, as a Limited Partner. The parties hereby agree as
follows:
1. Assignment. The definition of "Assignment" in Article I,
Section 1 of the Partnership Agreement is amended in its entirety to read as
follows:
"`Assignment' means a sale, exchange, gift, pledge, transfer
or disposition of any kind whatsoever and, in the case of a
Person that is not an individual, it includes the sale,
exchange, pledge, transfer or disposition of a majority of
either voting control or the equity interests in such Person;
provided, however, that an "Assignment" does not include a
pledge of, or a grant of a security interest in, a Partnership
Interest, Partnership Rights, or the majority of either voting
control or the equity interests in any Person, which pledge or
security interest is given or granted for the purpose of
securing an obligation of the Partnership or any Partner or
any Person owning an equity interest in a Partner, provided
that the giving or grant of such pledge or security interest
is approved by the Managing General Partner."
2. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 18401 U.S. Highway
19 North, Clearwater, Florida 34624."
3. Purposes of Partnership; Authorized Acts. Article II,
subsection 7.A.(a)(i) of the Partnership Agreement is amended to read as
follows:
"acquire, operate, manage and perform all matters necessary
and attendant to the operation of one or more radio stations
in the State of Florida,".
1
<PAGE> 34
4. Power to Guarantee Obligations of Others. Article II,
subsection 7.B. of the Partnership Agreement is amended by redesignating
clauses (g) and (h) as clauses (h) and (i), respectively, and inserting the
following as clause (g):
"(g) guarantee the debts and obligations of any Partner and
secure the same by a mortgage, pledge, security interest or
other liens upon the property of the Partnership, any part
thereof, any interest therein, or any improvements thereto;".
5. Section 49 of the Partnership Agreement, entitled "Evidence of
Partnership Interests," is hereby deleted in its entirety, and Sections 50, 51,
and 52 of the Partnership Agreement are renumbered as Sections 49, 50, and 51
respectively.
6. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 2
on this 29th day of March, 1993.
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ William Watson By: /s/ Lowell W. Paxson
- ------------------------ ------------------------
Its President
--------------------
/s/ John R. Feore
- ------------------------
LIMITED PARTNER:
/s/ William Watson /s/ Lowell Paxson
- ------------------------ ------------------------
Lowell Paxson
/s/ John R. Feore
- ------------------------
2
<PAGE> 35
GENERAL PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This is a General Partnership Interests Assignment Agreement
(the "Agreement") dated December 15, 1993 (the "Effective Date"). It is among
Paxson Enterprises, Inc. (the "General Partner Assignor"), Paxson
Communications Corp. (the "First Assignee"), Paxson Communications of Florida,
Inc. (the "General Partner Assignee"), and Lowell L. Paxson (the "Nonassigning
Limited Partner") in respect of the Limited Partnerships listed in Exhibit "A"
(the "Station Partnerships"). It is also among the General Partner Assignee,
the First Assignee, the General Partner Assignee and the Station Partnerships
in their capacities as a limited partner (each a "License Limited Partner") in
their respective Limited Partnerships listed in Exhibit "B" (the "License
Partnerships," and together with the Station Partnerships, the "Partnerships").
Capitalized terms used herein and not ascribed a definition have the meaning
assigned to them by the Partnership Agreement to which the term pertains.
BACKGROUND
The General Partner Assignor and the Nonassigning Limited
Partner are partners in the Station Partnerships. The General Partner Assignor
and the License Limited Partners are the partners in the License Partnerships.
The General Partner Assignor wishes to transfer each of its general partnership
interests in the Station Partnerships and the License Partnerships to the First
Assignee in exchange for certain of its common stock and the First Assignee
wishes to immediately assign such general partnership interests to the General
Partner Assignee in exchange for all of the capital stock of the General
Partner Assignee. The General Partner Assignor and the First Assignee also
wish to have the General Partner Assignee admitted as a Partner and granted
partnership rights in each of the Partnerships. The General Partner Assignee
agrees to accept the assignment of the general partnership interests and to be
admitted as a General Partner in the respective Partnerships pursuant to the
Partnership Agreements identified in Exhibit "A" and "B", respectively (the
"Partnership Agreements"). The Nonassigning Limited Partner as the limited
partner in each of the Station Partnerships and each of the License Limited
Partners as the limited partner in the respective License Partnerships hereby
consent to the assignment of the general partnership interests and admission of
the General Partner Assignee as the general partner in their respective
Partnerships pursuant to the terms of this Agreement and the Partnership
Agreements. Pursuant to Chapter 620, Florida Statutes, the Partnerships will
continue uninterrupted and the assignment of the general partnership interests
will not cause a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to
Section 23 of each of the Partnership Agreements and Section 620.152, Florida
Statutes, the General Partner Assignor assigns all of its general partnership
interests in the Partnerships to the First Assignee. The
1
<PAGE> 36
First Assignee accepts the assignment of all of the general partnership
interests. Pursuant to Section 23 of each of the Partnership Agreements and
Section 620.152, Florida Statutes, the First Assignee assigns all of its
general partnership interests in the Partnerships to the General Partner
Assignee. The General Partner Assignee accepts the assignment of all of the
general partnership interests.
2. Admission of General Partner Assignee and Withdrawal
of General Partner Assignor. On the Effective Date, the General Partner
Assignee is admitted as a general partner under the respective Partnership
Agreement and the General Partner Assignor has withdrawn from each of the
Partnerships.
3. General Partner Assignee's Acceptance of Admission.
By executing this Agreement, the General Partner Assignee accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements
and shall become the Managing General Partner of each of the Partnerships. The
parties agree that the General Partner Assignee's execution of this Agreement
shall satisfy the requirement of Sections 23, 24 and 25 of the respective
Partnership Agreements.
4. Limited Partner's Consent. Each of the Nonassigning
Limited Partner and the License Limited Partners consent to the assignment of
the general partnership interest by the General Partner of their respective
Partnership and to the admission of the General Partner Assignee as a general
partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the general partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of General Partner Assignor, First Assignee, General Partner
Assignee, Nonassigning Limited Partner and the License Limited Partners agree
and acknowledge that (i) General Partner Assignor's general partnership
interests in each of the Partnerships are subject to the lien and security
interest of Banque Paribas, as Agent on behalf of the Lenders (the "Agent"),
under the Loan Documents (as defined in that certain Credit Agreement dated as
of March 30, 1993 by and among Banque Paribas, the Lenders identified therein
and each of the Station Partnerships) and (ii) the assignment of the general
partnership interests in the Partnerships by General Partner Assignor to First
Assignee, and by First Assignee to General Partner Assignee, are made subject
to such continuing lien and security interest of Agent under the Loan
Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute one
agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
2
<PAGE> 37
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding among the parties and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON ENTERPRISES, INC., as
General Partner Assignor and as
Withdrawing General Partner of each
Partner
By: /s/ Lowell W. Paxson
-------------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
---------------------------------
Lowell W. Paxson, Nonassigning
Limited Partner
PAXSON COMMUNICATIONS CORPORATION,
First Assignee
By: /s/ Lowell W. Paxson
-------------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS OF FLORIDA,
INC., as General Partner Assignee
and successor General Partner of
each Partnership
By: /s/ Lowell W. Paxson
--------------------------------
Lowell W. Paxson, President
3
<PAGE> 38
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment Number
1 to the Agreement of Limited Partnership of Paxson Broadcasting of
Jacksonville, Limited Partnership dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson Broadcasting
of Jacksonville, Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, dated
June 27, 1991, and Amendment Number 2 to the Agreement of Limited
Partnership of Paxson Broadcasting of Tampa, dated April 27, 1992, and
Amendment Number 3 to the Agreement of Limited Partnership of Paxson
Broadcasting of Tampa, Limited Partnership, dated January 1, 1992, and
Amendment Number 4 to the Agreement of Limited Partnership of Paxson
Broadcasting of Tampa, Limited Partnership, dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Miami,
Limited Partnership, dated January 1, 1992, and Amendment Number 2 to
the Agreement of Limited Partnership of Paxson Broadcasting of Miami,
dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Orlando,
Limited Partnership, dated January 1, 1992, and Amendment Number 2 to
the Agreement of Limited Partnership of Paxson Broadcasting of Orlando,
Limited Partnership.
4
<PAGE> 39
EXHIBIT "B"
Limited Partnerships
Agreement of Limited Partnership of Jacksonville License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Jacksonville, Licensed
Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Tampa License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Tampa, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Miami License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Miami, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Orlando License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Orlando, Licensed Limited
Partnership dated March 29, 1993.
5
<PAGE> 40
AMENDMENT NUMBER 2 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON TAMPA LICENSE LIMITED PARTNERSHIP
This Amendment Number 2 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Tampa License Limited
Partnership ("Amendment") is effective as of the 19th day of September, 1995,
by and between PAXSON COMMUNICATIONS OF FLORIDA, INC., a Florida corporation,
as the General Partner and PAXSON BROADCASTING OF TAMPA, LIMITED PARTNERSHIP,
as a Limited Partner. The parties hereby agree as follows:
1. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 601 Clearwater Park
Road, West Palm Beach, Florida 33401."
2. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 2
on this 19th day of September, 1995.
WITNESSES: GENERAL PARTNER:
PAXSON COMMUNICATIONS OF FLORIDA, INC.
/s/ Lorie Closson By: /s/ William L. Watson
- -------------------------- -------------------------------
Its Secretary
/s/ Desire Malky
- --------------------------
LIMITED PARTNER:
PAXSON BROADCASTING OF TAMPA,
LIMITED PARTNERSHIP
/s/ Lorie Closson By: /s/ William L. Watson
- -------------------------- -------------------------------
The Secretary of Paxson Communications
of Florida, Inc., its general partner.
1
<PAGE> 1
EXHIBIT 3.16.1
<PAGE> 2
EXHIBIT 3.16.1
AGREEMENT OF LIMITED PARTNERSHIP OF
JACKSONVILLE LICENSE LIMITED PARTNERSHIP
This Agreement of Limited Partnership ("Agreement") is entered into
and shall be effective as of the 10th day of March, 1993, by and between Paxson
Enterprises, Inc., a Nevada Corporation, as the General Partner and Paxson
Broadcasting of Jacksonville, Limited Partnership, as a Limited Partner,
pursuant to the provisions of the Florida Uniform Limited Partnership Act, on
the following terms and conditions:
ARTICLE I.
FORM AND INTERPRETATION
10. Definitions. The following capitalized terms, as used in
this Agreement and in the attached exhibits, which constitute a part of this
Agreement, have the meanings ascribed to them below and include the plural as
well as the singular number:
"Act" means the Florida Uniform Limited Partnership Act, as amended,
or any subsequent Florida law concerning partnerships that are enacted in
substitution for the Act.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amount which such
Partner is obligated to restore (pursuant to the terms of a
promissory note or otherwise) or is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
"Affiliate" of a Partner means (1) another Partner of the
Partnership; (2) a legal or personal representative of any Partner; (3) the
Partner's lineal descendants and spouse (other than a spouse who is legally
separated from the Partner under a decree of divorce or separate maintenance);
(4) a trustee of a trust for the benefit of any Person referred to in clause
(1), (2) or (3); (5) a Person, other than an individual, of which 80% or more
of the voting or equity interests is owned directly or indirectly by a Partner
and/or one or more of the Persons referred to in clauses (1) through (4); (6) a
Person owning 80% or more of
1
<PAGE> 3
the voting or equity interests of a Partner that is not an individual; or (7) a
Person other than an individual, 80% or more of the voting or equity interests
of which is owned by the same Person that owns 80% or more of the voting or
equity interests of a Partner that is not an individual.
"Agreement" means this Limited Partnership Agreement as originally
executed and as subsequently amended or supplemented from time to time in
accordance with section 48.
"Assignment" means a sale, exchange, gift, pledge, transfer or
disposition of any kind whatsoever and, in the case of a Person that is not an
individual, it includes the sale, exchange, pledge, transfer or disposition of
a majority of either voting control or the equity interests in such Person.
"Bankruptcy" means taking advantage of any bankruptcy or insolvency
act (including the Bankruptcy Reform Act of 1978 or similar law, and also any
proceeding under state or local insolvency or debtor relief laws), or a final
adjudication of insolvency or an assignment of a major portion of a Person's
assets for the benefit of creditors.
"Capital Account" has the meaning set forth in section 10.
"Capital Contribution" means the total amount of cash, securities and
other property contributed by a Partner to the equity of the Partnership, or
agreed to be contributed by a Partner to the equity of the Partnership,
pursuant to section 9(a), and reduced by any return of capital to the Partner
within the meaning of section 9(c). Any reference in this Agreement to the
Capital Contribution of either a Partner or an assignee of a Partner shall
include the Capital Contribution of any prior Partner to whose Partnership
Interest the then existing Partner or assignee succeeded.
"Cash Flow" means the excess of cash derived by the Partnership from
all sources, including from capital contributions, loans, sales of securities
and other activities, (but excluding cash derived from the winding-up and
liquidation of the Partnership pursuant to section 32) over the sum of all cash
disbursements, including repayments of loans from Partners, loans to Partners
from the Partnership, and distributions to Partners pursuant to section 14(a)
or (b) (but excluding disbursements pursuant to section 14(c)), plus a
reasonable allowance for reserves for repairs, investments in Property
(including Marketable Securities), replacements, contingencies and anticipated
obligations (including debt service, capital improvements and replacements to
the extent not funded by reserves) as reasonably determined by the Managing
General Partner. Notwithstanding the preceding sentence, in determining the
reasonable allowance for reserves, the Managing General Partner shall reduce
such allowance to the extent necessary to ensure that annual distributions of
Cash Flow to each Partner will be in an amount at least equal to the annual
income tax liability (exclusive of income tax liability resulting from a
transaction pursuant to section 14(b) or (c)) of each such Partner (determined
assuming that the maximum possible income tax rate is
2
<PAGE> 4
applicable) resulting from the allocation to the Partner of his share of the
Partnership's Taxable Income and Taxable Loss.
"Code" means the Internal Revenue Code of 1986, as amended, or any
subsequent federal law concerning income taxes that is enacted in substitution
for the Code.
"General Partner" means any Person admitted as a general partner in
accordance with this Agreement.
"General Partnership Interest" means the Partnership Interest of a
General Partner, in his capacity as a General Partner.
"Limited Partner" means those Persons who are signatories to this
Agreement as limited partners; and all other Persons who shall be admitted to
the Partnership as limited partners.
"Majority in Interest", when used in regard to the degree of consent,
approval or agreement required among the Partners, means Partners whose
aggregate Capital Account balances constitute over 50% of the total aggregate
Capital Account balances of all owners of Partnership Interests then
outstanding.
"Managing General Partner" means the Person designated in this
Agreement as the general partner responsible for management of the affairs of
the Partnership and thereafter any Person which becomes a general partner
responsible for management of the affairs of the Partnership pursuant to this
Agreement, in the Person's capacity as a managing general partner of the
Partnership. Initially, the Managing General Partner shall be Paxson
Enterprises, Inc.
"Marketable Securities" means securities, including stock, which are
traded on an established securities market, whether or not registered under the
Securities Act of 1933.
"Partner" means each Person which is a General Partner or a Limited Partner.
"Partnership" means JACKSONVILLE LICENSE LIMITED PARTNERSHIP, the
Florida limited partnership formed in accordance with the Act pursuant to this
Agreement.
"Partnership Interest" includes only a Partner's Capital Contribution
and right to receive his Percentage Interest and excludes Partnership Rights.
"Partnership Rights" excludes the Partnership Interest of a Partner,
and includes, in addition to other rights provided in this Agreement, the
rights provided to him by the Act except to the extent expressly modified by
this Agreement.
"Percentage Interest" means a Partner's percentage share (as
initially stated opposite such Partner's name on EXHIBIT A as amended from time
to time), of the Profits and Losses, Taxable Income or Taxable Loss, cash and
other distributions and
3
<PAGE> 5
liquidation proceeds of the Partnership all subject to and interpreted in
accordance with the terms of this Agreement. The Percentage Interests of
Partners shall be proportionate to the Capital Accounts of the Partnership at
all times so that, for example, if a Partner's Capital Account is 100 and the
aggregate of all Capital Accounts is 1000, the Partner's Percentage Interest in
the Partnership is 10%. In the event of a change among the Partners in the
Percentage Interests in the Partnership during the year, the Partnership shall
use a closing-of-the-books method with respect to such change or changes in
Percentage Interests in computing a Partner's share of Profits and Losses,
Taxable Income and Taxable Losses, and entitlement to distributions during such
year.
"Person" means any individual and any general or limited partnership,
corporation, estate, joint venture, trust, business trust, cooperative,
association or other organization or entity.
"Profits and Losses" means the annual net income or loss of the
Partnership determined on a generally accepted accounting principles basis, as
disclosed on the annual financial statements of the Partnership.
"Property" means any real, personal, tangible or intangible property
contributed by a Partner to the equity of the Partnership or otherwise acquired
by the Partnership.
"Pro Rata" means in the proportion that the Percentage Interest of
each Partner bears to the total Percentage Interests of all the Partners.
"Retirement" means the death, Bankruptcy, adjudication of
incompetency as determined by a court of appropriate jurisdiction, dissolution
and liquidation or termination of existence, merger or consolidation (except as
provided in section 29) of a Partner, or the sale, lease or other disposition
of all or substantially all the property of a Partner (except as provided in
section 29).
"Taxable Income or Taxable Loss" means the net income or loss of the
Partnership for federal income tax purposes, as determined at the close of the
Partnership's fiscal year by the accountants employed by the Partnership to
prepare its income tax returns.
11. Captions and Certain Terms. The titles and captions
preceding the text of the articles and sections of this Agreement are solely
for convenience of reference and neither constitute a part of this Agreement
nor affect its meaning, interpretation, or effect. The words "hereby,"
"herein," "hereof," "hereto," "hereunder," and terms of similar import refer to
this Agreement as a whole and not to any particular article, section,
subsection or other part of this Agreement.
12. Severability. If any article, section or other provision of
this Agreement, or its application, is held to be invalid, illegal or
unenforceable in any respect or for any reason, the remainder of this Agreement
and the application of such
4
<PAGE> 6
article, section or other provision to a person or circumstance with respect to
which it is valid, legal and enforceable is not affected.
13. Limitation of Grant. Nothing in this Agreement, whether
express or implied, is intended or may be construed to confer upon, or to grant
to, any creditor or any other Person (other than the Partners and their legal
and personal representatives, heirs, successors and permitted assignees) any
right, remedy or claim under or because of this Agreement or any covenant,
condition or stipulation of it.
ARTICLE II
ORGANIZATION OF PARTNERSHIP
14. Formation, Name, Office and Registered Agent. The
Partnership is organized as of the date of this Agreement and the signatories
to this Agreement constitute the members of this partnership under the Act as
of the date hereof. The rights and obligations of the Partners are determined
by the Act, except as otherwise expressly provided in this Agreement. The name
of the Partnership is "JACKSONVILLE LICENSE LIMITED PARTNERSHIP." The
recordkeeping office of the Partnership is located at 18401 U.S. Highway 19
North, Clearwater, Florida 34624. The principal business office of the
Partnership is located at 50 West Liberty Street, Reno, Nevada 89501. The
Managing General Partner may change the name of the Partnership or the location
of its principal business office at any time and from time to time by giving
written notice of such change to each Partner.
15. Term of Partnership. The term of the Partnership shall
continue until December 31, 2066, unless the Partnership is earlier dissolved
and terminated under this Agreement.
16. Purposes of Partnership; Authorized Acts.
A. (a) Purposes of the partnership are to
(i) acquire, operate, manage and perform all matters
necessary and attendant to the operation of one or
more radio stations in Florida,
(ii) invest in, own, sell, acquire, manage and exercise
the voting rights associated with Marketable
Securities,
(iii) acquire, hold, sell, own, improve, develop or lease
other types of real and personal property, and
(iv) engage in any other lawful activity for profit
approved by an affirmative vote of a Majority in
Interest.
(i) Notwithstanding Section 7, unless unanimously approved by
the Partners, the Partnership shall not engage in any
activity(ies) which would result, based upon opinion of
5
<PAGE> 7
tax counsel, in the characterization of the Partnership
as an investment company as that term is used in Section
721(b) or any successor provision of the Code.
B. In furtherance of its purposes, but subject to every other provision of
this Agreement, the Partnership is authorized to do the following:
(a) acquire by purchase, lease or otherwise, any real or
personal, tangible or intangible property that may be necessary, convenient or
incidental to the accomplishment of the purposes of the Partnership;
(b) construct, operate, maintain, finance, improve, own,
sell, convey, exchange, assign, mortgage or lease any property (or a part
thereof) as may be necessary, convenient or incidental to the accomplishment of
the purposes of the Partnership;
(c) borrow money and issue evidences of indebtedness in
furtherance of any purpose of the Partnership and secure the same by a
mortgage, pledge, security interest or other liens on the property, any part
thereof, any interest therein or on any improvements thereto;
(d) prepay, in whole or in part, refinance, increase,
renew, modify or extend any indebtedness of the Partnership and, in connection
therewith, extend, renew or modify any mortgage, pledge, security interest or
other lien affecting any property;
(e) invest and reinvest the assets of the Partnership
in, and purchase, acquire, hold, sell, transfer and exchange securities of all
kinds;
(f) lend money to Partners;
(g) exercise the voting rights associated with property
owned by the Partnership; and
(h) enter into any activity and perform and carry out
any contract in connection with, or necessary or incidental to, the
accomplishment of the purposes of the Partnership.
C. Notwithstanding any other provision of this Agreement, the
Partnership shall not transfer any Federal Communications Commission ("FCC")
licenses it may hold at any time to any party except in accordance with the
rules and policies of the FCC, and unless substantially all the operating
assets of the associated station in connection with which a particular license
is used, or control of the entity that holds such assets, is simultaneously
transferred to such party.
8. Co-Ownership of Partnership Interests. Any consent required
of a Partner shall require the action or vote of each Person (or in such other
manner as such Persons have designated in writing to the Partnership) having an
interest in such Partnership Interest, with a majority approval needed for
consent. On the
6
<PAGE> 8
death of a co-owner of a Partnership Interest held in either joint tenancy with
right of survivorship or tenancy by the entirety, the Partnership Interest is
owned solely by the survivor as a Partner, and not as an assignee. The
Partnership need not (although it may) recognize the death of a co-owner of a
Partnership Interest until the Managing General Partner receives notice of the
death. A co-owner of a Partnership Interest may sever the tenancy by giving to
the Managing General Partner notice to that effect, and signed by the co-owner
requesting the severance in the case of a joint tenancy, and by both co-owners
in the case of a tenancy by the entirety. Upon receipt of the notice and the
certificate evidencing the Partnership Interest owned by the co-owners, the
Managing General Partner shall cause the Partnership Interest to be allocated
as directed by the co-owners and shall indicate on the Partnership records such
allocation. In absence of joint direction, the interests shall be allocated
between the owners as the severed ownership interests would be valued for
federal estate tax purposes.
ARTICLE III
PARTNERSHIP CAPITAL
9. Capital Contributions.
(a) Upon executing this Agreement, each Partner shall
make or has made a Capital Contribution in the amount and of the type, and
initially shall have a Percentage Interest equal to the percentage, set forth
opposite his name on EXHIBIT A. Partners may make (but Limited Partners are not
required to make) additional Capital Contributions at such time and in such
amount as they in their sole discretion shall determine but only if the
Managing General Partner and a Majority in Interest consent to such additional
Capital Contributions. Upon the assignment of any Partnership Interest, the
making of an additional Capital Contribution or any return of a Capital
Contribution, or any substitution of a Partner, EXHIBIT A shall be amended to
accurately reflect the name, address, Capital Contribution and Percentage
Interest of each Partner.
(b) Notwithstanding (a) above, no Capital Contributions
shall be made or permitted by any Partner which would result, directly or
indirectly, in the Partnership being treated as an investment company under
section 721(b) of the Code, and any such attempted Capital Contribution shall
be void ab initio. The Managing General Partner shall withhold its consent to
the making of an additional Capital Contribution, unless it has satisfied
itself (by seeking advice of legal counsel or otherwise) that the making of the
additional Capital Contribution will not result, directly or indirectly, in the
Partnership being treated as an investment company under section 721(b) of the
Code.
(c) A Partner shall not receive from the Managing
General Partner or out of Partnership Property, and the Managing General
Partner and the Partnership shall not return to a Partner, any part of his
Capital Contribution, except as set forth in Articles VIII and IX of this
Agreement and such distribution is
7
<PAGE> 9
determined to be a return of a Partner's Capital Contribution, and then only if
all liabilities of the Partnership, except liabilities to the Partners on
account of their Capital Contributions, have been paid or there remains
property of the Partnership sufficient to pay them. The Partnership shall not
pay interest on Capital Contributions, and a Partner may demand and receive
only cash in return for his Capital Contribution, except to the extent provided
for in Articles VIII and IX of this Agreement or unless the Liquidator (as
defined in section 32) decides to distribute Partnership property in kind upon
the dissolution, winding-up, and termination of the Partnership, or unless the
distribution of property to a Partner is unanimously approved by the Partners.
Each Partner, by signing this Agreement or a counterpart of it, consents to all
distributions authorized by this Agreement and releases all other Partners from
all liability to both him and the Partnership for all distributions made in
accordance with this Agreement.
(d) Any payments made by the Limited Partner as a guarantor
of obligations of the Partnership shall be treated as additional Capital
Contributions to the Partnership.
(e) Notwithstanding any provision in this Agreement to the
contrary, if any Partner's Capital Account has a deficit balance ("Deficit
Capital Account Balance") upon liquidation of the Partnership (after giving
effect to all contributions, distributions, and allocations for all taxable
years, including the year in which such liquidation occurs), such Partner shall
contribute to the Capital of the Partnership the amount necessary to restore
such deficit balance to zero in accordance with Regulations Section
1.704-1(b)(2)(ii)(d).
10. Capital Account.
(a) The Managing General Partner shall establish and
maintain a Capital Account for each Partner in the Partnership's books of
account. Capital Accounts shall be maintained and adjusted in accordance with
generally accepted accounting principles. Consistent with these capital
account maintenance rules, the Managing General Partner shall credit to each
Partner's Capital Account the amounts of the Partner's Capital Contributions
and any Profits allocated to the Partner. The Managing General Partner shall
charge to or deduct from each Partner's Capital Account the amounts of all
distributions (in cash or other property) to the Partner and any Losses
allocated to the Partner. If any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferror to the extent it relates to the
transferred interest.
(b) The provisions of this section and the other
provisions of this Agreement pertaining to the maintenance of Capital Accounts
are intended to comply with Treasury Regulation Section 1.704-1(b) (or any
successor provision thereto), and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Managing General Partner
determines that it is prudent to modify the manner in which the Capital
Accounts are computed in order to comply with such Regulations,
8
<PAGE> 10
provided that it is not likely to have a material effect on the amounts
distributable to any Partner without such Partner's consent and upon receipt of
an opinion of tax counsel to the Partnership concluding that such modification
will be given effect for federal income tax purposes, the Managing General
Partner may make such modification.
(c) The Managing General Partner shall revalue the
Partnership's property (based on its fair market value as of the moment
immediately preceding the relevant event) and shall adjust Capital Accounts to
take into account any resulting Profit or Loss (determined as if the
Partnership sold all its property for cash equal to the property's fair market
value) upon the occurrence of either of the following events: (1) the making by
any Partner of any non-Pro Rata additional Capital Contribution, (2) the
partial or complete withdrawal of a Partner's Partnership Interest, or (3) the
admission of a Partner.
11. Expenses Paid by Partners. Any Partnership expense
reasonably paid by any Partner on behalf of the Partnership is an indebtedness
of the Partnership to the Partner and does not increase the Partner's
Partnership Interest or Percentage Interest. The Partnership shall reimburse
the Partner as soon as practicable and may pay interest on the indebtedness.
12. Loans by Partners. The Managing General Partner may borrow
money on behalf of the Partnership from any Partner in such amounts and for
such purposes as it considers necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership. Each loan to the
Partnership by a Partner (excluding reimbursable expenses) shall be evidenced
by a promissory note or similar instrument of the Partnership, may be secured
by a lien on the Property, may bear interest at a rate determined by agreement
between such Partner and the Managing General Partner and may be subject to
such other terms and conditions as are agreed to by such Partner and the
Managing General Partner. The Partnership may prepay each loan from a Partner
in whole or in part, at any time and from time to time, without premium or
penalty.
ARTICLE IV
PROFITS AND LOSSES AND TAXABLE INCOME AND TAXABLE LOSS
13. Allocations
(a) Allocation of Profits and Losses.
(1) Profits and Losses of the Partnership shall
be allocated Pro Rata among the Partners.
(2) Profits and Losses of the Partnership shall
be determined for each fiscal year of the Partnership in accordance with the
method of accounting required or permitted to be used for federal income tax
purposes, with such exceptions thereto as are set forth in this Agreement, and
otherwise in accordance with generally accepted accounting principles applied
in a consistent manner.
9
<PAGE> 11
(b) Allocation of Taxable Income and Taxable Loss.
(1) Except as otherwise provided in this
section 13(b), allocations of tax items among the Partners shall be consistent
with corresponding book (Profits and Losses) items (if any). For tax purposes,
Profits and Losses, or any item thereof, shall be appropriately adjusted to
reflect Taxable Income and Taxable Loss, or any item thereof, as determined
under the Code and shall be allocated among the Partners in such a manner as to
comply with the provisions of the Code and Regulations thereunder (including,
if necessary, the "minimum gain chargeback provisions" of the Regulations under
Section 704 of the Code). For example, any gain or loss recognized by the
Partnership with respect to property contributed to the Partnership by a
Partner shall be shared among the Partners so as to take account of the
variation, if any, between the basis of the property to the Partnership and its
fair market value at the time of contribution or revaluation, whichever is
applicable, so as to comply with the requirements of Section 704 of the Code.
Thus, for example, if a Partner contributes property to the Partnership whose
agreed fair market value exceeds its adjusted basis in the hands of the
contributing Partner ("built-in gain"), and there have been no events giving
rise to a revaluation, built-in gain with respect to such contributed property
shall first be allocated to such contributing Partner when the Partnership
recognizes gain upon a disposition of such contributed property, but not in an
amount in excess of such built-in gain; the remaining balance of such
recognized gain, if any, shall be allocated among the Partners as set forth
herein. The allocation of built-in gain to a contributing Partner shall not
increase such Partner's Capital Account, because such gain was already taken
into account when the built-in gain property was contributed to the
Partnership. A Partner who contributes property other than cash shall provide
the Managing General Partner with information necessary to verify the
contributing Partner's adjusted tax basis in the items of property contributed
by him to the Partnership.
(2) Generally, except as provided in section
13(b)(i), Taxable Income and Taxable Loss (and each such income and loss item)
shall be allocated Pro Rata among the Partners. In the event, however, that
non- Pro Rata distributions of property are made to a Partner or the net
proceeds from the sale of property are distributed non-Pro Rata to a Partner,
Taxable Income and Taxable Loss derived from such distributions or sales shall
be allocated 100% to such Partner, subject only to such modifications as are
necessary to comply with Section 704 of the Code.
(c) Losses. The Losses allocated pursuant to Sections
13(a) and 13(b) hereof shall not exceed the maximum amount of Losses that can
be so allocated without causing any Partner who is not a General Partner to
have an Adjusted Capital Account Deficit at the end of any fiscal year. In the
event some but not all of the Partners who are not General Partners would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 13(a) or Section 13(b), the limitation set forth in this
Section 13(c) shall be applied on a Partner by Partner basis so as to allocate
the maximum permissible
10
<PAGE> 12
Loss to each Partner who is not a General Partner under Section
1.704-1(b)(2)(ii)(d) of the Regulations. All Losses in excess of the
limitation set forth in this Section 13(c) shall be allocated to the General
Partner.
(d) Special Allocations. The following special
allocations shall be made in the following order:
(1) Qualified Income Offset. In the event any Partner who is
not a General Partner unexpectedly receives any adjustments, allocations, or
distributions described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income and
gain shall be specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the
Adjusted Capital Account Deficit of such Partner as quickly as possible,
provided that an allocation pursuant to this Section 13(d)(1) shall be made if
and only to the extent that such Partner would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Section 13 have been
tentatively made as if this Section 13(d)(1) were not in the Agreement.
(2) Gross Income Allocation. In the event any Partner who is
not a General Partner has a deficit Capital Account at the end of any
Partnership fiscal year that is in excess of the sum of (i) the amount such
Partner is obligated to restore (pursuant to the terms of a promissory note or
otherwise), and (ii) the amount such Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially
allocated items of Partnership income and gain in the amount of such excess as
quickly as possible, provided that an allocation pursuant to this Section
13(d)(2) shall be made if and only to the extent that such Partner would have a
deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 13 have been tentatively made as if Section
13(d)(1) hereof and this Section 13(d)(2) were not in the Agreement."
ARTICLE V
DISTRIBUTIONS, WITHDRAWALS AND LOANS
14. Distributions.
(a) Cash Flow Distributions. Cash Flow shall be
distributed Pro Rata among the Partners. Notwithstanding the foregoing, if the
Partners unanimously agree, the Partnership may distribute Cash Flow
attributable to a sale of property in a non-Pro Rata manner.
(b) Partial or Complete Withdrawal by a Partner From the
Partnership.
(1) In the event of a partial or complete
withdrawal of a Partner from the Partnership pursuant to Article
11
<PAGE> 13
VIII, the Managing General Partner shall, as promptly as is reasonably
possible, distribute to the Partner his Pro Rata share of the Marketable
Securities previously contributed by such Partner to the Partnership, cash and
other readily divisible assets of the Partnership. The withdrawing Partner
shall also be entitled to receive cash equal in value to his Pro Rata share of
the fair market value (as reasonably determined by the Managing General
Partner) of any non-readily divisible assets owned by the Partnership. The
Managing General Partner shall, as promptly as possible, distribute this
additional amount of cash, if any, to the withdrawing Partner. Cash
distributions to the withdrawing Partner shall be reduced by such Partner's Pro
Rata share of the liabilities of the Partnership and by any expenses incurred
by the Partnership with respect to the withdrawal of the Partner.
(2) A Partner may request that all or a portion
of the Marketable Securities subject to the requested withdrawal be sold by the
Partnership and the net proceeds (after selling and other expenses) distributed
as directed by him. In the event that the Managing General Partner is unable
to sell these Marketable Securities, it shall distribute them to the Partner,
unless it is notified by the Partner to cancel the withdrawal.
(3) The Managing General Partner shall not be
required to distribute to the requesting Partner any assets that the
Partnership is legally restricted or prohibited from distributing to the
Partner, unless steps can be taken to remove the restriction or prohibition; in
which case the requesting Partner shall be charged with the expense of removing
such restriction or prohibition. Any distribution hereunder shall also be
subject to the limitations set forth in sections 9(c) and 15, respectively.
(c) Liquidating Distributions. The net proceeds from
liquidation of the Partnership's assets pursuant to its dissolution,
winding-up, and termination shall be distributed, and all Profits and Losses
resulting from the liquidation of the Partnership property shall be allocated,
among the Partners in the proportions and orders of priority specified in this
section 14(c).
(i) The Liquidator shall distribute the net
proceeds from liquidation of the Partnership's assets as follows:
(1) FIRST: To pay all the liabilities
of the Partnership that are then due and payable, except for both Capital
Contributions of Partners and liabilities to the Partners, in the order of
priority required by Florida law; then
(2) SECOND: To establish any reasonable
reserve that the Liquidator may determine is required for unpaid, future, or
contingent liabilities or obligations of the Partnership; then
(3) THIRD: To pay all liabilities of
the Partnership to the Partners, pro rata according to the amounts of their
respective liabilities; then
12
<PAGE> 14
(4) FOURTH: To the Partners to the
extent of any positive balances in their Capital Accounts, Pro Rata according
to the amounts of their respective positive balances; and then
(5) FIFTH: Any remaining net proceeds
shall be distributed Pro Rata among the Partners.
(ii) Any Profits and Losses and Taxable Income
and Taxable Loss resulting from the disposition of the Partnership's assets in
the process of liquidation shall be allocated among the Partners in the manner
provided in section 13. Any property distributed in kind in the liquidation
shall be valued and treated as if the property were sold and the cash proceeds
were distributed. The Profits and Losses arising from the constructive sale of
the property described in the preceding sentence shall be allocated among the
Partners in the manner provided in section 13.
15. Limitation on Distributions to Partners. A Partner may
receive distributions from the Partnership only to the extent the Partnership's
total assets exceed its total liabilities, other than liabilities to the
Partners on account of their Capital Contributions.
ARTICLE VI
AUTHORITY, DUTIES, AND LIABILITIES OF PARTNERS
16. Duties of Managing General Partner. The Managing General
Partner shall manage the affairs of the Partnership, shall apply itself
diligently for the Partnership, and shall devote to the Partnership such time
as is necessary and appropriate to manage the business of the Partnership. The
Managing General Partner is not required to devote all its business time to the
Partnership, and it may engage in other business ventures and employment,
including those in competition with the Partnership. In the performance of its
duties, the Managing General Partner may hire employees and agents of the
Partnership and generally shall supervise and direct all the daily operations
of the Partnership.
17. Managing General Partner's Fees and Expenses.
(a) Fees to Managing General Partner. In consideration
for performing services described herein, the Managing General Partner may be
paid a fee to be agreed upon by a Majority in Interest. Such fees shall be
deemed earned when the services have been performed and, regardless of when
paid, shall be non-executory from the date earned and shall be the obligation
of the Partnership from and after that date.
(b) Expenses. Except as otherwise provided herein, the
Partnership shall pay all expenses of the Partnership (which expenses may be
either billed directly to the Partnership or reimbursed to the Managing General
Partner) which may include, but are not limited to: (i) all costs of borrowed
money, taxes and assessments on the Property and other taxes applicable to the
13
<PAGE> 15
Partnership; (ii) all costs for goods and materials, whether purchased by the
Partnership directly or by the Managing General Partner on behalf of the
Partnership; (iii) legal, audit, accounting, brokerage and other professional
fees; (iv) fees and expenses paid to independent contractors, mortgage bankers,
brokers, insurance brokers and other agents; (v) expenses of organizing,
revising, amending, converting, modifying or terminating the Partnership; (vi)
expenses in connection with distributions made by the Partnership to, and
communications and bookkeeping work necessary in maintaining relations with,
Partners; (vii) expenses in connection with preparing and mailing reports to
Partners; (viii) costs of any accounting, statistical or bookkeeping equipment
necessary for the maintenance of the books and records of the Partnership; (ix)
the cost of preparation and dissemination of informational material and
documentation relating to the Partnership; (x) except with respect to
litigation solely among the Partners as such, costs incurred in connection with
any litigation in which the Partnership is involved, as well as in the
examination, investigation or other proceedings, conducted against the
Partnership by any regulatory agency, including legal and accounting fees
incurred in connection therewith; (xi) costs of any computer services or
equipment or services of personnel used for or by the Partnership; and (xii)
expenses of professionals employed by the Partnership in connection with any of
the foregoing, including attorneys, accountants and appraisers.
18. Authority of Managing General Partner. The Managing General
Partner may bind the Partnership to do all acts that are necessary,
appropriate, or incidental to the accomplishment of the purposes of the
Partnership. Any person dealing with the Partnership or the Managing General
Partner may rely on a certificate signed by the Managing General Partner as to
the identity of any Partner, the existence or absence of any fact or condition
that is necessary to permit action by either the Partnership or the Managing
General Partner or germane in any other way to the affairs of the Partnership,
and the persons who are authorized to execute and deliver any documents or
instruments of or on behalf of the Partnership. Without limiting the
generality of the foregoing, the Managing General Partner is specifically
authorized to do the following:
(a) to negotiate and enter into leases and agreements
with land or building owners or other Persons, and to incur obligations for,
and on behalf of, the Partnership in connection with Partnership business;
(b) to borrow money on behalf of the Partnership and, as
security therefor, to encumber the property;
(c) to prepay, in whole or in part, refinance, increase,
modify or extend any obligation affecting the property;
(d) to sell, exchange, convey and lease the property;
(e) to employ from time to time, at the expense of the
Partnership, other Persons required for the operation and management of the
Partnership business, including accountants,
14
<PAGE> 16
attorneys and others, who may be Partners, on such terms and for such
compensation as the Managing General Partner determines to be reasonable and
this may include Persons which are Affiliates;
(f) to pay all attorney's and accountant's fees and
other costs incurred in connection with the formation of the Partnership
business and the completion of all steps necessary or advisable for the
Partnership to comply with applicable laws;
(g) to assume responsibilities imposed on the Managing
General Partner by the Act;
(h) to compromise, arbitrate or otherwise adjust claims
in favor of or against the Partnership and to carry such insurance as the
Managing General Partner considers advisable;
(i) to exercise the voting rights associated with the
securities and other Property owned by the Partnership;
(j) to commence or defend litigation with respect to the
Partnership or any assets of the Partnership as the Managing General Partner
considers advisable, at the expense of the Partnership;
(k) to make, execute, acknowledge and deliver documents
of transfer and conveyance and any other instruments that may be necessary or
appropriate to carry out its powers; and
(l) to do all such acts and take all such proceedings
and execute all such rights and privileges, although not specifically mentioned
herein, as the Managing General Partner considers necessary to conduct the
business of the Partnership and to carry out the purposes of the Partnership.
Notwithstanding the foregoing, the Managing General Partner shall not
take any of the following actions without the consent of a Majority in
Interest:
(1) assign all or any part of the property for the
benefit of its creditors or confess a judgment against the Partnership;
(2) take any action in contravention of the Act, the
certificate of limited partnership or this Agreement;
(3) sell, lease, transfer, assign, pledge or encumber a
substantial portion (10% or more) in value of the property of the Partnership
(except with respect to transactions to which section 28 or section 32
applies); or
(4) admit a Person as a Partner of the Partnership.
19. Dealing with Affiliates. The Managing General Partner may
employ and enter into contracts and other arrangements with any Person,
including an Affiliate, and may obligate the Partnership to pay reasonable
compensation for services rendered by such Persons on terms that, in the
judgment of the Managing General
15
<PAGE> 17
Partner, are not less favorable to the Partnership than would be available from
an unrelated party.
20. Indemnification of General Partners. The Managing General
Partner need not secure the performance of its duties by bond or otherwise. A
General Partner is not liable, responsible, or accountable in damages or
otherwise to any Partner or to the Partnership for any act taken or omission
made in good faith on behalf of the Partnership and in a manner that such
General Partner reasonably believes to be within the scope of the authority
granted to it by this Agreement and in the best interest of the Partnership,
except for gross negligence or willful misconduct. Any loss, expense
(including attorneys' fees) or damage incurred by a General Partner by reason
of any act or omission by it in good faith on behalf of the Partnership and in
a manner that it reasonably believes to be within the scope of the authority
granted to it by this Agreement and in the best interest of the Partnership
(but not, in any event, any loss, expense or damage incurred by a General
Partner by reason of gross negligence or willful misconduct) shall be paid to
the indemnified General Partner from the Partnership's assets, to the extent
available.
21. Liability of Non-Managing General Partner. The non-managing
General Partners are not liable to any other Partner for the gross negligence
or willful misconduct of the Managing General Partner.
22. Authority of Non-Managing General Partner. The non-managing
General Partners shall not participate in the management of, or have any
control over, the business or policies of the Partnership, except as required
by the Act or permitted by section 18, and shall not transact any business in
the name of the Partnership. Unless required by the Act, a non-managing
general partner shall not sign any agreement, document or instrument in the
name of the Partnership or otherwise make commitments on behalf of the
Partnership.
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS
23. General Partners. Subject to section 24, a General Partner
may make an Assignment, directly or indirectly, of all or any part of its
Partnership Interest. However, an Assignment does not relieve such General
Partner of its obligations and liabilities under this Agreement, or constitute
the assignee a General Partner, or confer on the assignee any Partnership
Rights. Subject to section 24, and only if a Majority in Interest consents, a
General Partner may make an Assignment of both its Partnership Interest and its
Partnership Rights if the assignee assumes in writing all such General
Partner's obligations and liabilities under this Agreement and if all the
applicable requirements of section 25 are satisfied. Upon compliance with the
immediately preceding sentence, an assignee of such General Partner has all the
rights and powers granted to such General Partner under this Agreement and has
all the obligations and liabilities of such General Partner under this
Agreement.
16
<PAGE> 18
24. Restriction on Transfer. Notwithstanding any other
provision of this Agreement, an assignment of a Partnership Interest shall not
be made, and consent thereto shall be withheld:
(a) Unless the Managing General Partner has satisfied
itself (by seeking advice of legal counsel or otherwise, with any resulting
Partnership expense to be reimbursed by the assignor) that the assignment will
not have any significant adverse tax effect upon the Partnership or the other
Partners;
(b) Unless the Managing General Partner has satisfied
itself (by advice of legal counsel, with any resulting Partnership expense to
be reimbursed by the assignor) that the proposed assignment may be made without
registration under any applicable securities law; and it will not violate any
applicable securities law (including investor suitability standards);
(c) If the Assignment is sought to be made to:
(i) a minor or incompetent, except if made by
will or intestate succession, or
(ii) to a Person which is not an Affiliate.
25. Admission of Substitute Partner. Subject to the other
provisions of this Agreement, an assignee of a Partnership Interest may be
admitted as a Partner and granted Partnership Rights only if:
(a) the Assignment is made pursuant to a written
instrument in a form satisfactory to the Managing General Partner and specifies
the intention of the assignor that the assignee be substituted as a Partner;
(b) the Managing General Partner consents to the
admission by executing two counterparts of this Agreement that evidences the
Partnership Rights of the assignee, and if the assignee is to be admitted as a
General Partner a Majority in Interest consent to the admission;
(c) the assignee accepts, signs and agrees to be bound
by this Agreement, by executing two counterparts of this Agreement, including
an amended EXHIBIT A, and such other documents or instruments as the Managing
General Partner requires to effect the admission of the assignee as a Partner;
(d) the assignee provides the Managing General Partner
with evidence satisfactory to it of the assignee's authority to become a
Partner under the terms of this Agreement;
(e) the assignee pays all filing, publication and other
costs (including reasonable attorneys' fees) incurred by either the Partnership
or the Managing General Partner in connection with the admission and
substitution of the assignee as a Partner.
Notwithstanding an assignee's satisfaction of any or all of the
conditions specified above, the Managing General Partner, in
17
<PAGE> 19
its absolute discretion, may refuse to consent to the assignee's admission as a
Partner, in which event the assignee will not obtain any Partnership Rights,
but will retain only the rights of an assignee under section 23.
26. Rights of Partner After Assignment and Substitution. Upon
the Assignment of all his Partnership Interest, and the admission of a
substitute partner, a Partner shall cease to be a Partner and to have any
Partnership Rights.
27. Allocations and Distributions After Assignment. For the
purposes of allocations of Profits and Losses, Taxable Income or Taxable Loss,
and distributions, an Assignment of a Partnership Interest is effective as to
the Partnership, and shall be reflected in the records of the Partnership, as
of the date that the Managing General Partner receives written notice of the
Assignment. The Taxable Income or Taxable Loss, Profits and Losses and cash
and other distributions in respect of the assigned Partnership Interest with
respect to the fiscal year in which the Assignment of the Partnership Interest
occurs shall be divided between the assignor and the assignee according to the
method provided to the Managing General Partner by the assignor and the
assignee, so long as such method is permitted under the Code and does not
adversely affect the other Partners or the Partnership from a tax or economic
perspective. The method of allocation shall be provided to the Managing
General Partner in the written notice of the Assignment. Any additional costs
for computing the allocations hereunder shall be paid by the assignor or
assignee, as the case may be. The written notice referred to above shall also
contain information as to whether the assignor or assignee shall be responsible
for the payment of such additional cost, if any.
ARTICLE VIII
RETIREMENT, WITHDRAWAL, OR REMOVAL OF PARTNERS
28. Withdrawal of Non-Managing General Partner and Limited
Partners.
(a) A non-managing General Partner and a Limited Partner
may, at any time, partially withdraw his Partnership Interest from the
Partnership by providing written notice thereof to the Managing General
Partner. The Managing General Partner shall promptly send a copy of such
notice to all other Partners. Within thirty (30) days after the receipt of
such written notice from a Partner, the Managing General Partner shall make the
appropriate distributions to the Partner in partial or complete redemption of
his Partnership Interest as set forth in section 14(b).
(b) A partial withdrawal by a Partner shall be made in
increments of one-tenth (1/10th) of one percent (1%) of a Percentage Interest.
The written notice of withdrawal from a Partner to the Managing General Partner
must state whether the withdrawal is a partial or complete withdrawal and, if a
partial withdrawal, must state the Percentage Interest that is being withdrawn.
A Partner shall not make a partial withdrawal that will
18
<PAGE> 20
result in his remaining Percentage Interest becoming less than one-tenth
(1/10th) of one percent (1%) immediately after the withdrawal.
(c) The Managing General Partner agrees that it will
fully cooperate to the extent permitted by law to accomplish a withdrawal
requested by a non-managing General Partner and a Limited Partner hereunder.
It also agrees that it will not take any action that will obstruct or render
impossible the application of this section 28 (such as to pledge the
Partnership's Marketable Securities as collateral to creditors of the
Partnership), unless such action is essential to accomplish the purposes of the
Partnership.
(d) The partial withdrawal of a non-managing General
Partner or a Limited Partner does not dissolve or terminate the Partnership
unless there is only one Partner then remaining. The remaining Partners shall
amend this Agreement to reflect the partial or complete withdrawal of the
Partner from the Partnership, if and to the extent necessary.
(e) Upon the giving of the notice of withdrawal pursuant to
Paragraph (a), and upon the dissolution of the Partnership, the voting rights
with respect to any Marketable Securities allocable to the Percentage Interest
being withdrawn shall be vested in the withdrawing Partner or Partners, and the
Partnership shall have no voting rights with respect to such stock.
29. Retirement or Withdrawal of General Partner. The Managing
General Partner may not withdraw any part of its General Partnership Interest.
The Retirement of the Managing General Partner shall dissolve the Partnership.
Notwithstanding the foregoing or anything else in this Agreement to the
contrary, a merger, consolidation, or reorganization of the Managing General
Partner, or a sale of all or substantially all its assets that includes its
Partnership Interest, is not a Retirement of such Managing General Partner if
the resulting, surviving or acquiring Person is an Affiliate and becomes
substituted as the Managing General Partner of the Partnership. The resulting,
surviving or acquiring Person is substituted as the Managing General Partner
without further act if it gives notice of the substitution to the Partners
before the effective date of the merger, consolidation, reorganization or sale.
Each Partner consents to the admission and substitution of such substitute
Managing General Partner pursuant to this section 29, and no further consent or
approval of any Partner is required.
30. Rights of Partner After Retirement or Withdrawal. A Partner
ceases to have any Partnership Rights upon his Retirement or complete
withdrawal from the Partnership. However, until the appropriate distributions,
if any, are made to a Retired or withdrawn Partner for his Partnership
Interest, the Retired or withdrawn Partner is entitled to receive the
allocations of Profits and Losses, Taxable Income or Taxable Loss and all
distributions referred to in section 14 applicable to his Partnership Interest.
19
<PAGE> 21
ARTICLE IX
DISSOLUTION
31. Events of Dissolution. The Partnership shall be terminated
and dissolved upon:
(a) the expiration of its term;
(b) the vote of a Majority in Interest to dissolve the
Partnership;
(c) the Partnership being adjudicated insolvent or
bankrupt;
(d) the Retirement of the Managing General Partner; or
(e) the sale of all or substantially all of the
Partnership's Property.
32. Winding-Up and Distributions. Upon the dissolution of the
Partnership pursuant to section 31, the winding-up of the Partnership's
business and the liquidation and distribution of Partnership assets must be
carried out with due diligence and in a timely manner, and consistent with both
the requirements of applicable law and the following provisions of this
section:
(a) The Managing General Partner shall be responsible
for taking all actions relating to the winding-up, liquidation, and
distribution of assets of the Partnership, unless its Retirement causes the
dissolution, in which case the fiscal agent, liquidator, or receiver appointed
(without judicial action) by a Majority in Interest shall be so responsible.
The Managing General Partner, or the appointed fiscal agent, liquidator, or
receiver, is referred to in this Agreement as the "Liquidator." A non-managing
General Partner can be appointed to be the Liquidator. The Liquidator shall
file all certificates or notices of the dissolution of the Partnership as
required by law. Upon the complete liquidation and distribution of the
Partnership assets, the Partnership shall terminate, and the Liquidator shall
execute, acknowledge, and cause to be filed all certificates and notices
required by law to terminate the Partnership.
(b) The Liquidator shall proceed without unnecessary
delay to sell and otherwise liquidate the Partnership's assets. Unless
directed otherwise by a Majority in Interest, all Marketable Securities, cash
and other readily divisible or fungible assets of the Partnership shall be
distributed directly to the Partners in the manner set forth in section
14(c)(i). The Liquidator shall promptly sell the other assets of the
Partnership unless it determines that an immediate sale of part or all of such
assets would cause undue loss to the Partners. In such case, the Liquidator,
to avoid such loss, may defer the liquidation of the Partnership assets for a
reasonable time, except for those liquidations that are necessary to satisfy
the debts and liabilities of the Partnership to persons and parties other than
the Partners. The Liquidator shall distribute the proceeds from
20
<PAGE> 22
the liquidation of the Partnership's assets as provided in section 14(c).
(c) Upon the dissolution of the Partnership pursuant to
section 31, the Liquidator shall cause the accountants for the Partnership to
prepare within ninety (90) days after the occurrence of the event of
dissolution, and immediately thereafter shall furnish to each Partner, a
statement setting forth the assets and liabilities of the Partnership as of the
date of its dissolution. The Liquidator, promptly following the complete
liquidation and distribution of the Partnership's assets, shall cause the
Partnership's accountants to prepare, and the Liquidator shall furnish to each
person who is a Partner immediately before the dissolution, a statement showing
the manner in which the Partnership assets were liquidated and distributed.
33. Distribution of Liquidation Proceeds and Assets and
Allocation of Gains and Losses. The net proceeds from liquidation of the
Partnership's assets and the unliquidated Property of the Partnership shall be
distributed, and all Profits and Losses resulting from the liquidation of the
Partnership shall be allocated, among the Partners in the proportions and
orders of priority specified in section 14(c).
34. Limitation of Liability of Partners. Upon the dissolution
of the Partnership and the distribution of the net liquidation proceeds
pursuant to section 31 and section 14(c), each Partner shall look solely to the
assets of the Partnership for the payment of his unreturned Capital
Contributions, and if the Partnership's assets remaining after the payment or
discharge of the debts and liabilities of the Partnership are insufficient to
pay the full amount of the unreturned Capital Contributions of each Partner,
the Partner shall have no recourse or claim against any Partner or the
Partnership with respect to its unreturned Capital Contributions, except for
claims for fraud, gross negligence, or breach of fiduciary duty.
Notwithstanding anything to the contrary contained herein, each Limited Partner
hereby waives his or her right to seek indemnity from the General Partner for
any losses he or she might suffer under this Partnership Agreement or under any
ancillary agreements related to the business of the Partnership including any
personal guarantees of the liabilities of the Partnership. Further, each
Limited Partner hereby waives his or her right to recover from the Partnership,
as primary obligor, any amounts such Limited Partner becomes liable to pay or
pays pursuant to any agreements related to the business of the Partnership
including any personal guarantees of the liabilities of the Partnership.
35. Waiver of Right of Partition of Assets. Each Partner, and
for his heirs, successors, and assigns, waives his right to the partition of
the assets of the Partnership upon the dissolution and liquidation of the
Partnership.
21
<PAGE> 23
ARTICLE X
ACCOUNTING YEAR, BOOKS, RECORDS, AND REPORTS
36. Books and Records. The Managing General Partner shall
maintain at the principal office of the Partnership a complete and accurate set
of books of records and accounts, in which it shall make full and complete
entries of all dealings or transactions relating to the Partnership's business
and where it shall keep all supporting documentation of transactions with
respect to the conduct of the Partnership's business. Each Partner or his duly
authorized representative, upon five days' advance notice to the Managing
General Partner, may examine during normal business hours the books of the
Partnership and all other records and information concerning the operation of
the Partnership.
37. Reports. If requested by a Partner at least 30 days prior
to the end of a quarter, within 60 days after the end of each fiscal quarter in
each fiscal year of the Partnership, the Managing General Partner shall cause
to be prepared and sent to each Partner a balance sheet, income statement and
cash flow statement of the Partnership for and as of the end of that fiscal
quarter, in each case unaudited but accompanied by a report of the activities
of the Partnership for that quarter. Within 90 days after the end of each
fiscal year of the Partnership, the Managing General Partner shall cause to be
prepared and sent to each Partner a financial report consisting of (a) a
balance sheet as of the end of the fiscal year; (b) statements of income,
partner's equity, and changes in financial position for the fiscal year; (c) if
requested by a Partner, the opinion of the Partnership's certified public
accountant concerning the foregoing financial statements; (d) a summary of the
Partnership's activities for the fiscal year; (e) a statement showing the
distributions to each Partner during the fiscal year and identifying any
distributions which constitute a return of Capital Contribution; and (f) a
statement showing the amount of Taxable Income or Taxable Loss, and listing
each item of income, gain, loss, deduction, or credit allocated or charged
against the Partner for federal and state income tax purposes.
38. Bank Accounts. The Managing General Partner shall maintain
the bank accounts of the Partnership in such financial institutions as the
Managing General Partner considers appropriate. The Managing General Partner
shall make or permit withdrawals from the Partnership's bank accounts on the
signature of the Managing General Partner.
39. Tax Elections. The Partnership shall file an election under
Section 754 of the Code, relating to the optional adjustment to the basis of
partnership property, at the first time it is permitted to do so after the
beginning of the term of this Partnership. The Managing General Partner shall
make or waive, at its discretion, all other tax elections required or permitted
to be made by the Partnership under the Code.
40. Accounting Method and Fiscal Year. The Managing General
Partner shall maintain the Partnership records and books of accounts in
accordance with the method of accounting required or permitted to be used for
federal income tax purposes, with such
22
<PAGE> 24
modifications as are set forth in this Agreement, and otherwise in accordance
with generally accepted accounting principles consistently applied. The fiscal
year of the Partnership is the calendar year.
ARTICLE XI
GENERAL PROVISIONS
41. Partnership Contracts. The Managing General Partner may
enter into agreements and contracts on behalf of the Partnership only if they
are in writing and clearly indicate to the other parties that the Partnership
is a general partnership of which the Managing General Partner is a general
partner.
42. Conveyances. Subject to section 18, the Managing General
Partner may sign any deed, mortgage, lease, bill of sale, security agreement,
pledge, contract or other instrument or commitment purporting to convey or
encumber any of the Partnership's Property or any interest therein, whether now
or subsequently owned or leased at any time by the Partnership, and no other
signature is required.
43. Notices. To be effective, a notice required or permitted by
this Agreement must be in writing, or by telegram, telex or telecopy if
promptly confirmed in writing. A notice is given when delivered or, if mailed,
when deposited in a United States postal service letterbox to be sent by
first-class, postage-prepaid, certified mail, with return receipt requested
(whether or not the sender receives the return receipt), and addressed, if to a
Partner, at his registered address listed on EXHIBIT A and, if to the Managing
General Partner or the Partnership, to the attention of such Managing General
Partner at the Partnership's principal business office.
44. Consents. Any consent required by this Agreement may be
given as follows:
(a) by a writing given by the consenting Partner and
received by the Managing General Partner or other appropriate recipient at or
before the occurrence of the action or other thing for which the consent was
solicited, unless the consent is nullified by:
(i) A writing from the consenting Partner that
is received by the Managing General Partner before the occurrence of the action
or other thing for which the consent was solicited; or
(ii) the negative vote by the consenting Partner
at any meeting called for the purpose of considering the action or other thing.
(b) by the affirmative vote of the consenting Partner at
any meeting called for the purpose of considering the action or other thing for
which the Partner's consent was solicited.
23
<PAGE> 25
45. Meetings. The Managing General Partner may call meetings of
the Partners for any purpose, at any time. The Managing General Partner shall
call a meeting of the Partners within 30 days after he receives from a Majority
in Interest a written request for a meeting, stating the purpose of the
requested meeting and the matters proposed for consideration. Meetings of the
Partners may be held at such time, date and place as the Managing General
Partner designates. The Managing General Partner shall give notice of any
meeting of the Partners not less than ten nor more than 60 days before the date
of the meeting, to each Partner at his registered address listed on EXHIBIT A.
The notice shall state the time, date and place of the meeting, the purpose of
the meeting and the Partner at whose direction or request the meeting is
called. If a meeting is adjourned to another time or place, notice of the
adjourned meeting is not required if the time and place of the adjournment is
announced at the called meeting. The presence in person or by proxy of a
Majority in Interest constitutes a quorum at a meeting. Any notice of a
meeting required by this section may be waived in writing at, before or after
the meeting and shall be deemed to be waived by each Partner who is present in
person or by proxy at the meeting. Only those persons who are Partners at the
close of business on the day before the meeting are entitled to vote at the
meeting. Any Partner entitled to vote at a meeting may authorize any person to
act for him by written proxy if a copy of the proxy is delivered to the
Managing General Partner before the commencement of the meeting. To be
effective, a proxy must be signed by the Partner (and, if applicable, each
co-owner) or his duly appointed attorney-in-fact, and no proxy shall be valid
for more than 11 months after its date. A proxy is revocable at the pleasure
of the Partner granting it.
46. Binding Effect; Counterparts. The covenants and agreements
contained in this Agreement are binding on, and inure to the benefit of, the
legal and personal representatives, heirs, successors and permitted assignees
of the parties to this Agreement. The parties may execute this Agreement in
any number of counterparts, each of which will be an original, but all of which
together will constitute one and the same agreement.
47. Choice of Law. This Agreement and the rights and
obligations of the Partners under it are governed by, and construed and
enforced in accordance with, the laws of Florida.
48. Complete Agreement; Modification. This Agreement contains
the final, complete and exclusive expression of the understanding among the
Partners with respect to the Partnership and its purposes and objectives and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them. Except to admit a new or a substitute Partner or to
reflect the withdrawal or Retirement of a Partner, this Agreement and every
provision of it may be modified or amended only by an agreement in writing
signed by or on behalf of all Partners.
49. Evidence of Partnership Interests. The Partnership Interest
of each Partner is evidenced exclusively by a counterpart of this Agreement
(including EXHIBIT A) that has been signed and dated by the Managing General
Partner.
24
<PAGE> 26
50. Tax Matters Partner. The Managing General Partner or its
designee shall be the "tax matters partner" of the Partnership for federal
income tax purposes. If the Managing General Partner ceases to act as the
Managing General Partner of the Partnership, the successor Managing General
Partner (if any), shall be designated the tax matters partner. Pursuant to
Section 6223(c)(2) of the Code, upon receipt of notice from the Internal
Revenue Service of the beginning of an administrative proceeding with respect
to the Partnership, the Managing General Partner, as the tax matters partner,
shall furnish the Internal Revenue Service with the names, addresses, and
Percentage Interests of each of the Partners. The Managing General Partner
agrees not to enter into a settlement agreement pursuant to Section 6224 of the
Code without providing at least 30 days advance written notice to each Partner.
As tax matters partner, the Managing General Partner shall have absolute
discretion regarding whether to seek judicial review of any administrative
determination and, if it determines to seek judicial review of Internal Revenue
Service action pursuant to Section 6226 of the Code, then the Managing General
Partner shall select the judicial forum for such review. The tax matters
partner shall receive no compensation for its services as such. The
Partnership shall bear all third party costs and expenses incurred by the tax
matters partner in performing its duties as such. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm or law
firm to assist the tax matters partner in discharging its duties hereunder.
51. Gender and Number. As used in this Agreement, the masculine
gender includes the feminine and neuter, and the singular includes the plural.
52. Title. Title to any property acquired by the Partnership
shall be taken in the name of the Partnership.
25
<PAGE> 27
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of each Partner as of the date written beside his name.
General Partner
PAXSON ENTERPRISES, INC.
By /s/ Lowell W. Paxson
----------------------------------
Lowell W. Paxson, President
Limited Partner
Paxson Broadcasting of Jacksonville,
Limited Partnership
By: Paxson Enterprises, Inc.,
General Partner
By: /s/ Lowell W. Paxson
----------------------------------
Lowell W. Paxson, President
26
<PAGE> 28
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED TO AND SWORN BEFORE ME, on behalf of Paxson
Enterprises, Inc., a Nevada corporation, as General Partner, by Lowell W.
Paxson, its President, who is personally known to me/has produced
____________________________ as identification and who did/did not take an
oath, this 10th day of March, 1993.
(SEAL)
/s/ Michele Hansen
------------------------------------
Printed/Typed Name: Michele Hansen
Notary Public-State of Florida
Commission Number:
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED TO AND SWORN BEFORE ME, by Paxson Enterprises,
Inc., a Nevada corporation, as General Partner of Paxson Broadcasting of
Jacksonville, Limited Partnership, by Lowell W. Paxson, as Limited Partner, who
is personally known to me/has produced ____________________________ as
identification and who did/did not take an oath, this 10th day of March, 1993.
(SEAL)
/s/ Michele Hansen
------------------------------------
Printed/Typed Name: Michele Hansen
Notary Public-State of Florida
Commission Number:
27
<PAGE> 29
EXHIBIT A
<TABLE>
<CAPTION>
General Partners Contribution Percentage Interest
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Paxson Enterprises, Inc. 5%
18401 U.S. Highway 19 North
Clearwater, Florida 34624
Limited Partners
- ----------------
Paxson Broadcasting of 95%
Jacksonville,
Limited Partnership
18401 U.S. Highway 19 North
Clearwater, Florida 34624
</TABLE>
28
<PAGE> 30
AMENDMENT NUMBER 1 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON JACKSONVILLE LICENSE LIMITED PARTNERSHIP
This Amendment Number 1 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Jacksonville License
Limited Partnership ("Amendment") is effective as of the 29th day of March,
1993, by and between PAXSON ENTERPRISES, INC., a Nevada corporation, as the
General Partner and PAXSON BROADCASTING OF JACKSONVILLE, LIMITED PARTNERSHIP, a
Florida limited partnership, as a Limited Partner. The parties hereby agree as
follows:
1. Assignment. The definition of "Assignment" in Article I,
Section 1 of the Partnership Agreement is amended in its entirety to read as
follows:
"`Assignment' means a sale, exchange, gift, pledge, transfer
or disposition of any kind whatsoever and, in the case of a
Person that is not an individual, it includes the sale,
exchange, pledge, transfer or disposition of a majority of
either voting control or the equity interests in such Person;
provided, however, that an "Assignment" does not include a
pledge of, or a grant of a security interest in, a Partnership
Interest, Partnership Rights, or the majority of either voting
control or the equity interests in any Person, which pledge or
security interest is given or granted for the purpose of
securing an obligation of the Partnership or any Partner or
any Person owning an equity interest in a Partner, provided
that the giving or grant of such pledge or security interest
is approved by the Managing General Partner."
2. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 18401 U.S. Highway
19 North, Clearwater, Florida 34624."
3. Purposes of Partnership; Authorized Acts. Article II,
subsection 7.A.(a)(i) of the Partnership Agreement is amended to read as
follows:
"acquire, operate, manage and perform all matters necessary
and attendant to the operation of one or more radio stations
in the State of Florida,".
4. Power to Guarantee Obligations of Others. Article II,
subsection 7.B. of the Partnership Agreement is amended by redesignating
clauses (g) and (h) as clauses (h) and (i), respectively, and inserting the
following as clause (g):
1
<PAGE> 31
"(g) guarantee the debts and obligations of any Partner and
secure the same by a mortgage, pledge, security interest or
other liens upon the property of the Partnership, any part
thereof, any interest therein, or any improvements thereto;".
5. Section 49 of the Partnership Agreement, entitled "Evidence of
Partnership Interests," is hereby deleted in its entirety, and Sections 50, 51,
and 52 of the Partnership Agreement are renumbered as Sections 49, 50, and 51
respectively.
6. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 1
on this 29th day of March, 1993.
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ William L. Watson By: /s/ Lowell W. Paxson
- ------------------------ ------------------------
Its President
--------------------
/s/ John R. Feore
- ------------------------
LIMITED PARTNER:
PAXSON BROADCASTING OF JACKSONVILLE
LIMITED PARTNERSHIP, By Paxson
Enterprises, Inc., its General
Partner
/s/ William L. Watson /s/ Lowell W. Paxson
- ------------------------ ------------------------
Lowell Paxson, President
/s/ John R. Feore
- ------------------------
2
<PAGE> 32
GENERAL PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This is a General Partnership Interests Assignment Agreement
(the "Agreement") dated December 15, 1993 (the "Effective Date"). It is among
Paxson Enterprises, Inc. (the "General Partner Assignor"), Paxson
Communications Corp. (the "First Assignee"), Paxson Communications of Florida,
Inc. (the "General Partner Assignee"), and Lowell L. Paxson (the "Nonassigning
Limited Partner") in respect of the Limited Partnerships listed in Exhibit "A"
(the "Station Partnerships"). It is also among the General Partner Assignee,
the First Assignee, the General Partner Assignee and the Station Partnerships
in their capacities as a limited partner (each a "License Limited Partner") in
their respective Limited Partnerships listed in Exhibit "B" (the "License
Partnerships," and together with the Station Partnerships, the "Partnerships").
Capitalized terms used herein and not ascribed a definition have the meaning
assigned to them by the Partnership Agreement to which the term pertains.
BACKGROUND
The General Partner Assignor and the Nonassigning Limited
Partner are partners in the Station Partnerships. The General Partner Assignor
and the License Limited Partners are the partners in the License Partnerships.
The General Partner Assignor wishes to transfer each of its general partnership
interests in the Station Partnerships and the License Partnerships to the First
Assignee in exchange for certain of its common stock and the First Assignee
wishes to immediately assign such general partnership interests to the General
Partner Assignee in exchange for all of the capital stock of the General
Partner Assignee. The General Partner Assignor and the First Assignee also
wish to have the General Partner Assignee admitted as a Partner and granted
partnership rights in each of the Partnerships. The General Partner Assignee
agrees to accept the assignment of the general partnership interests and to be
admitted as a General Partner in the respective Partnerships pursuant to the
Partnership Agreements identified in Exhibit "A" and "B", respectively (the
"Partnership Agreements"). The Nonassigning Limited Partner as the limited
partner in each of the Station Partnerships and each of the License Limited
Partners as the limited partner in the respective License Partnerships hereby
consent to the assignment of the general partnership interests and admission of
the General Partner Assignee as the general partner in their respective
Partnerships pursuant to the terms of this Agreement and the Partnership
Agreements. Pursuant to Chapter 620, Florida Statutes, the Partnerships will
continue uninterrupted and the assignment of the general partnership interests
will not cause a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to
Section 23 of each of the Partnership Agreements and Section 620.152, Florida
Statutes, the General Partner Assignor assigns all of its general partnership
interests in the Partnerships to the First Assignee. The
1
<PAGE> 33
First Assignee accepts the assignment of all of the general partnership
interests. Pursuant to Section 23 of each of the Partnership Agreements and
Section 620.152, Florida Statutes, the First Assignee assigns all of its
general partnership interests in the Partnerships to the General Partner
Assignee. The General Partner Assignee accepts the assignment of all of the
general partnership interests.
2. Admission of General Partner Assignee and Withdrawal
of General Partner Assignor. On the Effective Date, the General Partner
Assignee is admitted as a general partner under the respective Partnership
Agreement and the General Partner Assignor has withdrawn from each of the
Partnerships.
3. General Partner Assignee's Acceptance of Admission.
By executing this Agreement, the General Partner Assignee accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements
and shall become the Managing General Partner of each of the Partnerships. The
parties agree that the General Partner Assignee's execution of this Agreement
shall satisfy the requirement of Sections 23, 24 and 25 of the respective
Partnership Agreements.
4. Limited Partner's Consent. Each of the Nonassigning
Limited Partner and the License Limited Partners consent to the assignment of
the general partnership interest by the General Partner of their respective
Partnership and to the admission of the General Partner Assignee as a general
partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the general partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of General Partner Assignor, First Assignee, General Partner
Assignee, Nonassigning Limited Partner and the License Limited Partners agree
and acknowledge that (i) General Partner Assignor's general partnership
interests in each of the Partnerships are subject to the lien and security
interest of Banque Paribas, as Agent on behalf of the Lenders (the "Agent"),
under the Loan Documents (as defined in that certain Credit Agreement dated as
of March 30, 1993 by and among Banque Paribas, the Lenders identified therein
and each of the Station Partnerships) and (ii) the assignment of the general
partnership interests in the Partnerships by General Partner Assignor to First
Assignee, and by First Assignee to General Partner Assignee, are made subject
to such continuing lien and security interest of Agent under the Loan
Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute one
agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
2
<PAGE> 34
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding among the parties and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON ENTERPRISES, INC., as
General Partner Assignor and as
Withdrawing General Partner of each
Partner
By: /s/ Lowell W. Paxson
----------------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
-------------------------------------
Lowell W. Paxson, Nonassigning
Limited Partner
PAXSON COMMUNICATIONS CORPORATION,
First Assignee
By: /s/ Lowell W. Paxson
----------------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS OF FLORIDA,
INC., as General Partner Assignee
and successor General Partner of
each Partnership
By: /s/ Lowell W. Paxson
----------------------------------
Lowell W. Paxson, President
3
<PAGE> 35
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment
Number 1 to the Agreement of Limited Partnership of Paxson
Broadcasting of Jacksonville, Limited Partnership dated January 1,
1992, and Amendment Number 2 to the Agreement of Limited Partnership
of Paxson Broadcasting of Jacksonville, Limited Partnership dated
March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Tampa,
dated June 27, 1991, and Amendment Number 2 to the Agreement of
Limited Partnership of Paxson Broadcasting of Tampa, dated April 27,
1992, and Amendment Number 3 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated January 1,
1992, and Amendment Number 4 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated March 29,
1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Miami, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Miami, dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Orlando, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Orlando, Limited Partnership.
4
<PAGE> 36
EXHIBIT "B"
Limited Partnerships
Agreement of Limited Partnership of Jacksonville License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Jacksonville, Licensed
Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Tampa License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Tampa, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Miami License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Miami, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Orlando License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Orlando, Licensed Limited
Partnership dated March 29, 1993.
5
<PAGE> 37
AMENDMENT NUMBER 2 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON JACKSONVILLE LICENSE LIMITED PARTNERSHIP
This Amendment Number 2 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Jacksonville License
Limited Partnership ("Amendment") is effective as of the 19th day of September,
1995, by and between PAXSON COMMUNICATIONS OF FLORIDA, INC., a Florida
corporation, as the General Partner and PAXSON BROADCASTING OF JACKSONVILLE,
LIMITED PARTNERSHIP, as a Limited Partner. The parties hereby agree as
follows:
1. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 601 Clearwater Park
Road, West Palm Beach, Florida 33401."
2. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 2
on this 19th day of September, 1995.
WITNESSES: GENERAL PARTNER:
PAXSON COMMUNICATIONS OF FLORIDA,
INC.
/s/ Lori Closson By: /s/ William L. Watson
- -------------------------- -------------------------------
Its Secretary
----------------------------
/s/ Desire Malky
- --------------------------
LIMITED PARTNER:
PAXSON BROADCASTING OF
JACKSONVILLE, LIMITED PARTNERSHIP
/s/ Lori Closson By: /s/ William L. Watson
- -------------------------- -------------------------------
The Secretary of Paxson
Communications of Florida, Inc.,
its general partner.
1
<PAGE> 1
EXHIBIT 3.17.1
<PAGE> 2
EXHIBIT 3.17.1
AGREEMENT OF LIMITED PARTNERSHIP OF
MIAMI LICENSE LIMITED PARTNERSHIP
This Agreement of Limited Partnership ("Agreement") is entered into
and shall be effective as of the 10th day of March, 1993, by and between
Paxson Enterprises, Inc., a Nevada Corporation, as the General Partner and
Paxson Broadcasting of Miami, Limited Partnership, as a Limited Partner,
pursuant to the provisions of the Florida Uniform Limited Partnership Act, on
the following terms and conditions:
ARTICLE I.
FORM AND INTERPRETATION
10. Definitions. The following capitalized terms, as used in
this Agreement and in the attached exhibits, which constitute a part of this
Agreement, have the meanings ascribed to them below and include the plural as
well as the singular number:
"Act" means the Florida Uniform Limited Partnership Act, as amended,
or any subsequent Florida law concerning partnerships that are enacted in
substitution for the Act.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amount which such
Partner is obligated to restore (pursuant to the terms of a
promissory note or otherwise) or is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
"Affiliate" of a Partner means (1) another Partner of the
Partnership; (2) a legal or personal representative of any Partner; (3) the
Partner's lineal descendants and spouse (other than a spouse who is legally
separated from the Partner under a decree of divorce or separate maintenance);
(4) a trustee of a trust for the benefit of any Person referred to in clause
(1), (2) or (3); (5) a Person, other than an individual, of which 80% or more
of the voting or equity interests is owned directly or indirectly by a Partner
and/or one or more of the Persons referred to in clauses (1) through (4); (6) a
Person owning 80% or more of
1
<PAGE> 3
the voting or equity interests of a Partner that is not an individual; or (7) a
Person other than an individual, 80% or more of the voting or equity interests
of which is owned by the same Person that owns 80% or more of the voting or
equity interests of a Partner that is not an individual.
"Agreement" means this Limited Partnership Agreement as originally
executed and as subsequently amended or supplemented from time to time in
accordance with section 48.
"Assignment" means a sale, exchange, gift, pledge, transfer or
disposition of any kind whatsoever and, in the case of a Person that is not an
individual, it includes the sale, exchange, pledge, transfer or disposition of
a majority of either voting control or the equity interests in such Person.
"Bankruptcy" means taking advantage of any bankruptcy or insolvency
act (including the Bankruptcy Reform Act of 1978 or similar law, and also any
proceeding under state or local insolvency or debtor relief laws), or a final
adjudication of insolvency or an assignment of a major portion of a Person's
assets for the benefit of creditors.
"Capital Account" has the meaning set forth in section 10.
"Capital Contribution" means the total amount of cash, securities and
other property contributed by a Partner to the equity of the Partnership, or
agreed to be contributed by a Partner to the equity of the Partnership,
pursuant to section 9(a), and reduced by any return of capital to the Partner
within the meaning of section 9(c). Any reference in this Agreement to the
Capital Contribution of either a Partner or an assignee of a Partner shall
include the Capital Contribution of any prior Partner to whose Partnership
Interest the then existing Partner or assignee succeeded.
"Cash Flow" means the excess of cash derived by the Partnership from
all sources, including from capital contributions, loans, sales of securities
and other activities, (but excluding cash derived from the winding-up and
liquidation of the Partnership pursuant to section 32) over the sum of all cash
disbursements, including repayments of loans from Partners, loans to Partners
from the Partnership, and distributions to Partners pursuant to section 14(a)
or (b) (but excluding disbursements pursuant to section 14(c)), plus a
reasonable allowance for reserves for repairs, investments in Property
(including Marketable Securities), replacements, contingencies and anticipated
obligations (including debt service, capital improvements and replacements to
the extent not funded by reserves) as reasonably determined by the Managing
General Partner. Notwithstanding the preceding sentence, in determining the
reasonable allowance for reserves, the Managing General Partner shall reduce
such allowance to the extent necessary to ensure that annual distributions of
Cash Flow to each Partner will be in an amount at least equal to the annual
income tax liability (exclusive of income tax liability resulting from a
transaction pursuant to section 14(b) or (c)) of each such Partner (determined
assuming that the maximum possible income tax rate is
2
<PAGE> 4
applicable) resulting from the allocation to the Partner of his share of the
Partnership's Taxable Income and Taxable Loss.
"Code" means the Internal Revenue Code of 1986, as amended, or any
subsequent federal law concerning income taxes that is enacted in substitution
for the Code.
"General Partner" means any Person admitted as a general partner in
accordance with this Agreement.
"General Partnership Interest" means the Partnership Interest of a
General Partner, in his capacity as a General Partner.
"Limited Partner" means those Persons who are signatories to this
Agreement as limited partners; and all other Persons who shall be admitted to
the Partnership as limited partners.
"Majority in Interest", when used in regard to the degree of consent,
approval or agreement required among the Partners, means Partners whose
aggregate Capital Account balances constitute over 50% of the total aggregate
Capital Account balances of all owners of Partnership Interests then
outstanding.
"Managing General Partner" means the Person designated in this
Agreement as the general partner responsible for management of the affairs of
the Partnership and thereafter any Person which becomes a general partner
responsible for management of the affairs of the Partnership pursuant to this
Agreement, in the Person's capacity as a managing general partner of the
Partnership. Initially, the Managing General Partner shall be Paxson
Enterprises, Inc.
"Marketable Securities" means securities, including stock, which are
traded on an established securities market, whether or not registered under the
Securities Act of 1933.
"Partner" means each Person which is a General Partner or a Limited
Partner.
"Partnership" means MIAMI LICENSE LIMITED PARTNERSHIP, the Florida
limited partnership formed in accordance with the Act pursuant to this
Agreement.
"Partnership Interest" includes only a Partner's Capital Contribution
and right to receive his Percentage Interest and excludes Partnership Rights.
"Partnership Rights" excludes the Partnership Interest of a Partner,
and includes, in addition to other rights provided in this Agreement, the
rights provided to him by the Act except to the extent expressly modified by
this Agreement.
"Percentage Interest" means a Partner's percentage share (as
initially stated opposite such Partner's name on EXHIBIT A as amended from time
to time), of the Profits and Losses, Taxable Income or Taxable Loss, cash and
other distributions and
3
<PAGE> 5
liquidation proceeds of the Partnership all subject to and interpreted in
accordance with the terms of this Agreement. The Percentage Interests of
Partners shall be proportionate to the Capital Accounts of the Partnership at
all times so that, for example, if a Partner's Capital Account is 100 and the
aggregate of all Capital Accounts is 1000, the Partner's Percentage Interest in
the Partnership is 10%. In the event of a change among the Partners in the
Percentage Interests in the Partnership during the year, the Partnership shall
use a closing-of-the-books method with respect to such change or changes in
Percentage Interests in computing a Partner's share of Profits and Losses,
Taxable Income and Taxable Losses, and entitlement to distributions during such
year.
"Person" means any individual and any general or limited partnership,
corporation, estate, joint venture, trust, business trust, cooperative,
association or other organization or entity.
"Profits and Losses" means the annual net income or loss of the
Partnership determined on a generally accepted accounting principles basis, as
disclosed on the annual financial statements of the Partnership.
"Property" means any real, personal, tangible or intangible property
contributed by a Partner to the equity of the Partnership or otherwise acquired
by the Partnership.
"Pro Rata" means in the proportion that the Percentage Interest of
each Partner bears to the total Percentage Interests of all the Partners.
"Retirement" means the death, Bankruptcy, adjudication of
incompetency as determined by a court of appropriate jurisdiction, dissolution
and liquidation or termination of existence, merger or consolidation (except as
provided in section 29) of a Partner, or the sale, lease or other disposition
of all or substantially all the property of a Partner (except as provided in
section 29).
"Taxable Income or Taxable Loss" means the net income or loss of the
Partnership for federal income tax purposes, as determined at the close of the
Partnership's fiscal year by the accountants employed by the Partnership to
prepare its income tax returns.
11. Captions and Certain Terms. The titles and captions
preceding the text of the articles and sections of this Agreement are solely
for convenience of reference and neither constitute a part of this Agreement
nor affect its meaning, interpretation, or effect. The words "hereby,"
"herein," "hereof," "hereto," "hereunder," and terms of similar import refer to
this Agreement as a whole and not to any particular article, section,
subsection or other part of this Agreement.
12. Severability. If any article, section or other provision of
this Agreement, or its application, is held to be invalid, illegal or
unenforceable in any respect or for any reason, the remainder of this Agreement
and the application of such
4
<PAGE> 6
article, section or other provision to a person or circumstance with respect to
which it is valid, legal and enforceable is not affected.
13. Limitation of Grant. Nothing in this Agreement,
whether express or implied, is intended or may be construed to confer upon, or
to grant to, any creditor or any other Person (other than the Partners and
their legal and personal representatives, heirs, successors and permitted
assignees) any right, remedy or claim under or because of this Agreement or any
covenant, condition or stipulation of it.
ARTICLE II
ORGANIZATION OF PARTNERSHIP
14. Formation, Name, Office and Registered Agent. The
Partnership is organized as of the date of this Agreement and the signatories
to this Agreement constitute the members of this partnership under the Act as
of the date hereof. The rights and obligations of the Partners are determined
by the Act, except as otherwise expressly provided in this Agreement. The name
of the Partnership is "MIAMI LICENSE LIMITED PARTNERSHIP." The recordkeeping
office of the Partnership is located at 18401 U.S. Highway 19 North,
Clearwater, Florida 34624. The principal business office of the Partnership is
located at 50 West Liberty Street, Reno, Nevada 89501. The Managing General
Partner may change the name of the Partnership or the location of its principal
business office at any time and from time to time by giving written notice of
such change to each Partner.
15. Term of Partnership. The term of the Partnership
shall continue until December 31, 2066, unless the Partnership is earlier
dissolved and terminated under this Agreement.
16. Purposes of Partnership; Authorized Acts.
A. (a) Purposes of the partnership are to
(i) acquire, operate, manage and perform all matters
necessary and attendant to the operation of one or
more radio stations in Florida,
(ii) invest in, own, sell, acquire, manage and exercise
the voting rights associated with Marketable
Securities,
(iii) acquire, hold, sell, own, improve, develop or lease
other types of real and personal property, and
(iv) engage in any other lawful activity for profit
approved by an affirmative vote of a Majority in
Interest.
(i) Notwithstanding Section 7, unless unanimously approved by
the Partners, the Partnership shall not engage in any
activity(ies) which would result, based upon opinion of
5
<PAGE> 7
tax counsel, in the characterization of the Partnership as an
investment company as that term is used in Section 721(b) or any
successor provision of the Code.
B. In furtherance of its purposes, but subject to every other provision of
this Agreement, the Partnership is authorized to do the following:
(a) acquire by purchase, lease or otherwise, any real or
personal, tangible or intangible property that may be necessary, convenient or
incidental to the accomplishment of the purposes of the Partnership;
(b) construct, operate, maintain, finance, improve, own,
sell, convey, exchange, assign, mortgage or lease any property (or a part
thereof) as may be necessary, convenient or incidental to the accomplishment of
the purposes of the Partnership;
(c) borrow money and issue evidences of indebtedness in
furtherance of any purpose of the Partnership and secure the same by a
mortgage, pledge, security interest or other liens on the property, any part
thereof, any interest therein or on any improvements thereto;
(d) prepay, in whole or in part, refinance, increase,
renew, modify or extend any indebtedness of the Partnership and, in connection
therewith, extend, renew or modify any mortgage, pledge, security interest or
other lien affecting any property;
(e) invest and reinvest the assets of the Partnership
in, and purchase, acquire, hold, sell, transfer and exchange securities of all
kinds;
(f) lend money to Partners;
(g) exercise the voting rights associated with property
owned by the Partnership; and
(h) enter into any activity and perform and carry out
any contract in connection with, or necessary or incidental to, the
accomplishment of the purposes of the Partnership.
C. Notwithstanding any other provision of this Agreement, the
Partnership shall not transfer any Federal Communications Commission ("FCC")
licenses it may hold at any time to any party except in accordance with the
rules and policies of the FCC, and unless substantially all the operating
assets of the associated station in connection with which a particular license
is used, or control of the entity that holds such assets, is simultaneously
transferred to such party.
8. Co-Ownership of Partnership Interests. Any consent required
of a Partner shall require the action or vote of each Person (or in such other
manner as such Persons have designated in writing to the Partnership) having an
interest in such Partnership Interest, with a majority approval needed for
consent. On the
6
<PAGE> 8
death of a co-owner of a Partnership Interest held in either joint tenancy with
right of survivorship or tenancy by the entirety, the Partnership Interest is
owned solely by the survivor as a Partner, and not as an assignee. The
Partnership need not (although it may) recognize the death of a co-owner of a
Partnership Interest until the Managing General Partner receives notice of the
death. A co-owner of a Partnership Interest may sever the tenancy by giving to
the Managing General Partner notice to that effect, and signed by the co-owner
requesting the severance in the case of a joint tenancy, and by both co-owners
in the case of a tenancy by the entirety. Upon receipt of the notice and the
certificate evidencing the Partnership Interest owned by the co-owners, the
Managing General Partner shall cause the Partnership Interest to be allocated
as directed by the co-owners and shall indicate on the Partnership records such
allocation. In absence of joint direction, the interests shall be allocated
between the owners as the severed ownership interests would be valued for
federal estate tax purposes.
ARTICLE III
PARTNERSHIP CAPITAL
9. Capital Contributions.
(a) Upon executing this Agreement, each Partner shall
make or has made a Capital Contribution in the amount and of the type, and
initially shall have a Percentage Interest equal to the percentage, set forth
opposite his name on EXHIBIT A. Partners may make (but Limited Partners are not
required to make) additional Capital Contributions at such time and in such
amount as they in their sole discretion shall determine but only if the
Managing General Partner and a Majority in Interest consent to such additional
Capital Contributions. Upon the assignment of any Partnership Interest, the
making of an additional Capital Contribution or any return of a Capital
Contribution, or any substitution of a Partner, EXHIBIT A shall be amended to
accurately reflect the name, address, Capital Contribution and Percentage
Interest of each Partner.
(b) Notwithstanding (a) above, no Capital Contributions
shall be made or permitted by any Partner which would result, directly or
indirectly, in the Partnership being treated as an investment company under
section 721(b) of the Code, and any such attempted Capital Contribution shall
be void ab initio. The Managing General Partner shall withhold its consent to
the making of an additional Capital Contribution, unless it has satisfied
itself (by seeking advice of legal counsel or otherwise) that the making of the
additional Capital Contribution will not result, directly or indirectly, in the
Partnership being treated as an investment company under section 721(b) of the
Code.
(c) A Partner shall not receive from the Managing
General Partner or out of Partnership Property, and the Managing General
Partner and the Partnership shall not return to a Partner, any part of his
Capital Contribution, except as set forth in Articles VIII and IX of this
Agreement and such distribution is
7
<PAGE> 9
determined to be a return of a Partner's Capital Contribution, and then only if
all liabilities of the Partnership, except liabilities to the Partners on
account of their Capital Contributions, have been paid or there remains
property of the Partnership sufficient to pay them. The Partnership shall not
pay interest on Capital Contributions, and a Partner may demand and receive
only cash in return for his Capital Contribution, except to the extent provided
for in Articles VIII and IX of this Agreement or unless the Liquidator (as
defined in section 32) decides to distribute Partnership property in kind upon
the dissolution, winding-up, and termination of the Partnership, or unless the
distribution of property to a Partner is unanimously approved by the Partners.
Each Partner, by signing this Agreement or a counterpart of it, consents to all
distributions authorized by this Agreement and releases all other Partners from
all liability to both him and the Partnership for all distributions made in
accordance with this Agreement.
(d) Any payments made by the Limited Partner as a guarantor
of obligations of the Partnership shall be treated as additional Capital
Contributions to the Partnership.
(e) Notwithstanding any provision in this Agreement to the
contrary, if any Partner's Capital Account has a deficit balance ("Deficit
Capital Account Balance") upon liquidation of the Partnership (after giving
effect to all contributions, distributions, and allocations for all taxable
years, including the year in which such liquidation occurs), such Partner shall
contribute to the Capital of the Partnership the amount necessary to restore
such deficit balance to zero in accordance with Regulations Section
1.704-1(b)(2)(ii)(d).
10. Capital Account.
(a) The Managing General Partner shall establish and
maintain a Capital Account for each Partner in the Partnership's books of
account. Capital Accounts shall be maintained and adjusted in accordance with
generally accepted accounting principles. Consistent with these capital
account maintenance rules, the Managing General Partner shall credit to each
Partner's Capital Account the amounts of the Partner's Capital Contributions
and any Profits allocated to the Partner. The Managing General Partner shall
charge to or deduct from each Partner's Capital Account the amounts of all
distributions (in cash or other property) to the Partner and any Losses
allocated to the Partner. If any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferror to the extent it relates to the
transferred interest.
(b) The provisions of this section and the other
provisions of this Agreement pertaining to the maintenance of Capital Accounts
are intended to comply with Treasury Regulation Section 1.704-1(b) (or any
successor provision thereto), and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Managing General Partner
determines that it is prudent to modify the manner in which the Capital
Accounts are computed in order to comply with such Regulations,
8
<PAGE> 10
provided that it is not likely to have a material effect on the amounts
distributable to any Partner without such Partner's consent and upon receipt of
an opinion of tax counsel to the Partnership concluding that such modification
will be given effect for federal income tax purposes, the Managing General
Partner may make such modification.
(c) The Managing General Partner shall revalue the
Partnership's property (based on its fair market value as of the moment
immediately preceding the relevant event) and shall adjust Capital Accounts to
take into account any resulting Profit or Loss (determined as if the
Partnership sold all its property for cash equal to the property's fair market
value) upon the occurrence of either of the following events: (1) the making by
any Partner of any non-Pro Rata additional Capital Contribution, (2) the
partial or complete withdrawal of a Partner's Partnership Interest, or (3) the
admission of a Partner.
11. Expenses Paid by Partners. Any Partnership expense
reasonably paid by any Partner on behalf of the Partnership is an indebtedness
of the Partnership to the Partner and does not increase the Partner's
Partnership Interest or Percentage Interest. The Partnership shall reimburse
the Partner as soon as practicable and may pay interest on the indebtedness.
12. Loans by Partners. The Managing General Partner may borrow
money on behalf of the Partnership from any Partner in such amounts and for
such purposes as it considers necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership. Each loan to the
Partnership by a Partner (excluding reimbursable expenses) shall be evidenced
by a promissory note or similar instrument of the Partnership, may be secured
by a lien on the Property, may bear interest at a rate determined by agreement
between such Partner and the Managing General Partner and may be subject to
such other terms and conditions as are agreed to by such Partner and the
Managing General Partner. The Partnership may prepay each loan from a Partner
in whole or in part, at any time and from time to time, without premium or
penalty.
ARTICLE IV
PROFITS AND LOSSES AND TAXABLE INCOME AND TAXABLE LOSS
13. Allocations
(a) Allocation of Profits and Losses.
(1) Profits and Losses of the Partnership shall
be allocated Pro Rata among the Partners.
(2) Profits and Losses of the Partnership shall
be determined for each fiscal year of the Partnership in accordance with the
method of accounting required or permitted to be used for federal income tax
purposes, with such exceptions thereto as are set forth in this Agreement, and
otherwise in accordance with generally accepted accounting principles applied
in a consistent manner.
9
<PAGE> 11
(b) Allocation of Taxable Income and Taxable Loss.
(1) Except as otherwise provided in this
section 13(b), allocations of tax items among the Partners shall be consistent
with corresponding book (Profits and Losses) items (if any). For tax purposes,
Profits and Losses, or any item thereof, shall be appropriately adjusted to
reflect Taxable Income and Taxable Loss, or any item thereof, as determined
under the Code and shall be allocated among the Partners in such a manner as to
comply with the provisions of the Code and Regulations thereunder (including,
if necessary, the "minimum gain chargeback provisions" of the Regulations under
Section 704 of the Code). For example, any gain or loss recognized by the
Partnership with respect to property contributed to the Partnership by a
Partner shall be shared among the Partners so as to take account of the
variation, if any, between the basis of the property to the Partnership and its
fair market value at the time of contribution or revaluation, whichever is
applicable, so as to comply with the requirements of Section 704 of the Code.
Thus, for example, if a Partner contributes property to the Partnership whose
agreed fair market value exceeds its adjusted basis in the hands of the
contributing Partner ("built-in gain"), and there have been no events giving
rise to a revaluation, built-in gain with respect to such contributed property
shall first be allocated to such contributing Partner when the Partnership
recognizes gain upon a disposition of such contributed property, but not in an
amount in excess of such built-in gain; the remaining balance of such
recognized gain, if any, shall be allocated among the Partners as set forth
herein. The allocation of built-in gain to a contributing Partner shall not
increase such Partner's Capital Account, because such gain was already taken
into account when the built-in gain property was contributed to the
Partnership. A Partner who contributes property other than cash shall provide
the Managing General Partner with information necessary to verify the
contributing Partner's adjusted tax basis in the items of property contributed
by him to the Partnership.
(2) Generally, except as provided in section
13(b)(i), Taxable Income and Taxable Loss (and each such income and loss item)
shall be allocated Pro Rata among the Partners. In the event, however, that
non- Pro Rata distributions of property are made to a Partner or the net
proceeds from the sale of property are distributed non-Pro Rata to a Partner,
Taxable Income and Taxable Loss derived from such distributions or sales shall
be allocated 100% to such Partner, subject only to such modifications as are
necessary to comply with Section 704 of the Code.
(c) Losses. The Losses allocated pursuant to Sections
13(a) and 13(b) hereof shall not exceed the maximum amount of Losses that can
be so allocated without causing any Partner who is not a General Partner to
have an Adjusted Capital Account Deficit at the end of any fiscal year. In the
event some but not all of the Partners who are not General Partners would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 13(a) or Section 13(b), the limitation set forth in this
Section 13(c) shall be applied on a Partner by Partner basis so as to allocate
the maximum permissible
10
<PAGE> 12
Loss to each Partner who is not a General Partner under Section
1.704-1(b)(2)(ii)(d) of the Regulations. All Losses in excess of the
limitation set forth in this Section 13(c) shall be allocated to the General
Partner.
(d) Special Allocations. The following special
allocations shall be made in the following order:
(1) Qualified Income Offset. In the event any Partner who is
not a General Partner unexpectedly receives any adjustments, allocations, or
distributions described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income and
gain shall be specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the
Adjusted Capital Account Deficit of such Partner as quickly as possible,
provided that an allocation pursuant to this Section 13(d)(1) shall be made if
and only to the extent that such Partner would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Section 13 have been
tentatively made as if this Section 13(d)(1) were not in the Agreement.
(2) Gross Income Allocation. In the event any Partner who is
not a General Partner has a deficit Capital Account at the end of any
Partnership fiscal year that is in excess of the sum of (i) the amount such
Partner is obligated to restore (pursuant to the terms of a promissory note or
otherwise), and (ii) the amount such Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially
allocated items of Partnership income and gain in the amount of such excess as
quickly as possible, provided that an allocation pursuant to this Section
13(d)(2) shall be made if and only to the extent that such Partner would have a
deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 13 have been tentatively made as if Section
13(d)(1) hereof and this Section 13(d)(2) were not in the Agreement."
ARTICLE V
DISTRIBUTIONS, WITHDRAWALS AND LOANS
14. Distributions.
(a) Cash Flow Distributions. Cash Flow shall be
distributed Pro Rata among the Partners. Notwithstanding the foregoing, if the
Partners unanimously agree, the Partnership may distribute Cash Flow
attributable to a sale of property in a non-Pro Rata manner.
(b) Partial or Complete Withdrawal by a Partner From the
Partnership.
(1) In the event of a partial or complete
withdrawal of a Partner from the Partnership pursuant to Article
11
<PAGE> 13
VIII, the Managing General Partner shall, as promptly as is reasonably
possible, distribute to the Partner his Pro Rata share of the Marketable
Securities previously contributed by such Partner to the Partnership, cash and
other readily divisible assets of the Partnership. The withdrawing Partner
shall also be entitled to receive cash equal in value to his Pro Rata share of
the fair market value (as reasonably determined by the Managing General
Partner) of any non-readily divisible assets owned by the Partnership. The
Managing General Partner shall, as promptly as possible, distribute this
additional amount of cash, if any, to the withdrawing Partner. Cash
distributions to the withdrawing Partner shall be reduced by such Partner's Pro
Rata share of the liabilities of the Partnership and by any expenses incurred
by the Partnership with respect to the withdrawal of the Partner.
(2) A Partner may request that all or a portion
of the Marketable Securities subject to the requested withdrawal be sold by the
Partnership and the net proceeds (after selling and other expenses) distributed
as directed by him. In the event that the Managing General Partner is unable
to sell these Marketable Securities, it shall distribute them to the Partner,
unless it is notified by the Partner to cancel the withdrawal.
(3) The Managing General Partner shall not be
required to distribute to the requesting Partner any assets that the
Partnership is legally restricted or prohibited from distributing to the
Partner, unless steps can be taken to remove the restriction or prohibition; in
which case the requesting Partner shall be charged with the expense of removing
such restriction or prohibition. Any distribution hereunder shall also be
subject to the limitations set forth in sections 9(c) and 15, respectively.
(c) Liquidating Distributions. The net proceeds from
liquidation of the Partnership's assets pursuant to its dissolution,
winding-up, and termination shall be distributed, and all Profits and Losses
resulting from the liquidation of the Partnership property shall be allocated,
among the Partners in the proportions and orders of priority specified in this
section 14(c).
(i) The Liquidator shall distribute the net
proceeds from liquidation of the Partnership's assets as follows:
(1) FIRST: To pay all the liabilities
of the Partnership that are then due and payable, except for both Capital
Contributions of Partners and liabilities to the Partners, in the order of
priority required by Florida law; then
(2) SECOND: To establish any reasonable
reserve that the Liquidator may determine is required for unpaid, future, or
contingent liabilities or obligations of the Partnership; then
(3) THIRD: To pay all liabilities of
the Partnership to the Partners, pro rata according to the amounts of their
respective liabilities; then
12
<PAGE> 14
(4) FOURTH: To the Partners to the
extent of any positive balances in their Capital Accounts, Pro Rata according
to the amounts of their respective positive balances; and then
(5) FIFTH: Any remaining net proceeds
shall be distributed Pro Rata among the Partners.
(ii) Any Profits and Losses and Taxable Income
and Taxable Loss resulting from the disposition of the Partnership's assets in
the process of liquidation shall be allocated among the Partners in the manner
provided in section 13. Any property distributed in kind in the liquidation
shall be valued and treated as if the property were sold and the cash proceeds
were distributed. The Profits and Losses arising from the constructive sale of
the property described in the preceding sentence shall be allocated among the
Partners in the manner provided in section 13.
15. Limitation on Distributions to Partners. A Partner may
receive distributions from the Partnership only to the extent the Partnership's
total assets exceed its total liabilities, other than liabilities to the
Partners on account of their Capital Contributions.
ARTICLE VI
AUTHORITY, DUTIES, AND LIABILITIES OF PARTNERS
16. Duties of Managing General Partner. The Managing General
Partner shall manage the affairs of the Partnership, shall apply itself
diligently for the Partnership, and shall devote to the Partnership such time
as is necessary and appropriate to manage the business of the Partnership. The
Managing General Partner is not required to devote all its business time to the
Partnership, and it may engage in other business ventures and employment,
including those in competition with the Partnership. In the performance of its
duties, the Managing General Partner may hire employees and agents of the
Partnership and generally shall supervise and direct all the daily operations
of the Partnership.
17. Managing General Partner's Fees and Expenses.
(a) Fees to Managing General Partner. In consideration
for performing services described herein, the Managing General Partner may be
paid a fee to be agreed upon by a Majority in Interest. Such fees shall be
deemed earned when the services have been performed and, regardless of when
paid, shall be non-executory from the date earned and shall be the obligation
of the Partnership from and after that date.
(b) Expenses. Except as otherwise provided herein, the
Partnership shall pay all expenses of the Partnership (which expenses may be
either billed directly to the Partnership or reimbursed to the Managing General
Partner) which may include, but are not limited to: (i) all costs of borrowed
money, taxes and assessments on the Property and other taxes applicable to the
13
<PAGE> 15
Partnership; (ii) all costs for goods and materials, whether purchased by the
Partnership directly or by the Managing General Partner on behalf of the
Partnership; (iii) legal, audit, accounting, brokerage and other professional
fees; (iv) fees and expenses paid to independent contractors, mortgage bankers,
brokers, insurance brokers and other agents; (v) expenses of organizing,
revising, amending, converting, modifying or terminating the Partnership; (vi)
expenses in connection with distributions made by the Partnership to, and
communications and bookkeeping work necessary in maintaining relations with,
Partners; (vii) expenses in connection with preparing and mailing reports to
Partners; (viii) costs of any accounting, statistical or bookkeeping equipment
necessary for the maintenance of the books and records of the Partnership; (ix)
the cost of preparation and dissemination of informational material and
documentation relating to the Partnership; (x) except with respect to
litigation solely among the Partners as such, costs incurred in connection with
any litigation in which the Partnership is involved, as well as in the
examination, investigation or other proceedings, conducted against the
Partnership by any regulatory agency, including legal and accounting fees
incurred in connection therewith; (xi) costs of any computer services or
equipment or services of personnel used for or by the Partnership; and (xii)
expenses of professionals employed by the Partnership in connection with any of
the foregoing, including attorneys, accountants and appraisers.
18. Authority of Managing General Partner. The Managing General
Partner may bind the Partnership to do all acts that are necessary,
appropriate, or incidental to the accomplishment of the purposes of the
Partnership. Any person dealing with the Partnership or the Managing General
Partner may rely on a certificate signed by the Managing General Partner as to
the identity of any Partner, the existence or absence of any fact or condition
that is necessary to permit action by either the Partnership or the Managing
General Partner or germane in any other way to the affairs of the Partnership,
and the persons who are authorized to execute and deliver any documents or
instruments of or on behalf of the Partnership. Without limiting the
generality of the foregoing, the Managing General Partner is specifically
authorized to do the following:
(a) to negotiate and enter into leases and agreements
with land or building owners or other Persons, and to incur obligations for,
and on behalf of, the Partnership in connection with Partnership business;
(b) to borrow money on behalf of the Partnership and, as
security therefor, to encumber the property;
(c) to prepay, in whole or in part, refinance, increase,
modify or extend any obligation affecting the property;
(d) to sell, exchange, convey and lease the property;
(e) to employ from time to time, at the expense of the
Partnership, other Persons required for the operation and management of the
Partnership business, including accountants,
14
<PAGE> 16
attorneys and others, who may be Partners, on such terms and for such
compensation as the Managing General Partner determines to be reasonable and
this may include Persons which are Affiliates;
(f) to pay all attorney's and accountant's fees and
other costs incurred in connection with the formation of the Partnership
business and the completion of all steps necessary or advisable for the
Partnership to comply with applicable laws;
(g) to assume responsibilities imposed on the Managing
General Partner by the Act;
(h) to compromise, arbitrate or otherwise adjust claims
in favor of or against the Partnership and to carry such insurance as the
Managing General Partner considers advisable;
(i) to exercise the voting rights associated with the
securities and other Property owned by the Partnership;
(j) to commence or defend litigation with respect to the
Partnership or any assets of the Partnership as the Managing General Partner
considers advisable, at the expense of the Partnership;
(k) to make, execute, acknowledge and deliver documents
of transfer and conveyance and any other instruments that may be necessary or
appropriate to carry out its powers; and
(l) to do all such acts and take all such proceedings
and execute all such rights and privileges, although not specifically mentioned
herein, as the Managing General Partner considers necessary to conduct the
business of the Partnership and to carry out the purposes of the Partnership.
Notwithstanding the foregoing, the Managing General Partner shall not
take any of the following actions without the consent of a Majority in
Interest:
(1) assign all or any part of the property for the
benefit of its creditors or confess a judgment against the Partnership;
(2) take any action in contravention of the Act, the
certificate of limited partnership or this Agreement;
(3) sell, lease, transfer, assign, pledge or encumber a
substantial portion (10% or more) in value of the property of the Partnership
(except with respect to transactions to which section 28 or section 32
applies); or
(4) admit a Person as a Partner of the Partnership.
19. Dealing with Affiliates. The Managing General Partner may
employ and enter into contracts and other arrangements with any Person,
including an Affiliate, and may obligate the Partnership to pay reasonable
compensation for services rendered by such Persons on terms that, in the
judgment of the Managing General
15
<PAGE> 17
Partner, are not less favorable to the Partnership than would be available from
an unrelated party.
20. Indemnification of General Partners. The Managing General
Partner need not secure the performance of its duties by bond or otherwise. A
General Partner is not liable, responsible, or accountable in damages or
otherwise to any Partner or to the Partnership for any act taken or omission
made in good faith on behalf of the Partnership and in a manner that such
General Partner reasonably believes to be within the scope of the authority
granted to it by this Agreement and in the best interest of the Partnership,
except for gross negligence or willful misconduct. Any loss, expense
(including attorneys' fees) or damage incurred by a General Partner by reason
of any act or omission by it in good faith on behalf of the Partnership and in
a manner that it reasonably believes to be within the scope of the authority
granted to it by this Agreement and in the best interest of the Partnership
(but not, in any event, any loss, expense or damage incurred by a General
Partner by reason of gross negligence or willful misconduct) shall be paid to
the indemnified General Partner from the Partnership's assets, to the extent
available.
21. Liability of Non-Managing General Partner. The non-managing
General Partners are not liable to any other Partner for the gross negligence
or willful misconduct of the Managing General Partner.
22. Authority of Non-Managing General Partner. The non-managing
General Partners shall not participate in the management of, or have any
control over, the business or policies of the Partnership, except as required
by the Act or permitted by section 18, and shall not transact any business in
the name of the Partnership. Unless required by the Act, a non-managing
general partner shall not sign any agreement, document or instrument in the
name of the Partnership or otherwise make commitments on behalf of the
Partnership.
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS
23. General Partners. Subject to section 24, a General Partner
may make an Assignment, directly or indirectly, of all or any part of its
Partnership Interest. However, an Assignment does not relieve such General
Partner of its obligations and liabilities under this Agreement, or constitute
the assignee a General Partner, or confer on the assignee any Partnership
Rights. Subject to section 24, and only if a Majority in Interest consents, a
General Partner may make an Assignment of both its Partnership Interest and its
Partnership Rights if the assignee assumes in writing all such General
Partner's obligations and liabilities under this Agreement and if all the
applicable requirements of section 25 are satisfied. Upon compliance with the
immediately preceding sentence, an assignee of such General Partner has all the
rights and powers granted to such General Partner under this Agreement and has
all the obligations and liabilities of such General Partner under this
Agreement.
16
<PAGE> 18
24. Restriction on Transfer. Notwithstanding any other
provision of this Agreement, an assignment of a Partnership Interest shall not
be made, and consent thereto shall be withheld:
(a) Unless the Managing General Partner has satisfied
itself (by seeking advice of legal counsel or otherwise, with any resulting
Partnership expense to be reimbursed by the assignor) that the assignment will
not have any significant adverse tax effect upon the Partnership or the other
Partners;
(b) Unless the Managing General Partner has satisfied
itself (by advice of legal counsel, with any resulting Partnership expense to
be reimbursed by the assignor) that the proposed assignment may be made without
registration under any applicable securities law; and it will not violate any
applicable securities law (including investor suitability standards);
(c) If the Assignment is sought to be made to:
(i) a minor or incompetent, except if made by
will or intestate succession, or
(ii) to a Person which is not an Affiliate.
25. Admission of Substitute Partner. Subject to the other
provisions of this Agreement, an assignee of a Partnership Interest may be
admitted as a Partner and granted Partnership Rights only if:
(a) the Assignment is made pursuant to a written
instrument in a form satisfactory to the Managing General Partner and specifies
the intention of the assignor that the assignee be substituted as a Partner;
(b) the Managing General Partner consents to the
admission by executing two counterparts of this Agreement that evidences the
Partnership Rights of the assignee, and if the assignee is to be admitted as a
General Partner a Majority in Interest consent to the admission;
(c) the assignee accepts, signs and agrees to be bound
by this Agreement, by executing two counterparts of this Agreement, including
an amended EXHIBIT A, and such other documents or instruments as the Managing
General Partner requires to effect the admission of the assignee as a Partner;
(d) the assignee provides the Managing General Partner
with evidence satisfactory to it of the assignee's authority to become a
Partner under the terms of this Agreement;
(e) the assignee pays all filing, publication and other
costs (including reasonable attorneys' fees) incurred by either the Partnership
or the Managing General Partner in connection with the admission and
substitution of the assignee as a Partner.
Notwithstanding an assignee's satisfaction of any or all of the
conditions specified above, the Managing General Partner, in
17
<PAGE> 19
its absolute discretion, may refuse to consent to the assignee's admission as a
Partner, in which event the assignee will not obtain any Partnership Rights,
but will retain only the rights of an assignee under section 23.
26. Rights of Partner After Assignment and Substitution. Upon
the Assignment of all his Partnership Interest, and the admission of a
substitute partner, a Partner shall cease to be a Partner and to have any
Partnership Rights.
27. Allocations and Distributions After Assignment. For the
purposes of allocations of Profits and Losses, Taxable Income or Taxable Loss,
and distributions, an Assignment of a Partnership Interest is effective as to
the Partnership, and shall be reflected in the records of the Partnership, as
of the date that the Managing General Partner receives written notice of the
Assignment. The Taxable Income or Taxable Loss, Profits and Losses and cash
and other distributions in respect of the assigned Partnership Interest with
respect to the fiscal year in which the Assignment of the Partnership Interest
occurs shall be divided between the assignor and the assignee according to the
method provided to the Managing General Partner by the assignor and the
assignee, so long as such method is permitted under the Code and does not
adversely affect the other Partners or the Partnership from a tax or economic
perspective. The method of allocation shall be provided to the Managing
General Partner in the written notice of the Assignment. Any additional costs
for computing the allocations hereunder shall be paid by the assignor or
assignee, as the case may be. The written notice referred to above shall also
contain information as to whether the assignor or assignee shall be responsible
for the payment of such additional cost, if any.
ARTICLE VIII
RETIREMENT, WITHDRAWAL, OR REMOVAL OF PARTNERS
28. Withdrawal of Non-Managing General Partner and Limited
Partners.
(a) A non-managing General Partner and a Limited Partner
may, at any time, partially withdraw his Partnership Interest from the
Partnership by providing written notice thereof to the Managing General
Partner. The Managing General Partner shall promptly send a copy of such
notice to all other Partners. Within thirty (30) days after the receipt of
such written notice from a Partner, the Managing General Partner shall make the
appropriate distributions to the Partner in partial or complete redemption of
his Partnership Interest as set forth in section 14(b).
(b) A partial withdrawal by a Partner shall be made in
increments of one-tenth (1/10th) of one percent (1%) of a Percentage Interest.
The written notice of withdrawal from a Partner to the Managing General Partner
must state whether the withdrawal is a partial or complete withdrawal and, if a
partial withdrawal, must state the Percentage Interest that is being withdrawn.
A Partner shall not make a partial withdrawal that will
18
<PAGE> 20
result in his remaining Percentage Interest becoming less than one-tenth
(1/10th) of one percent (1%) immediately after the withdrawal.
(c) The Managing General Partner agrees that it will
fully cooperate to the extent permitted by law to accomplish a withdrawal
requested by a non-managing General Partner and a Limited Partner hereunder.
It also agrees that it will not take any action that will obstruct or render
impossible the application of this section 28 (such as to pledge the
Partnership's Marketable Securities as collateral to creditors of the
Partnership), unless such action is essential to accomplish the purposes of the
Partnership.
(d) The partial withdrawal of a non-managing General
Partner or a Limited Partner does not dissolve or terminate the Partnership
unless there is only one Partner then remaining. The remaining Partners shall
amend this Agreement to reflect the partial or complete withdrawal of the
Partner from the Partnership, if and to the extent necessary.
(e) Upon the giving of the notice of withdrawal pursuant to
Paragraph (a), and upon the dissolution of the Partnership, the voting rights
with respect to any Marketable Securities allocable to the Percentage Interest
being withdrawn shall be vested in the withdrawing Partner or Partners, and the
Partnership shall have no voting rights with respect to such stock.
29. Retirement or Withdrawal of General Partner. The Managing
General Partner may not withdraw any part of its General Partnership Interest.
The Retirement of the Managing General Partner shall dissolve the Partnership.
Notwithstanding the foregoing or anything else in this Agreement to the
contrary, a merger, consolidation, or reorganization of the Managing General
Partner, or a sale of all or substantially all its assets that includes its
Partnership Interest, is not a Retirement of such Managing General Partner if
the resulting, surviving or acquiring Person is an Affiliate and becomes
substituted as the Managing General Partner of the Partnership. The resulting,
surviving or acquiring Person is substituted as the Managing General Partner
without further act if it gives notice of the substitution to the Partners
before the effective date of the merger, consolidation, reorganization or sale.
Each Partner consents to the admission and substitution of such substitute
Managing General Partner pursuant to this section 29, and no further consent or
approval of any Partner is required.
30. Rights of Partner After Retirement or Withdrawal. A Partner
ceases to have any Partnership Rights upon his Retirement or complete
withdrawal from the Partnership. However, until the appropriate distributions,
if any, are made to a Retired or withdrawn Partner for his Partnership
Interest, the Retired or withdrawn Partner is entitled to receive the
allocations of Profits and Losses, Taxable Income or Taxable Loss and all
distributions referred to in section 14 applicable to his Partnership Interest.
19
<PAGE> 21
ARTICLE IX
DISSOLUTION
31. Events of Dissolution. The Partnership shall be terminated
and dissolved upon:
(a) the expiration of its term;
(b) the vote of a Majority in Interest to dissolve the
Partnership;
(c) the Partnership being adjudicated insolvent or
bankrupt;
(d) the Retirement of the Managing General Partner; or
(e) the sale of all or substantially all of the
Partnership's Property.
32. Winding-Up and Distributions. Upon the dissolution of the
Partnership pursuant to section 31, the winding-up of the Partnership's
business and the liquidation and distribution of Partnership assets must be
carried out with due diligence and in a timely manner, and consistent with both
the requirements of applicable law and the following provisions of this
section:
(a) The Managing General Partner shall be responsible
for taking all actions relating to the winding-up, liquidation, and
distribution of assets of the Partnership, unless its Retirement causes the
dissolution, in which case the fiscal agent, liquidator, or receiver appointed
(without judicial action) by a Majority in Interest shall be so responsible.
The Managing General Partner, or the appointed fiscal agent, liquidator, or
receiver, is referred to in this Agreement as the "Liquidator." A non-managing
General Partner can be appointed to be the Liquidator. The Liquidator shall
file all certificates or notices of the dissolution of the Partnership as
required by law. Upon the complete liquidation and distribution of the
Partnership assets, the Partnership shall terminate, and the Liquidator shall
execute, acknowledge, and cause to be filed all certificates and notices
required by law to terminate the Partnership.
(b) The Liquidator shall proceed without unnecessary
delay to sell and otherwise liquidate the Partnership's assets. Unless
directed otherwise by a Majority in Interest, all Marketable Securities, cash
and other readily divisible or fungible assets of the Partnership shall be
distributed directly to the Partners in the manner set forth in section
14(c)(i). The Liquidator shall promptly sell the other assets of the
Partnership unless it determines that an immediate sale of part or all of such
assets would cause undue loss to the Partners. In such case, the Liquidator,
to avoid such loss, may defer the liquidation of the Partnership assets for a
reasonable time, except for those liquidations that are necessary to satisfy
the debts and liabilities of the Partnership to persons and parties other than
the Partners. The Liquidator shall distribute the proceeds from
20
<PAGE> 22
the liquidation of the Partnership's assets as provided in section 14(c).
(c) Upon the dissolution of the Partnership pursuant to
section 31, the Liquidator shall cause the accountants for the Partnership to
prepare within ninety (90) days after the occurrence of the event of
dissolution, and immediately thereafter shall furnish to each Partner, a
statement setting forth the assets and liabilities of the Partnership as of the
date of its dissolution. The Liquidator, promptly following the complete
liquidation and distribution of the Partnership's assets, shall cause the
Partnership's accountants to prepare, and the Liquidator shall furnish to each
person who is a Partner immediately before the dissolution, a statement showing
the manner in which the Partnership assets were liquidated and distributed.
33. Distribution of Liquidation Proceeds and Assets and
Allocation of Gains and Losses. The net proceeds from liquidation of the
Partnership's assets and the unliquidated Property of the Partnership shall be
distributed, and all Profits and Losses resulting from the liquidation of the
Partnership shall be allocated, among the Partners in the proportions and
orders of priority specified in section 14(c).
34. Limitation of Liability of Partners. Upon the dissolution
of the Partnership and the distribution of the net liquidation proceeds
pursuant to section 31 and section 14(c), each Partner shall look solely to the
assets of the Partnership for the payment of his unreturned Capital
Contributions, and if the Partnership's assets remaining after the payment or
discharge of the debts and liabilities of the Partnership are insufficient to
pay the full amount of the unreturned Capital Contributions of each Partner,
the Partner shall have no recourse or claim against any Partner or the
Partnership with respect to its unreturned Capital Contributions, except for
claims for fraud, gross negligence, or breach of fiduciary duty.
Notwithstanding anything to the contrary contained herein, each Limited Partner
hereby waives his or her right to seek indemnity from the General Partner for
any losses he or she might suffer under this Partnership Agreement or under any
ancillary agreements related to the business of the Partnership including any
personal guarantees of the liabilities of the Partnership. Further, each
Limited Partner hereby waives his or her right to recover from the Partnership,
as primary obligor, any amounts such Limited Partner becomes liable to pay or
pays pursuant to any agreements related to the business of the Partnership
including any personal guarantees of the liabilities of the Partnership.
35. Waiver of Right of Partition of Assets. Each Partner, and
for his heirs, successors, and assigns, waives his right to the partition of
the assets of the Partnership upon the dissolution and liquidation of the
Partnership.
21
<PAGE> 23
ARTICLE X
ACCOUNTING YEAR, BOOKS, RECORDS, AND REPORTS
36. Books and Records. The Managing General Partner shall
maintain at the principal office of the Partnership a complete and accurate set
of books of records and accounts, in which it shall make full and complete
entries of all dealings or transactions relating to the Partnership's business
and where it shall keep all supporting documentation of transactions with
respect to the conduct of the Partnership's business. Each Partner or his duly
authorized representative, upon five days' advance notice to the Managing
General Partner, may examine during normal business hours the books of the
Partnership and all other records and information concerning the operation of
the Partnership.
37. Reports. If requested by a Partner at least 30 days prior
to the end of a quarter, within 60 days after the end of each fiscal quarter in
each fiscal year of the Partnership, the Managing General Partner shall cause
to be prepared and sent to each Partner a balance sheet, income statement and
cash flow statement of the Partnership for and as of the end of that fiscal
quarter, in each case unaudited but accompanied by a report of the activities
of the Partnership for that quarter. Within 90 days after the end of each
fiscal year of the Partnership, the Managing General Partner shall cause to be
prepared and sent to each Partner a financial report consisting of (a) a
balance sheet as of the end of the fiscal year; (b) statements of income,
partner's equity, and changes in financial position for the fiscal year; (c) if
requested by a Partner, the opinion of the Partnership's certified public
accountant concerning the foregoing financial statements; (d) a summary of the
Partnership's activities for the fiscal year; (e) a statement showing the
distributions to each Partner during the fiscal year and identifying any
distributions which constitute a return of Capital Contribution; and (f) a
statement showing the amount of Taxable Income or Taxable Loss, and listing
each item of income, gain, loss, deduction, or credit allocated or charged
against the Partner for federal and state income tax purposes.
38. Bank Accounts. The Managing General Partner shall maintain
the bank accounts of the Partnership in such financial institutions as the
Managing General Partner considers appropriate. The Managing General Partner
shall make or permit withdrawals from the Partnership's bank accounts on the
signature of the Managing General Partner.
39. Tax Elections. The Partnership shall file an election under
Section 754 of the Code, relating to the optional adjustment to the basis of
partnership property, at the first time it is permitted to do so after the
beginning of the term of this Partnership. The Managing General Partner shall
make or waive, at its discretion, all other tax elections required or permitted
to be made by the Partnership under the Code.
40. Accounting Method and Fiscal Year. The Managing General
Partner shall maintain the Partnership records and books of accounts in
accordance with the method of accounting required or permitted to be used for
federal income tax purposes, with such
22
<PAGE> 24
modifications as are set forth in this Agreement, and otherwise in accordance
with generally accepted accounting principles consistently applied. The fiscal
year of the Partnership is the calendar year.
ARTICLE XI
GENERAL PROVISIONS
41. Partnership Contracts. The Managing General Partner may
enter into agreements and contracts on behalf of the Partnership only if they
are in writing and clearly indicate to the other parties that the Partnership
is a general partnership of which the Managing General Partner is a general
partner.
42. Conveyances. Subject to section 18, the Managing General
Partner may sign any deed, mortgage, lease, bill of sale, security agreement,
pledge, contract or other instrument or commitment purporting to convey or
encumber any of the Partnership's Property or any interest therein, whether now
or subsequently owned or leased at any time by the Partnership, and no other
signature is required.
43. Notices. To be effective, a notice required or permitted by
this Agreement must be in writing, or by telegram, telex or telecopy if
promptly confirmed in writing. A notice is given when delivered or, if mailed,
when deposited in a United States postal service letterbox to be sent by
first-class, postage-prepaid, certified mail, with return receipt requested
(whether or not the sender receives the return receipt), and addressed, if to a
Partner, at his registered address listed on EXHIBIT A and, if to the Managing
General Partner or the Partnership, to the attention of such Managing General
Partner at the Partnership's principal business office.
44. Consents. Any consent required by this Agreement may be
given as follows:
(a) by a writing given by the consenting Partner and
received by the Managing General Partner or other appropriate recipient at or
before the occurrence of the action or other thing for which the consent was
solicited, unless the consent is nullified by:
(i) A writing from the consenting Partner that
is received by the Managing General Partner before the occurrence of the action
or other thing for which the consent was solicited; or
(ii) the negative vote by the consenting Partner
at any meeting called for the purpose of considering the action or other thing.
(b) by the affirmative vote of the consenting Partner at
any meeting called for the purpose of considering the action or other thing for
which the Partner's consent was solicited.
23
<PAGE> 25
45. Meetings. The Managing General Partner may call meetings of
the Partners for any purpose, at any time. The Managing General Partner shall
call a meeting of the Partners within 30 days after he receives from a Majority
in Interest a written request for a meeting, stating the purpose of the
requested meeting and the matters proposed for consideration. Meetings of the
Partners may be held at such time, date and place as the Managing General
Partner designates. The Managing General Partner shall give notice of any
meeting of the Partners not less than ten nor more than 60 days before the date
of the meeting, to each Partner at his registered address listed on EXHIBIT A.
The notice shall state the time, date and place of the meeting, the purpose of
the meeting and the Partner at whose direction or request the meeting is
called. If a meeting is adjourned to another time or place, notice of the
adjourned meeting is not required if the time and place of the adjournment is
announced at the called meeting. The presence in person or by proxy of a
Majority in Interest constitutes a quorum at a meeting. Any notice of a
meeting required by this section may be waived in writing at, before or after
the meeting and shall be deemed to be waived by each Partner who is present in
person or by proxy at the meeting. Only those persons who are Partners at the
close of business on the day before the meeting are entitled to vote at the
meeting. Any Partner entitled to vote at a meeting may authorize any person to
act for him by written proxy if a copy of the proxy is delivered to the
Managing General Partner before the commencement of the meeting. To be
effective, a proxy must be signed by the Partner (and, if applicable, each
co-owner) or his duly appointed attorney-in-fact, and no proxy shall be valid
for more than 11 months after its date. A proxy is revocable at the pleasure
of the Partner granting it.
46. Binding Effect; Counterparts. The covenants and agreements
contained in this Agreement are binding on, and inure to the benefit of, the
legal and personal representatives, heirs, successors and permitted assignees
of the parties to this Agreement. The parties may execute this Agreement in
any number of counterparts, each of which will be an original, but all of which
together will constitute one and the same agreement.
47. Choice of Law. This Agreement and the rights and
obligations of the Partners under it are governed by, and construed and
enforced in accordance with, the laws of Florida.
48. Complete Agreement; Modification. This Agreement contains
the final, complete and exclusive expression of the understanding among the
Partners with respect to the Partnership and its purposes and objectives and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them. Except to admit a new or a substitute Partner or to
reflect the withdrawal or Retirement of a Partner, this Agreement and every
provision of it may be modified or amended only by an agreement in writing
signed by or on behalf of all Partners.
49. Evidence of Partnership Interests. The Partnership Interest
of each Partner is evidenced exclusively by a counterpart of this Agreement
(including EXHIBIT A) that has been signed and dated by the Managing General
Partner.
24
<PAGE> 26
50. Tax Matters Partner. The Managing General Partner or its
designee shall be the "tax matters partner" of the Partnership for federal
income tax purposes. If the Managing General Partner ceases to act as the
Managing General Partner of the Partnership, the successor Managing General
Partner (if any), shall be designated the tax matters partner. Pursuant to
Section 6223(c)(2) of the Code, upon receipt of notice from the Internal
Revenue Service of the beginning of an administrative proceeding with respect
to the Partnership, the Managing General Partner, as the tax matters partner,
shall furnish the Internal Revenue Service with the names, addresses, and
Percentage Interests of each of the Partners. The Managing General Partner
agrees not to enter into a settlement agreement pursuant to Section 6224 of the
Code without providing at least 30 days advance written notice to each Partner.
As tax matters partner, the Managing General Partner shall have absolute
discretion regarding whether to seek judicial review of any administrative
determination and, if it determines to seek judicial review of Internal Revenue
Service action pursuant to Section 6226 of the Code, then the Managing General
Partner shall select the judicial forum for such review. The tax matters
partner shall receive no compensation for its services as such. The
Partnership shall bear all third party costs and expenses incurred by the tax
matters partner in performing its duties as such. Nothing herein shall be
construed to restrict the Partnership from engaging an accounting firm or law
firm to assist the tax matters partner in discharging its duties hereunder.
51. Gender and Number. As used in this Agreement, the masculine
gender includes the feminine and neuter, and the singular includes the plural.
52. Title. Title to any property acquired by the Partnership
shall be taken in the name of the Partnership.
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of each Partner as of the date written beside his name.
General Partner
PAXSON ENTERPRISES, INC.
By /s/ Lowell W. Paxson
--------------------------------
Lowell W. Paxson, President
Limited Partner
Paxson Broadcasting of Miami,
Limited Partnership
By: Paxson Enterprises, Inc.,
General Partner
By: /s/ Lowell W. Paxson
------------------------------
Lowell W. Paxson, President
25
<PAGE> 27
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED TO AND SWORN BEFORE ME, on behalf of Paxson Enterprises,
Inc., a Nevada corporation, as General Partner, by Lowell W. Paxson, its
President, who is personally known to me/has produced _________________________
as identification and who did/did not take an oath, this 10th day of March,
1993.
(SEAL)
/s/ Michele Hansen
------------------------------------
Printed/Typed Name: Michele Hansen
Notary Public-State of Florida
Commission Number:
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED TO AND SWORN BEFORE ME, by Paxson Enterprises,
Inc., a Nevada corporation, as General Partner of Paxson Broadcasting of Miami,
Limited Partnership, by Lowell W. Paxson, as Limited Partner, who is personally
known to me/has produced ____________________________ as identification and who
did/did not take an oath, this 10th day of March, 1993.
(SEAL)
/s/ Michele Hansen
------------------------------------
Printed/Typed Name: Michele Hansen
Notary Public-State of Florida
Commission Number:
26
<PAGE> 28
EXHIBIT A
<TABLE>
<CAPTION>
General Partners Contribution Percentage Interest
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Paxson Enterprises, Inc. 5%
18401 U.S. Highway 19 North
Clearwater, Florida 34624
Limited Partners
- ----------------
Paxson Broadcasting of Miami, 95%
Limited Partnership
18401 U.S. Highway 19 North
Clearwater, Florida 34624
</TABLE>
27
<PAGE> 29
AMENDMENT NUMBER 1 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON MIAMI LICENSE LIMITED PARTNERSHIP
This Amendment Number 1 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Miami License Limited
Partnership ("Amendment") is effective as of the ___ day of March, 1993, by and
between PAXSON ENTERPRISES, INC., a Nevada corporation, as the General Partner
and LOWELL PAXSON, as a Limited Partner. The parties hereby agree as follows:
1. Assignment. The definition of "Assignment" in Article I,
Section 1 of the Partnership Agreement is amended in its entirety to read as
follows:
"`Assignment' means a sale, exchange, gift, pledge, transfer
or disposition of any kind whatsoever and, in the case of a
Person that is not an individual, it includes the sale,
exchange, pledge, transfer or disposition of a majority of
either voting control or the equity interests in such Person;
provided, however, that an "Assignment" does not include a
pledge of, or a grant of a security interest in, a Partnership
Interest, Partnership Rights, or the majority of either voting
control or the equity interests in any Person, which pledge or
security interest is given or granted for the purpose of
securing an obligation of the Partnership or any Partner or
any Person owning an equity interest in a Partner, provided
that the giving or grant of such pledge or security interest
is approved by the Managing General Partner."
2. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 18401 U.S. Highway
19 North, Clearwater, Florida 34624."
3. Purposes of Partnership; Authorized Acts. Article II,
subsection 7.A.(a)(i) of the Partnership Agreement is amended to read as
follows:
"acquire, operate, manage and perform all matters necessary
and attendant to the operation of one or more radio stations
in the State of Florida,".
4. Power to Guarantee Obligations of Others. Article II,
subsection 7.B. of the Partnership Agreement is amended by redesignating
clauses (g) and (h) as clauses (h) and (i), respectively, and inserting the
following as clause (g):
1
<PAGE> 30
"(g) guarantee the debts and obligations of any Partner and
secure the same by a mortgage, pledge, security interest or
other liens upon the property of the Partnership, any part
thereof, any interest therein, or any improvements thereto;".
5. Section 49 of the Partnership Agreement, entitled "Evidence of
Partnership Interests," is hereby deleted in its entirety, and Sections 50, 51,
and 52 of the Partnership Agreement are renumbered as Sections 49, 50, and 51
respectively.
6. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 1
on this 29 day of March, 1993.
-----
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ William L. Watson By: /s/ Lowell W. Paxson
- --------------------------- ---------------------------
Its President
------------------------
- ---------------------------
LIMITED PARTNER:
/s/ William L. Watson /s/ Lowell W. Paxson
- --------------------------- ---------------------------
Lowell Paxson
- ---------------------------
2
<PAGE> 31
GENERAL PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This is a General Partnership Interests Assignment Agreement
(the "Agreement") dated December 15, 1993 (the "Effective Date"). It is among
Paxson Enterprises, Inc. (the "General Partner Assignor"), Paxson
Communications Corp. (the "First Assignee"), Paxson Communications of Florida,
Inc. (the "General Partner Assignee"), and Lowell L. Paxson (the "Nonassigning
Limited Partner") in respect of the Limited Partnerships listed in Exhibit "A"
(the "Station Partnerships"). It is also among the General Partner Assignee,
the First Assignee, the General Partner Assignee and the Station Partnerships
in their capacities as a limited partner (each a "License Limited Partner") in
their respective Limited Partnerships listed in Exhibit "B" (the "License
Partnerships," and together with the Station Partnerships, the "Partnerships").
Capitalized terms used herein and not ascribed a definition have the meaning
assigned to them by the Partnership Agreement to which the term pertains.
BACKGROUND
The General Partner Assignor and the Nonassigning Limited
Partner are partners in the Station Partnerships. The General Partner Assignor
and the License Limited Partners are the partners in the License Partnerships.
The General Partner Assignor wishes to transfer each of its general partnership
interests in the Station Partnerships and the License Partnerships to the First
Assignee in exchange for certain of its common stock and the First Assignee
wishes to immediately assign such general partnership interests to the General
Partner Assignee in exchange for all of the capital stock of the General
Partner Assignee. The General Partner Assignor and the First Assignee also
wish to have the General Partner Assignee admitted as a Partner and granted
partnership rights in each of the Partnerships. The General Partner Assignee
agrees to accept the assignment of the general partnership interests and to be
admitted as a General Partner in the respective Partnerships pursuant to the
Partnership Agreements identified in Exhibit "A" and "B", respectively (the
"Partnership Agreements"). The Nonassigning Limited Partner as the limited
partner in each of the Station Partnerships and each of the License Limited
Partners as the limited partner in the respective License Partnerships hereby
consent to the assignment of the general partnership interests and admission of
the General Partner Assignee as the general partner in their respective
Partnerships pursuant to the terms of this Agreement and the Partnership
Agreements. Pursuant to Chapter 620, Florida Statutes, the Partnerships will
continue uninterrupted and the assignment of the general partnership interests
will not cause a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to
Section 23 of each of the Partnership Agreements and Section 620.152, Florida
Statutes, the General Partner Assignor assigns all of its general partnership
interests in the Partnerships to the First Assignee. The
1
<PAGE> 32
First Assignee accepts the assignment of all of the general partnership
interests. Pursuant to Section 23 of each of the Partnership Agreements and
Section 620.152, Florida Statutes, the First Assignee assigns all of its
general partnership interests in the Partnerships to the General Partner
Assignee. The General Partner Assignee accepts the assignment of all of the
general partnership interests.
2. Admission of General Partner Assignee and Withdrawal
of General Partner Assignor. On the Effective Date, the General Partner
Assignee is admitted as a general partner under the respective Partnership
Agreement and the General Partner Assignor has withdrawn from each of the
Partnerships.
3. General Partner Assignee's Acceptance of Admission.
By executing this Agreement, the General Partner Assignee accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements
and shall become the Managing General Partner of each of the Partnerships. The
parties agree that the General Partner Assignee's execution of this Agreement
shall satisfy the requirement of Sections 23, 24 and 25 of the respective
Partnership Agreements.
4. Limited Partner's Consent. Each of the Nonassigning
Limited Partner and the License Limited Partners consent to the assignment of
the general partnership interest by the General Partner of their respective
Partnership and to the admission of the General Partner Assignee as a general
partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the general partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of General Partner Assignor, First Assignee, General Partner
Assignee, Nonassigning Limited Partner and the License Limited Partners agree
and acknowledge that (i) General Partner Assignor's general partnership
interests in each of the Partnerships are subject to the lien and security
interest of Banque Paribas, as Agent on behalf of the Lenders (the "Agent"),
under the Loan Documents (as defined in that certain Credit Agreement dated as
of March 30, 1993 by and among Banque Paribas, the Lenders identified therein
and each of the Station Partnerships) and (ii) the assignment of the general
partnership interests in the Partnerships by General Partner Assignor to First
Assignee, and by First Assignee to General Partner Assignee, are made subject
to such continuing lien and security interest of Agent under the Loan
Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute one
agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
2
<PAGE> 33
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding among the parties and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON ENTERPRISES, INC., as
General Partner Assignor and as
Withdrawing General Partner of each
Partner
By: /s/ Lowell W. Paxson
---------------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
------------------------------------
Lowell W. Paxson, Nonassigning
Limited Partner
PAXSON COMMUNICATIONS CORPORATION,
First Assignee
By: /s/ Lowell W. Paxson
---------------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS OF FLORIDA,
INC., as General Partner Assignee
and successor General Partner of
each Partnership
By: /s/ Lowell W. Paxson
---------------------------------
Lowell W. Paxson, President
3
<PAGE> 34
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment
Number 1 to the Agreement of Limited Partnership of Paxson
Broadcasting of Jacksonville, Limited Partnership dated January 1,
1992, and Amendment Number 2 to the Agreement of Limited Partnership
of Paxson Broadcasting of Jacksonville, Limited Partnership dated
March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Tampa,
dated June 27, 1991, and Amendment Number 2 to the Agreement of
Limited Partnership of Paxson Broadcasting of Tampa, dated April 27,
1992, and Amendment Number 3 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated January 1,
1992, and Amendment Number 4 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated March 29,
1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Miami, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Miami, dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Orlando, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Orlando, Limited Partnership.
4
<PAGE> 35
EXHIBIT "B"
Limited Partnerships
Agreement of Limited Partnership of Jacksonville License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Jacksonville, Licensed
Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Tampa License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Tampa, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Miami License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Miami, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Orlando License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Orlando, Licensed Limited
Partnership dated March 29, 1993.
5
<PAGE> 36
AMENDMENT NUMBER 2 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON MIAMI LICENSE LIMITED PARTNERSHIP
This Amendment Number 2 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Miami License Limited
Partnership ("Amendment") is effective as of the 19th day of September, 1995,
by and between PAXSON COMMUNICATIONS OF FLORIDA, INC., a Florida corporation,
as the General Partner and PAXSON BROADCASTING OF MIAMI, LIMITED PARTNERSHIP,
as a Limited Partner. The parties hereby agree as follows:
1. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 601 Clearwater Park
Road, West Palm Beach, Florida 33401."
2. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 2
on this 19th day of September, 1995.
WITNESSES: GENERAL PARTNER:
PAXSON COMMUNICATIONS OF FLORIDA, INC.
/s/ Lori Closson By: /s/ William L. Watson
- -------------------------- -------------------------------
Its Secretary
--------------------
/s/ Desrie Malky
- --------------------------
LIMITED PARTNER:
PAXSON BROADCASTING OF MIAMI, LIMITED
PARTNERSHIP
/s/ Lori Closson By: /s/ William L. Watson
- -------------------------- -------------------------------
The Secretary of Paxson
Communications of Florida, Inc., its
general partner.
1
<PAGE> 1
EXHIBIT 3.18.1
<PAGE> 2
EXHIBIT 3.18.1
AGREEMENT OF LIMITED PARTNERSHIP OF
ORLANDO LICENSE LIMITED PARTNERSHIP
This Agreement of Limited Partnership ("Agreement") is entered into
and shall be effective as of the 10th day of March, 1993, by and between Paxson
Enterprises, Inc., a Nevada Corporation, as the General Partner and Paxson
Broadcasting of Orlando, Limited Partnership, as a Limited Partner, pursuant to
the provisions of the Florida Uniform Limited Partnership Act, on the following
terms and conditions:
ARTICLE I.
FORM AND INTERPRETATION
1. Definitions. The following capitalized terms, as
used in this Agreement and in the attached exhibits, which constitute a part of
this Agreement, have the meanings ascribed to them below and include the plural
as well as the singular number:
"Act" means the Florida Uniform Limited Partnership Act, as
amended, or any subsequent Florida law concerning partnerships that are enacted
in substitution for the Act.
"Adjusted Capital Account Deficit" means, with respect to
any Partner, the deficit balance, if any, in such Partner's Capital Account as
of the end of the relevant fiscal year, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amount which such
Partner is obligated to restore (pursuant to the terms of a
promissory note or otherwise) or is deemed to be obligated to restore
pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations
and shall be interpreted consistently therewith.
"Affiliate" of a Partner means (1) another Partner of the
Partnership; (2) a legal or personal representative of any Partner; (3) the
Partner's lineal descendants and spouse (other than a spouse who is legally
separated from the Partner under a decree of divorce or separate maintenance);
(4) a trustee of a trust for the benefit of any Person referred to in clause
(1), (2)
<PAGE> 3
or (3); (5) a Person, other than an individual, of which 80% or more of the
voting or equity interests is owned directly or indirectly by a Partner and/or
one or more of the Persons referred to in clauses (1) through (4); (6) a Person
owning 80% or more of the voting or equity interests of a Partner that is not
an individual; or (7) a Person other than an individual, 80% or more of the
voting or equity interests of which is owned by the same Person that owns 80%
or more of the voting or equity interests of a Partner that is not an
individual.
"Agreement" means this Limited Partnership Agreement as originally
executed and as subsequently amended or supplemented from time to time in
accordance with section 48.
"Assignment" means a sale, exchange, gift, pledge, transfer or
disposition of any kind whatsoever and, in the case of a Person that is not an
individual, it includes the sale, exchange, pledge, transfer or disposition of
a majority of either voting control or the equity interests in such Person.
"Bankruptcy" means taking advantage of any bankruptcy or insolvency
act (including the Bankruptcy Reform Act of 1978 or similar law, and also any
proceeding under state or local insolvency or debtor relief laws), or a final
adjudication of insolvency or an assignment of a major portion of a Person's
assets for the benefit of creditors.
"Capital Account" has the meaning set forth in section 10.
"Capital Contribution" means the total amount of cash, securities and
other property contributed by a Partner to the equity of the Partnership, or
agreed to be contributed by a Partner to the equity of the Partnership,
pursuant to section 9(a), and reduced by any return of capital to the Partner
within the meaning of section 9(c). Any reference in this Agreement to the
Capital Contribution of either a Partner or an assignee of a Partner shall
include the Capital Contribution of any prior Partner to whose Partnership
Interest the then existing Partner or assignee succeeded.
"Cash Flow" means the excess of cash derived by the Partnership from
all sources, including from capital contributions, loans, sales of securities
and other activities, (but excluding cash derived from the winding-up and
liquidation of the Partnership pursuant to section 32) over the sum of all cash
disbursements, including repayments of loans from Partners, loans to Partners
from the Partnership, and distributions to Partners pursuant to section 14(a)
or (b) (but excluding disbursements pursuant to section 14(c)), plus a
reasonable allowance for reserves for repairs, investments in Property
(including Marketable Securities), replacements, contingencies and anticipated
obligations (including
2
<PAGE> 4
debt service, capital improvements and replacements to the extent not funded by
reserves) as reasonably determined by the Managing General Partner.
Notwithstanding the preceding sentence, in determining the reasonable allowance
for reserves, the Managing General Partner shall reduce such allowance to the
extent necessary to ensure that annual distributions of Cash Flow to each
Partner will be in an amount at least equal to the annual income tax liability
(exclusive of income tax liability resulting from a transaction pursuant to
section 14(b) or (c)) of each such Partner (determined assuming that the
maximum possible income tax rate is applicable) resulting from the allocation
to the Partner of his share of the Partnership's Taxable Income and Taxable
Loss.
"Code" means the Internal Revenue Code of 1986, as amended, or any
subsequent federal law concerning income taxes that is enacted in substitution
for the Code.
"General Partner" means any Person admitted as a general partner in
accordance with this Agreement.
"General Partnership Interest" means the Partnership Interest of a
General Partner, in his capacity as a General Partner.
"Limited Partner" means those Persons who are signatories to this
Agreement as limited partners; and all other Persons who shall be admitted to
the Partnership as limited partners.
"Majority in Interest", when used in regard to the degree of consent,
approval or agreement required among the Partners, means Partners whose
aggregate Capital Account balances constitute over 50% of the total aggregate
Capital Account balances of all owners of Partnership Interests then
outstanding.
"Managing General Partner" means the Person designated in this
Agreement as the general partner responsible for management of the affairs of
the Partnership and thereafter any Person which becomes a general partner
responsible for management of the affairs of the Partnership pursuant to this
Agreement, in the Person's capacity as a managing general partner of the
Partnership. Initially, the Managing General Partner shall be Paxson
Enterprises, Inc.
"Marketable Securities" means securities, including stock, which are
traded on an established securities market, whether or not registered under the
Securities Act of 1933.
"Partner" means each Person which is a General Partner or a Limited
Partner.
3
<PAGE> 5
"Partnership" means ORLANDO LICENSE LIMITED PARTNERSHIP, the Florida
limited partnership formed in accordance with the Act pursuant to this
Agreement.
"Partnership Interest" includes only a Partner's Capital Contribution
and right to receive his Percentage Interest and excludes Partnership Rights.
"Partnership Rights" excludes the Partnership Interest of a Partner,
and includes, in addition to other rights provided in this Agreement, the
rights provided to him by the Act except to the extent expressly modified by
this Agreement.
"Percentage Interest" means a Partner's percentage share (as
initially stated opposite such Partner's name on EXHIBIT A as amended from time
to time), of the Profits and Losses, Taxable Income or Taxable Loss, cash and
other distributions and liquidation proceeds of the Partnership all subject to
and interpreted in accordance with the terms of this Agreement. The Percentage
Interests of Partners shall be proportionate to the Capital Accounts of the
Partnership at all times so that, for example, if a Partner's Capital Account
is 100 and the aggregate of all Capital Accounts is 1000, the Partner's
Percentage Interest in the Partnership is 10%. In the event of a change among
the Partners in the Percentage Interests in the Partnership during the year,
the Partnership shall use a closing-of-the-books method with respect to such
change or changes in Percentage Interests in computing a Partner's share of
Profits and Losses, Taxable Income and Taxable Losses, and entitlement to
distributions during such year.
"Person" means any individual and any general or limited partnership,
corporation, estate, joint venture, trust, business trust, cooperative,
association or other organization or entity.
"Profits and Losses" means the annual net income or loss of the
Partnership determined on a generally accepted accounting principles basis, as
disclosed on the annual financial statements of the Partnership.
"Property" means any real, personal, tangible or intangible property
contributed by a Partner to the equity of the Partnership or otherwise acquired
by the Partnership.
"Pro Rata" means in the proportion that the Percentage Interest of
each Partner bears to the total Percentage Interests of all the Partners.
"Retirement" means the death, Bankruptcy, adjudication of
incompetency as determined by a court of appropriate jurisdiction, dissolution
and liquidation or termination of existence, merger or consolidation (except as
provided in
4
<PAGE> 6
section 29) of a Partner, or the sale, lease or other disposition of all or
substantially all the property of a Partner (except as provided in section 29).
"Taxable Income or Taxable Loss" means the net income or loss of the
Partnership for federal income tax purposes, as determined at the close of the
Partnership's fiscal year by the accountants employed by the Partnership to
prepare its income tax returns.
2. Captions and Certain Terms. The titles and captions
preceding the text of the articles and sections of this Agreement are solely
for convenience of reference and neither constitute a part of this Agreement
nor affect its meaning, interpretation, or effect. The words "hereby,"
"herein," "hereof," "hereto," "hereunder," and terms of similar import refer to
this Agreement as a whole and not to any particular article, section,
subsection or other part of this Agreement.
3. Severability. If any article, section or other provision of
this Agreement, or its application, is held to be invalid, illegal or
unenforceable in any respect or for any reason, the remainder of this Agreement
and the application of such article, section or other provision to a person or
circumstance with respect to which it is valid, legal and enforceable is not
affected.
4. Limitation of Grant. Nothing in this Agreement, whether
express or implied, is intended or may be construed to confer upon, or to grant
to, any creditor or any other Person (other than the Partners and their legal
and personal representatives, heirs, successors and permitted assignees) any
right, remedy or claim under or because of this Agreement or any covenant,
condition or stipulation of it.
ARTICLE II
ORGANIZATION OF PARTNERSHIP
5. Formation, Name, Office and Registered Agent. The
Partnership is organized as of the date of this Agreement and the signatories
to this Agreement constitute the members of this partnership under the Act as
of the date hereof. The rights and obligations of the Partners are determined
by the Act, except as otherwise expressly provided in this Agreement. The name
of the Partnership is "ORLANDO LICENSE LIMITED PARTNERSHIP." The
recordkeeping office of the Partnership is located at 18401 U.S. Highway 19
North, Clearwater, Florida 34624. The principal business office of the
Partnership is located at 50 West Liberty Street, Reno, Nevada 89501. The
Managing General Partner may change the name of the Partnership or the location
of its principal
5
<PAGE> 7
business office at any time and from time to time by giving written notice of
such change to each Partner.
6. Term of Partnership. The term of the Partnership
shall continue until December 31, 2066, unless the Partnership is earlier
dissolved and terminated under this Agreement.
7. Purposes of Partnership; Authorized Acts.
A. (a) Purposes of the partnership are to
(i) acquire, operate, manage and perform all matters
necessary and attendant to the operation of one or
more radio stations in Florida,
(ii) invest in, own, sell, acquire, manage and exercise
the voting rights associated with Marketable
Securities,
(iii) acquire, hold, sell, own, improve, develop or lease
other types of real and personal property, and
(iv) engage in any other lawful activity for profit
approved by an affirmative vote of a Majority in
Interest.
(i) Notwithstanding Section 7, unless unanimously approved by
the Partners, the Partnership shall not engage in any
activity(ies) which would result, based upon opinion of tax
counsel, in the characterization of the Partnership as an
investment company as that term is used in Section 721(b) or
any successor provision of the Code.
B. In furtherance of its purposes, but subject to every other provision of
this Agreement, the Partnership is authorized to do the following:
(a) acquire by purchase, lease or otherwise,
any real or personal, tangible or intangible property that may be necessary,
convenient or incidental to the accomplishment of the purposes of the
Partnership;
(b) construct, operate, maintain, finance,
improve, own, sell, convey, exchange, assign, mortgage or lease any property
(or a part thereof) as may be necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership;
(c) borrow money and issue evidences of
indebtedness in furtherance of any purpose of the Partnership and secure the
same by a mortgage, pledge, security interest or other
6
<PAGE> 8
liens on the property, any part thereof, any interest therein or on any
improvements thereto;
(d) prepay, in whole or in part, refinance,
increase, renew, modify or extend any indebtedness of the Partnership and, in
connection therewith, extend, renew or modify any mortgage, pledge, security
interest or other lien affecting any property;
(e) invest and reinvest the assets of the
Partnership in, and purchase, acquire, hold, sell, transfer and exchange
securities of all kinds;
(f) lend money to Partners;
(g) exercise the voting rights associated with
property owned by the Partnership; and
(h) enter into any activity and perform and
carry out any contract in connection with, or necessary or incidental to, the
accomplishment of the purposes of the Partnership.
C. Notwithstanding any other provision of this Agreement, the
Partnership shall not transfer any Federal Communications Commission ("FCC")
licenses it may hold at any time to any party except in accordance with the
rules and policies of the FCC, and unless substantially all the operating
assets of the associated station in connection with which a particular license
is used, or control of the entity that holds such assets, is simultaneously
transferred to such party.
8. Co-Ownership of Partnership Interests. Any consent
required of a Partner shall require the action or vote of each Person (or in
such other manner as such Persons have designated in writing to the
Partnership) having an interest in such Partnership Interest, with a majority
approval needed for consent. On the death of a co-owner of a Partnership
Interest held in either joint tenancy with right of survivorship or tenancy by
the entirety, the Partnership Interest is owned solely by the survivor as a
Partner, and not as an assignee. The Partnership need not (although it may)
recognize the death of a co-owner of a Partnership Interest until the Managing
General Partner receives notice of the death. A co-owner of a Partnership
Interest may sever the tenancy by giving to the Managing General Partner notice
to that effect, and signed by the co-owner requesting the severance in the case
of a joint tenancy, and by both co-owners in the case of a tenancy by the
entirety. Upon receipt of the notice and the certificate evidencing the
Partnership Interest owned by the co-owners, the Managing General Partner shall
cause the Partnership Interest to be allocated as directed by the co-owners and
shall indicate on the Partnership records such allocation. In absence of joint
direction, the interests shall be allocated between the owners as
7
<PAGE> 9
the severed ownership interests would be valued for federal estate tax
purposes.
ARTICLE III
PARTNERSHIP CAPITAL
9. Capital Contributions.
(a) Upon executing this Agreement, each Partner shall
make or has made a Capital Contribution in the amount and of the type, and
initially shall have a Percentage Interest equal to the percentage, set forth
opposite his name on EXHIBIT A. Partners may make (but Limited Partners are not
required to make) additional Capital Contributions at such time and in such
amount as they in their sole discretion shall determine but only if the
Managing General Partner and a Majority in Interest consent to such additional
Capital Contributions. Upon the assignment of any Partnership Interest, the
making of an additional Capital Contribution or any return of a Capital
Contribution, or any substitution of a Partner, EXHIBIT A shall be amended to
accurately reflect the name, address, Capital Contribution and Percentage
Interest of each Partner.
(b) Notwithstanding (a) above, no Capital Contributions
shall be made or permitted by any Partner which would result, directly or
indirectly, in the Partnership being treated as an investment company under
section 721(b) of the Code, and any such attempted Capital Contribution shall
be void ab initio. The Managing General Partner shall withhold its consent to
the making of an additional Capital Contribution, unless it has satisfied
itself (by seeking advice of legal counsel or otherwise) that the making of the
additional Capital Contribution will not result, directly or indirectly, in the
Partnership being treated as an investment company under section 721(b) of the
Code.
(c) A Partner shall not receive from the Managing
General Partner or out of Partnership Property, and the Managing General
Partner and the Partnership shall not return to a Partner, any part of his
Capital Contribution, except as set forth in Articles VIII and IX of this
Agreement and such distribution is determined to be a return of a Partner's
Capital Contribution, and then only if all liabilities of the Partnership,
except liabilities to the Partners on account of their Capital Contributions,
have been paid or there remains property of the Partnership sufficient to pay
them. The Partnership shall not pay interest on Capital Contributions, and a
Partner may demand and receive only cash in return for his Capital
Contribution, except to the extent provided for in Articles VIII and IX of this
Agreement or unless the Liquidator (as defined in section 32) decides to
distribute Partnership property in kind upon the dissolution, winding-up, and
8
<PAGE> 10
termination of the Partnership, or unless the distribution of property to a
Partner is unanimously approved by the Partners. Each Partner, by signing this
Agreement or a counterpart of it, consents to all distributions authorized by
this Agreement and releases all other Partners from all liability to both him
and the Partnership for all distributions made in accordance with this
Agreement.
(d) Any payments made by the Limited Partner as a guarantor
of obligations of the Partnership shall be treated as additional Capital
Contributions to the Partnership.
(e) Notwithstanding any provision in this Agreement to the
contrary, if any Partner's Capital Account has a deficit balance ("Deficit
Capital Account Balance") upon liquidation of the Partnership (after giving
effect to all contributions, distributions, and allocations for all taxable
years, including the year in which such liquidation occurs), such Partner shall
contribute to the Capital of the Partnership the amount necessary to restore
such deficit balance to zero in accordance with Regulations Section
1.704-1(b)(2)(ii)(d).
10. Capital Account.
(a) The Managing General Partner shall establish and
maintain a Capital Account for each Partner in the Partnership's books of
account. Capital Accounts shall be maintained and adjusted in accordance with
generally accepted accounting principles. Consistent with these capital
account maintenance rules, the Managing General Partner shall credit to each
Partner's Capital Account the amounts of the Partner's Capital Contributions
and any Profits allocated to the Partner. The Managing General Partner shall
charge to or deduct from each Partner's Capital Account the amounts of all
distributions (in cash or other property) to the Partner and any Losses
allocated to the Partner. If any interest in the Partnership is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferror to the extent it relates to the
transferred interest.
(b) The provisions of this section and the other
provisions of this Agreement pertaining to the maintenance of Capital Accounts
are intended to comply with Treasury Regulation Section 1.704-1(b) (or any
successor provision thereto), and shall be interpreted and applied in a manner
consistent with such Regulations. In the event the Managing General Partner
determines that it is prudent to modify the manner in which the Capital
Accounts are computed in order to comply with such Regulations, provided that
it is not likely to have a material effect on the amounts distributable to any
Partner without such Partner's consent and upon receipt of an opinion of tax
counsel to the Partnership concluding that such modification will be given
effect for federal
9
<PAGE> 11
income tax purposes, the Managing General Partner may make such modification.
(c) The Managing General Partner shall revalue the
Partnership's property (based on its fair market value as of the moment
immediately preceding the relevant event) and shall adjust Capital Accounts to
take into account any resulting Profit or Loss (determined as if the
Partnership sold all its property for cash equal to the property's fair market
value) upon the occurrence of either of the following events: (1) the making by
any Partner of any non-Pro Rata additional Capital Contribution, (2) the
partial or complete withdrawal of a Partner's Partnership Interest, or (3) the
admission of a Partner.
11. Expenses Paid by Partners. Any Partnership expense
reasonably paid by any Partner on behalf of the Partnership is an indebtedness
of the Partnership to the Partner and does not increase the Partner's
Partnership Interest or Percentage Interest. The Partnership shall reimburse
the Partner as soon as practicable and may pay interest on the indebtedness.
12. Loans by Partners. The Managing General Partner may borrow
money on behalf of the Partnership from any Partner in such amounts and for
such purposes as it considers necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership. Each loan to the
Partnership by a Partner (excluding reimbursable expenses) shall be evidenced
by a promissory note or similar instrument of the Partnership, may be secured
by a lien on the Property, may bear interest at a rate determined by agreement
between such Partner and the Managing General Partner and may be subject to
such other terms and conditions as are agreed to by such Partner and the
Managing General Partner. The Partnership may prepay each loan from a Partner
in whole or in part, at any time and from time to time, without premium or
penalty.
ARTICLE IV
PROFITS AND LOSSES AND TAXABLE INCOME AND TAXABLE LOSS
13. Allocations
(a) Allocation of Profits and Losses.
(1) Profits and Losses of the Partnership shall
be allocated Pro Rata among the Partners.
(2) Profits and Losses of the Partnership shall
be determined for each fiscal year of the Partnership in accordance with the
method of accounting required or permitted to be used for federal income tax
purposes, with such exceptions thereto as are set forth in this Agreement, and
otherwise in
10
<PAGE> 12
accordance with generally accepted accounting principles applied in a
consistent manner.
(b) Allocation of Taxable Income and Taxable Loss.
(1) Except as otherwise provided in this
section 13(b), allocations of tax items among the Partners shall be consistent
with corresponding book (Profits and Losses) items (if any). For tax purposes,
Profits and Losses, or any item thereof, shall be appropriately adjusted to
reflect Taxable Income and Taxable Loss, or any item thereof, as determined
under the Code and shall be allocated among the Partners in such a manner as to
comply with the provisions of the Code and Regulations thereunder (including,
if necessary, the "minimum gain chargeback provisions" of the Regulations under
Section 704 of the Code). For example, any gain or loss recognized by the
Partnership with respect to property contributed to the Partnership by a
Partner shall be shared among the Partners so as to take account of the
variation, if any, between the basis of the property to the Partnership and its
fair market value at the time of contribution or revaluation, whichever is
applicable, so as to comply with the requirements of Section 704 of the Code.
Thus, for example, if a Partner contributes property to the Partnership whose
agreed fair market value exceeds its adjusted basis in the hands of the
contributing Partner ("built-in gain"), and there have been no events giving
rise to a revaluation, built-in gain with respect to such contributed property
shall first be allocated to such contributing Partner when the Partnership
recognizes gain upon a disposition of such contributed property, but not in an
amount in excess of such built-in gain; the remaining balance of such
recognized gain, if any, shall be allocated among the Partners as set forth
herein. The allocation of built-in gain to a contributing Partner shall not
increase such Partner's Capital Account, because such gain was already taken
into account when the built-in gain property was contributed to the
Partnership. A Partner who contributes property other than cash shall provide
the Managing General Partner with information necessary to verify the
contributing Partner's adjusted tax basis in the items of property contributed
by him to the Partnership.
(2) Generally, except as provided in section
13(b)(i), Taxable Income and Taxable Loss (and each such income and loss item)
shall be allocated Pro Rata among the Partners. In the event, however, that
non- Pro Rata distributions of property are made to a Partner or the net
proceeds from the sale of property are distributed non-Pro Rata to a Partner,
Taxable Income and Taxable Loss derived from such distributions or sales shall
be allocated 100% to such Partner, subject only to such modifications as are
necessary to comply with Section 704 of the Code.
11
<PAGE> 13
(c) Losses. The Losses allocated pursuant to Sections
13(a) and 13(b) hereof shall not exceed the maximum amount of Losses that can
be so allocated without causing any Partner who is not a General Partner to
have an Adjusted Capital Account Deficit at the end of any fiscal year. In the
event some but not all of the Partners who are not General Partners would have
Adjusted Capital Account Deficits as a consequence of an allocation of Losses
pursuant to Section 13(a) or Section 13(b), the limitation set forth in this
Section 13(c) shall be applied on a Partner by Partner basis so as to allocate
the maximum permissible Loss to each Partner who is not a General Partner under
Section 1.704-1(b)(2)(ii)(d) of the Regulations. All Losses in excess of the
limitation set forth in this Section 13(c) shall be allocated to the General
Partner.
(d) Special Allocations. The following special
allocations shall be made in the following order:
(1) Qualified Income Offset. In the event any Partner who is
not a General Partner unexpectedly receives any adjustments, allocations, or
distributions described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), 1.704-
1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Partnership income and
gain shall be specially allocated to each such Partner in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the
Adjusted Capital Account Deficit of such Partner as quickly as possible,
provided that an allocation pursuant to this Section 13(d)(1) shall be made if
and only to the extent that such Partner would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Section 13 have been
tentatively made as if this Section 13(d)(1) were not in the Agreement.
(2) Gross Income Allocation. In the event any Partner who is
not a General Partner has a deficit Capital Account at the end of any
Partnership fiscal year that is in excess of the sum of (i) the amount such
Partner is obligated to restore (pursuant to the terms of a promissory note or
otherwise), and (ii) the amount such Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially
allocated items of Partnership income and gain in the amount of such excess as
quickly as possible, provided that an allocation pursuant to this Section
13(d)(2) shall be made if and only to the extent that such Partner would have a
deficit Capital Account in excess of such sum after all other allocations
provided for in this Section 13 have been tentatively made as if Section
13(d)(1) hereof and this Section 13(d)(2) were not in the Agreement."
12
<PAGE> 14
ARTICLE V
DISTRIBUTIONS, WITHDRAWALS AND LOANS
14. Distributions.
(a) Cash Flow Distributions. Cash Flow shall be
distributed Pro Rata among the Partners. Notwithstanding the foregoing, if the
Partners unanimously agree, the Partnership may distribute Cash Flow
attributable to a sale of property in a non-Pro Rata manner.
(b) Partial or Complete Withdrawal by a Partner From the
Partnership.
(1) In the event of a partial or complete
withdrawal of a Partner from the Partnership pursuant to Article VIII, the
Managing General Partner shall, as promptly as is reasonably possible,
distribute to the Partner his Pro Rata share of the Marketable Securities
previously contributed by such Partner to the Partnership, cash and other
readily divisible assets of the Partnership. The withdrawing Partner shall
also be entitled to receive cash equal in value to his Pro Rata share of the
fair market value (as reasonably determined by the Managing General Partner) of
any non-readily divisible assets owned by the Partnership. The Managing
General Partner shall, as promptly as possible, distribute this additional
amount of cash, if any, to the withdrawing Partner. Cash distributions to the
withdrawing Partner shall be reduced by such Partner's Pro Rata share of the
liabilities of the Partnership and by any expenses incurred by the Partnership
with respect to the withdrawal of the Partner.
(2) A Partner may request that all or a portion
of the Marketable Securities subject to the requested withdrawal be sold by the
Partnership and the net proceeds (after selling and other expenses) distributed
as directed by him. In the event that the Managing General Partner is unable
to sell these Marketable Securities, it shall distribute them to the Partner,
unless it is notified by the Partner to cancel the withdrawal.
(3) The Managing General Partner shall not be
required to distribute to the requesting Partner any assets that the
Partnership is legally restricted or prohibited from distributing to the
Partner, unless steps can be taken to remove the restriction or prohibition; in
which case the requesting Partner shall be charged with the expense of removing
such restriction or prohibition. Any distribution hereunder shall also be
subject to the limitations set forth in sections 9(c) and 15, respectively.
(c) Liquidating Distributions. The net proceeds from
liquidation of the Partnership's assets pursuant to its
13
<PAGE> 15
dissolution, winding-up, and termination shall be distributed, and all Profits
and Losses resulting from the liquidation of the Partnership property shall be
allocated, among the Partners in the proportions and orders of priority
specified in this section 14(c).
(i) The Liquidator shall distribute the net
proceeds from liquidation of the Partnership's assets as follows:
(1) FIRST: To pay all the liabilities
of the Partnership that are then due and payable, except for both Capital
Contributions of Partners and liabilities to the Partners, in the order of
priority required by Florida law; then
(2) SECOND: To establish any reasonable
reserve that the Liquidator may determine is required for unpaid, future, or
contingent liabilities or obligations of the Partnership; then
(3) THIRD: To pay all liabilities of
the Partnership to the Partners, pro rata according to the amounts of their
respective liabilities; then
(4) FOURTH: To the Partners to the
extent of any positive balances in their Capital Accounts, Pro Rata according
to the amounts of their respective positive balances; and then
(5) FIFTH: Any remaining net proceeds
shall be distributed Pro Rata among the Partners.
(ii) Any Profits and Losses and Taxable Income
and Taxable Loss resulting from the disposition of the Partnership's assets in
the process of liquidation shall be allocated among the Partners in the manner
provided in section 13. Any property distributed in kind in the liquidation
shall be valued and treated as if the property were sold and the cash proceeds
were distributed. The Profits and Losses arising from the constructive sale of
the property described in the preceding sentence shall be allocated among the
Partners in the manner provided in section 13.
15. Limitation on Distributions to Partners. A Partner may
receive distributions from the Partnership only to the extent the Partnership's
total assets exceed its total liabilities, other than liabilities to the
Partners on account of their Capital Contributions.
14
<PAGE> 16
ARTICLE VI
AUTHORITY, DUTIES, AND LIABILITIES OF PARTNERS
16. Duties of Managing General Partner. The Managing General
Partner shall manage the affairs of the Partnership, shall apply itself
diligently for the Partnership, and shall devote to the Partnership such time
as is necessary and appropriate to manage the business of the Partnership. The
Managing General Partner is not required to devote all its business time to the
Partnership, and it may engage in other business ventures and employment,
including those in competition with the Partnership. In the performance of its
duties, the Managing General Partner may hire employees and agents of the
Partnership and generally shall supervise and direct all the daily operations
of the Partnership.
17. Managing General Partner's Fees and Expenses.
(a) Fees to Managing General Partner. In consideration
for performing services described herein, the Managing General Partner may be
paid a fee to be agreed upon by a Majority in Interest. Such fees shall be
deemed earned when the services have been performed and, regardless of when
paid, shall be non-executory from the date earned and shall be the obligation
of the Partnership from and after that date.
(b) Expenses. Except as otherwise provided herein, the
Partnership shall pay all expenses of the Partnership (which expenses may be
either billed directly to the Partnership or reimbursed to the Managing General
Partner) which may include, but are not limited to: (i) all costs of borrowed
money, taxes and assessments on the Property and other taxes applicable to the
Partnership; (ii) all costs for goods and materials, whether purchased by the
Partnership directly or by the Managing General Partner on behalf of the
Partnership; (iii) legal, audit, accounting, brokerage and other professional
fees; (iv) fees and expenses paid to independent contractors, mortgage bankers,
brokers, insurance brokers and other agents; (v) expenses of organizing,
revising, amending, converting, modifying or terminating the Partnership; (vi)
expenses in connection with distributions made by the Partnership to, and
communications and bookkeeping work necessary in maintaining relations with,
Partners; (vii) expenses in connection with preparing and mailing reports to
Partners; (viii) costs of any accounting, statistical or bookkeeping equipment
necessary for the maintenance of the books and records of the Partnership; (ix)
the cost of preparation and dissemination of informational material and
documentation relating to the Partnership; (x) except with respect to
litigation solely among the Partners as such, costs incurred in connection with
any litigation in which the Partnership is involved, as well as in the
examination, investigation or other proceedings, conducted against the
Partnership by any regulatory agency, including legal and
15
<PAGE> 17
accounting fees incurred in connection therewith; (xi) costs of any computer
services or equipment or services of personnel used for or by the Partnership;
and (xii) expenses of professionals employed by the Partnership in connection
with any of the foregoing, including attorneys, accountants and appraisers.
18. Authority of Managing General Partner. The Managing General
Partner may bind the Partnership to do all acts that are necessary,
appropriate, or incidental to the accomplishment of the purposes of the
Partnership. Any person dealing with the Partnership or the Managing General
Partner may rely on a certificate signed by the Managing General Partner as to
the identity of any Partner, the existence or absence of any fact or condition
that is necessary to permit action by either the Partnership or the Managing
General Partner or germane in any other way to the affairs of the Partnership,
and the persons who are authorized to execute and deliver any documents or
instruments of or on behalf of the Partnership. Without limiting the
generality of the foregoing, the Managing General Partner is specifically
authorized to do the following:
(a) to negotiate and enter into leases and agreements
with land or building owners or other Persons, and to incur obligations for,
and on behalf of, the Partnership in connection with Partnership business;
(b) to borrow money on behalf of the Partnership and, as
security therefor, to encumber the property;
(c) to prepay, in whole or in part, refinance, increase,
modify or extend any obligation affecting the property;
(d) to sell, exchange, convey and lease the property;
(e) to employ from time to time, at the expense of the
Partnership, other Persons required for the operation and management of the
Partnership business, including accountants, attorneys and others, who may be
Partners, on such terms and for such compensation as the Managing General
Partner determines to be reasonable and this may include Persons which are
Affiliates;
(f) to pay all attorney's and accountant's fees and
other costs incurred in connection with the formation of the Partnership
business and the completion of all steps necessary or advisable for the
Partnership to comply with applicable laws;
(g) to assume responsibilities imposed on the Managing
General Partner by the Act;
16
<PAGE> 18
(h) to compromise, arbitrate or otherwise adjust claims
in favor of or against the Partnership and to carry such insurance as the
Managing General Partner considers advisable;
(i) to exercise the voting rights associated with the
securities and other Property owned by the Partnership;
(j) to commence or defend litigation with respect to the
Partnership or any assets of the Partnership as the Managing General Partner
considers advisable, at the expense of the Partnership;
(k) to make, execute, acknowledge and deliver documents
of transfer and conveyance and any other instruments that may be necessary or
appropriate to carry out its powers; and
(l) to do all such acts and take all such proceedings
and execute all such rights and privileges, although not specifically mentioned
herein, as the Managing General Partner considers necessary to conduct the
business of the Partnership and to carry out the purposes of the Partnership.
Notwithstanding the foregoing, the Managing General Partner shall not
take any of the following actions without the consent of a Majority in
Interest:
(1) assign all or any part of the property for the
benefit of its creditors or confess a judgment against the Partnership;
(2) take any action in contravention of the Act, the
certificate of limited partnership or this Agreement;
(3) sell, lease, transfer, assign, pledge or encumber a
substantial portion (10% or more) in value of the property of the Partnership
(except with respect to transactions to which section 28 or section 32
applies); or
(4) admit a Person as a Partner of the Partnership.
19. Dealing with Affiliates. The Managing General Partner may
employ and enter into contracts and other arrangements with any Person,
including an Affiliate, and may obligate the Partnership to pay reasonable
compensation for services rendered by such Persons on terms that, in the
judgment of the Managing General Partner, are not less favorable to the
Partnership than would be available from an unrelated party.
20. Indemnification of General Partners. The Managing General
Partner need not secure the performance of its duties by bond or otherwise. A
General Partner is not liable, responsible,
17
<PAGE> 19
or accountable in damages or otherwise to any Partner or to the Partnership for
any act taken or omission made in good faith on behalf of the Partnership and
in a manner that such General Partner reasonably believes to be within the
scope of the authority granted to it by this Agreement and in the best interest
of the Partnership, except for gross negligence or willful misconduct. Any
loss, expense (including attorneys' fees) or damage incurred by a General
Partner by reason of any act or omission by it in good faith on behalf of the
Partnership and in a manner that it reasonably believes to be within the scope
of the authority granted to it by this Agreement and in the best interest of
the Partnership (but not, in any event, any loss, expense or damage incurred by
a General Partner by reason of gross negligence or willful misconduct) shall be
paid to the indemnified General Partner from the Partnership's assets, to the
extent available.
21. Liability of Non-Managing General Partner. The non-managing
General Partners are not liable to any other Partner for the gross negligence
or willful misconduct of the Managing General Partner.
22. Authority of Non-Managing General Partner. The non-managing
General Partners shall not participate in the management of, or have any
control over, the business or policies of the Partnership, except as required
by the Act or permitted by section 18, and shall not transact any business in
the name of the Partnership. Unless required by the Act, a non-managing
general partner shall not sign any agreement, document or instrument in the
name of the Partnership or otherwise make commitments on behalf of the
Partnership.
ARTICLE VII
TRANSFER OF PARTNERSHIP INTERESTS
23. General Partners. Subject to section 24, a General Partner
may make an Assignment, directly or indirectly, of all or any part of its
Partnership Interest. However, an Assignment does not relieve such General
Partner of its obligations and liabilities under this Agreement, or constitute
the assignee a General Partner, or confer on the assignee any Partnership
Rights. Subject to section 24, and only if a Majority in Interest consents, a
General Partner may make an Assignment of both its Partnership Interest and its
Partnership Rights if the assignee assumes in writing all such General
Partner's obligations and liabilities under this Agreement and if all the
applicable requirements of section 25 are satisfied. Upon compliance with the
immediately preceding sentence, an assignee of such General Partner has all the
rights and powers granted to such General Partner under this Agreement and has
all the obligations and liabilities of such General Partner under this
Agreement.
18
<PAGE> 20
24. Restriction on Transfer. Notwithstanding any other
provision of this Agreement, an assignment of a Partnership Interest shall not
be made, and consent thereto shall be withheld:
(a) Unless the Managing General Partner has satisfied
itself (by seeking advice of legal counsel or otherwise, with any resulting
Partnership expense to be reimbursed by the assignor) that the assignment will
not have any significant adverse tax effect upon the Partnership or the other
Partners;
(b) Unless the Managing General Partner has satisfied
itself (by advice of legal counsel, with any resulting Partnership expense to
be reimbursed by the assignor) that the proposed assignment may be made without
registration under any applicable securities law; and it will not violate any
applicable securities law (including investor suitability standards);
(c) If the Assignment is sought to be made to:
(i) a minor or incompetent, except if made by
will or intestate succession, or
(ii) to a Person which is not an Affiliate.
25. Admission of Substitute Partner. Subject to the other
provisions of this Agreement, an assignee of a Partnership Interest may be
admitted as a Partner and granted Partnership Rights only if:
(a) the Assignment is made pursuant to a written
instrument in a form satisfactory to the Managing General Partner and specifies
the intention of the assignor that the assignee be substituted as a Partner;
(b) the Managing General Partner consents to the
admission by executing two counterparts of this Agreement that evidences the
Partnership Rights of the assignee, and if the assignee is to be admitted as a
General Partner a Majority in Interest consent to the admission;
(c) the assignee accepts, signs and agrees to be bound
by this Agreement, by executing two counterparts of this Agreement, including
an amended EXHIBIT A, and such other documents or instruments as the Managing
General Partner requires to effect the admission of the assignee as a Partner;
(d) the assignee provides the Managing General Partner
with evidence satisfactory to it of the assignee's authority to become a
Partner under the terms of this Agreement;
(e) the assignee pays all filing, publication and other
costs (including reasonable attorneys' fees) incurred by
19
<PAGE> 21
either the Partnership or the Managing General Partner in connection with the
admission and substitution of the assignee as a Partner.
Notwithstanding an assignee's satisfaction of any or all of the
conditions specified above, the Managing General Partner, in its absolute
discretion, may refuse to consent to the assignee's admission as a Partner, in
which event the assignee will not obtain any Partnership Rights, but will
retain only the rights of an assignee under section 23.
26. Rights of Partner After Assignment and Substitution. Upon
the Assignment of all his Partnership Interest, and the admission of a
substitute partner, a Partner shall cease to be a Partner and to have any
Partnership Rights.
27. Allocations and Distributions After Assignment. For the
purposes of allocations of Profits and Losses, Taxable Income or Taxable Loss,
and distributions, an Assignment of a Partnership Interest is effective as to
the Partnership, and shall be reflected in the records of the Partnership, as
of the date that the Managing General Partner receives written notice of the
Assignment. The Taxable Income or Taxable Loss, Profits and Losses and cash
and other distributions in respect of the assigned Partnership Interest with
respect to the fiscal year in which the Assignment of the Partnership Interest
occurs shall be divided between the assignor and the assignee according to the
method provided to the Managing General Partner by the assignor and the
assignee, so long as such method is permitted under the Code and does not
adversely affect the other Partners or the Partnership from a tax or economic
perspective. The method of allocation shall be provided to the Managing
General Partner in the written notice of the Assignment. Any additional costs
for computing the allocations hereunder shall be paid by the assignor or
assignee, as the case may be. The written notice referred to above shall also
contain information as to whether the assignor or assignee shall be responsible
for the payment of such additional cost, if any.
ARTICLE VIII
RETIREMENT, WITHDRAWAL, OR REMOVAL OF PARTNERS
28. Withdrawal of Non-Managing General Partner and Limited
Partners.
(a) A non-managing General Partner and a Limited Partner
may, at any time, partially withdraw his Partnership Interest from the
Partnership by providing written notice thereof to the Managing General
Partner. The Managing General Partner shall promptly send a copy of such
notice to all other Partners. Within thirty (30) days after the receipt of
such written notice
20
<PAGE> 22
from a Partner, the Managing General Partner shall make the appropriate
distributions to the Partner in partial or complete redemption of his
Partnership Interest as set forth in section 14(b).
(b) A partial withdrawal by a Partner shall be made in
increments of one-tenth (1/10th) of one percent (1%) of a Percentage Interest.
The written notice of withdrawal from a Partner to the Managing General Partner
must state whether the withdrawal is a partial or complete withdrawal and, if a
partial withdrawal, must state the Percentage Interest that is being withdrawn.
A Partner shall not make a partial withdrawal that will result in his remaining
Percentage Interest becoming less than one-tenth (1/10th) of one percent (1%)
immediately after the withdrawal.
(c) The Managing General Partner agrees that it will
fully cooperate to the extent permitted by law to accomplish a withdrawal
requested by a non-managing General Partner and a Limited Partner hereunder.
It also agrees that it will not take any action that will obstruct or render
impossible the application of this section 28 (such as to pledge the
Partnership's Marketable Securities as collateral to creditors of the
Partnership), unless such action is essential to accomplish the purposes of the
Partnership.
(d) The partial withdrawal of a non-managing General
Partner or a Limited Partner does not dissolve or terminate the Partnership
unless there is only one Partner then remaining. The remaining Partners shall
amend this Agreement to reflect the partial or complete withdrawal of the
Partner from the Partnership, if and to the extent necessary.
(e) Upon the giving of the notice of withdrawal pursuant to
Paragraph (a), and upon the dissolution of the Partnership, the voting rights
with respect to any Marketable Securities allocable to the Percentage Interest
being withdrawn shall be vested in the withdrawing Partner or Partners, and the
Partnership shall have no voting rights with respect to such stock.
29. Retirement or Withdrawal of General Partner. The Managing
General Partner may not withdraw any part of its General Partnership Interest.
The Retirement of the Managing General Partner shall dissolve the Partnership.
Notwithstanding the foregoing or anything else in this Agreement to the
contrary, a merger, consolidation, or reorganization of the Managing General
Partner, or a sale of all or substantially all its assets that includes its
Partnership Interest, is not a Retirement of such Managing General Partner if
the resulting, surviving or acquiring Person is an Affiliate and becomes
substituted as the Managing General Partner of the Partnership. The resulting,
surviving or acquiring Person is substituted as the Managing General Partner
21
<PAGE> 23
without further act if it gives notice of the substitution to the Partners
before the effective date of the merger, consolidation, reorganization or sale.
Each Partner consents to the admission and substitution of such substitute
Managing General Partner pursuant to this section 29, and no further consent or
approval of any Partner is required.
30. Rights of Partner After Retirement or Withdrawal. A Partner
ceases to have any Partnership Rights upon his Retirement or complete
withdrawal from the Partnership. However, until the appropriate distributions,
if any, are made to a Retired or withdrawn Partner for his Partnership
Interest, the Retired or withdrawn Partner is entitled to receive the
allocations of Profits and Losses, Taxable Income or Taxable Loss and all
distributions referred to in section 14 applicable to his Partnership Interest.
ARTICLE IX
DISSOLUTION
31. Events of Dissolution. The Partnership shall be terminated
and dissolved upon:
(a) the expiration of its term;
(b) the vote of a Majority in Interest to dissolve the
Partnership;
(c) the Partnership being adjudicated insolvent or
bankrupt;
(d) the Retirement of the Managing General Partner; or
(e) the sale of all or substantially all of the
Partnership's Property.
32. Winding-Up and Distributions. Upon the dissolution of the
Partnership pursuant to section 31, the winding-up of the Partnership's
business and the liquidation and distribution of Partnership assets must be
carried out with due diligence and in a timely manner, and consistent with both
the requirements of applicable law and the following provisions of this
section:
(a) The Managing General Partner shall be responsible
for taking all actions relating to the winding-up, liquidation, and
distribution of assets of the Partnership, unless its Retirement causes the
dissolution, in which case the fiscal agent, liquidator, or receiver appointed
(without judicial action) by a Majority in Interest shall be so responsible.
The Managing General Partner, or the appointed fiscal agent, liquidator, or
22
<PAGE> 24
receiver, is referred to in this Agreement as the "Liquidator." A non-managing
General Partner can be appointed to be the Liquidator. The Liquidator shall
file all certificates or notices of the dissolution of the Partnership as
required by law. Upon the complete liquidation and distribution of the
Partnership assets, the Partnership shall terminate, and the Liquidator shall
execute, acknowledge, and cause to be filed all certificates and notices
required by law to terminate the Partnership.
(b) The Liquidator shall proceed without unnecessary
delay to sell and otherwise liquidate the Partnership's assets. Unless
directed otherwise by a Majority in Interest, all Marketable Securities, cash
and other readily divisible or fungible assets of the Partnership shall be
distributed directly to the Partners in the manner set forth in section
14(c)(i). The Liquidator shall promptly sell the other assets of the
Partnership unless it determines that an immediate sale of part or all of such
assets would cause undue loss to the Partners. In such case, the Liquidator,
to avoid such loss, may defer the liquidation of the Partnership assets for a
reasonable time, except for those liquidations that are necessary to satisfy
the debts and liabilities of the Partnership to persons and parties other than
the Partners. The Liquidator shall distribute the proceeds from the
liquidation of the Partnership's assets as provided in section 14(c).
(c) Upon the dissolution of the Partnership pursuant to
section 31, the Liquidator shall cause the accountants for the Partnership to
prepare within ninety (90) days after the occurrence of the event of
dissolution, and immediately thereafter shall furnish to each Partner, a
statement setting forth the assets and liabilities of the Partnership as of the
date of its dissolution. The Liquidator, promptly following the complete
liquidation and distribution of the Partnership's assets, shall cause the
Partnership's accountants to prepare, and the Liquidator shall furnish to each
person who is a Partner immediately before the dissolution, a statement showing
the manner in which the Partnership assets were liquidated and distributed.
33. Distribution of Liquidation Proceeds and Assets and
Allocation of Gains and Losses. The net proceeds from liquidation of the
Partnership's assets and the unliquidated Property of the Partnership shall be
distributed, and all Profits and Losses resulting from the liquidation of the
Partnership shall be allocated, among the Partners in the proportions and
orders of priority specified in section 14(c).
34. Limitation of Liability of Partners. Upon the dissolution
of the Partnership and the distribution of the net liquidation proceeds
pursuant to section 31 and section 14(c), each Partner shall look solely to the
assets of the Partnership for the payment of his unreturned Capital
Contributions, and if the
23
<PAGE> 25
Partnership's assets remaining after the payment or discharge of the debts and
liabilities of the Partnership are insufficient to pay the full amount of the
unreturned Capital Contributions of each Partner, the Partner shall have no
recourse or claim against any Partner or the Partnership with respect to its
unreturned Capital Contributions, except for claims for fraud, gross
negligence, or breach of fiduciary duty. Notwithstanding anything to the
contrary contained herein, each Limited Partner hereby waives his or her right
to seek indemnity from the General Partner for any losses he or she might
suffer under this Partnership Agreement or under any ancillary agreements
related to the business of the Partnership including any personal guarantees of
the liabilities of the Partnership. Further, each Limited Partner hereby
waives his or her right to recover from the Partnership, as primary obligor,
any amounts such Limited Partner becomes liable to pay or pays pursuant to any
agreements related to the business of the Partnership including any personal
guarantees of the liabilities of the Partnership.
35. Waiver of Right of Partition of Assets. Each Partner, and
for his heirs, successors, and assigns, waives his right to the partition of
the assets of the Partnership upon the dissolution and liquidation of the
Partnership.
ARTICLE X
ACCOUNTING YEAR, BOOKS, RECORDS, AND REPORTS
36. Books and Records. The Managing General Partner shall
maintain at the principal office of the Partnership a complete and accurate set
of books of records and accounts, in which it shall make full and complete
entries of all dealings or transactions relating to the Partnership's business
and where it shall keep all supporting documentation of transactions with
respect to the conduct of the Partnership's business. Each Partner or his duly
authorized representative, upon five days' advance notice to the Managing
General Partner, may examine during normal business hours the books of the
Partnership and all other records and information concerning the operation of
the Partnership.
37. Reports. If requested by a Partner at least 30 days prior
to the end of a quarter, within 60 days after the end of each fiscal quarter in
each fiscal year of the Partnership, the Managing General Partner shall cause
to be prepared and sent to each Partner a balance sheet, income statement and
cash flow statement of the Partnership for and as of the end of that fiscal
quarter, in each case unaudited but accompanied by a report of the activities
of the Partnership for that quarter. Within 90 days after the end of each
fiscal year of the Partnership, the Managing General Partner shall cause to be
prepared and sent to each Partner a financial report consisting of (a) a
balance sheet as of the end
24
<PAGE> 26
of the fiscal year; (b) statements of income, partner's equity, and changes in
financial position for the fiscal year; (c) if requested by a Partner, the
opinion of the Partnership's certified public accountant concerning the
foregoing financial statements; (d) a summary of the Partnership's activities
for the fiscal year; (e) a statement showing the distributions to each Partner
during the fiscal year and identifying any distributions which constitute a
return of Capital Contribution; and (f) a statement showing the amount of
Taxable Income or Taxable Loss, and listing each item of income, gain, loss,
deduction, or credit allocated or charged against the Partner for federal and
state income tax purposes.
38. Bank Accounts. The Managing General Partner shall maintain
the bank accounts of the Partnership in such financial institutions as the
Managing General Partner considers appropriate. The Managing General Partner
shall make or permit withdrawals from the Partnership's bank accounts on the
signature of the Managing General Partner.
39. Tax Elections. The Partnership shall file an election under
Section 754 of the Code, relating to the optional adjustment to the basis of
partnership property, at the first time it is permitted to do so after the
beginning of the term of this Partnership. The Managing General Partner shall
make or waive, at its discretion, all other tax elections required or permitted
to be made by the Partnership under the Code.
40. Accounting Method and Fiscal Year. The Managing General
Partner shall maintain the Partnership records and books of accounts in
accordance with the method of accounting required or permitted to be used for
federal income tax purposes, with such modifications as are set forth in this
Agreement, and otherwise in accordance with generally accepted accounting
principles consistently applied. The fiscal year of the Partnership is the
calendar year.
ARTICLE XI
GENERAL PROVISIONS
41. Partnership Contracts. The Managing General Partner may
enter into agreements and contracts on behalf of the Partnership only if they
are in writing and clearly indicate to the other parties that the Partnership
is a general partnership of which the Managing General Partner is a general
partner.
42. Conveyances. Subject to section 18, the Managing General
Partner may sign any deed, mortgage, lease, bill of sale, security agreement,
pledge, contract or other instrument or commitment purporting to convey or
encumber any of the Partnership's Property or any interest therein, whether now
or
25
<PAGE> 27
subsequently owned or leased at any time by the Partnership, and no other
signature is required.
43. Notices. To be effective, a notice required or permitted by
this Agreement must be in writing, or by telegram, telex or telecopy if
promptly confirmed in writing. A notice is given when delivered or, if mailed,
when deposited in a United States postal service letterbox to be sent by
first-class, postage-prepaid, certified mail, with return receipt requested
(whether or not the sender receives the return receipt), and addressed, if to a
Partner, at his registered address listed on EXHIBIT A and, if to the Managing
General Partner or the Partnership, to the attention of such Managing General
Partner at the Partnership's principal business office.
44. Consents. Any consent required by this Agreement may be
given as follows:
(a) by a writing given by the consenting Partner and
received by the Managing General Partner or other appropriate recipient at or
before the occurrence of the action or other thing for which the consent was
solicited, unless the consent is nullified by:
(i) A writing from the consenting Partner that
is received by the Managing General Partner before the occurrence of the action
or other thing for which the consent was solicited; or
(ii) the negative vote by the consenting Partner
at any meeting called for the purpose of considering the action or other thing.
(b) by the affirmative vote of the consenting Partner at
any meeting called for the purpose of considering the action or other thing for
which the Partner's consent was solicited.
45. Meetings. The Managing General Partner may call meetings of
the Partners for any purpose, at any time. The Managing General Partner shall
call a meeting of the Partners within 30 days after he receives from a Majority
in Interest a written request for a meeting, stating the purpose of the
requested meeting and the matters proposed for consideration. Meetings of the
Partners may be held at such time, date and place as the Managing General
Partner designates. The Managing General Partner shall give notice of any
meeting of the Partners not less than ten nor more than 60 days before the date
of the meeting, to each Partner at his registered address listed on EXHIBIT A.
The notice shall state the time, date and place of the meeting, the purpose of
the meeting and the Partner at whose direction or request the meeting is
called. If a meeting is adjourned to another time or
26
<PAGE> 28
place, notice of the adjourned meeting is not required if the time and place of
the adjournment is announced at the called meeting. The presence in person or
by proxy of a Majority in Interest constitutes a quorum at a meeting. Any
notice of a meeting required by this section may be waived in writing at,
before or after the meeting and shall be deemed to be waived by each Partner
who is present in person or by proxy at the meeting. Only those persons who
are Partners at the close of business on the day before the meeting are
entitled to vote at the meeting. Any Partner entitled to vote at a meeting may
authorize any person to act for him by written proxy if a copy of the proxy is
delivered to the Managing General Partner before the commencement of the
meeting. To be effective, a proxy must be signed by the Partner (and, if
applicable, each co-owner) or his duly appointed attorney-in-fact, and no proxy
shall be valid for more than 11 months after its date. A proxy is revocable at
the pleasure of the Partner granting it.
46. Binding Effect; Counterparts. The covenants and agreements
contained in this Agreement are binding on, and inure to the benefit of, the
legal and personal representatives, heirs, successors and permitted assignees
of the parties to this Agreement. The parties may execute this Agreement in
any number of counterparts, each of which will be an original, but all of which
together will constitute one and the same agreement.
47. Choice of Law. This Agreement and the rights and
obligations of the Partners under it are governed by, and construed and
enforced in accordance with, the laws of Florida.
48. Complete Agreement; Modification. This Agreement contains
the final, complete and exclusive expression of the understanding among the
Partners with respect to the Partnership and its purposes and objectives and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them. Except to admit a new or a substitute Partner or to
reflect the withdrawal or Retirement of a Partner, this Agreement and every
provision of it may be modified or amended only by an agreement in writing
signed by or on behalf of all Partners.
49. Evidence of Partnership Interests. The Partnership Interest
of each Partner is evidenced exclusively by a counterpart of this Agreement
(including EXHIBIT A) that has been signed and dated by the Managing General
Partner.
50. Tax Matters Partner. The Managing General Partner or its
designee shall be the "tax matters partner" of the Partnership for federal
income tax purposes. If the Managing General Partner ceases to act as the
Managing General Partner of the Partnership, the successor Managing General
Partner (if any), shall be designated the tax matters partner. Pursuant to
Section 6223(c)(2) of the Code, upon receipt of notice from the Internal
Revenue Service of the beginning of an administrative
27
<PAGE> 29
proceeding with respect to the Partnership, the Managing General Partner, as
the tax matters partner, shall furnish the Internal Revenue Service with the
names, addresses, and Percentage Interests of each of the Partners. The
Managing General Partner agrees not to enter into a settlement agreement
pursuant to Section 6224 of the Code without providing at least 30 days advance
written notice to each Partner. As tax matters partner, the Managing General
Partner shall have absolute discretion regarding whether to seek judicial
review of any administrative determination and, if it determines to seek
judicial review of Internal Revenue Service action pursuant to Section 6226 of
the Code, then the Managing General Partner shall select the judicial forum for
such review. The tax matters partner shall receive no compensation for its
services as such. The Partnership shall bear all third party costs and
expenses incurred by the tax matters partner in performing its duties as such.
Nothing herein shall be construed to restrict the Partnership from engaging an
accounting firm or law firm to assist the tax matters partner in discharging
its duties hereunder.
51. Gender and Number. As used in this Agreement, the masculine
gender includes the feminine and neuter, and the singular includes the plural.
52. Title. Title to any property acquired by the Partnership
shall be taken in the name of the Partnership.
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of each Partner as of the date written beside his name.
General Partner
PAXSON ENTERPRISES, INC.
By /s/ Lowell W. Paxson
---------------------------
Lowell W. Paxson, President
Limited Partner
Paxson Broadcasting of Orlando,
Limited Partnership
By: Paxson Enterprises, Inc.,
General Partner
By: /s/ Lowell W. Paxson
---------------------------
Lowell W. Paxson, President
28
<PAGE> 30
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED TO AND SWORN BEFORE ME, on behalf of Paxson Enterprises,
Inc., a Nevada corporation, as General Partner, by Lowell W. Paxson, its
President, who is personally known to me/has produced
____________________________ as identification and who did/did not take an
oath, this 10th day of March, 1993.
(SEAL)
/s/ Michele Hansen
---------------------------------
Printed/Typed Name:Michele Hansen
Notary Public-State of Florida
Commission Number:
STATE OF FLORIDA
COUNTY OF Pinellas
SUBSCRIBED TO AND SWORN BEFORE ME, by Paxson Enterprises,
Inc., a Nevada corporation, as General Partner of Paxson Broadcasting of
Orlando, Limited Partnership, by Lowell W. Paxson, as Limited Partner, who is
personally known to me/has produced ____________________________ as
identification and who did/did not take an oath, this 10th day of March, 1993.
(SEAL)
/s/ Michele Hansen
---------------------------------
Printed/Typed Name:Michele Hansen
Notary Public-State of Florida
Commission Number:
29
<PAGE> 31
EXHIBIT A
General Partners Contribution Percentage Interest
- -------------------------------------------------------------------------------
Paxson Enterprises, Inc. 5%
18401 U.S. Highway 19 North
Clearwater, Florida 34624
Limited Partners
- ----------------
Paxson Broadcasting of Orlando, 95%
Limited Partnership
18401 U.S. Highway 19 North
Clearwater, Florida 34624
30
<PAGE> 32
AMENDMENT NUMBER 1 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON ORLANDO LICENSE LIMITED PARTNERSHIP
This Amendment Number 1 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Orlando License Limited
Partnership ("Amendment") is effective as of the 29th day of March, 1993, by
and between PAXSON ENTERPRISES, INC., a Nevada corporation, as the General
Partner and PAXSON BROADCASTING OF ORLANDO, LIMITED PARTNERSHIP, a Florida
limited partnership, as a Limited Partner. The parties hereby agree as
follows:
1. Assignment. The definition of "Assignment" in Article I,
Section 1 of the Partnership Agreement is amended in its entirety to read as
follows:
"`Assignment' means a sale, exchange, gift, pledge, transfer
or disposition of any kind whatsoever and, in the case of a
Person that is not an individual, it includes the sale,
exchange, pledge, transfer or disposition of a majority of
either voting control or the equity interests in such Person;
provided, however, that an "Assignment" does not include a
pledge of, or a grant of a security interest in, a Partnership
Interest, Partnership Rights, or the majority of either voting
control or the equity interests in any Person, which pledge or
security interest is given or granted for the purpose of
securing an obligation of the Partnership or any Partner or
any Person owning an equity interest in a Partner, provided
that the giving or grant of such pledge or security interest
is approved by the Managing General Partner."
2. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 18401 U.S. Highway
19 North, Clearwater, Florida 34624."
3. Purposes of Partnership; Authorized Acts. Article II,
subsection 7.A.(a)(i) of the Partnership Agreement is amended to read as
follows:
"acquire, operate, manage and perform all matters necessary
and attendant to the operation of one or more radio stations
in the State of Florida,".
1
<PAGE> 33
4. Power to Guarantee Obligations of Others. Article II,
subsection 7.B. of the Partnership Agreement is amended by redesignating
clauses (g) and (h) as clauses (h) and (i), respectively, and inserting the
following as clause (g):
"(g) guarantee the debts and obligations of any Partner and
secure the same by a mortgage, pledge, security interest or
other liens upon the property of the Partnership, any part
thereof, any interest therein, or any improvements thereto;".
5. Section 49 of the Partnership Agreement, entitled "Evidence of
Partnership Interests," is hereby deleted in its entirety, and Sections 50, 51,
and 52 of the Partnership Agreement are renumbered as Sections 49, 50, and 51
respectively.
6. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 2
on this 29th day of March, 1993.
WITNESSES: GENERAL PARTNER:
PAXSON ENTERPRISES, INC.
/s/ William Watson By: /s/ Lowell W. Paxson
- ------------------------ ------------------------
Its
President
--------------------
/s/ John R. Feore
- ------------------------
LIMITED PARTNER:
PAXSON BROADCASTING OF ORLANDO,
LIMITED PARTNERSHIP, By Paxson
Enterprises, Inc. its General
Partner
/s/ William Watson /s/ Lowell W. Paxson
- ------------------------ --------------------------
Lowell Paxson, President
/s/ John R. Feore
- ------------------------
2
<PAGE> 34
GENERAL PARTNERSHIP INTERESTS ASSIGNMENT AGREEMENT
This is a General Partnership Interests Assignment Agreement
(the "Agreement") dated December 15, 1993 (the "Effective Date"). It is among
Paxson Enterprises, Inc. (the "General Partner Assignor"), Paxson
Communications Corp. (the "First Assignee"), Paxson Communications of Florida,
Inc. (the "General Partner Assignee"), and Lowell L. Paxson (the "Nonassigning
Limited Partner") in respect of the Limited Partnerships listed in Exhibit "A"
(the "Station Partnerships"). It is also among the General Partner Assignee,
the First Assignee, the General Partner Assignee and the Station Partnerships
in their capacities as a limited partner (each a "License Limited Partner") in
their respective Limited Partnerships listed in Exhibit "B" (the "License
Partnerships," and together with the Station Partnerships, the "Partnerships").
Capitalized terms used herein and not ascribed a definition have the meaning
assigned to them by the Partnership Agreement to which the term pertains.
BACKGROUND
The General Partner Assignor and the Nonassigning Limited
Partner are partners in the Station Partnerships. The General Partner Assignor
and the License Limited Partners are the partners in the License Partnerships.
The General Partner Assignor wishes to transfer each of its general partnership
interests in the Station Partnerships and the License Partnerships to the First
Assignee in exchange for certain of its common stock and the First Assignee
wishes to immediately assign such general partnership interests to the General
Partner Assignee in exchange for all of the capital stock of the General
Partner Assignee. The General Partner Assignor and the First Assignee also
wish to have the General Partner Assignee admitted as a Partner and granted
partnership rights in each of the Partnerships. The General Partner Assignee
agrees to accept the assignment of the general partnership interests and to be
admitted as a General Partner in the respective Partnerships pursuant to the
Partnership Agreements identified in Exhibit "A" and "B", respectively (the
"Partnership Agreements"). The Nonassigning Limited Partner as the limited
partner in each of the Station Partnerships and each of the License Limited
Partners as the limited partner in the respective License Partnerships hereby
consent to the assignment of the general partnership interests and admission of
the General Partner Assignee as the general partner in their respective
Partnerships pursuant to the terms of this Agreement and the Partnership
Agreements. Pursuant to Chapter 620, Florida Statutes, the Partnerships will
continue uninterrupted and the assignment of the general partnership interests
will not cause a termination of the Partnerships.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
TERMS
1. Assignment of Partnership Interests. Pursuant to
Section 23 of each of the Partnership Agreements and Section 620.152, Florida
Statutes, the General Partner Assignor assigns all of its general partnership
interests in the Partnerships to the First Assignee. The
1
<PAGE> 35
First Assignee accepts the assignment of all of the general partnership
interests. Pursuant to Section 23 of each of the Partnership Agreements and
Section 620.152, Florida Statutes, the First Assignee assigns all of its
general partnership interests in the Partnerships to the General Partner
Assignee. The General Partner Assignee accepts the assignment of all of the
general partnership interests.
2. Admission of General Partner Assignee and Withdrawal
of General Partner Assignor. On the Effective Date, the General Partner
Assignee is admitted as a general partner under the respective Partnership
Agreement and the General Partner Assignor has withdrawn from each of the
Partnerships.
3. General Partner Assignee's Acceptance of Admission.
By executing this Agreement, the General Partner Assignee accepts and agrees to
be bound by the terms and provisions of the respective Partnership Agreements
and shall become the Managing General Partner of each of the Partnerships. The
parties agree that the General Partner Assignee's execution of this Agreement
shall satisfy the requirement of Sections 23, 24 and 25 of the respective
Partnership Agreements.
4. Limited Partner's Consent. Each of the Nonassigning
Limited Partner and the License Limited Partners consent to the assignment of
the general partnership interest by the General Partner of their respective
Partnership and to the admission of the General Partner Assignee as a general
partner under the respective Partnership Agreements.
5. Continuation of Partnerships. Pursuant to Chapter
620, Florida Statutes, the partners agree that the Partnerships will continue
uninterrupted and the assignment of the general partnership interests will not
cause a termination of any of the Partnerships.
6. Security Interests. Without limiting any of the
foregoing, each of General Partner Assignor, First Assignee, General Partner
Assignee, Nonassigning Limited Partner and the License Limited Partners agree
and acknowledge that (i) General Partner Assignor's general partnership
interests in each of the Partnerships are subject to the lien and security
interest of Banque Paribas, as Agent on behalf of the Lenders (the "Agent"),
under the Loan Documents (as defined in that certain Credit Agreement dated as
of March 30, 1993 by and among Banque Paribas, the Lenders identified therein
and each of the Station Partnerships) and (ii) the assignment of the general
partnership interests in the Partnerships by General Partner Assignor to First
Assignee, and by First Assignee to General Partner Assignee, are made subject
to such continuing lien and security interest of Agent under the Loan
Documents.
7. Applicable Law. This Agreement will be construed,
interpreted, and enforced in accordance with the laws of the State of Florida.
8. Counterparts. This Agreement may be executed in
several counterparts and all counterparts so executed will constitute one
agreement binding on all of the parties, notwithstanding that all of the
parties have not signed the original or the same counterpart.
2
<PAGE> 36
9. Entire Agreement. This Agreement embodies the final,
complete, and exclusive expression of the understanding among the parties and
supersedes any prior or contemporaneous agreement or representation, oral or
written, by any of them.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year stated above.
PAXSON ENTERPRISES, INC., as
General Partner Assignor and as
Withdrawing General Partner of each
Partner
By: /s/ Lowell W. Paxson
---------------------------
Lowell W. Paxson, President
/s/ Lowell W. Paxson
------------------------------
Lowell W. Paxson, Nonassigning
Limited Partner
PAXSON COMMUNICATIONS CORPORATION,
First Assignee
By: /s/ Lowell W. Paxson
---------------------------
Lowell W. Paxson, President
PAXSON COMMUNICATIONS OF FLORIDA,
INC., as General Partner Assignee
and successor General Partner of
each Partnership
By: /s/ Lowell W. Paxson
----------------------------
Lowell W. Paxson, President
3
<PAGE> 37
EXHIBIT "A"
Limited Partnerships
Agreement of Limited Partnership of Paxson Broadcasting of Jacksonville,
Limited Partnership dated June 27, 1991, as amended by Amendment
Number 1 to the Agreement of Limited Partnership of Paxson
Broadcasting of Jacksonville, Limited Partnership dated January 1,
1992, and Amendment Number 2 to the Agreement of Limited Partnership
of Paxson Broadcasting of Jacksonville, Limited Partnership dated
March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Tampa, Limited
Partnership dated June 27, 1991, as amended by Amendment Number 1 to
the Agreement of Limited Partnership of Paxson Broadcasting of Tampa,
dated June 27, 1991, and Amendment Number 2 to the Agreement of
Limited Partnership of Paxson Broadcasting of Tampa, dated April 27,
1992, and Amendment Number 3 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated January 1,
1992, and Amendment Number 4 to the Agreement of Limited Partnership
of Paxson Broadcasting of Tampa, Limited Partnership, dated March 29,
1993.
Agreement of Limited Partnership of Paxson Broadcasting of Miami, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Miami, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Miami, dated March 29, 1993.
Agreement of Limited Partnership of Paxson Broadcasting of Orlando, Limited
Partnership dated November 18, 1991, as amended by Amendment Number 1
to the Agreement of Limited Partnership of Paxson Broadcasting of
Orlando, Limited Partnership, dated January 1, 1992, and Amendment
Number 2 to the Agreement of Limited Partnership of Paxson
Broadcasting of Orlando, Limited Partnership.
4
<PAGE> 38
EXHIBIT "B"
Limited Partnerships
Agreement of Limited Partnership of Jacksonville License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Jacksonville, Licensed
Limited Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Tampa License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Tampa, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Miami License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Miami, Licensed Limited
Partnership dated March 29, 1993.
Agreement of Limited Partnership of Paxson Orlando License Limited Partnership
dated as of March 10, 1993, as amended by Amendment Number 1 to the
Agreement of Limited Partnership of Paxson Orlando, Licensed Limited
Partnership dated March 29, 1993.
5
<PAGE> 39
AMENDMENT NUMBER 2 TO THE
AGREEMENT OF LIMITED PARTNERSHIP OF
PAXSON ORLANDO LICENSE LIMITED PARTNERSHIP
This Amendment Number 2 ("Amendment") to the Agreement of Limited
Partnership (the "Partnership Agreement") of Paxson Orlando License Limited
Partnership ("Amendment") is effective as of the 19th day of September, 1995,
by and between PAXSON COMMUNICATIONS OF FLORIDA, INC., a Florida corporation,
as the General Partner and PAXSON BROADCASTING OF ORLANDO, LIMITED PARTNERSHIP,
as a Limited Partner. The parties hereby agree as follows:
1. Partnership Office. The fifth sentence of Article II,
Section 5 of the Partnership Agreement is amended to read as follows: "The
principal business office of the Partnership is located at 601 Clearwater Park
Road, West Palm Beach, Florida 33401."
2. Ratification and Confirmation. The Partnership Agreement, as
hereby amended, is ratified and confirmed in all other respects.
IN WITNESS WHEREOF, the parties have executed this Amendment Number 2
on this 19th day of September, 1995.
WITNESSES: GENERAL PARTNER:
PAXSON COMMUNICATIONS OF FLORIDA,
INC.
/s/ Lorie Closson By: /s/ William L. Watson
- -------------------------- ------------------------
Its
Secretary
--------------------
/s/ Desire Malky
- --------------------------
LIMITED PARTNER:
PAXSON BROADCASTING OF ORLANDO,
LIMITED PARTNERSHIP
/s/ Lorie Closson By: /s/ William L. Watson
- -------------------------- -------------------------------
The Secretary of Paxson
Communications of Florida, Inc., its
general partner.
1
<PAGE> 1
EXHIBIT 3.19.1
<PAGE> 2
EXHIBIT 3.19.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF ATLANTA - 14, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
ATLANTA - 14, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF ATLANTA - 14, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 23 day of March, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF GEORGIA - 14, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U. S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
4
<PAGE> 1
EXHIBIT 3.20.1
<PAGE> 2
EXHIBIT 3.20.1
ARTICLES OF INCORPORATION
OF
PAXSON ATLANTA LICENSE, INC.
The undersigned, acting as incorporator of PAXSON ATLANTA LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON ATLANTA LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 31 day of May, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON ATLANTA LICENSE, INC., desiring to organize under the laws
of the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 18401 U.S. Highway 19, North, City of Clearwater,
State of Florida, has named William L. Watson, as its agent to accept service
of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
4
<PAGE> 1
EXHIBIT 3.21.1
<PAGE> 2
EXHIBIT 3.21.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF BOSTON-60, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
BOSTON-60, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF BOSTON-60, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 23 day of November, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON COMMUNICATIONS OF BOSTON-60, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U. S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.22.1
<PAGE> 2
EXHIBIT 3.22.1
ARTICLES OF INCORPORATION
OF
PAXSON BOSTON LICENSE, INC.
The undersigned, acting as incorporator of PAXSON BOSTON LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON BOSTON LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 23 day of November, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON BOSTON LICENSE, INC., desiring to organize under the laws
of the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 18401 U. S. Highway 19, North, City of
Clearwater, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.23.1
<PAGE> 2
EXHIBIT 3.23.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF DALLAS-68, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
DALLAS-68, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF DALLAS-68, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this day of November 21, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON COMMUNICATIONS OF DALLAS-68, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.24.1
<PAGE> 2
EXHIBIT 3.24.1
ARTICLES OF INCORPORATION
OF
PAXSON DALLAS LICENSE, INC.
The undersigned, acting as incorporator of PAXSON DALLAS LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON DALLAS LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
<PAGE> 3
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
---- -------
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
---- -------
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 23 day of November, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
2
<PAGE> 4
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON DALLAS LICENSE, INC., desiring to organize under the laws
of the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 18401 U. S. Highway 19, North, City of
Clearwater, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.25.1
<PAGE> 2
EXHIBIT 3.25.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF NEW LONDON-26, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
NEW LONDON-26, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF NEW LONDON-26, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 23 day of November, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF NEW LONDON-26, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.26.1
<PAGE> 2
EXHIBIT 3.26.1
ARTICLES OF INCORPORATION
OF
PAXSON NEW LONDON LICENSE, INC.
The undersigned, acting as incorporator of PAXSON NEW LONDON LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON NEW LONDON LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 23 day of November, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON NEW LONDON LICENSE, INC., desiring to organize under the
laws of the State of Florida with its initial registered office, as indicated
in the Articles of Incorporation, at 18401 U.S. Highway 19, North, City of
Clearwater, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.27.1
<PAGE> 2
EXHIBIT 3.27.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF PHILADELPHIA-61, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
PHILADELPHIA-61, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF PHILADELPHIA-61, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these Articles
of Incorporation this day of November __, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON COMMUNICATIONS OF PHILADELPHIA-61, INC., desiring to
organize under the laws of the State of Florida with its initial registered
office, as indicated in the Articles of Incorporation, at 18401 U.S. Highway
19, North, City of Clearwater, State of Florida, has named William L. Watson,
as its agent to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.28.1
<PAGE> 2
EXHIBIT 3.28.1
ARTICLES OF INCORPORATION
OF
PAXSON PHILADELPHIA LICENSE, INC.
The undersigned, acting as incorporator of PAXSON PHILADELPHIA
LICENSE, INC., under the Florida Business Corporation Act, adopts the following
Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON PHILADELPHIA LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this day of November __, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON PHILADELPHIA LICENSE, INC., desiring to organize under the
laws of the State of Florida with its initial registered office, as indicated
in the Articles of Incorporation, at 18401 U.S. Highway 19, North, City of
Clearwater, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.29.1
<PAGE> 2
EXHIBIT 3.29.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF MIAMI-35, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
MIAMI-35, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF MIAMI-35, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this day of February 9, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON COMMUNICATIONS OF MIAMI-35, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
-4-
<PAGE> 1
EXHIBIT 3.30.1
<PAGE> 2
EXHIBIT 3.30.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF SAN JOSE-65, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
SAN JOSE-65, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF SAN JOSE-65, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
-2-
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 23 day of November, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON COMMUNICATIONS OF SAN JOSE-65, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
-4-
<PAGE> 1
EXHIBIT 3.31.1
<PAGE> 2
EXHIBIT 3.31.1
ARTICLES OF INCORPORATION
OF
PAXSON SAN JOSE LICENSE, INC.
The undersigned, acting as incorporator of PAXSON SAN JOSE LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON SAN JOSE LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
2
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 23 day of November, 1994.
/s/ William L. Watson
--------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON SAN JOSE LICENSE, INC., desiring to organize under the laws of
the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 18401 U. S. Highway 19, North, City of
Clearwater, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.32.1
<PAGE> 2
EXHIBIT 3.32.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF TAMPA-66, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
TAMPA-66, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF TAMPA-66, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this day of February 9, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON COMMUNICATIONS OF TAMPA-66, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
-4-
<PAGE> 1
EXHIBIT 3.33.1
<PAGE> 2
EXHIBIT 3.33.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF WEST PALM BEACH - 25, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
WEST PALM BEACH - 25, INC., under the Florida Business Corporation Act, adopts
the following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF WEST PALM BEACH - 25, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
-2-
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this day of March 23, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON COMMUNICATIONS OF WEST PALM BEACH - 25, INC., desiring to
organize under the laws of the State of Florida with its initial registered
office, as indicated in the Articles of Incorporation, at 18401 U.S. Highway
19, North, City of Clearwater, State of Florida, has named William L. Watson,
as its agent to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
-4-
<PAGE> 1
EXHIBIT 3.34.1
<PAGE> 2
EXHIBIT 3.34.1
ARTICLES OF INCORPORATION
OF
PAXSON WEST PALM BEACH LICENSE, INC.
The undersigned, acting as incorporator of PAXSON WEST PALM BEACH
LICENSE, INC., under the Florida Business Corporation Act, adopts the following
Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON WEST PALM BEACH LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
-2-
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 6th day of May, 1994.
/s/ William L. Watson
--------------------------------
William L. Watson, Incorporator
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON WEST PALM BEACH LICENSE, INC., desiring to organize under
the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
-4-
<PAGE> 1
EXHIBIT 3.35.1
<PAGE> 2
EXHIBIT 3.35.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF LOS ANGELES-30, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
LOS ANGELES-30, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF LOS ANGELES-30, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
-2-
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 16 day of December, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF LOS ANGELES-30, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
-4-
<PAGE> 1
EXHIBIT 3.36.1
<PAGE> 2
EXHIBIT 3.36.1
ARTICLES OF INCORPORATION
OF
PAXSON LOS ANGELES LICENSE, INC.
The undersigned, acting as incorporator of PAXSON LOS ANGELES LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON LOS ANGELES LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
-2-
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 16 day of December, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON LOS ANGELES LICENSE, INC., desiring to organize under the laws
of the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 18401 U.S. Highway 19, North, City of
Clearwater, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
-4-
<PAGE> 1
EXHIBIT 3.37.1
<PAGE> 2
EXHIBIT 3.37.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF MINNEAPOLIS-41, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
MINNEAPOLIS-41, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF MINNEAPOLIS-41, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
-1-
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
-2-
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 16 day of December, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
-3-
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF MINNEAPOLIS-41, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
-4-
<PAGE> 1
EXHIBIT 3.38.1
<PAGE> 2
EXHIBIT 3.38.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF MINNEAPOLIS-45, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
MINNEAPOLIS-45, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF MINNEAPOLIS-45, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 16 day of December, 1994.
/s/ William L. Watson
----------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF MINNEAPOLIS-45, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 6
ARTICLES OF AMENDMENT NO. 1
OF THE ARTICLES OF INCORPORATION OF
PAXSON COMMUNICATIONS OF MINNEAPOLIS-45, INC.
Pursuant to Section 607.1002 and 607.1006 of the Florida Business
Corporation Act, the Articles of Incorporation of Paxson Communications of
Minneapolis-45, Inc. (the "Corporation"), are hereby amended according to these
Articles of Amendment:
FIRST: The name of the Corporation is Paxson Communications of
Minneapolis-45, Inc.
SECOND: Article I of the Articles of Incorporation is amended in its
entirety to read as follows:
"The name of the Corporation is Paxson Communications of St. Louis, Inc."
THIRD: The foregoing amendment was adopted by written consent of the
sole shareholder of the Corporation, in accordance with Sections 607.1003(6)
and 607.0704 of the Florida Statutes, on March 28, 1995 constituting a
sufficient number of votes to approve the amendment.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has
executed this instrument this 28th day of March, 1995.
By: /s/ Anthony L. Morrison
--------------------------------------
Its: Assistant Secretary
-------------------------------------
<PAGE> 1
EXHIBIT 3.39.1
<PAGE> 2
EXHIBIT 3.39.1
ARTICLES OF INCORPORATION
OF
PAXSON MINNEAPOLIS LICENSE, INC.
The undersigned, acting as incorporator of PAXSON MINNEAPOLIS LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON MINNEAPOLIS LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his
rights under Section 607.0201, Florida Statues, to constitute a corporation,
and he assigns to those persons designated by the board of directors any rights
he may have as incorporator to acquire any of the capital stock of this
corporation, this assignment becoming effective on the date corporate existence
begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repel bylaws shall be vested in
the board of directors and shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal
any provision in these Articles of Incorporation in the manner prescribed by
law, and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a corporation
under the laws of the State of Florida, has executed these Articles of
Incorporation this 16 day of December, 1994.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON MINNEAPOLIS LICENSE, INC., desiring to organize under the
laws of the State of Florida with its initial registered office, as indicated
in the Articles of Incorporation, at 18401 U.S. Highway 19, North, City of
Clearwater, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGEMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.40.1
<PAGE> 2
EXHIBIT 3.40.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF COOKEVILLE, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
COOKEVILLE, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF COOKEVILLE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34627
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 26 day of January, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF COOKEVILLE, INC., desiring to organize under
the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.41.1
<PAGE> 2
EXHIBIT 3.41.1
ARTICLES OF INCORPORATION
OF
PAXSON COOKEVILLE LICENSE, INC.
The undersigned, acting as incorporator of PAXSON COOKEVILLE LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COOKEVILLE LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is Anthony L. Morrison.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
Anthony L. Morrison 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his
rights under Section 607.0201, Florida Statues, to constitute a corporation,
and he assigns to those persons designated by the board of directors any rights
he may have as incorporator to acquire any of the capital stock of this
corporation, this assignment becoming effective on the date corporate existence
begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repel bylaws shall be vested in
the board of directors and shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal
any provision in these Articles of Incorporation in the manner prescribed by
law, and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a corporation
under the laws of the State of Florida, has executed these Articles of
Incorporation this 29 day of March, 1995.
/s/ Anthony L. Morrison
---------------------------------
Anthony L. Morrison, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is
submitted:
That PAXSON COOKEVILLE LICENSE, INC., desiring to organize under the
laws of the State of Florida with its initial registered office, as indicated
in the Articles of Incorporation, at 18401 U.S. Highway 19, North, City of
Clearwater, State of Florida, has named Anthony L. Morrison, as its agent to
accept service of process within this state.
ACKNOWLEDGEMENT:
Having been named to accept service of process for the corporation
named above, at the place designated in this certificate, I agree to act in
that capacity, to comply with the provisions of the Florida Business
Corporation Act, and am familiar with, and accept, the obligations of that
position.
/s/ Anthony L. Morrison
-------------------------------------
Anthony L. Morrison, Registered Agent
<PAGE> 1
EXHIBIT 3.42.1
<PAGE> 2
EXHIBIT 3.42.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF FT. PIERCE-34, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
FT. PIERCE-34, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF FT. PIERCE-34, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is Anthony L. Morrison.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
Anthony L. Morrison 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 29 day of March, 1995.
/s/ Anthony L. Morrison
---------------------------------
Anthony L. Morrison, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF FT. PIERCE-34, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named Anthony L. Morrison, as its
agent to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ Anthony L. Morrison
-------------------------------------
Anthony L. Morrison, Registered Agent
<PAGE> 1
EXHIBIT 3.43.1
<PAGE> 2
EXHIBIT 3.43.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF ORLANDO-56, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
ORLANDO-56, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF ORLANDO-56, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34627
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 9 day of January, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF ORLANDO-56, INC., desiring to organize under
the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.44.1
<PAGE> 2
EXHIBIT 3.44.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF HOUSTON-49, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
HOUSTON-49, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF HOUSTON-49, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34627
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 20 day of January, 1995.
/s/ William L. Watson
---------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF HOUSTON-49, INC., desiring to organize under
the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-------------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.45.1
<PAGE> 2
EXHIBIT 3.45.1
ARTICLES OF INCORPORATION
OF
PAXSON HOUSTON LICENSE, INC.
The undersigned, acting as incorporator of PAXSON HOUSTON LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON HOUSTON LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 20 day of January, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON HOUSTON LICENSE, INC., desiring to organize under the laws of
the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 18401 U.S. Highway 19, North, City of
Clearwater, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-------------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.46.1
<PAGE> 2
EXHIBIT 3.46.1
CERTIFICATE OF INCORPORATION
OF
THE INFOMALL TV NETWORK, INC.
The undersigned, for the purpose of organizing a corporation, under
the provisions and subject to the requirements of the Delaware General
Corporation Law, hereby certifies that:
FIRST: The name of the corporation (hereinafter called the "Corporation") is
THE INFOMALL TV NETWORK, INC.
SECOND: The address, including street, number, city, and county, of
the registered office of the Corporation in the State of Delaware is 1013
Centre Road, City of Wilmington, County of New Castle; and the name of the
registered agent of the Corporation in the State of Delaware at such address
is The Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares of stock that the Corporation shall
have authority to issue is 1,000 shares of common stock with a par value of
$.01 per share.
FIFTH: The name and the mailing address of the incorporator are as
follows:
NAME MAILING ADDRESS
William L. Watson 18401 U.S. Highway 19 N.
Clearwater, FL 34624
SIXTH: The power of the incorporator shall terminate upon the filing
of this certificate of incorporation. The name and mailing address of the
person who shall serve as director of the Corporation until the first annual
meeting of stockholders is as follows:
1
<PAGE> 3
NAME MAILING ADDRESS
Lowell W. Paxson 18401 U.S. Highway 19 N.
Clearwater, FL 34624
The number of directors may be increased or decreased from time to time as
provided in the bylaws.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
EIGHTH: No director, officer, or agent of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as either a director, an officer, or an agent,
except for liability (i) for any breach of duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director, officer, or agent derived any improper
personal benefit. If the Delaware General Corporation Law is amended after the
adoption of this Article EIGHTH to authorize corporate action further
eliminating or limiting the personal liability of directors, officers, or
agents, then the liabilities shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director, an officer, or an agent of the Corporation surviving
at the time of such repeal or modification.
<PAGE> 4
NINTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and
all rights at any time conferred upon the stockholders of the Corporation by
this certificate of incorporation are granted subject to the provisions of this
Article NINE.
Signed on January 19, 1995.
/s/ William L. Watson
-----------------------------------
William L. Watson, Incorporator
-3-
<PAGE> 1
EXHIBIT 3.46.2
<PAGE> 2
EXHIBIT 3.46.2
BYLAWS
OF
THE INFOMALL TV NETWORK, INC.
ARTICLE I
Name of Corporation
Section 1: This corporation shall be known as THE INFOMALL TV NETWORK, INC.
ARTICLE II
Stockholders
Section 1. Annual Meetings: The annual meeting of the stockholders shall be
held in the month of April at a date and time to be specified by the Board of
Directors. Said meeting shall be for the purpose of electing directors for the
ensuing year and for the transaction of such other business as may come before
the meeting. If the annual meeting shall not be held by oversight or
otherwise, the Board of Directors shall cause a special meeting to be held as
soon thereafter as possible.
Section 2. Special Meetings: Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by law, may be called by the
Chairman, President, by the Board of Directors, or by written request of the
holders of not less than one-half of all the outstanding shares of the
corporation entitled to vote at the meeting.
Section 3. Place of Meeting: Meetings of shareholders may be held either
within or outside the State of Delaware.
Section 4. Notice of Meeting: Written notice stating the site, date and hour
of the meeting and, in case of a special meeting, the purposes for which the
meeting is called, shall be delivered not less than ten days nor more than
sixty days before the date of the meeting, either personally or by first-class
mail, at the direction of the Chairman, President, the Secretary, or the
officer or person calling the meeting, to each stockholder entitled to vote at
such meeting. If mailed, such notice shall be deemed delivered when deposited
in the United States mail, postage prepaid, addressed to the stockholder at his
address as it appears on the stock transfer books of the corporation.
Section 5. Record Date: For the purpose of determining stockholders entitled
to vote at any meeting or entitled to receive payment of any dividend, or in
order to make a determination of stockholders for any other proper purpose, the
Board of Directors may fix in advance a date as the record date for any such
determination of stockholders, such date in any case
-1-
<PAGE> 3
to be not more than sixty days and, in case of a meeting of stockholders, not
less than ten days prior to the date on which the particular action requiring
such determination of stockholders is to be taken. If no record date is fixed
for the determination of stockholders entitled to notice or entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring such dividend
is adopted, as the case may be, shall be the record date for such determination
of stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
Section 6. Shareholder's List: The officer having charge of the stock ledger
of the corporation shall prepare, at least ten days before every stockholders
meeting, a complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of, and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination by any stockholder for a period of ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which shall
be specified in the notice of meeting or at the place where the meeting is to
be held. The list shall also be produced and kept at the time and place of the
meeting during the whole meeting thereof, and may be inspected by any present
stockholder.
Section 7. Shareholder Quorum and Voting: A majority of the outstanding
shares of the corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of stockholders. If less than a
majority of the outstanding shares are represented at a meeting, a majority of
the shares so represented may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have been transacted
at the meeting as originally noticed. The stockholders present at a duly
organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
Section 8. Shareholders' Proxies: At all meetings of stockholders, a
stockholder may vote by proxy which shall be executed either in writing or
electronic transmission in accordance with Section 212(2) of the Delaware
General Corporation Law, by the stockholder or by his duly authorized attorney
in fact, or his authorized officer, director, or employee. Such proxy, or
facsimile thereof, shall be filed with the Secretary of the corporation before
or at the time of the meeting. No proxy shall be voted or acted upon after
three years from the date of its execution, unless otherwise provided in the
proxy.
Section 9. Voting of Shares: Each outstanding share otherwise entitled to
vote shall be entitled to one vote upon each matter submitted to a vote at a
meeting of stockholders. A majority vote of those shares present and voting at
a duly organized meeting shall suffice to defeat or enact any proposal unless
the laws of the State of Delaware require a greater-than-majority vote, in
which event the higher vote shall be required for the action to constitute the
action of the corporation.
Section 10. Voting by Fiduciary: Shares held by an administrator, executor,
guardian or conservator may be voted by him, either in person or by proxy,
without the transfer of such
- 2 -
<PAGE> 4
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without transfer of such shares into his name. Shares
standing in the name of a receiver may be voted by such receiver, and shares
held by or under the control of a receiver may be voted by such receiver
without the transfer thereof into his name if authority to do so is contained
in an appropriate order of the court by which such receiver was appointed.
A stockholder whose shares are pledged shall be entitled to vote such shares
until the shares are transferred into the name of the pledgee, and thereafter
the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at a meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 11. Action of Shareholders Without a Meeting: An action required to
be taken at a meeting of the stockholders, or any other action which may be
taken at a meeting of the stockholders, may be taken without a meeting, if a
consent in writing, setting forth the action so taken, shall be signed by a
majority of the stockholders entitled to vote with respect to the subject
matter thereof, unless a greater-than-majority vote would be required at a duly
organized meeting, in which event said greater-than-majority stockholder
approval must be obtained. Such consent shall be filed with the minutes of the
corporation. In the event that action is taken by less than unanimous written
consent, prompt notice of the action taken shall be given to those stockholders
who have not consented in writing.
ARTICLE III
Board of Directors
Section 1. Functions: The business and affairs of the corporation shall be
managed by its Board of Directors.
Section 2. Number of Directors: As provided in the Certificate of
Incorporation, the Board of Directors shall initially consist of one person,
but may be increased or diminished by resolution of the Board of Directors or
shareholders. The directors shall hold office until the next annual meeting of
stockholders and until their successors shall have been elected and qualified.
Directors need not be stockholders of the corporation.
Section 3. Election: Directors shall be elected at an annual or special
stockholders' meeting by those stockholders present and entitled to vote, a
plurality of the vote being cast being required to elect. Each stockholder
shall be entitled to one vote for each share of stock owned. If there is but
one nominee for any office, it shall be in order to move that the secretary
cast the elective ballot to elect the nominee.
Section 4. Regular Meetings: A regular meeting of the Board of Directors
shall be held without notice, other than this Bylaw immediately after, and at
the same place as, the annual meeting of stockholders. The Board of Directors
may provide, by resolution, the
- 3 -
<PAGE> 5
day, time and place for the holding of additional regular meetings without
other notice than such resolution. The Secretary of the corporation shall
serve as Secretary for the Board of Directors and shall issue notices for all
meetings as required by the Bylaws; shall keep a record of the minutes of the
proceedings of the meetings of directors; and shall perform such other duties
as may be properly required of him by the Board of Directors.
Section 5. Special Meetings: Special meetings of the Board of Directors may
be called by or at the request of the Chairman, President, or by a majority of
the directors. The person or persons authorized to call special meetings of
the Board of Directors may fix the place for holding any special meeting of the
Board of Directors called by them.
Section 6. Notice: Notice of any special meeting shall be given at least two
days prior thereto by written notice delivered personally or mailed to each
director at his business address, or by facsimile transmission or telegram. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail so addressed, with postage prepaid. If notice be given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of
any business at the meeting.
Section 7. Quorum and Voting: A majority of the number of directors fixed
according to Section 2 of this Article IV shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but if less
than such majority is present at a meeting, a majority of the directors present
may adjourn the meeting from time to time without further notice. The act of
the majority of the Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors unless the laws of the State of
Delaware require a greater-than-majority vote, in which case such greater vote
shall be required for the act to be that of the Board of Directors.
Section 8. Vacancy: Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining directors, even
though the remaining directors are less than a quorum of the Board of
Directors. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. Any directorship to be filled by
reason of an increase in the number of directors shall be filled by either the
board of directors or by the stockholders at an annual or special meeting
called for that purpose.
Section 9. Compensation: By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation.
Section 10. Presumption of Assent: A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
he requests that his objection be entered in the minutes of the meeting or
unless he shall file his written dissent to such
- 4 -
<PAGE> 6
action with the Secretary of the meeting before the adjournment thereof or
shall express such dissent by written notice sent by registered mail to the
Secretary of the corporation within one day after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 11. Directors Action Without a Meeting: Any action that may be taken
at a meeting of the Board of Directors, may be taken without a meeting if a
written consent thereto is signed by all the members of the Board. Such
written consent shall be filed with the minutes of proceedings of the Board.
Section 12. Meeting Participation: Any meeting of the Board of Directors may
be held by conference telephone, or similar communication equipment, if all
persons participating in the meeting can hear each other, with minutes thereof
duly prepared and entered into the minutes of the corporation.
ARTICLE IV
Officers
Section 1. Officers: The officers of the corporation shall be a President,
one or more Vice Presidents, a Secretary, a Treasurer, and may include a
Chairman, each of whom shall be appointed by the Board of Directors. Other
officers and assistant officers may be authorized and appointed by the Board of
Directors. Any two or more offices may be held by the same person.
Section 2. Election and Term: The officers of the corporation shall be
appointed by the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of the stockholders. Each officer
shall hold office until his successor shall have been duly elected and
qualified, until his death, or until he shall resign or shall be removed as
provided below.
Section 3. Removal: Any officer or agent elected or appointed by the Board of
Directors may be removed by the Board of Directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancy: A vacancy in any office because of death, resignation,
removal, disqualification or otherwise, may be filled by majority vote of the
remaining members of the Board of Directors.
Section 5. Chairman of the Board. If elected, the chairman of the board,
shall be the chief executive officer, subject to the directions of the board of
directors, is responsible for the general and active management of the business
and affairs of the Corporation, has the power to sign certificates of stock,
bonds, deeds, and contracts for the Corporation, and shall preside at all
meetings of the shareholders.
- 5 -
<PAGE> 7
Section 6. President: In the absence of the chairman of the board the
president shall preside at all meetings of the directors and stockholders,
shall have general charge and control over the affairs of the corporation
subject to the direction of the Board of Directors, shall sign or countersign
all certificates, contracts and other instruments of the corporation as
authorized by the Board of Directors and shall perform such other duties as are
incident to his office or are required of him by the Board of Directors.
Section 7. Vice President: The most senior Vice-President shall exercise the
functions of the President, in the Chairman's and President's absence. The
Vice Presidents shall have such powers and duties as may be assigned to them
from time to time by the Board of Directors, the Chairman, or the President.
Section 8. Secretary: The Secretary shall issue notices for all meetings as
required by the Bylaws, shall keep a record of the minutes of the proceedings
of the meetings of stockholders and directors, shall have charge of the seal
and of the corporate books, and shall make such reports and perform such other
duties as are incident to his office, or properly required of him by the Board
of Directors, the Chairman or the President.
Section 9. Treasurer: The Treasurer shall have the custody of all monies and
securities of the corporation and shall keep regular books of account. He
shall disburse the funds of the corporation in payment of the just demands
against the corporation, or as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements, and shall render to the Board of
Directors, from time to time as may be required of him, an account of all his
transactions as Treasurer and of the financial condition of the corporation.
He shall perform all duties incident to this office or which are required of
him by the Board of Directors, the Chairman or the President.
ARTICLE V
Certificates Representing Shares
Section 1. Issues: Certificates representing shares of the corporation shall
be in such form as shall be determined by the Board of Directors. Such
certificates shall be signed by the Chairman or the President and by the
Secretary. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except in case of a
lost, destroyed or mutilated certificate, in which case a replacement
certificate may be issued therefor upon such terms and indemnity to the
corporation as the Board of Directors may prescribe.
Section 2. Transfers: Transfer of shares of the corporation shall be made
only on the stock transfer books of the corporation by the holder of record
thereof of by his legal representative, who shall furnish proper evidence of
authority to transfer, or by his attorney authorized by power of attorney duly
executed and filed with the Secretary of the corporation, and on
- 6 -
<PAGE> 8
surrender for the cancellation of the certificate for such shares. The person
in whose name shares stand on the books of the corporation shall be deemed by
the corporation to be the owner thereof for all purposes, unless otherwise
notified by such person in writing.
ARTICLE VI
Seal
Section 1. Seal: The corporation may or may not have a corporate seal, as may
from time to time be determined by resolution of the Board of Directors. If a
corporate seal is adopted, it shall have inscribed thereon the name of the
corporation and the words "Corporate Seal" and "Delaware." The seal may be
used by causing it or a facsimile thereof to be impressed or affixed or in any
manner reproduced.
ARTICLE VII
Amendments
Section 1. Shareholders: These Bylaws may be amended by a majority vote of
all the stock issued and outstanding and entitled to vote at any annual or
special meeting of the stockholders, provided notice of intention to amend
shall have been contained in the notice of the meeting.
Section 2. Directors: The Board of Directors, by a majority vote of the
entire Board at any meeting, may amend these Bylaws, including Bylaws adopted
by the stockholders, unless such amendment specifically provides that it is not
subject to repeal by the Directors.
- 7 -
<PAGE> 1
EXHIBIT 3.47.1
<PAGE> 2
EXHIBIT 3.47.1
ARTICLES OF INCORPORATION
OF
PAXSON ST. LOUIS LICENSE, INC.
The undersigned, acting as incorporator of PAXSON ST. LOUIS LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON ST. LOUIS LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
- 1 -
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
- 2 -
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 17th day of April, 1995.
/s/ William L. Watson
----------------------------------
William L. Watson, Incorporator
- 3 -
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON ST. LOUIS LICENSE, INC., desiring to organize under the laws
of the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 18401 U.S. Highway 19, North, City of
Clearwater, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-------------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.48.1
<PAGE> 2
EXHIBIT 3.48.1
CERTIFICATE OF INCORPORATION
OF
INFOMALL CABLE NETWORK, INC.
The undersigned, for the purpose of organizing a corporation, under
the provisions and subject to the requirements of the Delaware General
Corporation Law, hereby certifies that:
FIRST: The name of the corporation (hereinafter called the "Corporation") is
INFOMALL CABLE NETWORK, INC.
SECOND: The address, including street, number, city, and county, of
the registered office of the Corporation in the State of Delaware is 1013
Centre Road, City of Wilmington, County of New Castle; and the name of the
registered agent of the Corporation in the State of Delaware at such address
is The Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares of stock that the Corporation shall
have authority to issue is 1,000 shares of common stock with a par value of
$.01 per share.
FIFTH: The name and the mailing address of the incorporator are as
follows:
NAME MAILING ADDRESS
William L. Watson 18401 U.S. Highway 19 N.
Clearwater, FL 34624
SIXTH: The power of the incorporator shall terminate upon the filing
of this certificate of incorporation. The name and mailing address of the
person who shall serve as director of the Corporation until the first annual
meeting of stockholders is as follows:
NAME MAILING ADDRESS
Lowell W. Paxson 18401 U.S. Highway 19 N.
Clearwater, FL 34624
- 1 -
<PAGE> 3
The number of directors may be increased or decreased from time to time as
provided in the bylaws.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
EIGHTH: No director, officer, or agent of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as either a director, an officer, or an agent,
except for liability (i) for any breach of duty of loyalty to the Corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director, officer, or agent derived any improper
personal benefit. If the Delaware General Corporation Law is amended after the
adoption of this Article EIGHTH to authorize corporate action further
eliminating or limiting the personal liability of directors, officers, or
agents, then the liabilities shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director, an officer, or an agent of the Corporation surviving
at the time of such repeal or modification.
NINTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and
all rights at any time conferred upon the stockholders of the Corporation by
this certificate of incorporation are granted subject to the provisions of this
Article NINE.
Signed on April 17, 1995.
/s/ William L. Watson
--------------------------------
William L. Watson, Incorporator
<PAGE> 1
EXHIBIT 3.49.1
<PAGE> 2
EXHIBIT 3.49.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF CLEVELAND-67, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
CLEVELAND-67, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF CLEVELAND-67, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
- 1 -
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
- 2 -
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 8th day of May, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
- 3 -
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF CLEVELAND-67, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
-4-
<PAGE> 1
EXHIBIT 3.50.1
<PAGE> 2
EXHIBIT 3.50.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF WASHINGTON-60, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
WASHINGTON-60, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF WASHINGTON-60, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
2
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 10 day of May, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF WASHINGTON-60, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.51.1
<PAGE> 2
EXHIBIT 3.51.1
ARTICLES OF INCORPORATION
OF
PAXSON WASHINGTON LICENSE, INC.
The undersigned, acting as incorporator of PAXSON WASHINGTON LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON WASHINGTON LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
2
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 10 day of May, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON WASHINGTON LICENSE, INC., desiring to organize under the laws
of the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 18401 U.S. Highway 19, North, City of
Clearwater, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.52.1
<PAGE> 2
EXHIBIT 3.52.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF PHOENIX-13, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
PHOENIX-13, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF PHOENIX-13, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
2
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 11 day of May, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF PHOENIX-13, INC., desiring to organize under
the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 18401 U.S. Highway 19, North,
City of Clearwater, State of Florida, has named William L. Watson, as its agent
to accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.53.1
<PAGE> 2
EXHIBIT 3.53.1
ARTICLES OF INCORPORATION
OF
PAXSON PHOENIX LICENSE, INC.
The undersigned, acting as incorporator of PAXSON PHOENIX LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON PHOENIX LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
18401 U.S. Highway 19, North
Clearwater, Florida 34624
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 18401 U.S. Highway 19 North, Clearwater, Florida 34624, and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 700 Spottis Woode Lane
Clearwater, Florida 34624
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 18401 U.S. Highway 19, North
Clearwater, Florida 34624
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
2
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 11 day of May, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON PHOENIX LICENSE, INC., desiring to organize under the laws of
the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 18401 U.S. Highway 19, North, City of
Clearwater, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.54.1
<PAGE> 2
EXHIBIT 3.54.1
ARTICLES OF INCORPORATION
OF
INFOMALL LOS ANGELES, INC.
The undersigned, acting as incorporator of INFOMALL LOS ANGELES, INC.,
under the Florida Business Corporation Act, adopts the following Articles of
Incorporation.
ARTICLE I. NAME
The name of the corporation is:
INFOMALL LOS ANGELES, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of execution of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 601 Clearwater Park Road, West Palm Beach, Florida 33401, and the name of
the corporation's initial registered agent at that address is Anthony L.
Morrison.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 601 Clearwater Park Road West
Palm Beach, Florida 33401
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
Anthony Morrison 601 Clearwater Park Road West
Palm Beach, Florida 33401
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
2
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this day of July, 1995.
----
/s/ Anthony L. Morrison
------------------------------------------
Anthony L. Morrison, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That INFOMALL LOS ANGELES, INC., desiring to organize under the laws of
the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 601 Clearwater Park Road, City of West Palm
Beach, State of Florida, has named Anthony L. Morrison, as its agent to accept
service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ Anthony L. Morrison
-------------------------------------
Anthony L. Morrison, Registered Agent
<PAGE> 1
EXHIBIT 3.55.1
<PAGE> 2
EXHIBIT 3.55.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF MILWAUKEE-55, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
MILWAUKEE-55, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF MILWAUKEE-55,INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
- 1 -
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 601 Clearwater Park Road, West Palm Beach, Florida 33401 and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 601 Clearwater Park Road West
Palm Beach, Florida 33401
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 601 Clearwater Park Road West
Palm Beach, Florida 33401
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
- 2 -
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 9 day of August, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
- 3 -
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF MILWAUKEE-55, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 601 Clearwater Park Road, City
West Palm Beach, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
------------------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.56.1
<PAGE> 2
EXHIBIT 3.56.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF DENVER-59, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
DENVER-59, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF DENVER-59,INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
- 1 -
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 601 Clearwater Park Road, West Palm Beach, Florida 33401 and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 601 Clearwater Park Road West
Palm Beach, Florida 33401
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 601 Clearwater Park Road West
Palm Beach, Florida 33401
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders
- 2 -
<PAGE> 4
if the shareholders specifically provide that the bylaw is not subject to
amendment or repeal by the directors.
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 9 day of August, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
- 3 -
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF DENVER-59, INC., desiring to organize under
the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 601 Clearwater Park Road, City
West Palm Beach, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.57.1
<PAGE> 2
EXHIBIT 3.57.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF NEW YORK-43, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
NEW YORK-43, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF NEW YORK-43, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 601 Clearwater Park Road, West Palm Beach, Florida 33401 and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 601 Clearwater Park Road
West Palm Beach, Florida 33401
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 22 day of August, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF NEW YORK-43, INC., desiring to organize
under the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 601 Clearwater Park Road, City
West Palm Beach, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-----------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.58.1
<PAGE> 2
EXHIBIT 3.58.1
ARTICLES OF INCORPORATION
OF
PAXSON NEW YORK LICENSE, INC.
The undersigned, acting as incorporator of PAXSON NEW YORK LICENSE,
INC., under the Florida Business Corporation Act, adopts the following Articles
of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON NEW YORK LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 601 Clearwater Park Road, West Palm Beach, Florida 33401 and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 601 Clearwater Park Road
West Palm Beach, Florida 33401
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 22 day of August, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON NEW YORK LICENSE, INC., desiring to organize under the laws of
the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 601 Clearwater Park Road, City West Palm Beach,
State of Florida, has named William L. Watson, as its agent to accept service
of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-------------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.59.1
<PAGE> 2
EXHIBIT 3.59.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF AKRON-23, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
AKRON-23, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF AKRON-23, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 601 Clearwater Park Road, West Palm Beach, Florida 33401 and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 601 Clearwater Park Road
West Palm Beach, Florida 33401
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 22 day of August, 1995.
/s/ William L. Watson
--------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF AKRON-23, INC., desiring to organize under
the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 601 Clearwater Park Road, City
West Palm Beach, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-------------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.60.1
<PAGE> 2
EXHIBIT 3.60.1
ARTICLES OF INCORPORATION
OF
PAXSON AKRON LICENSE, INC.
The undersigned, acting as incorporator of PAXSON AKRON LICENSE, INC.,
under the Florida Business Corporation Act, adopts the following Articles of
Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON AKRON LICENSE, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 601 Clearwater Park Road, West Palm Beach, Florida 33401 and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 601 Clearwater Park Road
West Palm Beach, Florida 33401
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 22 day of August, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON AKRON LICENSE, INC., desiring to organize under the laws of
the State of Florida with its initial registered office, as indicated in the
Articles of Incorporation, at 601 Clearwater Park Road, City West Palm Beach,
State of Florida, has named William L. Watson, as its agent to accept service
of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
--------------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 3.61.1
<PAGE> 2
EXHIBIT 3.61.1
ARTICLES OF INCORPORATION
OF
PAXSON COMMUNICATIONS OF DAYTON-26, INC.
The undersigned, acting as incorporator of PAXSON COMMUNICATIONS OF
DAYTON-26, INC., under the Florida Business Corporation Act, adopts the
following Articles of Incorporation.
ARTICLE I. NAME
The name of the corporation is:
PAXSON COMMUNICATIONS OF DAYTON-26, INC.
ARTICLE II. ADDRESS
The mailing address of the corporation is:
601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE III. COMMENCEMENT OF EXISTENCE
The existence of the corporation will commence at 8:00 A.M. on the
date of filing of these Articles of Incorporation.
ARTICLE IV. PURPOSE
The corporation is organized to engage in any activity or business
permitted under the laws of the United States and Florida.
ARTICLE V. AUTHORIZED SHARES
The maximum number of shares that the corporation is authorized to
have outstanding at any time is 10,000 shares of common stock having a par
value of $.01 per share.
1
<PAGE> 3
ARTICLE VI. INITIAL REGISTERED OFFICE AND AGENT
The street address of the initial registered office of the corporation
is 601 Clearwater Park Road, West Palm Beach, Florida 33401 and the name of the
corporation's initial registered agent at that address is William L. Watson.
ARTICLE VII. INITIAL BOARD OF DIRECTORS
The corporation shall have one director initially. The number of
directors may be either increased or diminished from time to time, as provided
in the bylaws, but shall never be less than one. The name and street address
of the initial director is:
Name Address
Lowell W. Paxson 601 Clearwater Park Road
West Palm Beach, Florida 33401
ARTICLE VIII. INCORPORATOR
The name and street address of the incorporator is:
Name Address
William L. Watson 601 Clearwater Park Road
West Palm Beach, Florida 33401
The incorporator of the corporation assigns to this corporation his rights
under Section 607.0201, Florida Statutes, to constitute a corporation, and he
assigns to those persons designated by the board of directors any rights he may
have as incorporator to acquire any of the capital stock of this corporation,
this assignment becoming effective on the date corporate existence begins.
ARTICLE IX. BYLAWS
The power to adopt, alter, amend, or repeal bylaws shall be vested in the
board of directors and the shareholders, except that the board of directors may
not amend or repeal any bylaw adopted by the shareholders if the shareholders
specifically provide that the bylaw is not subject to amendment or repeal by
the directors.
2
<PAGE> 4
ARTICLE X. AMENDMENTS
The corporation reserves the right to amend, alter, change, or repeal any
provision in these Articles of Incorporation in the manner prescribed by law,
and all rights conferred on shareholders are subject to this reservation.
The undersigned incorporator, for the purpose of forming a
corporation under the laws of the State of Florida, has executed these
Articles of Incorporation this 12 day of September, 1995.
/s/ William L. Watson
-------------------------------
William L. Watson, Incorporator
3
<PAGE> 5
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF
PROCESS WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
Pursuant to Chapter 48.091, Florida Statutes, the following is submitted:
That PAXSON COMMUNICATIONS OF DAYTON-26, INC., desiring to organize under
the laws of the State of Florida with its initial registered office, as
indicated in the Articles of Incorporation, at 601 Clearwater Park Road, City
West Palm Beach, State of Florida, has named William L. Watson, as its agent to
accept service of process within this state.
ACKNOWLEDGMENT:
Having been named to accept service of process for the corporation named
above, at the place designated in this certificate, I agree to act in that
capacity, to comply with the provisions of the Florida Business Corporation
Act, and am familiar with, and accept, the obligations of that position.
/s/ William L. Watson
-------------------------------------
William L. Watson, Registered Agent
<PAGE> 1
EXHIBIT 4.1
<PAGE> 2
Exhibit 4.1
================================================================================
PAXSON COMMUNICATIONS CORPORATION, as Issuer,
ITS DIRECT AND INDIRECT SUBSIDIARIES,
as Guarantors,
and
THE BANK OF NEW YORK, as Trustee
____________________
INDENTURE
Dated as of September 28, 1995
____________________
$230,000,000
11 5/8% Senior Subordinated Notes due 2002
================================================================================
<PAGE> 3
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10; 12.02
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b)(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02; 4.04; 12.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04; 12.05
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04; 12.05
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01; 7.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 12.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05; 7.01; 7.02
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a) (last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.06
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.04
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.12
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
</TABLE>
N.A. means Not Applicable
____________________
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 1.03. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . 26
Section 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 2.
THE NOTES
Section 2.01. Dating; Incorporation of Form in Indenture . . . . . . . . . . . . . . . . . . . 27
Section 2.02. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.04. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.05. Noteholder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.07. Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.08. Outstanding Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.09. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.10. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.11. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.12. Deposit of Moneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.13. CUSIP Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.14. Book-Entry Provisions for Global Notes . . . . . . . . . . . . . . . . . . . . . 33
Section 2.15. Special Transfer Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 3.
REDEMPTION
Section 3.01. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 3.02. Selection by Trustee of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . 37
Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.06. Notes Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.07. Optional Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
-i-
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.02. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.03. Waiver of Stay, Extension or Usury Laws . . . . . . . . . . . . . . . . . . . . 42
Section 4.04. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.06. Limitation on Additional Indebtedness . . . . . . . . . . . . . . . . . . . . . 44
Section 4.07. Limitation on Preferred Stock of Restricted Subsidiaries . . . . . . . . . . . . 45
Section 4.08. Limitation on Capital Stock of Restricted Subsidiaries . . . . . . . . . . . . . 45
Section 4.09. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.10. Limitation on Certain Asset Sales . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.11. Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . 50
Section 4.12. Limitations on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.13. Limitations on Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.14. Limitation on Creation of Subsidiaries . . . . . . . . . . . . . . . . . . . . . 52
Section 4.15. Limitation on Other Senior Subordinated Debt . . . . . . . . . . . . . . . . . . 52
Section 4.16. Limitation on Sale and Lease-Back Transactions . . . . . . . . . . . . . . . . . 52
Section 4.17. Payments for Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.18. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.19. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.20. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 5.
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets . . . . . . . . . . . . . 57
Section 5.02. Successor Person Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 6.04. Waiver of Past Defaults and Events of Default . . . . . . . . . . . . . . . . . 61
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.07. Rights of Holders to Receive Payment . . . . . . . . . . . . . . . . . . . . . . 63
Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . 63
</TABLE>
-ii-
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.03. Individual Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.09. Successor Trustee by Consolidation, Merger or Conversion . . . . . . . . . . . . 71
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . 71
Section 7.12. Paying Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE 8.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 8.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 8.03. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . 74
Section 8.04. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . 74
Section 8.05. Notation on or Exchange of Notes . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 8.06. Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE 9.
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 9.02. Legal Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 9.03. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 9.04. Conditions to Defeasance or Covenant Defeasance . . . . . . . . . . . . . . . . 77
Section 9.05. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . 79
Section 9.06. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.07. Moneys Held by Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.08. Moneys Held by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
</TABLE>
-iii-
<PAGE> 7
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 10.
GUARANTEE OF NOTES
Section 10.01. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.02. Execution and Delivery of Guarantees . . . . . . . . . . . . . . . . . . . . . 83
Section 10.03. Limitation of Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 10.04. Additional Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.05. Release of Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 10.06. Guarantee Obligations Subordinated to Guarantor Senior Indebtedness . . . . . . 85
Section 10.07. Payment Over of Proceeds upon Dissolution, etc., of a Guarantor . . . . . . . . 85
Section 10.08. Suspension of Guarantee Obligations When Guarantor Senior
Indebtedness in Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 10.09. Subrogation to Rights of Holders of Guarantor Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 10.10. Guarantee Subordination Provisions Solely to Define
Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 10.11. Application of Certain Article 11 Provisions . . . . . . . . . . . . . . . . . 91
ARTICLE 11.
SUBORDINATION OF NOTES
Section 11.01. Notes Subordinate to Senior Indebtedness . . . . . . . . . . . . . . . . . . . 91
Section 11.02. Payment Over of Proceeds upon Dissolution, etc. . . . . . . . . . . . . . . . . 91
Section 11.03. Suspension of Payment When Senior Indebtedness in Default . . . . . . . . . . . 93
Section 11.04. Trustee's Relation to Senior Indebtedness . . . . . . . . . . . . . . . . . . . 95
Section 11.05. Subrogation to Rights of Holders of Senior Indebtedness . . . . . . . . . . . . 95
Section 11.06. Provisions Solely to Define Relative Rights . . . . . . . . . . . . . . . . . . 96
Section 11.07. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . 97
Section 11.08. No Waiver of Subordination Provisions . . . . . . . . . . . . . . . . . . . . . 97
Section 11.09. Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 11.10. Reliance on Judicial Order or Certificate of Liquidating Agent . . . . . . . . 99
Section 11.11. Rights of Trustee as a Holder of Senior Indebtedness; Preservation
of Trustee's Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 11.12. Article Applicable to Paying Agents . . . . . . . . . . . . . . . . . . . . . . 100
Section 11.13. No Suspension of Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 12.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 12.03. Communications by Holders with Other Holders . . . . . . . . . . . . . . . . . 102
</TABLE>
-iv-
<PAGE> 8
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 12.04. Certificate and Opinion as to Conditions Precedent . . . . . . . . . . . . . . 102
Section 12.05. Statements Required in Certificate and Opinion . . . . . . . . . . . . . . . . 102
Section 12.06. When Treasury Notes Disregarded . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 12.07. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 12.08. Business Days; Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 12.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 12.10. No Adverse Interpretation of Other Agreements . . . . . . . . . . . . . . . . . 104
Section 12.11. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 12.12. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 12.13. Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 12.14. Table of Contents, Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . 105
Section 12.15. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
EXHIBITS
Exhibit A. Form of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B. Form of Legend for Global Securities . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C. Form of Certificate to Be Delivered in Connection with Transfers to
Non-QIB Accredited Investors . . . . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D. Form of Certificate to Be Delivered in Connection with Transfers
Pursuant to Regulation S . . . . . . . . . . . . . . . . . . . . . . . . . D-1
</TABLE>
-v-
<PAGE> 9
INDENTURE, dated as of September 28, 1995, among PAXSON
COMMUNICATIONS CORPORATION, a Delaware corporation, as Issuer (the "Company"),
its direct and indirect Subsidiaries (each individually, a "Guarantor" and
collectively, the "Guarantors"), and THE BANK OF NEW YORK, a New York banking
corporation, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
11 5/8% Senior Subordinated Notes due 2002 (the "Notes").
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
"Acquired Indebtedness" means Indebtedness of a Person
(including an Unrestricted Subsidiary) existing at the time such Person becomes
a Restricted Subsidiary or assumed in connection with the acquisition of assets
from such Person.
"Additional Interest" means additional interest on the Notes
which the Company and the Guarantors, jointly and severally, agree to pay to
the Holders pursuant to Section 4 of the Registration Rights Agreement.
"Adjusted EBITDA" means for any Person the sum of (a) EBITDA
of such Person and its Restricted Subsidiaries for the four most recent fiscal
quarters for which internal financial statements are available, minus IN TV
EBITDA for the most recent four fiscal quarter period, and (b) IN TV EBITDA for
the most recent quarterly period, multiplied by four.
"Adjusted Net Assets" of a Guarantor at any date shall mean
the lesser of the amount by which (x) the fair value of the property of such
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities), but excluding liabilities under the Guarantee, of such
Guarantor at such date and (y) the present fair salable value of the assets of
such Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Guarantor on its debts (after giving effect to all
other fixed and contingent liabilities and after giving effect to any
collection from any Subsidiary of such Guarantor in respect of the obligations
of such Subsidiary under the Guarantee), excluding Indebtedness in respect of
the Guarantee, as they become absolute and matured.
<PAGE> 10
-2-
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement
or otherwise. With respect to the Company, Affiliate will also include any
Permitted Holders or Persons controlled by the Permitted Holders.
"Agent" means any Registrar, Paying Agent, co-registrar or
agent for service of notices and demands.
"Asset Sale" means the sale, transfer or other disposition
(other than to the Company or any of its Restricted Subsidiaries) in any single
transaction or series of related transactions involving assets with a fair
market value in excess of $500,000 of (a) any Capital Stock of or other equity
interest in any Restricted Subsidiary of the Company, (b) all or substantially
all of the assets of the Company or of any Restricted Subsidiary thereof, (c)
real property or (d) all or substantially all of the assets of any media
property, or part thereof, owned by the Company or any Restricted Subsidiary
thereof, or a division, line of business or comparable business segment of the
Company or any Restricted Subsidiary thereof; provided that Asset Sales shall
not include sales, leases, conveyances, transfers or other dispositions to the
Company or to a Restricted Subsidiary or to any other Person if after giving
effect to such sale, lease, conveyance, transfer or other disposition such
other Person becomes a Restricted Subsidiary.
"Asset Sale Proceeds" means, with respect to any Asset Sale,
(i) cash received by the Company or any Restricted Subsidiary from such Asset
Sale (including cash received as consideration for the assumption of
liabilities incurred in connection with or in anticipation of such Asset Sale),
after (a) provision for all income or other taxes measured by or resulting from
such Asset Sale, (b) payment of all brokerage commissions, underwriting,
accounting, legal and other fees and expenses related to such Asset Sale, (c)
provision for minority interest holders in any Restricted Subsidiary as a
result of such Asset Sale and (d) deduction of appropriate amounts to be
provided by the Company or a Restricted Subsidiary as a reserve, in accordance
with GAAP, against any liabilities associated with the assets sold or disposed
of in such Asset Sale and retained by the Company or a Restricted Subsidiary
after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with the assets
sold or disposed of in such Asset Sale, and (ii) promissory notes and other
non-cash consideration received by the Company or any Restricted Subsidiary
from such Asset Sale or other disposition upon the liquidation or conversion of
such notes or non-cash consideration into cash.
<PAGE> 11
-3-
"Attributable Indebtedness" in respect of a Sale and
Lease-Back Transaction means, as at the time of determination, the greater of
(i) the fair value of the property subject to such arrangement (as determined
by the Board of Directors) and (ii) the present value of the notes (discounted
at a rate of 10%, compounded annually) of the total obligations of the lessee
for rental payments during the remaining term of the lease included in such
Sale and Lease-Back Transaction (including any period for which such lease has
been extended).
"Available Asset Sale Proceeds" means, with respect to any
Asset Sale, the aggregate Asset Sale Proceeds from such Asset Sale that have
not been applied in accordance with clause (iii)(a), (b) or (c) of Section
4.10(a) and which have not been the basis for an Excess Proceeds Offer in
accordance with clause (iii)(d) of such Section 4.10(a).
"Board of Directors" means the board of directors of the
Company or a Guarantor, as appropriate, or any committee authorized to act
therefor.
"Board Resolution" means a copy of a resolution certified
pursuant to an Officers' Certificate to have been duly adopted by the Board of
Directors of the Company or a Guarantor, as appropriate, and to be in full
force and effect, and delivered to the Trustee.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated) of capital stock, partnership
interests or any other participation, right or other interest in the nature of
an equity interest in such Person or any option, warrant or other security
convertible into any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Cash Equivalents" means (i) direct obligations of the United
States of America or any agency thereof, or obligations guaranteed or insured
by the United States of America, provided that in each case such obligations
mature within one year from the date of acquisition thereof, (ii) certificates
of deposit maturing within one year from the date of creation thereof issued by
any U.S. national or state banking institution having capital, surplus and
undivided profits aggregating at least $250,000,000 and rated at least A-1 by
S&P and P-1 by Moody's, (iii) commercial paper with a maturity of 180 days or
less issued by a corporation (except an Affiliate of the Company) organized
under the laws of any state of the United States or the District of Columbia
and rated at least A-1 by S&P or at least P-1 by Moody's and (iv) repurchase
agreements and reverse repurchase agreements relating to marketable direct
obligations issued or unconditionally guaranteed by the United States of
America or issued by an agency thereof and backed by the full faith and credit
of the United States of America, in each case maturing within one year from the
date of acquisition; provided that the terms of such agreements comply with the
guidelines set forth in the Federal Financial Agreements of
<PAGE> 12
-4-
Depository Institutions with Securities Dealers and Others, as adopted by
the Comptroller of the Currency and (v) tax-exempt auction rate securities and
municipal preferred stock, in each case, subject to reset no more than 35 days
after the date of acquisition and having a rating of at least AA by S&P or AA
by Moody's.
"Change of Control" of the Company will be deemed to have
occurred at such time as (i) any Person (including a Person's Affiliates and
associates), other than a Permitted Holder, becomes the beneficial owner (as
defined under Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act) of 50% or more of the total voting or economic power of the
Company's Common Stock, (ii) any Person (including a Person's Affiliates and
associates), other than a Permitted Holder, becomes the beneficial owner of
more than 33 1/3% of the total voting power of the Company's Common Stock, and
the Permitted Holders beneficially own, in the aggregate, a lesser percentage
of the total voting power of the Common Stock of the Company than such other
Person and do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board of
Directors of the Company, (iii) there shall be consummated any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which the Common Stock of the Company would be
converted into cash, securities or other property, other than a merger or
consolidation of the Company in which the holders of the Common Stock of the
Company outstanding immediately prior to the consolidation or merger hold,
directly or indirectly, at least a majority of the Common Stock of the
surviving corporation immediately after such consolidation or merger, (iv)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company (together with
any new directors whose election by such Board of Directors or whose nomination
for election by the shareholders of the Company has been approved by a majority
of the directors then still in office who either were directors at the
beginning of such period or whose election or recommendation for election was
previously so approved) cease to constitute a majority of the Board of
Directors of the Company or (v) any "change in control" occurs (as defined at
such time) with respect to the Senior Preferred Stock, the Junior Preferred
Stock or any issue of Disqualified Capital Stock.
"Common Stock" of any Person means all Capital Stock of such
Person that is generally entitled to (i) vote in the election of directors of
such Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or
others that will control the management and policies of such Person.
"Company" means the party named as such in the first paragraph
of this Indenture until a successor replaces such party pursuant to Article 5
of this Indenture and thereafter means the successor and any other obligor on
the Notes.
"Company Request" means any written request signed in the name
of the Company by the Chief Executive Officer, the President, any Vice
President, the Chief Financial
<PAGE> 13
-5-
Officer or the Treasurer and attested to by the Secretary or any Assistant
Secretary of the Company.
"Consolidated Interest Expense" means, with respect to any
Person, for any period, the aggregate amount of interest which, in conformity
with GAAP, would be set forth opposite the caption "interest expense" or any
like caption on an income statement for such Person and its Subsidiaries on a
consolidated basis (including, but not limited to, Redeemable Dividends,
whether paid or accrued, on Subsidiary Preferred Stock, imputed interest
included in Capitalized Lease Obligations, all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, the net costs associated with hedging obligations, amortization of
other financing fees and expenses, the interest portion of any deferred payment
obligation, amortization of discount or premium, if any, and all other non-cash
interest expense (other than interest amortized to cost of sales)) plus,
without duplication, all net capitalized interest for such period and all
interest incurred or paid under any guarantee of Indebtedness (including a
guarantee of principal, interest or any combination thereof) of any Person,
plus the amount of all dividends or distributions paid on Disqualified Capital
Stock (other than dividends paid or payable in shares of Capital Stock of the
Company).
"Consolidated Net Income" means, with respect to any Person,
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, however, that (a) the Net Income of any Person (the "other
Person") in which the Person in question or any of its Subsidiaries has less
than a 100% interest (which interest does not cause the net income of such
other Person to be consolidated into the net income of the Person in question
in accordance with GAAP) shall be included only to the extent of the amount of
dividends or distributions paid to the Person in question or the Subsidiary,
(b) the Net Income of any Subsidiary of the Person in question that is subject
to any restriction or limitation on the payment of dividends or the making of
other distributions (other than pursuant to the Notes or this Indenture) shall
be excluded to the extent of such restriction or limitation, (c)(i) the Net
Income of any Person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition and (ii) any net gain (but not
loss) resulting from an Asset Sale by the Person in question or any of its
Subsidiaries other than in the ordinary course of business shall be excluded,
(d) extraordinary, unusual and non-recurring gains and losses shall be
excluded, (e) expenses incurred in 1995 relating to the relocation of the
Company's headquarters shall be excluded, (f) losses associated with
discontinued and terminated operations in an amount not to exceed $750,000 per
annum shall be excluded and (g) all non-cash items (including, without
limitation, cumulative effects of changes in GAAP and equity entitlements
granted to employees of the Company and its Restricted Subsidiaries) increasing
and decreasing Consolidated Net Income and not otherwise included in the
definition of EBITDA shall be excluded.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the
<PAGE> 14
-6-
date of execution of this Indenture is located at 101 Barclay Street, Floor 21
West, New York, New York 10286.
"Cumulative Consolidated Interest Expense" means with respect
to any Person, as of any date of determination, Consolidated Interest Expense
from October 1, 1995 to the end of the Company's most recently ended full
fiscal quarter prior to such date, taken as a single accounting period.
"Cumulative EBITDA" means with respect to any Person, as of
any date of determination, EBITDA from October 1, 1995 to the end of the
Company's most recently ended full fiscal quarter prior to such date, taken as
a single accounting period.
"Default" means any event that is, or with the passing of time
or giving of notice or both would be, an Event of Default.
"Depository" means, with respect to the Notes issued in the
form of one or more Global Notes, The Depository Trust Company or another
Person designated as Depository by the Company, which Person must be a clearing
agency registered under the Exchange Act.
"Designated Senior Indebtedness," as to the Company or any
Guarantor, as the case may be, means any Senior Indebtedness (a) under the New
Credit Facility, or (b) which at the time of determination exceeds $75,000,000
in aggregate principal amount (or accreted value in the case of Indebtedness
issued at a discount) outstanding or available under a committed facility and
(x) which is specifically designated in the instrument evidencing such Senior
Indebtedness as "Designated Senior Indebtedness" by such Person and (y) as to
which the Trustee has been given written notice of such designation.
"Disqualified Capital Stock" means any Capital Stock of the
Company or a Restricted Subsidiary thereof which, by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable at
the option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the maturity date of the Notes, for cash or securities constituting
Indebtedness. Without limitation of the foregoing, Disqualified Capital Stock
shall be deemed to include (i) any Preferred Stock of a Restricted Subsidiary
of the Company and (ii) any Preferred Stock of the Company, with respect to
either of which, under the terms of such Preferred Stock, by agreement or
otherwise, such Restricted Subsidiary or the Company is obligated to pay
current dividends or distributions in cash during the period prior to the
maturity date of the Notes; provided, however, that Preferred Stock of the
Company or any Restricted Subsidiary thereof that is issued with the benefit of
provisions requiring a change of control offer to be made for such Preferred
Stock in the event of a Change of Control of the Company or Restricted
Subsidiary, which provisions have substantially the same effect as the
provisions described in Section 4.19, shall not be deemed to be Disqualified
Capital Stock solely by virtue of such
<PAGE> 15
-7-
provisions; and provided, further, that the Senior Preferred Stock and Junior
Preferred Stock in effect on the Issue Date shall not be considered
Disqualified Capital Stock.
"EBITDA" means, for any Person, for any period, an amount
equal to (a) the sum of (i) Consolidated Net Income for such period, plus (ii)
the provision for taxes for such period based on income or profits to the
extent such income or profits were included in computing Consolidated Net
Income and any provision for taxes utilized in computing net loss under clause
(i) hereof, plus (iii) Consolidated Interest Expense for such period
(including, for this purpose, dividends on the Senior Preferred Stock and
Junior Preferred Stock outstanding on the Issue Date and any Redeemable
Dividends in each case only to the extent that such dividends were deducted in
determining Net Income), plus (iv) depreciation for such period on a
consolidated basis, plus (v) amortization of intangibles and broadcast program
licenses for such period on a consolidated basis, plus (vi) for the purpose of
Section 4.06 only, payments made under time brokerage or similar agreements
with broadcast properties to the extent such properties have been acquired
during the period of determination or are proposed to be acquired in connection
with such incurrence of Indebtedness, minus (b) scheduled payments relating to
broadcast program license liabilities, except that with respect to the Company
each of the foregoing items shall be determined on a consolidated basis with
respect to the Company and its Restricted Subsidiaries only; provided, however,
that, for purposes of calculating EBITDA during any fiscal quarter, cash income
from a particular Investment of such Person shall be included only if cash
income has been received by such Person with respect to such Investment during
each of the previous four fiscal quarters.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"FCC" means the United States Federal Communications
Commission as constituted from time to time or any successor performing
substantially the same functions.
"GAAP" means generally accepted accounting principles
consistently applied as in effect in the United States from time to time.
"Guarantee" means the guarantee of the Obligations of the
Company with respect to the Notes by each Guarantor pursuant to the terms of
Article 10 hereof.
"Guarantor" means each direct and indirect Subsidiary of the
Company on the Issue Date and each Restricted Subsidiary of the Company that
hereafter becomes a Guarantor pursuant to Section 10.04, and "Guarantors" means
such entities, collectively.
"Guarantor Senior Indebtedness" means the principal of and
premium, if any, and interest (including, without limitation, interest accruing
or that would have accrued but for the filing of a bankruptcy, reorganization
or other insolvency proceeding whether or not such interest constitutes an
allowed claim in such proceeding on, and any and all other fees, expense
reimbursement obligations, indemnities and other amounts due pursuant to the
terms of all
<PAGE> 16
-8-
agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with, (a) Guarantor's direct
incurrence of any Indebtedness or its guarantee of all Indebtedness of the
Company or any Restricted Subsidiaries, in each case, owed to lenders under
the New Credit Facility, (b) all obligations of such Guarantor with respect to
any Interest Rate Agreement, (c) all obligations of such Guarantor to reimburse
any bank or other person in respect of amounts paid under letters of credit,
acceptances or other similar instruments, (d) all other Indebtedness of such
Guarantor which does not provide that it is to rank pari passu with or
subordinate to the Guarantees and (e) all deferrals, renewals, extensions and
refundings of, and amendments, modifications and supplements to, any of the
Guarantor Senior Indebtedness described above. Notwithstanding anything to the
contrary in the foregoing, Guarantor Senior Indebtedness will not include (i)
Indebtedness of such Guarantor to any of its Subsidiaries, (ii) Indebtedness
represented by the Guarantees, (iii) any Indebtedness which by the express
terms of the agreement or instrument creating, evidencing or governing the same
is junior or subordinate in right of payment to any item of Guarantor Senior
Indebtedness, (iv) any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of business or (v)
Indebtedness incurred in violation of this Indenture, except if such
Indebtedness was incurred under the New Credit Facility based on financial
information and certificates provided by responsible officers of the Company
and relied on in good faith by the lenders thereunder in which event such
Indebtedness shall be deemed to have been incurred in compliance with this
Indenture and constitute Guarantor Senior Indebtedness.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"IN TV" means the Company's network of owned, operated or
affiliated television stations dedicated to infomercial programming.
"IN TV EBITDA" means EBITDA for the IN TV network determined
on a basis consistent with the Company's internal financial statements,
generated by stations declared by the Board of Directors as IN TV properties.
"incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "incurrence," "incurred," "incurrable," and "incurring"
shall have meanings correlative to the foregoing); provided that a change in
GAAP that results in an obligation of such Person that exists at such time
becoming Indebtedness shall not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to
any Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of
<PAGE> 17
-9-
such Person or only to a portion thereof), or evidenced by bonds, notes,
debentures or similar instruments or representing the balance deferred and
unpaid of the purchase price of any property (excluding, without limitation,
any balances that constitute accounts payable or trade payables, and other
accrued liabilities arising in the ordinary course of business, including,
without limitation, any and all programming broadcast obligations) if and to
the extent any of the foregoing indebtedness would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, and shall also
include, to the extent not otherwise included (i) any Capitalized Lease
Obligations, (ii) obligations secured by a Lien to which the property or assets
owned or held by such Person is subject, whether or not the obligation or
obligations secured thereby shall have been assumed (provided, however, that if
such obligation or obligations shall not have been assumed, the amount of such
Indebtedness shall be deemed to be the lesser of the principal amount of the
obligation or the fair market value of the pledged property or assets), (iii)
guarantees of items of other Persons which would be included within this
definition for such other Persons (whether or not such items would appear upon
the balance sheet of the guarantor), (iv) all obligations for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (v) in the case of the Company, Disqualified Capital Stock of the
Company or any Restricted Subsidiary thereof, and (vi) obligations of any such
Person under any Interest Rate Agreement applicable to any of the foregoing (if
and to the extent such Interest Rate Agreement obligations would appear as a
liability upon a balance sheet of such Person prepared in accordance with
GAAP). The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum liability upon
the occurrence of the contingency giving rise to the obligation, provided (i)
that the amount outstanding at any time of any Indebtedness issued with
original issue discount, including the Notes, is the principal amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP and (ii) that Indebtedness shall not include any liability for Federal,
state, local or other taxes. Notwithstanding any other provision of the
foregoing definition, any trade payable arising from the purchase of goods or
materials or for services obtained in the ordinary course of business or
contingent obligations arising out of customary indemnification agreements with
respect to the sale of assets or securities shall not be deemed to be
"Indebtedness" of the Company or any Restricted Subsidiaries for purposes of
this definition. Furthermore, guarantees of (or obligations with respect to
letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included.
"Indenture" means this Indenture as amended, restated or
supplemented from time to time.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501 (a)(1), (2),
(3) or (7) promulgated under the Securities Act.
<PAGE> 18
-10-
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement designed to protect the party indicated
therein against fluctuations in interest rates.
"Investments" means, directly or indirectly, any advance,
account receivable (other than an account receivable arising in the ordinary
course of business), loan or capital contribution to (by means of transfers of
property to others, payments for property or services for the account or use of
others or otherwise), the purchase of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities of, the acquisition,
by purchase or otherwise, of all or substantially all of the business or assets
or stock or other evidence of beneficial ownership of, any Person or the making
of any investment in any Person. Investments shall exclude extensions of trade
credit on commercially reasonable terms in accordance with normal trade
practices and the repurchases or redemptions of the Notes by the Company.
"Issue Date" means the date the Notes are first issued by the
Company and authenticated by the Trustee under this Indenture.
"Junior Preferred Stock" means the 33,000 shares of Junior
Cumulative Compounding Redeemable Preferred Stock of the Company outstanding on
the Issue Date.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement, encumbrance,
preference, priority, or other security agreement or preferential arrangement
of any kind or nature whatsoever on or with respect to such property or assets
(including, without limitation, any Capitalized Lease Obligation, conditional
sales, or other title retention agreement having substantially the same
economic effect as any of the foregoing).
"Major Asset Sale" means an Asset Sale or series of related
Asset Sales involving assets with a fair market value in excess of $25,000,000.
"Maturity Date" means October 1, 2002.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Income" means, with respect to any Person for any period,
the net income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital
Stock by the Company or a Major Asset Sale, the aggregate net proceeds received
by the Company, after payment of
<PAGE> 19
-11-
expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the fair market value
thereof, as determined in good faith by the Board of Directors, at the time of
receipt) and (b) in the case of any exchange, exercise, conversion or surrender
of outstanding securities of any kind for or into shares of Capital Stock of
the Company which is not Disqualified Capital Stock, the net book value of such
outstanding securities on the date of such exchange, exercise, conversion or
surrender (plus any additional amount required to be paid by the holder to the
Company upon such exchange, exercise, conversion or surrender, less any and all
payments made to the holders, e.g., on account of fractional shares and less
all expenses incurred by the Company in connection therewith).
"New Credit Facility" means the credit agreement to be entered
into by and among the Company, the Guarantors and one or more lenders, as the
same may be amended, extended, increased, renewed, restated, supplemented or
otherwise modified (in whole or in part, and without limitation as to amount,
terms, conditions, covenants and other provisions) from time to time, and any
agreement governing Indebtedness incurred to refinance, replace or refund in
whole or in part the borrowings and then maximum commitments under the New
Credit Facility or such agreement. The Company shall promptly notify the
Trustee of any such refunding, replacement or refinancing of the New Credit
Facility.
"Non-Payment Event of Default" means any event (other than a
Payment Default) the occurrence of which entitles one or more Persons to
accelerate the maturity of any Designated Senior Indebtedness.
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Notes" means the securities that are issued under this
Indenture, as amended or supplemented from time to time pursuant to this
Indenture.
"Obligations" means, with respect to any Indebtedness, any
principal, premium, interest, penalties, fees, indemnifications,
reimbursements, damages and other expenses payable under the documentation
governing such Indebtedness.
"Offering" means the offering of the Notes as described in the
Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum dated
September 21, 1995 pursuant to which the Notes were offered.
"Officer" means the Chief Executive Officer, the President,
any Vice President, the Chief Financial Officer, the Treasurer, the Controller
or the Secretary of the Company or a Guarantor, or any other officer
designated by the Board of Directors, as the case may be.
<PAGE> 20
-12-
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President, the Chief Financial Officer, the Controller or any Treasurer of such
Person that shall comply with applicable provisions of this Indenture.
"Opinion of Counsel" means a written opinion from legal
counsel which counsel is reasonably acceptable to the Trustee.
"Payment Default" means any default, whether or not any
requirement for the giving of notice, the lapse of time or both, or any other
condition to such default becoming an Event of Default has occurred, in the
payment of principal of (or premium, if any) or interest on or any other amount
payable in connection with Designated Senior Indebtedness.
"Permitted Holders" means, collectively, Lowell W. Paxson, his
spouse, children or other lineal descendants (whether adoptive or biological)
and any revocable or irrevocable inter vivos or testamentary trust or the
probate estate of any such individual, so long as one or more of the foregoing
individuals is the principal beneficiary of such trust or probate estate.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Restricted Subsidiary
arising under or in connection with the New Credit Facility
incurred prior to December 31, 1996 in an amount not to exceed
$42,700,000;
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness not covered by any other clause of this
definition which is outstanding on the date of this Indenture;
(iv) Indebtedness of the Company to any Restricted Subsidiary
and Indebtedness of any Restricted Subsidiary to the Company or another
Restricted Subsidiary;
(v) Purchase Money Indebtedness and Capitalized Lease
Obligations incurred to acquire property in the ordinary course of
business which Indebtedness and Capitalized Lease Obligations do not in
the aggregate exceed 5% of the Company's consolidated total assets at any
one time;
(vi) Interest Rate Agreements;
(vii) additional Indebtedness of the Company not to exceed
$5,000,000 in principal amount outstanding at any time; and
(viii) Refinancing Indebtedness.
<PAGE> 21
-13-
"Permitted Investments" means, for any Person, Investments
made on or after the date of this Indenture consisting of:
(i) Investments by the Company, or by a Restricted Subsidiary
thereof, in the Company or a Restricted Subsidiary;
(ii) Temporary Cash Investments;
(iii) Investments by the Company, or by a Restricted Subsidiary
thereof, in a Person (or in all or substantially all of the business or
assets), if as a result of such Investment (a) such Person becomes a
Restricted Subsidiary of the Company, (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or
a Restricted Subsidiary thereof or (c) such business or assets are owned
by the Company or a Restricted Subsidiary;
(iv) reasonable and customary loans made to employees not to
exceed $500,000 in the aggregate at any one time outstanding;
(v) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are
issued by a third party to the Company or Restricted Subsidiary solely as
partial consideration for the consummation of an Asset Sale that is
otherwise permitted by Section 4.10;
(vi) time brokerage and other similar agreements under which
separately owned and licensed broadcast properties enter into cooperative
arrangements and which may include an option to acquire the broadcast
property at a future date;
(vii) accounts receivable of the Company and its Restricted
Subsidiaries generated in the ordinary course of business;
(viii) loans and guarantees of loans by third-party lenders to
third parties in connection with the acquisition of media properties,
secured by substantially all of such Person's assets (to the extent
permitted by FCC rules), which are made in conjunction with the execution
of a time brokerage agreement; and
(ix) options on media properties having an exercise price in an
amount not in excess of $100,000 plus the forgiveness of any loan
referred to in clause (viii) above, entered into or made in connection
with the execution of time brokerage agreements.
"Permitted Liens" means (i) Liens on property or assets of, or
any shares of stock of or secured debt of, any corporation existing at the time
such corporation becomes a Restricted Subsidiary of the Company or at the time
such corporation is merged into the Company or any
<PAGE> 22
-14-
of its Restricted Subsidiaries, provided that such Liens are not incurred in
connection with, or in contemplation of, such corporation becoming a Restricted
Subsidiary of the Company or merging into the Company or any of its Restricted
Subsidiaries, (ii) Liens securing Refinancing Indebtedness, provided that any
such Lien does not extend to or cover any Property, shares or debt other than
the Property, shares or debt securing the Indebtedness so refunded, refinanced
or extended, (iii) Liens in favor of the Company or any of its Restricted
Subsidiaries, (iv) Liens securing industrial revenue bonds, (v) Liens to secure
Purchase Money Indebtedness that is otherwise permitted under this Indenture,
provided that (a) any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the
cost (including sales and excise taxes, installation and delivery charges and
other direct costs of, and other direct expenses paid or charged in connection
with, such purchase or construction) of such Property, (b) the principal amount
of the Indebtedness secured by such Lien does not exceed 100% of such costs,
and (c) such Lien does not extend to or cover any Property other than such
item of Property and any improvements on such item, (vi) statutory liens or
landlords', carriers', warehousemen's, mechanics', suppliers', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which do not secure any Indebtedness and with respect to amounts not yet
delinquent or being contested in good faith by appropriate proceedings, if a
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor, (vii) other Liens securing
obligations incurred in the ordinary course of business or judgment Liens not
giving rise to an Event of Default which obligations or judgments do not exceed
$1,000,000 in the aggregate at any one time outstanding, (viii) any extensions,
substitutions, replacements or renewals of the foregoing, (ix) Liens for taxes,
assessments or governmental charges that are not delinquent or are being
contested in good faith by appropriate proceedings, (x) Liens securing
Capitalized Lease Obligations permitted to be incurred under clause (v) of the
definition of "Permitted Indebtedness," provided that such Lien does not extend
to any property other than that subject to the underlying lease, (xi) easements
or minor defects or irregularities in title and other similar charges or
encumbrances on Property not interfering in any material respect with the
Company's use of such Property and (xii) Liens securing Secured Senior Debt.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government (including any agency or political subdivision thereof).
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the
holders of other Capital Stock issued by such Person.
"Private Placement Legend" means the legend initially set
forth on the Notes in the form set forth on Exhibit A.
<PAGE> 23
-15-
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"Public Equity Offering" means a public offering by the
Company of shares of its Common Stock (however designated and whether voting
or non-voting) and any and all rights, warrants or options to acquire such
Common Stock.
"Purchase Money Indebtedness" means any Indebtedness incurred
in the ordinary course of business by a Person to finance the cost (including
the cost of construction) of an item of Property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A promulgated under the Securities Act.
"Redeemable Dividend" means, for any dividend or distribution
with regard to Disqualified Capital Stock, the quotient of the dividend or
distribution divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the issuer of such Disqualified Capital Stock.
"Redemption Date" when used with respect to any Note to be
redeemed means the date fixed for such redemption pursuant to this Indenture.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances or extends any Indebtedness of the Company or its Restricted
Subsidiaries outstanding on the Issue Date or other Indebtedness permitted to
be incurred by the Company or its Restricted Subsidiaries pursuant to the terms
of this Indenture, but only to the extent that (i) the Refinancing Indebtedness
is subordinated to the Notes to at least the same extent as the Indebtedness
being refunded, refinanced or extended, if at all, (ii) the Refinancing
Indebtedness is scheduled to mature either (a) no earlier than the Indebtedness
being refunded, refinanced or extended, or (b) after the maturity date of the
Notes, (iii) the portion, if any, of the Refinancing Indebtedness that is
scheduled to mature on or prior to the maturity date of the Notes has a
weighted average life to maturity at the time such Refinancing Indebtedness is
incurred that is equal to or greater than the weighted average life to maturity
of the portion of the Indebtedness being refunded, refinanced or extended that
is scheduled to mature on or prior to the maturity date of the Notes, (iv) such
Refinancing Indebtedness is in an aggregate principal amount that is equal to
or less than the sum of (a) the aggregate principal amount then outstanding
under the Indebtedness being refunded, refinanced or extended, (b) the amount
of accrued and unpaid interest, if any, and premiums owed, if any, not in
excess of preexisting prepayment provisions on such Indebtedness being
refunded, refinanced or extended and (c) the amount of customary fees, expenses
and costs related to the incurrence of such Refinancing Indebtedness, and (v)
such
<PAGE> 24
-16-
Refinancing Indebtedness is incurred by the same Person that initially incurred
the Indebtedness being refunded, refinanced or extended, except that the
Company may incur Refinancing Indebtedness to refund, refinance or extend
Indebtedness of any Wholly-Owned Subsidiary of the Company.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of September 28, 1995 among the Company, the Guarantors and
Wood Gundy Inc. and Smith Barney Inc., as Initial Purchasers.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution or payment on
Capital Stock of the Company or any Restricted Subsidiary of the Company or any
payment made to the direct or indirect holders (in their capacities as such) of
Capital Stock of the Company or any Restricted Subsidiary of the Company (other
than (x) dividends or distributions payable solely in Capital Stock (other than
Disqualified Capital Stock) or in options, warrants or other rights to purchase
Capital Stock (other than Disqualified Capital Stock), and (y) in the case of
Restricted Subsidiaries of the Company, dividends or distributions payable to
the Company or to a Wholly-Owned Subsidiary of the Company), (ii) the purchase,
redemption or other acquisition or retirement for value of any Capital Stock of
the Company or any of its Restricted Subsidiaries (other than Capital Stock
owned by the Company or a Wholly-Owned Subsidiary of the Company, excluding
Disqualified Capital Stock), (iii) the making of any principal payment on, or
the purchase, defeasance, repurchase, redemption or other acquisition or
retirement for value, prior to any scheduled maturity, scheduled repayment or
scheduled sinking fund payment, of any Indebtedness which is subordinated in
right of payment to the Notes other than subordinated Indebtedness acquired in
anticipation of satisfying a scheduled sinking fund obligation, principal
installment or final maturity (in each case due within one year of the date of
acquisition), (iv) the making of any Investment or guarantee of any Investment
in any Person other than a Permitted Investment, (v) any designation of a
Restricted Subsidiary as an Unrestricted Subsidiary on the basis of the fair
market value of such Subsidiary utilizing standard valuation methodologies and
approved by the Board of Directors and (vi) forgiveness of any Indebtedness of
an Affiliate of the Company to the Company or a Restricted Subsidiary. For
purposes of determining the amount expended for Restricted Payments, cash
distributed or invested shall be valued at the face amount thereof and property
other than cash shall be valued at its fair market value determined by the
Company's Board of Directors in good faith.
<PAGE> 25
-17-
"Restricted Security" has the meaning set forth in Rule
144(a)(3) promulgated under the Securities Act; provided that the Trustee shall
be entitled to request and conclusively rely upon an Opinion of Counsel with
respect to whether any Note is a Restricted Security.
"Restricted Subsidiary" means a Subsidiary of the Company
other than an Unrestricted Subsidiary and includes all of the Subsidiaries of
the Company existing as of the Issue Date. The Board of Directors of the
Company may designate any Unrestricted Subsidiary or any Person that is to
become a Subsidiary as a Restricted Subsidiary if immediately after giving
effect to such action (and treating any Acquired Indebtedness as having been
incurred at the time of such action), the Company could have incurred at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant
to Section 4.06.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"Sale and Lease-Back Transaction" means any arrangement with
any Person providing for the leasing by the Company or any Restricted
Subsidiary of the Company of any real or tangible personal Property, which
Property has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person in contemplation of such leasing.
"S&P" means Standard & Poor's Corporation and its successors.
"SEC" means the United States Securities and Exchange
Commission as constituted from time to time or any successor performing
substantially the same functions.
"Secured Senior Debt" means any Senior Indebtedness (a) under
the New Credit Facility and (b) which at the time of determination exceeds
$25,000,000 in aggregate principal amount (or accreted value in the case of
Indebtedness issued at a discount) outstanding or available under a committed
facility.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means the principal of and premium, if
any, and interest (including, without limitation, interest accruing or that
would have accrued but for the filing of a bankruptcy, reorganization or other
insolvency proceeding whether or not such interest constitutes an allowed claim
in such proceeding) on, and any and all other fees, expense reimbursement
obligations, indemnities and other amounts due pursuant to the terms of all
agreements, documents and instruments providing for, creating, securing or
evidencing or otherwise entered into in connection with (a) all Indebtedness of
the Company owed to lenders under the New Credit Facility, (b) all obligations
of the Company with respect to any Interest Rate Agreement, (c) all obligations
of the Company to reimburse any bank or other person in respect of amounts paid
under letters of credit, acceptances or other similar instruments, (d) all
other Indebtedness of the Company which does not provide that it is to rank
pari passu with or subordinate to the Notes and (e) all deferrals, renewals,
extensions and refundings of, and
<PAGE> 26
-18-
amendments, modifications and supplements to, any of the Senior Indebtedness
described above. Notwithstanding anything to the contrary in the foregoing,
Senior Indebtedness will not include (i) Indebtedness of the Company to any of
its Subsidiaries, (ii) Indebtedness represented by the Notes, (iii) any
Indebtedness which by the express terms of the agreement or instrument
creating, evidencing or governing the same is junior or subordinate in right of
payment to any item of Senior Indebtedness, (iv) any trade payable arising from
the purchase of goods or materials or for services obtained in the ordinary
course of business or (v) Indebtedness incurred in violation of this Indenture,
except if such Indebtedness was incurred under the New Credit Facility based on
financial information and certificates provided by responsible officers of the
Company and relied on in good faith by the lenders thereunder in which event
such Indebtedness shall be deemed to have been incurred in compliance with this
Indenture and constitute Senior Indebtedness.
"Senior Preferred Stock" means the 2,000 shares of 15%
Cumulative Compounding Redeemable Preferred Stock of the Company and the
714.286 shares of Series B 15% Cumulative Compounding Redeemable Preferred
Stock of the Company, in each case outstanding on the Issue Date.
"Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, officers or trustees thereof is held by such first-named Person
or any of its Subsidiaries; or (ii) in the case of a partnership, joint
venture, association or other business entity, with respect to which such
first-named Person or any of its Subsidiaries has the power to direct or cause
the direction of the management and policies of such entity by contract or
otherwise or if in accordance with GAAP such entity is consolidated with the
first-named Person for financial statement purposes.
"Subsidiary Preferred Stock" means Preferred Stock issued by a
Subsidiary of the Company.
"Temporary Cash Investments" means (i) Investments in
marketable, direct obligations issued, guaranteed or insured by the United
States of America, or of any governmental agency, instrumentality or political
subdivision thereof, maturing within 365 days of the date of purchase; (ii)
Investments in certificates of deposit issued by a bank organized under the
laws of the United States of America or any state thereof or the District of
Columbia, in each case having capital, surplus and undivided profits totaling
more than $500,000,000 and rated at least A by S&P and A-2 by Moody's maturing
within 365 days of purchase; (iii) Investments not exceeding 365 days in
duration in money market funds that invest substantially all of such funds'
assets in the Investments described in the preceding clauses (i) and (ii); or
(iv) any security maturing not more than 180 days after the date of
acquisition,
<PAGE> 27
-19-
backed by stand-by or direct pay letters of credit issued by a bank meeting the
qualifications described in clause (ii) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
Section Section 77aaa-77bbbb) as in effect on the date of this Indenture
(except as provided in Section 8.03 hereof).
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer trust accounts.
"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor.
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary and (b) any Subsidiary of the Company which is
classified after the Issue Date as an Unrestricted Subsidiary by a resolution
adopted by the Board of Directors of the Company; provided that a Subsidiary
organized or acquired after the Issue Date may be so classified as an
Unrestricted Subsidiary only if such classification is in compliance with the
covenant set forth in Section 4.09 hereof. The Trustee shall be given prompt
notice by the Company of each resolution adopted by the Board of Directors of
the Company under this provision, together with a copy of each such resolution
adopted.
"U.S. Government Obligations" means (a) securities that are
direct obligations of the United States of America for the payment of which its
full faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America, the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and shall
also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or a specific payment of
principal or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt.
"Wholly-Owned Subsidiary" means any Restricted Subsidiary all
of the outstanding voting securities (other than directors' qualifying shares)
of which are owned, directly or indirectly, by the Company.
Section 1.02 Other Definitions.
<PAGE> 28
-20-
The definitions of the following terms may be found in the
sections indicated as follows:
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Affiliate Transaction" 4.11
"Agent Members" 2.14
"Bankruptcy Law" 6.01
"Business Day" 12.08
"Change of Control Offer" 4.19
"Change of Control Payment Date" 4.19
"Covenant Defeasance" 9.03
"Custodian" 6.01
"Event of Default" 6.01
"Excess Proceeds Offer" 4.10
"Global Notes" 2.01
"Guarantee Payment Blockage Date" 10.08
"Guarantor Representative 10.08
"Initial Blockage Period" 11.03
"Initial Guarantee Blockage Period" 10.08
"Legal Defeasance" 9.02
"Legal Holiday" 12.08
"Offer Period" 4.10
"Offshore Physical Notes" 2.01
"Paying Agent" 2.03
"Payment Blockage Period" 11.03
"Physical Notes" 2.01
"Purchase Date" 4.10
"Registrar" 2.03
"Reinvestment Date" 4.10
"Representative" 11.03
"Required Filing Dates" 4.02
"U.S. Physical Notes" 2.01
</TABLE>
Section 1.03 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
portion of such provision required to be incorporated herein in order for this
Indenture to be qualified under the TIA is incorporated by reference in and
made a part of this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the SEC.
<PAGE> 29
-21-
"indenture securities" means the Notes.
"indenture securityholder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor on the indenture securities" means the Company, the
Guarantors or any other obligor on the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by SEC rule
have the meanings therein assigned to them.
Section 1.04 Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether
defined expressly or by reference;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) words used herein implying any gender shall apply to
every gender.
ARTICLE 2.
THE NOTES
Section 2.01 Dating; Incorporation of Form in Indenture.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A which is incorporated in and
made part of this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. The
<PAGE> 30
-22-
Company may use "CUSIP" numbers in issuing the Notes. The Company shall
approve the form of the Notes. Each Note shall be dated the date of its
authentication.
The Notes offered and sold in reliance on Rule 144A shall be
issued initially in the form of one or more permanent Global Notes in
registered form, substantially in the form set forth in Exhibit A ("Global
Notes"), deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided and shall bear the legend set forth on Exhibit B. The aggregate
principal amount of any Global Note may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depository, as hereinafter provided.
Notes offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of certificated Notes in registered
form set forth in Exhibit A (the "Offshore Physical Notes"). Notes offered and
sold in reliance on any other exemption from registration under the Securities
Act other than as described in the preceding paragraph shall be issued, and
Notes offered and sold in reliance on Rule 144A may be issued, in the form of
certificated Notes in registered form in substantially the form set forth in
Exhibit A (the "U.S. Physical Notes"). The Offshore Physical Notes and the
U.S. Physical Notes are sometimes collectively herein referred to as the
"Physical Notes."
Section 2.02 Execution and Authentication.
The Notes shall be executed on behalf of the Company by two
Officers of the Company or an Officer and an Assistant Secretary of the
Company. Such signature may be either manual or facsimile. The Company's seal
shall be impressed, affixed, imprinted or reproduced on the Notes and may be
in facsimile form.
If an Officer whose signature is on a Note no longer holds
that office at the time the Trustee authenticates the Note, the Note shall be
valid nevertheless.
A Note shall not be valid until the Trustee manually signs the
certificate of authentication on the Note. Such signature shall be conclusive
evidence that the Note has been authenticated under this Indenture.
The Trustee or an authenticating agent shall authenticate
Notes for original issue in the aggregate principal amount of $230,000,000 upon
a Company Request. The aggregate principal amount of Notes outstanding at any
time may not exceed such amount except as provided in Section 2.07 hereof.
Upon receipt of the Company Request, the Trustee shall authenticate an
additional series of Notes in an aggregate principal amount not to exceed
$230,000,000 for issuance in exchange for all Notes previously issued pursuant
to an exchange offer registered under the Securities Act or pursuant to a
Private Exchange (as defined in the Registration Rights Agreement). Exchange
Notes may have such distinctive series designation as and such changes in the
form thereof as are specified in the Company Request referred to in
<PAGE> 31
-23-
the preceding sentence. The Notes shall be issuable only in registered form
without coupons and only in denominations of $1,000 and integral multiples
thereof.
The Trustee may appoint an authenticating agent to
authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent. An authenticating agent has
the same right as an Agent to deal with the Company or an Affiliate.
Section 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar"), an
office or agency located in the Borough of Manhattan, City of New York, State
of New York where Notes may be presented for payment ("Paying Agent") and an
office or agency where notices and demands to or upon the Company in respect of
the Notes and this Indenture may be served. The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents.
Neither the Company nor any Affiliate may act as Paying Agent. The Company may
change any Paying Agent, Registrar or co-registrar without notice to any
Noteholder.
The Company shall enter into an appropriate agency agreement
with any Registrar or Paying Agent not a party to this Indenture. The
agreement shall implement the provisions of this Indenture that relate to such
Agent. The Company shall notify the Trustee of the name and address of any
such Agent. If the Company fails to maintain a Registrar or Paying Agent, or
agent for service of notices and demands, or fails to give the foregoing
notice, the Trustee shall act as such. The Company initially appoints the
Trustee as Registrar, Paying Agent and agent for service of notices and demands
in connection with the Notes.
Section 2.04 Paying Agent to Hold Money in Trust.
On or before each due date of the principal of and interest on
any Notes, the Company shall deposit with the Paying Agent a sum sufficient to
pay such principal and interest so becoming due. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and the
Trustee, may at any time during the continuance of any Payment Default, upon
written request to a Paying Agent, require such Paying Agent to forthwith pay
to the Trustee all sums so held in trust by such Paying Agent together with a
complete accounting of such sums. Upon doing so, the Paying Agent shall have
no further liability for the money.
Section 2.05 Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Noteholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee on or before each March 15 and
<PAGE> 32
-24-
September 15 in each year, and at such other times as the Trustee may request
in writing, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Noteholders.
Section 2.06 Transfer and Exchange.
When a Note is presented to the Registrar with a request to
register the transfer thereof, the Registrar shall register the transfer as
requested if the requirements of applicable law are met and, when Notes are
presented to the Registrar with a request to exchange them for an equal
principal amount of Notes of other authorized denominations, the Registrar
shall make the exchange as requested provided that every Note presented or
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar duly executed by the Holder thereof or his attorney
duly authorized in writing. To permit transfers and exchanges, upon surrender
of any Note for registration of transfer at the office or agency maintained
pursuant to Section 2.03 hereof, the Company shall execute and the Trustee
shall authenticate Notes at the Registrar's request. Any exchange or transfer
shall be without charge, except that the Company may require payment by the
Holder of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation to a transfer or exchange, but this provision shall
not apply to any exchange pursuant to Sections 2.09, 3.06 or 8.05 hereof. The
Trustee shall not be required to register transfers of Notes or to exchange
Notes for a period of 15 days before selection of any Notes to be redeemed.
The Trustee shall not be required to exchange or register transfers of any
Notes called or being called for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
Any Holder of the Global Note shall, by acceptance of such
Global Note, agree that transfers of the beneficial interests in such Global
Note may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Global Note shall be required to be reflected in a book entry.
Each Holder of a Note agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Note in violation of any provision of this
Indenture and/or applicable U.S. Federal or state securities law.
Section 2.07 Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the
Holder of a Note presents evidence to the satisfaction of the Company and the
Trustee that the Note has been lost, destroyed or wrongfully taken, the Company
shall issue and the Trustee shall authenticate a replacement Note if the
requirements of Section 8-405 of the New York Uniform Commercial Code as in
effect on the date of this Indenture are met. An indemnity bond may be
required by the Company or the Trustee that is sufficient in the judgment of
the Company and the Trustee
<PAGE> 33
-25-
to protect the Company, the Trustee or any Agent from any loss which any of
them may suffer if a Note is replaced. In every case of destruction, loss or
theft, the applicant shall also furnish to the Company and to the Trustee
evidence to their satisfaction of the destruction, loss or the theft of such
Note and the ownership thereof. The Company and the Trustee may charge for its
expenses in replacing a Note. Every replacement Note is an additional
obligation of the Company.
Section 2.08 Outstanding Notes.
Notes outstanding at any time are all Notes authenticated by
the Trustee except for those canceled by it, those delivered to it for
cancellation, and those described in this Section 2.08 as not outstanding.
If a Note is replaced pursuant to Section 2.07, it ceases to
be outstanding until the Company and the Trustee receive proof satisfactory to
each of them that the replaced Note is held by a bona fide purchaser.
If a Paying Agent holds on a Redemption Date or Maturity Date
money sufficient to pay the principal of, premium, if any, and accrued interest
on Notes payable on that date, then on and after that date such Notes cease to
be outstanding and interest on them ceases to accrue.
Subject to Section 12.06, a Note does not cease to be
outstanding solely because the Company or an Affiliate holds the Note.
Section 2.09 Temporary Notes.
Until definitive Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Notes. Temporary Notes
shall be substantially in the form, and shall carry all rights, of definitive
Notes but may have variations that the Company considers appropriate for
temporary Notes. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes
presented to it.
Section 2.10. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee
shall cancel and retain or, upon written request of the Company, may destroy or
return to the Company in accordance with its normal practice, all Notes
surrendered for transfer, exchange, payment or cancellation and if such Notes
are destroyed, deliver a certificate of destruction to the Company unless the
Company instructs the Trustee in writing to deliver the Notes to the Company.
Subject to Section 2.07 hereof, the
<PAGE> 34
-26-
Company may not issue new Notes to replace Notes in respect of which it has
previously paid all principal, premium and interest accrued thereon, or
delivered to the Trustee for cancellation.
Section 2.11. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted amounts, plus any interest payable on defaulted
amounts pursuant to Section 4.01 hereof, to the persons who are Noteholders on
a subsequent special record date. The Company shall fix the special record
date and payment date in a manner satisfactory to the Trustee and provide the
Trustee at least 20 days notice of the proposed amount of default interest to
be paid and the special payment date. At least 15 days before the special
record date, the Company shall mail or cause to be mailed to each Noteholder at
his address as it appears on the Notes register maintained by the Registrar a
notice that states the special record date, the payment date (which shall be
not less than five nor more than ten days after the special record date), and
the amount to be paid. In lieu of the foregoing procedures, the Company may
pay defaulted interest in any other lawful manner satisfactory to the Trustee.
Section 2.12. Deposit of Moneys.
Prior to 10:00 a.m., New York City time, on each Interest
Payment Date and Maturity Date, the Company shall have deposited with the
Paying Agent in immediately available funds money sufficient to make cash
payments, if any, due on such Interest Payment Date or Maturity Date, as the
case may be, in a timely manner which permits the Trustee to remit payment to
the Holders on such Interest Payment Date or Maturity Date, as the case may be.
The principal and interest on Global Notes shall be payable to the Depository
or its nominee, as the case may be, as the sole registered owner and the sole
holder of the Global Notes represented thereby. The principal and interest on
Notes in certificated form shall be payable at the office of the Paying Agent.
Section 2.13. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number(s),
and if so, the Trustee shall use the CUSIP number(s) in notices of redemption
or exchange as a convenience to Holders, provided that any such notice may
state that no representation is made as to the correctness or accuracy of the
CUSIP number(s) printed in the notice or on the Notes, and that reliance may be
placed only on the other identification numbers printed on the Notes.
Section 2.14. Book-Entry Provisions for Global Notes.
(a) The Global Notes initially shall (i) be registered in
the name of the Depository or the nominee of such Depository, (ii) be delivered
to the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Exhibit B.
<PAGE> 35
-27-
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Note held on their behalf by the Depository, or the Trustee as its custodian,
or under the Global Note, and the Depository may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the absolute owner of
the Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy
or other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices
governing the exercise of the rights of a Holder of any Note.
(b) Transfers of Global Notes shall be limited to
transfer in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global Notes may be
transferred or exchanged for Physical Notes in accordance with the rules and
procedures of the Depository and the provisions of Section 2.15. In addition,
Physical Notes shall be transferred to all beneficial owners in exchange for
their beneficial interests in Global Notes if (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for any Global
Note and a successor depositary is not appointed by the Company within 90 days
of such notice or (ii) an Event of Default has occurred and is continuing and
the Registrar has received a written request from the Depository to issue
Physical Notes.
(c) In connection with any transfer or exchange of a
portion of the beneficial interest in any Global Note to beneficial owners
pursuant to paragraph (b), the Registrar shall (if one or more Physical Notes
are to be issued) reflect on its books and records the date and a decrease in
the principal amount of the Global Note in an amount equal to the principal
amount of the beneficial interest in the Global Note to be transferred, and the
Company shall execute, and the Trustee shall upon receipt of a written order
from the Company authenticate and make available for delivery, one or more
Physical Notes of like tenor and amount.
(d) In connection with the transfer of Global Notes as an
entirety to beneficial owners pursuant to paragraph (b), the Global Notes shall
be deemed to be surrendered to the Trustee for cancellation, and the Company
shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in writing in exchange for its
beneficial interest in the Global Notes, an equal aggregate principal amount of
Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security
delivered in exchange for an interest in a Global Note pursuant to paragraph
(b), (c) or (d) shall, except as otherwise provided by paragraphs (a)(i)(x) and
(c) of Section 2.15, bear the legend regarding transfer restrictions applicable
to the Physical Notes set forth in Exhibit A.
(f) The Holder of any Global Note may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent
<PAGE> 36
-28-
Members, to take any action which a Holder is entitled to take under this
Indenture, the Notes or the Guarantees.
Section 2.15. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited
Investors and Non-U.S. Persons. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to any Institutional Accredited Investor which is not a QIB
or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after
September 28, 1998 or (y) (1) in the case of a transfer to an
Institutional Accredited Investor which is not a QIB (excluding
Non-U.S. Persons), the proposed transferee has delivered to the
Registrar a certificate substantially in the form of Exhibit C hereto
or (2) in the case of a transfer to a Non-U.S. Person (including a
QIB), the proposed transferor has delivered to the Registrar a
certificate substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding
a beneficial interest in a Global Note, upon receipt by the Registrar
of (x) the certificate, if any, required by paragraph (i) above and
(y) instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in a Global Note to be transferred,
and (b) the Company shall execute, the Guarantors shall endorse and the Trustee
shall authenticate and make available for delivery one or more Physical Notes
of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer of a Note
constituting a Restricted Security to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the
box provided for on the form of Note stating, or has otherwise advised
the Company and the Registrar in writing, that the sale has been made
in compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Note stating, or
has otherwise advised the Company and the Registrar in writing, that
it is purchasing the Note for its own account or an account with
respect to which it exercises sole investment discretion and that it
and any such account is a QIB within the meaning of Rule 144A, and is
aware that the sale
<PAGE> 37
-29-
to it is being made in reliance on Rule 144A and acknowledges that it
has received such information regarding the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and
the Securities to be transferred consist of Physical Notes which after
transfer are to be evidenced by an interest in the Global Note, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of the Global Note in an amount equal to the
principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred.
(c) Private Placement Legend. Upon the transfer,
exchange or replacement of Notes not bearing the Private Placement Legend, the
Registrar shall deliver Notes that do not bear the Private Placement Legend.
Upon the transfer, exchange or replacement of Securities bearing the Private
Placement Legend, the Registrar shall deliver only Notes that bear the Private
Placement Legend unless (i) the circumstances contemplated by paragraph
(a)(i)(x) of this Section 2.15 exist, (ii) there is delivered to the Registrar
an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to
the effect that neither such legend nor the related restrictions on transfer
are required in order to maintain compliance with the provisions of the
Securities Act or (iii) such Note has been sold pursuant to an effective
registration statement under the Securities Act.
(d) General. By its acceptance of any Note bearing the
Private Placement Legend, each Holder of such a Note acknowledges the
restrictions on transfer of such Note set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Note only as
provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.14 or this Section
2.15. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable notice to the Registrar.
<PAGE> 38
-30-
ARTICLE 3.
REDEMPTION
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Section 3.07
hereof, (i) at least 60 days prior to the Redemption Date in the case of a
partial redemption, (ii) at least 45 days prior to the Redemption Date in the
case of a total redemption or (iii) during such other period as the Trustee may
agree to, the Company shall notify the Trustee in writing of the Redemption
Date, the principal amount of Notes to be redeemed and the redemption price,
and deliver to the Trustee an Officers' Certificate stating that such
redemption will comply with the conditions contained in Section 3.07 hereof, as
appropriate.
Section 3.02. Selection by Trustee of Notes to Be Redeemed.
In the event that fewer than all of the Notes are to be
redeemed, the Trustee shall select the Notes to be redeemed, if the Notes are
listed on a national securities exchange, in accordance with the rules of such
exchange or, if the Notes are not so listed, on either a pro rata basis or by
lot, or such other method as it shall deem fair and equitable; provided,
however, that if a partial redemption is made with the proceeds of a Public
Equity Offering or a Major Asset Sale, selection of the Notes or portion
thereof for redemption shall be made by the Trustee on a pro rata basis, unless
such a method is prohibited. The Trustee shall promptly notify the Company of
the Notes selected for redemption and, in the case of any Notes selected for
partial redemption, the principal amount thereof to be redeemed. The Trustee
may select for redemption portions of the principal of the Notes that have
denominations larger than $1,000. Notes and portions thereof the Trustee
selects shall be redeemed in amounts of $1,000 or whole multiples of $1,000.
For all purposes of this Indenture unless the context otherwise requires,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
At least 30 days, and no more than 60 days, before a
Redemption Date, the Company shall mail, or cause to be mailed, a notice of
redemption by first-class mail to each Holder of Notes to be redeemed at his or
her last address as the same appears on the registry books maintained by the
Registrar pursuant to Section 2.03 hereof.
The notice shall identify the Notes to be redeemed (including
the CUSIP numbers thereof) and shall state:
(1) the Redemption Date;
<PAGE> 39
-31-
(2) the redemption price;
(3) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the
Redemption Date and upon surrender of such Note, a new Note or Notes
in principal amount equal to the unredeemed portion will be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(6) that unless the Company defaults in making the
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the Redemption Date;
(7) the paragraph of Section 3.07 hereof pursuant to
which the Notes called for redemption are being redeemed; and
(8) the aggregate principal amount of Notes that are
being redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's sole expense.
Section 3.04. Effect of Notice of Redemption.
Once the notice of redemption described in Section 3.03 is
mailed, Notes called for redemption become due and payable on the Redemption
Date and at the redemption price, including any premium, plus interest accrued
to the Redemption Date. Upon surrender to the Paying Agent, such Notes shall
be paid at the redemption price, including any premium, plus interest accrued
to the Redemption Date, provided that if the Redemption Date is after a regular
interest payment record date and on or prior to the Interest Payment Date, the
accrued interest shall be payable to the Holder of the redeemed Notes
registered on the relevant record date, and provided, further, that if a
Redemption Date is a Legal Holiday, payment shall be made on the next
succeeding Business Day and no interest shall accrue for the period from such
Redemption Date to such succeeding Business Day.
Section 3.05. Deposit of Redemption Price.
On or prior to 10:00 A.M., New York City time, on each
Redemption Date, the Company shall deposit with the Paying Agent in immediately
available funds money sufficient to pay the redemption price of and accrued
interest on all Notes to be redeemed on that date
<PAGE> 40
-32-
other than Notes or portions thereof called for redemption on that date which
have been delivered by the Company to the Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay
the redemption price of and accrued interest on Notes called for redemption
shall have been made available in accordance with the preceding paragraph, the
Notes called for redemption will cease to accrue interest and the only right of
the Holders of such Notes will be to receive payment of the redemption price of
and, subject to the first proviso in Section 3.04, accrued and unpaid interest
on such Notes to the Redemption Date. If any Note called for redemption shall
not be so paid, interest will be paid, from the Redemption Date until such
redemption payment is made, on the unpaid principal of the Note and any
interest not paid on such unpaid principal, in each case, at the rate and in
the manner provided in the Notes.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Trustee
shall authenticate for a Holder a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
(a) The Company may redeem the Notes, in whole or in
part, at any time on or after October 1, 1999 at the following redemption
prices (expressed as a percentage of principal amount), together, in each case,
with accrued and unpaid interest to the Redemption Date, if redeemed during the
twelve-month period beginning on October 1 of each year listed below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1999 . . . . . . . . . . . . . . . . . . . . 104%
2000 . . . . . . . . . . . . . . . . . . . . 102%
2001 and thereafter . . . . . . . . . . . . . 100%
</TABLE>
(b) Notwithstanding the foregoing, the Company may redeem
in the aggregate up to 25% of the original principal amount of Notes at any
time and from time to time prior to October 1, 1998 at a redemption price equal
to 110% of the aggregate principal amount so redeemed, plus accrued interest to
the Redemption Date with the Net Proceeds of either or both of one or more
Public Equity Offerings or Major Asset Sales; provided that at least
$172,500,000 aggregate principal amount of Notes remain outstanding immediately
after the occurrence of any such redemption pursuant to a Public Equity
Offering or a Major Asset Sale and that any such redemption occurs within 90
days following the closing of any such Public Equity Offering or Major Asset
Sale.
<PAGE> 41
-33-
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay the principal of and interest (including
all Additional Interest as provided in the Registration Rights Agreement) on
the Notes on the dates and in the manner provided in the Notes and this
Indenture. An installment of principal or interest shall be considered paid on
the date it is due if the Trustee or Paying Agent holds on that date money
designated for and sufficient to pay such installment.
The Company shall pay interest on overdue principal (including
post-petition interest in a proceeding under any Bankruptcy Law), and overdue
interest, to the extent lawful, at the rate specified in the Notes.
Section 4.02. SEC Reports.
(a) The Company will file with the SEC all information,
documents and reports to be filed with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act, whether or not the Company is subject to such filing
requirements so long as the SEC will accept such filings. The Company (at its
own expense) will file with the Trustee within 15 days after it files them with
the SEC, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) which the Company files with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. Upon qualification of
this Indenture under the TIA, the Company shall also comply with the provisions
of TIA Section 314(a). Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee's receipt of
such shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
(b) At the Company's expense, regardless of whether the
Company is required to furnish such reports and other information referred to
in paragraph (a) above to its stockholders pursuant to the Exchange Act, the
Company shall cause such reports and other information to be mailed to the
Holders at their addresses appearing in the register of Notes maintained by the
Registrar within 15 days after it files them with the SEC.
(c) The Company will, upon request, provide to any Holder
of Notes or any prospective transferee of any such Holder any information
concerning the Company (including financial statements) necessary in order to
permit such Holder to sell or transfer Notes in compliance with Rule 144A under
the Securities Act; provided, however, that the Company shall
<PAGE> 42
-34-
not be required to furnish such information in connection with any request
made on or after the date which is three years from the later of (i) the date
such Note (or any predecessor Note) was acquired from the Company or (ii) the
date such Note (or any predecessor Note) was last acquired from an "affiliate"
of the Company within the meaning of Rule 144 under the Securities Act.
Section 4.03. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead (as a defense or
otherwise) or in any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law or any usury law or other law which would
prohibit or forgive the Company from paying all or any portion of the principal
of, premium, if any, and/or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of this Indenture; and (to the extent that it
may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 100
days after the end of each fiscal year and on or before 50 days after the end
of the first, second and third quarters of each fiscal year, an Officers'
Certificate (one of the signers of which shall be the principal executive
officer, principal financial officer or principal accounting officer of the
Company) stating that a review of the activities of the Company and its
Subsidiaries during such fiscal year or fiscal quarter, as the case may be, has
been made under the supervision of the signing Officers with a view to
determining whether each has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge each has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions hereof (or, if a Default or Event of
Default shall have occurred, describing all or such Defaults or Events of
Default of which he or she may have knowledge and what action each is taking or
proposes to take with respect thereto) and that to the best of his or her
knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action each is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.02 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
<PAGE> 43
-35-
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of this Article 4 or Article 5 hereof of
this Indenture or, if any such violation has occurred, specifying the nature
and period of existence thereof, it being understood that such accountants
shall not be liable directly or indirectly for any failure to obtain knowledge
of any such violation.
(c) The Company will, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes
to take with respect thereto.
Section 4.05. Taxes.
The Company shall, and shall cause each of its Subsidiaries
to, pay prior to delinquency all material taxes, assessments, and governmental
levies except as contested in good faith and by appropriate proceedings.
Section 4.06. Limitation on Additional Indebtedness.
The Company will not, and will not permit any Restricted
Subsidiary of the Company to, directly or indirectly, incur any Indebtedness
(including Acquired Indebtedness) unless (a) after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the ratio of the Company's total Indebtedness to the Company's
Adjusted EBITDA (determined on a pro forma basis for the last four fiscal
quarters of the Company for which financial statements are available at the
date of determination) is less than 7.0 to 1 if the Indebtedness is incurred
prior to the first anniversary of the Issue Date, 6.5 to 1 if the Indebtedness
is incurred after the first and before the second anniversary of the Issue Date
and 5.75 to 1 if the Indebtedness is incurred thereafter; provided, however,
that if the Indebtedness which is the subject of a determination under this
provision is Acquired Indebtedness, or Indebtedness incurred in connection with
the simultaneous acquisition of any Person, business, property or assets, then
such ratio shall be determined by giving effect to (on a pro forma basis, as if
the transaction had occurred at the beginning of the four-quarter period) both
the incurrence or assumption of such Acquired Indebtedness or such other
Indebtedness by the Company and the inclusion in the Company's Adjusted EBITDA
of the EBITDA of the acquired Person, business, property or assets; and
provided, further, that in the event the EBITDA of the acquired Person,
business, property or assets reflects an operating loss, no amounts shall be
deducted from the Company's Adjusted EBITDA in making the determinations
described above and (b) no Default or Event of Default shall have occurred and
be continuing at the time or as a consequence of the incurrence of such
Indebtedness.
Notwithstanding the foregoing, the Company and its Restricted
Subsidiaries may incur Permitted Indebtedness; provided that the Company will
not incur any Permitted Indebted-
<PAGE> 44
-36-
ness that ranks junior in right of payment to the Notes that has a maturity or
mandatory sinking fund payment prior to the maturity of the Notes.
Section 4.07. Limitation on Preferred Stock of Restricted Subsidiaries.
The Company will not permit any Restricted Subsidiary to issue
any Preferred Stock (except Preferred Stock to the Company or a Restricted
Subsidiary) or permit any Person (other than the Company or a Subsidiary) to
hold any such Preferred Stock unless the Company or such Restricted Subsidiary
would be entitled to incur or assume Indebtedness under Section 4.06 hereof in
the aggregate principal amount equal to the aggregate liquidation value of the
Preferred Stock to be issued.
Section 4.08. Limitation on Capital Stock of Restricted Subsidiaries.
The Company will not (i) sell, pledge, hypothecate or
otherwise convey or dispose of any Capital Stock of a Restricted Subsidiary
(other than under the New Credit Facility or under the terms of any Secured
Senior Debt) or (ii) permit any of its Restricted Subsidiaries to issue any
Capital Stock, other than to the Company or a Wholly-Owned Subsidiary of the
Company. The foregoing restrictions shall not apply to an Asset Sale made in
compliance with Section 4.10 hereof or the issuance of Preferred Stock in
compliance with Section 4.06 hereof.
Section 4.09. Limitation on Restricted Payments.
The Company will not make, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, make, any Restricted
Payment, unless:
(a) no Default or Event of Default shall have occurred
and be continuing at the time of or immediately after giving effect to
such Restricted Payment;
(b) immediately after giving pro forma effect to such
Restricted Payment, the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under Section 4.06
hereof; and
(c) immediately after giving effect to such Restricted
Payment, the aggregate of all Restricted Payments declared or made
after the Issue Date does not exceed the sum of (1) 100% of the
Company's Cumulative EBITDA minus 1.4 times the Company's Cumulative
Consolidated Interest Expense, and (2) 100% of the aggregate Net
Proceeds and the fair market value of securities or other property
received by the Company from the issue or sale, after the Issue Date,
of Capital Stock (other than Disqualified Capital Stock or Capital
Stock of the Company issued to any Subsidiary of the Company) of the
Company or any Indebtedness or other securities of the Company
convertible into or exercisable or exchangeable for Capital Stock
(other than Disqualified Capital Stock) of the Company which has been
so converted or exercised or exchanged, as the case may
<PAGE> 45
-37-
be. For purposes of determining under this clause (c) the amount
expended for Restricted Payments, cash distributed shall be valued at
the face amount thereof and property other than cash shall be valued
at its fair market value determined, in good faith, by the Company's
Board of Directors.
The provisions of this Section 4.09 shall not prohibit: (i)
the payment of any distribution within 60 days after the date of declaration
thereof, if at such date of declaration such payment would comply with the
provisions of this Indenture; (ii) the retirement of any shares of Capital
Stock of the Company or subordinated Indebtedness by conversion into, or by or
in exchange for, shares of Capital Stock (other than Disqualified Capital
Stock), or out of, the Net Proceeds of the substantially concurrent sale (other
than to a Subsidiary of the Company) of other shares of Capital Stock of the
Company (other than Disqualified Capital Stock); (iii) the redemption or
retirement of Indebtedness of the Company subordinated to the Notes in exchange
for, by conversion into, or out of the Net Proceeds of, a substantially
concurrent sale or incurrence of Indebtedness (other than any Indebtedness owed
to a Subsidiary) of the Company that is contractually subordinated in right of
payment to the Notes to at least the same extent as the subordinated
Indebtedness being redeemed or retired; (iv) the retirement of any shares of
Disqualified Capital Stock by conversion into, or by exchange for, shares of
Disqualified Capital Stock, or out of the Net Proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company) of other shares of
Disqualified Capital Stock; (v) as long as no Default or Event of Default shall
have occurred and be continuing, the retirement of the Senior Preferred Stock
in accordance with the mandatory redemption and put option provisions as in
effect on the Issue Date in the applicable amended and restated certificates of
designation; provided, however, that any amounts paid by the Company with
respect to the Senior Preferred Stock pursuant to such mandatory redemption and
put option provisions shall reduce amounts otherwise available for Restricted
Payments; and provided, further, that the aggregate amount permitted to be
applied in respect of such retirement of Senior Preferred Stock under this
clause (v) on any date shall be reduced by the aggregate amount of dividends
(other than dividends payable in Common Stock of the Company) paid subsequent
to the Issue Date on the Common Stock of the Company; or (vi) beginning
December 31, 1999, and as long as no Default or Event of Default shall have
occurred and be continuing, the payment of cash dividends on the Junior
Preferred Stock at times and in amounts no less favorable to holders of the
Notes than such provisions as are in effect in the related certificate of
designations on the Issue Date; provided, however, that any cash dividends
paid with respect to the Junior Preferred Stock shall reduce amounts otherwise
available for Restricted Payments.
Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.09 were computed, which calculations
may be based upon the Company's latest available financial statements, and that
no Default or Event of Default exists and is continuing and no Default or Event
of Default will occur immediately after giving effect to any Restricted
Payments.
<PAGE> 46
-38-
Section 4.10. Limitation on Certain Asset Sales.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or
such Restricted Subsidiary, as the case may be, receives consideration at the
time of such sale or other disposition at least equal to the fair market value
thereof (as determined in good faith by the Company's Board of Directors, and
evidenced by a Board Resolution); (ii) not less than 85% of the consideration
received by the Company or its Subsidiaries, as the case may be, is in the form
of cash or Temporary Cash Investments other than in the case where the Company
is exchanging all or substantially all of the assets of one or more media
properties operated by the Company (including by way of the transfer of Capital
Stock) for all or substantially all of the assets (including by way of transfer
of Capital Stock) constituting one or more media properties operated by another
Person, provided that at least 85% of the consideration received by the Company
in such exchange, other than the media properties, is in the form of cash or
Temporary Cash Investments; and (iii) the Asset Sale Proceeds received by the
Company or such Restricted Subsidiary are applied (a) first, to the extent the
Company elects, or is required, to prepay, repay or purchase debt under any
then existing Senior Indebtedness of the Company or any Restricted Subsidiary
within 180 days following the receipt of the Asset Sale Proceeds from any Asset
Sale; (b) second, to the extent of the balance of Asset Sale Proceeds after
application as described above, to the extent the Company elects, to an
investment in assets (including Capital Stock or other securities purchased in
connection with the acquisition of Capital Stock or property of another person)
used or useful in businesses similar or ancillary to the business of the
Company or Restricted Subsidiary as conducted at the time of such Asset Sale,
provided that such investment occurs or the Company or a Restricted Subsidiary
enters into contractual commitments to make such investment, subject only to
customary conditions (other than the obtaining of financing), on or prior to
the 181st day following receipt of such Asset Sale Proceeds (the "Reinvestment
Date") and Asset Sale Proceeds contractually committed are so applied within
360 days following the receipt of such Asset Sale Proceeds; (c) third, to make
an offer for the Notes as described in Section 3.07(b) following a Major Asset
Sale; and (d) fourth, if, on the Reinvestment Date with respect to any Asset
Sale, the Available Asset Sale Proceeds exceed $10,000,000, the Company shall
apply an amount equal to such Available Asset Sale Proceeds to an offer to
repurchase the Notes, at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase (an "Excess Proceeds Offer").
(b) If the Company is required to make an Excess Proceeds
Offer, the Company shall mail, within 30 days following the Reinvestment Date,
a notice to the Holders stating, among other things: (1) that such Holders
have the right to require the Company to apply the Available Asset Sale
Proceeds to repurchase such Notes at a purchase price in cash equal to 100% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase; (2) the purchase date (the "Purchase Date"), which shall be
no earlier than 30 days and not later than 60 days from the date such notice is
mailed; (3) the instructions, determined by the Company, that each Holder must
follow in order to have such Notes repur-
<PAGE> 47
-39-
chased; and (4) the calculations used in determining the amount of Available
Asset Sale Proceeds to be applied to the repurchase of such Notes. The Excess
Proceeds Offer shall remain open for a period of 20 Business Days following its
commencement (the "Offer Period"). The notice, which shall govern the terms of
the Excess Proceeds Offer, shall state:
(1) that the Excess Proceeds Offer is being made pursuant
to this Section 4.10 and the length of time the Excess Proceeds Offer
will remain open;
(2) the purchase price and the Purchase Date;
(3) that any Note not tendered or accepted for payment
will continue to accrue interest;
(4) that any Note accepted for payment pursuant to the
Excess Proceeds Offer shall cease to accrue interest on and after the
Purchase Date;
(5) that Holders electing to have a Note purchased
pursuant to any Excess Proceeds Offer will be required to surrender
the Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Note completed, to the Company, a depositary, if
appointed by the Company, or a Paying Agent at the address specified
in the notice at least three Business Days before the Purchase Date;
(6) that Holders will be entitled to withdraw their
election if the Company, depositary or Paying Agent, as the case may
be, receives, not later than the expiration of the Offer Period, a
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Note the Holder delivered for purchase and
a statement that such Holder is withdrawing his election to have the
Note purchased;
(7) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Available Asset Sale Proceeds, the
Company shall select the Notes to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so
that only Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(8) that Holders whose Notes were purchased only in part
will be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered.
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
Notes or portions thereof tendered pursuant to the Excess Proceeds Offer,
deposit with the Paying Agent U.S. legal tender sufficient to pay the purchase
price plus accrued interest, if any, on the Notes to be purchased and deliver
to the Trustee an Officers' Certificate stating that such Notes or portions
thereof were accepted for payment by the Company in accordance with the terms
of this Section 4.10.
<PAGE> 48
-40-
The Paying Agent shall promptly (but in any case not later than 5 days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Note tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee shall authenticate and mail or make available for delivery such new
Note to such Holder equal in principal amount to any unpurchased portion of the
Note surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company will publicly
announce the results of the Excess Proceeds Offer on the Purchase Date. If an
Excess Proceeds Offer is not fully subscribed, the Company may retain that
portion of the Available Asset Sale Proceeds not required to repurchase Notes.
Section 4.11. Limitation on Transactions with Affiliates.
(a) The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into or suffer to
exist any transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets, property or
services) with any Affiliate (including entities in which the Company or any of
its Restricted Subsidiaries own a minority interest) or holder of 10% or more
of the Company's Common Stock (an "Affiliate Transaction") or extend, renew,
waive or otherwise modify the terms of any Affiliate Transaction entered into
prior to the Issue Date unless (i) such Affiliate Transaction is between or
among the Company and its Wholly-Owned Subsidiaries; or (ii) the terms of such
Affiliate Transaction is fair and reasonable to the Company or such Restricted
Subsidiary, as the case may be, and the terms of such Affiliate Transaction are
at least as favorable as the terms which could be obtained by the Company or
such Restricted Subsidiary, as the case may be, in a comparable transaction
made on an arm's-length basis between unaffiliated parties. In any Affiliate
Transaction involving an amount or having a value in excess of $1,000,000 which
is not permitted under clause (i) above, the Company must obtain a resolution
of the Board of Directors certifying that such Affiliate Transaction complies
with clause (ii) above. In transactions with a value in excess of $3,000,000
which are not permitted under clause (i) above, the Company must obtain a
written opinion as to the fairness of such a transaction from an independent
investment banking firm.
(b) The limitations set forth in Section 4.11(a) will not
apply to (i) any Restricted Payment that is not prohibited by Section 4.09
hereof, (ii) any transaction, approved by the Board of Directors of the
Company, with an officer or director of the Company or of any Subsidiary in his
or her capacity as officer or director entered into in the ordinary course of
business, including compensation and employee benefit arrangements with any
officer or director of the Company or of any Subsidiary that are customary for
public companies in the broadcasting industry or (iii) modifications of the
Senior Preferred Stock or the Junior Preferred Stock.
<PAGE> 49
-41-
Section 4.12. Limitations on Liens.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, create, incur or otherwise cause or suffer to exist
or become effective any Liens of any kind (other than Permitted Liens) upon any
property or asset of the Company or any Restricted Subsidiary or any shares of
stock or debt of any Restricted Subsidiary which owns property or assets, now
owned or hereafter acquired, unless (i) if such Lien secures Indebtedness which
is pari passu with the Notes, then the Notes are secured on an equal and
ratable basis with the obligations so secured until such time as such
obligation is no longer secured by a Lien or (ii) if such Lien secures
Indebtedness which is subordinated to the Notes, any such Lien shall be
subordinated to the Lien granted to the Holders of the Notes to the same extent
as such subordinated Indebtedness is subordinated to the Notes.
Section 4.13. Limitations on Investments.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, make any Investment other than (i) a Permitted
Investment or (ii) an Investment that is made as a Restricted Payment in
compliance with Section 4.09 hereof, after the Issue Date.
Section 4.14. Limitation on Creation of Subsidiaries.
The Company shall not create or acquire, nor permit any of its
Restricted Subsidiaries to create or acquire, any Subsidiary other than (i) a
Restricted Subsidiary existing as of the date of this Indenture, (ii) a
Restricted Subsidiary that is acquired or created after the Issue Date, or
(iii) an Unrestricted Subsidiary; provided, however, that each Restricted
Subsidiary acquired or created pursuant to clause (ii) shall at the time it has
either assets or stockholder's equity in excess of $5,000 execute a guarantee,
satisfactory in form and substance to the Trustee (and with such documentation
relating thereto as the Trustee shall require, including, without limitation a
supplement or amendment to this Indenture and Opinions of Counsel as to the
enforceability of such guarantee), pursuant to which such Restricted
Subsidiary shall become a Guarantor.
Section 4.15. Limitation on Other Senior Subordinated Debt.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, incur, contingently or
otherwise, any Indebtedness (other than the Notes and the Guarantees, as the
case may be) that is both (i) subordinate in right of payment to any Senior
Indebtedness of the Company or its Restricted Subsidiaries, as the case may be,
and (ii) senior in right of payment to the Notes and the Guarantees, as the
case may be. For purposes of this Section 4.15, Indebtedness is deemed to be
senior in right of payment to the Notes and the Guarantees, as the case may be,
if it is not explicitly subordinate in right of payment to Senior Indebtedness
at least to the same extent as the Notes and the Guarantees, as the case may
be, are subordinate to Senior Indebtedness.
<PAGE> 50
-42-
Section 4.16. Limitation on Sale and Lease-Back Transactions.
The Company will not, and will not permit any Restricted
Subsidiary to, enter into any Sale and Lease-Back Transaction unless (i) the
consideration received in such Sale and Lease-Back Transaction is at least
equal to the fair market value of the property sold, as determined, in good
faith, by the Board of Directors of the Company and (ii) the Company could
incur the Attributable Indebtedness in respect of such Sale and Lease-Back
Transaction in compliance with the Section 4.06.
Section 4.17. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid or agreed to be paid to all Holders of the Notes which so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement.
Section 4.18. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each Restricted Subsidiary, in accordance with the respective organizational
documents (as the same may be amended from time to time) of each Restricted
Subsidiary and the rights (charter and statutory), licenses and franchises of
the Company and its Restricted Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Restricted
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders.
Section 4.19. Change of Control.
(a) Within 30 days of the occurrence of a Change of
Control, the Company shall notify the Trustee in writing of such occurrence and
shall make an offer to purchase (the "Change of Control Offer") the outstanding
Notes at a purchase price equal to 101% of the principal amount thereof plus
any accrued and unpaid interest thereon to the Change of Control Payment Date
(such purchase price being hereinafter referred to as the "Change of Control
Purchase Price") in accordance with the procedures set forth in this Section
4.19.
<PAGE> 51
-43-
If the New Credit Facility is in effect, or any amounts are
owing thereunder, at the time of the occurrence of a Change of Control, prior
to the mailing of the notice to Holders described in paragraph (b) below, but
in any event within 30 days following any Change of Control, the Company
covenants to (i) repay in full all obligations under the New Credit Facility or
offer to repay in full all obligations under the New Credit Facility and repay
the obligations under the New Credit Facility of each lender who has accepted
such offer or (ii) obtain the requisite consent under the New Credit Facility
to permit the repurchase of the Notes pursuant to this Section 4.19. The
Company must first comply with the covenant described in the preceding sentence
before it shall be required to purchase Notes in the event of a Change of
Control; provided that the Company's failure to comply with the covenant
described in the preceding sentence constitutes an Event of Default described
in clause (3) under Section 6.01 hereof if not cured within 60 days after the
notice required by such clause.
(b) Within 30 days of the occurrence of a Change of
Control, the Company also shall (i) cause a notice of the Change of Control
Offer to be sent at least once to the Dow Jones News Service or similar
business news service in the United States and (ii) send by first-class mail,
postage prepaid, to the Trustee and to each Holder of the Notes, at the address
appearing in the register maintained by the Registrar of the Notes, a notice
stating:
(i) that the Change of Control Offer is being made
pursuant to this Section 4.19 and that all Notes tendered will be
accepted for payment, and otherwise subject to the terms and
conditions set forth herein;
(ii) the Change of Control Purchase Price and the purchase
date (which shall be a Business Day no earlier than 20 business days
from the date such notice is mailed (the "Change of Control Payment
Date"));
(iii) that any Note not tendered will continue to accrue
interest;
(iv) that, unless the Company defaults in the payment of
the Change of Control Purchase Price, any Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Payment Date;
(v) that Holders accepting the offer to have their Notes
purchased pursuant to a Change of Control Offer will be required to
surrender the Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Paying Agent at
the address specified in the notice prior to the close of business on
the Business Day preceding the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their
acceptance if the Paying Agent receives, not later than the close of
business on the third Business Day preceding the Change of Control
Payment Date, a facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Notes delivered for
purchase, and a statement that such Holder is withdrawing his
election to have such Notes purchased;
<PAGE> 52
-44-
(vii) that Holders whose Notes are being purchased only in
part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, provided that each Note
purchased and each such new Note issued shall be in an original
principal amount in denominations of $1,000 and integral multiples
thereof;
(viii) any other procedures that a Holder must follow to
accept a Change of Control Offer or effect withdrawal of such
acceptance; and
(ix) the name and address of the Paying Agent.
On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent
money sufficient to pay the purchase price of all Notes or portions thereof so
tendered and (iii) deliver or cause to be delivered to the Trustee Notes so
accepted together with an Officers' Certificate stating the Notes or portions
thereof tendered to the Company. The Paying Agent shall promptly mail to each
Holder of Notes so accepted payment in an amount equal to the purchase price
for such Notes, and the Company shall execute and issue, and the Trustee shall
promptly authenticate and make available for delivery to such Holder, a new
Note equal in principal amount to any unpurchased portion of the Notes
surrendered; provided that each such new Note shall be issued in an original
principal amount in denominations of $1,000 and integral multiples thereof.
(c) (i) If the Company or any Subsidiary thereof has issued
any outstanding (A) Indebtedness that is subordinated in right of payment to
the Notes or (B) Preferred Stock (which for these purposes shall include, as of
the Issue Date, the Senior Preferred Stock and Junior Preferred Stock), and the
Company or such Subsidiary is required to repurchase, or make an offer to
repurchase, such Indebtedness, or redeem, or make an offer to redeem, such
Preferred Stock, in the event of a Change of Control or to make a distribution
with respect to such subordinated Indebtedness or Preferred Stock in the event
of a Change of Control, the Company shall not consummate any such offer or
distribution with respect to such subordinated Indebtedness or Preferred Stock
until such time as the Company shall have paid the Change of Control Purchase
Price in full to the Holders of Notes that have accepted the Company's Change
of Control Offer and shall otherwise have consummated the Change of Control
Offer made to Holders of the Notes and (ii) the Company will not issue
Indebtedness that is subordinated in right of payment to the Notes or Preferred
Stock with change of control provisions requiring the payment of such
Indebtedness or Preferred Stock prior to the payment of the Notes in the event
of a Change in Control under the Indenture.
In the event that a Change of Control occurs and the Holders
of Notes exercise their right to require the Company to purchase Notes, if such
purchase constitutes a "tender offer" for purposes of Rule 14e-1 under the
Exchange Act at that time, the Company will comply with the requirements of
Rule 14e-1 as then in effect with respect to such repurchase.
<PAGE> 53
-45-
Section 4.20. Maintenance of Office or Agency.
The Company shall maintain an office or agency where Notes may
be surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee as set forth in Section 12.02.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations.
The Company shall give prompt written notice to the Trustee of such designation
or rescission and of any change in the location of any such other office or
agency.
The Company hereby initially designates the Corporate Trust
Office of the Trustee set forth in Section 12.02 as such office of the Company.
ARTICLE 5.
SUCCESSOR CORPORATION
Section 5.01 Limitation on Consolidation, Merger and Sale of Assets.
(a) The Company will not and will not permit any
Guarantor to consolidate with, merge with or into, or transfer all or
substantially all of its assets (as an entirety or substantially as an entirety
in one transaction or a series of related transactions), to any Person unless:
(i) the Company or the Guarantor, as the case may be, shall be the continuing
Person, or the Person (if other than the Company or the Guarantor) formed by
such consolidation or into which the Company or the Guarantor, as the case may
be, is merged or to which the properties and assets of the Company or the
Guarantor, as the case may be, are transferred shall be a corporation organized
and existing under the laws of the United States or any State thereof or the
District of Columbia and shall expressly assume, by a supplemental indenture,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
of the obligations of the Company or the Guarantor, as the case may be, under
the Notes and this Indenture, and the obligations under this Indenture shall
remain in full force and effect; (ii) immediately before and immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing; and (iii) immediately after giving effect to such
transaction on a pro forma basis the Company or such Person could incur at
least $1.00 additional Indebtedness
<PAGE> 54
-46-
(other than Permitted Indebtedness) pursuant to Section 4.06 hereof, provided
that a Person that is a Guarantor on the Issue Date may merge into the Company
or another Person that is a Guarantor on the Issue Date without complying with
this clause (iii).
(b) In connection with any consolidation, merger or
transfer of assets contemplated by this Section 5.01, the Company shall deliver
or cause to be delivered, to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and the
supplemental indenture in respect thereto comply with this Section 5.01 and
that all conditions precedent herein provided for relating to such transaction
or transactions have been complied with.
Section 5.02 Successor Person Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company or any Guarantor in accordance
with Section 5.01 above, the successor corporation formed by such consolidation
or into which the Company is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor under this Indenture with the same effect as if
such successor corporation had been named as the Company or such Guarantor
herein, and thereafter the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Notes.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01 Events of Default.
An "Event of Default" occurs if
(1) there is a default in the payment of any principal
of, or premium, if any, on the Notes when the same becomes due and
payable at maturity, upon acceleration, redemption or otherwise,
whether or not such payment is prohibited by the provisions of Article
11 hereof;
(2) there is a default in the payment of any interest on
any Note when the same becomes due and payable and the Default
continues for a period of 30 days, whether or not such payment is
prohibited by the provisions of Article 11 hereof;
<PAGE> 55
-47-
(3) the Company or any Guarantor defaults in the
observance or performance of any other covenant in the Notes or this
Indenture for 60 days after written notice from the Trustee or the
Holders of not less than 25% in the aggregate principal amount of the
Notes then outstanding;
(4) there is a default in the payment at final maturity
of principal in an aggregate amount of $5,000,000 or more with respect
to any Indebtedness of the Company or any Restricted Subsidiary
thereof which default shall not be cured, waived or postponed
pursuant to an agreement with the holders of such Indebtedness within
60 days after written notice, or the acceleration of any such
Indebtedness aggregating $5,000,000 or more which acceleration shall
not be rescinded or annulled within 20 days after written notice to
the Company of such Default by the Trustee or any Holder;
(5) a court of competent jurisdiction enters a final
judgment or judgments which can no longer be appealed for the payment
of money in excess of $5,000,000 against the Company or any Restricted
Subsidiary thereof and such judgment remains undischarged, for a
period of 60 consecutive days during which a stay of enforcement of
such judgment shall not be in effect;
(6) the Company or any Restricted Subsidiary pursuant to
or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief
against it in an involuntary case,
(C) consents to the appointment of a Custodian of
it or for all or substantially all of its property,
(D) makes a general assignment for the benefit of
its creditors, or
(E) generally is not paying its debts as they
become due; or
(7) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Restricted Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any
Restricted Subsidiary or for all or substantially all
of the property of the Company or any Restricted Subsidiary,
or
<PAGE> 56
-48-
(C) orders the liquidation of the Company or any
Restricted Subsidiary, and the order or decree remains unstayed and in
effect for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
The Trustee may withhold notice to the Holders of the Notes of
any Default (except in payment of principal or premium, if any, or interest on
the Notes) if the Trustee considers it to be in the best interest of the
Holders of the Notes to do so.
Section 6.02 Acceleration.
If an Event of Default (other than an Event of Default arising
under Section 6.01(6) or (7) with respect to the Company) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding may by
written notice to the Company and the Trustee declare to be immediately due and
payable the entire principal amount of all the Notes then outstanding plus
accrued but unpaid interest to the date of acceleration and (i) such amounts
shall become immediately due and payable or (ii) if there are any amounts
outstanding under the New Credit Facility, such amounts shall become due and
payable upon the first to occur of an acceleration under the New Credit
Facility or five Business Days after receipt by the Company and the
Representative of notice of the acceleration of the Notes; provided, however,
that after such acceleration but before a judgement or decree based on such
acceleration is obtained by the Trustee, the Holders of a majority in aggregate
principal amount of the outstanding Notes may, under certain circumstances,
rescind and annul such acceleration and its consequences if all existing Events
of Default, other than the nonpayment of accelerated principal, premium, if
any, or interest that has become due solely because of the acceleration, have
been cured or waived and if the rescission would not conflict with any judgment
or decree. No such rescission shall affect any subsequent Default or impair
any right consequent thereto. In case an Event of Default specified in Section
6.01(6) or (7) with respect to the Company occurs, such principal, premium, if
any, and interest amount with respect to all of the Notes shall be due and
payable immediately without any declaration or other act on the part of the
Trustee or the Holders of the Notes.
Section 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect
the payment of principal of, or premium, if any, and interest on the Notes or
to enforce the performance of any provision of the Notes or this Indenture and
may take any necessary action requested of it as Trustee to settle, compromise,
adjust or otherwise conclude any proceedings to which it is a party.
<PAGE> 57
-49-
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Noteholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative.
Section 6.04 Waiver of Past Defaults and Events of Default.
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of
a majority in principal amount of the Notes then outstanding have the right to
waive any existing Default or Event of Default or compliance with any provision
of this Indenture or the Notes. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereto.
Section 6.05 Control by Majority.
The Holders of a majority in principal amount of the Notes
then outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee by this Indenture. The Trustee, however, may
refuse to follow any direction that conflicts with law or this Indenture or
that the Trustee determines may be unduly prejudicial to the rights of another
Noteholder not taking part in such direction, and the Trustee shall have the
right to decline to follow any such direction if the Trustee, being advised by
counsel, determines that the action so directed may not lawfully be taken or if
the Trustee in good faith shall, by a Trust Officer, determine that the
proceedings so directed may involve it in personal liability; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 6.06 Limitation on Suits.
Subject to Section 6.07 below, a Noteholder may not institute
any proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
reasonably satisfactory to the Trustee against any loss, liability or
expense;
<PAGE> 58
-50-
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60 day period by the Holders
of a majority in aggregate principal amount of the Notes then
outstanding.
A Noteholder may not use this Indenture to prejudice the
rights of another Noteholder or to obtain a preference or priority over another
Noteholder.
Section 6.07 Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal of, or premium,
if any, and interest of the Note on or after the respective due dates expressed
in the Note, or to bring suit for the enforcement of any such payment on or
after such respective dates, is absolute and unconditional and shall not be
impaired or affected without the consent of the Holder.
Section 6.08 Collection Suit by Trustee.
If an Event of Default in payment of principal, premium or
interest specified in Section 6.01(1) or (2) hereof occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an express
trust against the Company or the Guarantors (or any other obligor on the Notes)
for the whole amount of unpaid principal and accrued interest remaining unpaid,
together with interest on overdue principal and, to the extent that payment of
such interest is lawful, interest on overdue installments of interest, in each
case at the rate then borne by the Notes, and such further amounts as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Noteholders allowed in any judicial proceedings relative to the Company or the
Guarantors (or any other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same
after deduction of its charges and expenses to the extent that any such charges
and expenses are not paid out of the estate in any such proceedings and any
custodian in any such judicial proceeding is hereby authorized by each
Noteholder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount
<PAGE> 59
-51-
due to it for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Noteholder any plan or reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such
proceedings.
Section 6.10 Priorities.
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07
hereof;
SECOND: to Noteholders for amounts due and unpaid on the
Notes for principal, premium, if any, and interest as to each,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes; and
THIRD: to the Company or, to the extent the Trustee collects
any amount from any Guarantor, to such Guarantor.
The Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 6.07 hereof or a suit by Holders of more than 10%
in principal amount of the Notes then outstanding.
<PAGE> 60
-52-
ARTICLE 7.
TRUSTEE
Section 7.01 Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the same circumstances in
the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture but, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph
(b) of this Section 7.01.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Sections 6.02 and 6.05 hereof.
(4) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its rights or powers
if it shall have reasonable grounds for believing that repayment of
such
<PAGE> 61
-53-
funds or adequate indemnity satisfactory to it against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided,
paragraphs (a), (b) and (c) of this Section 7.01 shall govern every provision
of this Indenture that in any way relates to the Trustee.
(e) The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity reasonably
satisfactory to it against any loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company or any Guarantor. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by the law.
Section 7.02 Rights of Trustee.
Subject to Section 7.01 hereof:
(1) The Trustee may rely on any document reasonably
believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or
matter stated in the document.
(2) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel, or
both, which shall conform to the provisions of Section 12.05 hereof.
The Trustee shall be protected and shall not be liable for any action
it takes or omits to take in good faith in reliance on such
certificate or opinion.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed by
it with due care.
(4) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it reasonably believes to
be authorized or within its rights or powers.
(5) The Trustee may consult with counsel of its
selection, and the advice or opinion of such counsel as to matters of
law shall be full and complete authorization and protection from
liability in respect of any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion
of such counsel.
<PAGE> 62
-54-
Section 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may make loans to, accept deposits from,
perform services for or otherwise deal with the Company or any Guarantor, or
any Affiliates thereof, with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. The Trustee, however,
shall be subject to Sections 7.10 and 7.11 hereof.
Section 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the
Company's use of the proceeds from the sale of Notes or any money paid to the
Company pursuant to the terms of this Indenture and it shall not be responsible
for any statement in the Notes other than its certificate of authentication.
Section 7.05 Notice of Defaults.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to each Noteholder notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
the principal of, or premium, if any, or interest on any Note the Trustee may
withhold the notice if and so long as the board of directors of the Trustee,
the executive committee or any trust committee of such board and/or its Trust
Officers in good faith determine(s) that withholding the notice is in the
interests of the Noteholders.
Section 7.06 Reports by Trustee to Holders.
If required by TIA Section 313(a), within 60 days after May
15 of any year, commencing the May 15 following the date of this Indenture, the
Trustee shall mail to each Noteholder a brief report dated as of such May 15
that complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA Section 313(c) and TIA Section 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by
mail:
(1) to all registered Holders of Notes, as the names and
addresses of such Holders appear on the Registrar's books; and
(2) to such Holder of Notes as have, within the two years
preceding such transmission, filed their names and addresses with the
Trustee for that purpose.
<PAGE> 63
-55-
A copy of each report at the time of its mailing to
Noteholders shall be filed with the SEC and each stock exchange on which the
Notes are listed. The Company shall promptly notify the Trustee when the Notes
are listed on any stock exchange.
Section 7.07 Compensation and Indemnity.
The Company and the Guarantors shall pay to the Trustee from
time to time such compensation as shall be agreed in writing between the
Company and the Trustee for its services hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust). The Company and the Guarantors shall reimburse
the Trustee upon request for all reasonable disbursements, expenses and
advances incurred or made by it in connection with its duties under this
Indenture, including the reasonable compensation, disbursements and expenses of
the Trustee's agents and counsel.
The Company and the Guarantors shall indemnify each of the
Trustee and any predecessor Trustee for, and hold it harmless against, any and
all loss, damage, claim, liability or reasonable expense, including taxes
(other than taxes based on the income of the Trustee) incurred by it in
connection with the acceptance or performance of its duties under this
Indenture including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder (including, without limitation,
settlement costs). The Trustee shall notify the Company and the Guarantors in
writing promptly of any claim asserted against the Trustee for which it may
seek indemnity. However, the failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
the Company is prejudiced thereby.
Notwithstanding the foregoing, the Company and the Guarantors
need not reimburse the Trustee for any expense or indemnify it against any loss
or liability incurred by the Trustee through its negligence or bad faith. To
secure the payment obligations of the Company and the Guarantors in this
Section 7.07, the Trustee shall have a lien prior to the Notes on all money or
property held or collected by the Trustee except such money or property held in
trust to pay principal of and interest on particular Notes. The obligations of
the Company and the Guarantors under this Section 7.07 to compensate and
indemnify the Trustee and each predecessor Trustee and to pay or reimburse the
Trustee and each predecessor Trustee for expenses, disbursements and advances
shall be joint and several liabilities of the Company and each of the
Guarantors and shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(6) or (7) hereof occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
For purposes of this Section 7.07, the term "Trustee" shall
include any trustee appointed pursuant to Article 9.
<PAGE> 64
-56-
Section 7.08 Replacement of Trustee.
The Trustee may resign by so notifying the Company and the
Guarantors in writing. The Holders of a majority in principal amount of the
outstanding Notes may remove the Trustee by notifying the removed Trustee in
writing and may appoint a successor Trustee with the Company's written consent
which consent shall not be unreasonably withheld. The Company may remove the
Trustee at its election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property;
(4) the Trustee otherwise becomes incapable of acting; or
(5) a successor corporation becomes successor Trustee
pursuant to Section 7.09 below.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of a majority in principal amount of the outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
7.07 hereof, transfer all property held by it as Trustee to the successor
Trustee, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Noteholder. Notwithstanding replacement of
the Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.
<PAGE> 65
-57-
Section 7.09 Successor Trustee by Consolidation, Merger or Conversion.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, the successor corporation without
any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (2) in every respect. The Trustee
shall have a combined capital and surplus of at least $100,000,000 as set
forth in its most recent published annual report of condition. The Trustee
shall comply with TIA Section 310(b), including the provision in Section
310(b)(1).
Section 7.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311 (b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
Section 7.12 Paying Agents.
The Company shall cause each Paying Agent other than the
Trustee to execute and deliver to it and the Trustee an instrument in which
such agent shall agree with the Trustee, subject to the provisions of this
Section 7.12:
(A) that it will hold all sums held by it as agent for
the payment of principal of, or premium, if any, or interest on, the
Notes (whether such sums have been paid to it by the Company or by any
obligor on the Notes) in trust for the benefit of Holders of the Notes
or the Trustee;
(B) that it will at any time during the continuance of
any Event of Default, upon written request from the Trustee, deliver
to the Trustee all sums so held in trust by it together with a full
accounting thereof; and
(C) that it will give the Trustee written notice within
three (3) Business Days of any failure of the Company (or by any
obligor on the Notes) in the payment of any installment of the
principal of, premium, if any, or interest on, the Notes when the same
shall be due and payable.
<PAGE> 66
-58-
ARTICLE 8.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01 Without Consent of Holders.
The Company and the Guarantors, when authorized by a Board
Resolution of each of them, and the Trustee may amend or supplement this
Indenture or the Notes without notice to or consent of any Noteholder:
(1) to comply with Section 5.01 hereof;
(2) to provide for uncertificated Notes in addition to or
in place of certificated Notes;
(3) to comply with any requirements of the SEC under the
TIA;
(4) to cure any ambiguity, defect or inconsistency, or to
make any other change that does not materially and adversely affect
the rights of any Noteholder; or
(5) to make any other change that does not, in the
opinion of the Trustee, adversely affect in any material respect the
rights of any Noteholders hereunder.
The Trustee is hereby authorized to join with the Company and
the Guarantors in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
adversely affects its own rights, duties or immunities under this Indenture.
Section 8.02 With Consent of Holders.
The Company, the Guarantors and the Trustee may modify or
supplement this Indenture or the Notes with the written consent of the Holders
of not less than a majority in aggregate principal amount of the outstanding
Notes without notice to any Noteholder. The Holders of not less than a
majority in aggregate principal amount of the outstanding Notes may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes without notice to any Noteholder. Subject to Section
8.04, without the consent of each Noteholder affected, however, an amendment,
supplement or waiver, including a waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Notes whose Holders must consent
to an amendment, supplement or waiver to this Indenture or the Notes;
<PAGE> 67
-59-
(2) reduce the rate of or change the time for payment of
interest on any Note;
(3) reduce the principal of or premium on or change the
stated maturity of any Note;
(4) make any Note payable in money other than that stated
in the Note or change the place of payment from New York, New York;
(5) change the amount or time of any payment required by
the Notes or reduce the premium payable upon any redemption of the
Notes in accordance with Section 3.07 hereof, or change the time
before which no such redemption may be made;
(6) waive a default in the payment of the principal of,
or interest on, or redemption payment with respect to, any Note
(including any obligation to make a Change of Control Offer or, after
the Company's obligation to purchase Notes arises thereunder, an
Excess Proceeds Offer or modify any of the provisions or definitions
with respect to such offers);
(7) make any changes in Sections 6.04 or 6.07 hereof or
this sentence of Section 8.02; or
(8) affect the ranking of the Notes in a manner adverse
to the Holders.
After an amendment, supplement or waiver under this Section
8.02 becomes effective, the Company shall mail to the Holders a notice briefly
describing the amendment, supplement or waiver.
Upon the request of the Company, accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the receipt by the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Noteholders as aforesaid and upon receipt by the
Trustee of the documents described in Section 8.06 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture, in which case the Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
<PAGE> 68
-60-
Section 8.03 Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the
Notes shall comply with the TIA as then in effect.
Section 8.04 Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may
revoke the consent as to his Note or portion of a Note, if the Trustee receives
the notice of revocation before the date the amendment, supplement, waiver or
other action becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement, or waiver. If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such amendment, supplement, or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date unless the consent of the requisite number
of Holders has been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Noteholder, unless it makes a change described
in any of clauses (1) through (8) of Section 8.02 hereof. In that case the
amendment, supplement, waiver or other action shall bind each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note.
Section 8.05 Notation on or Exchange of Notes.
If an amendment, supplement, or waiver changes the terms of a
Note, the Trustee may request the Holder of the Note to deliver it to the
Trustee. In such case, the Trustee shall place an appropriate notation on the
Note about the changed terms and return it to the Holder. Alternatively, if
the Company or the Trustee so determines, the Company in exchange for the Note
shall issue and the Trustee shall authenticate a new security that reflects the
changed terms. Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment supplement or
waiver.
<PAGE> 69
-61-
Section 8.06 Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this Article 8 if the amendment, supplement or waiver
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment, supplement or waiver the Trustee shall be
entitled to receive and, subject to Section 7.01 hereof, shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating that such amendment, supplement or waiver is authorized or permitted by
this Indenture. The Company or any Guarantor may not sign an amendment or
supplement until the Board of Directors of the Company or such Guarantor, as
appropriate, approves it.
ARTICLE 9.
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01 Discharge of Indenture.
The Company and the Guarantors may terminate their obligations
under the Notes, the Guarantees and this Indenture, except the obligations
referred to in the last paragraph of this Section 9.01, if there shall have
been canceled by the Trustee or delivered to the Trustee for cancellation all
Notes theretofore authenticated and delivered (other than any Notes that are
asserted to have been destroyed, lost or stolen and that shall have been
replaced as provided in Section 2.07 hereof) and the Company has paid all sums
payable by it hereunder or deposited all required sums with the Trustee.
After such delivery the Trustee upon request shall acknowledge
in writing the discharge of the Company's and the Guarantors' obligations under
the Notes, the Guarantees and this Indenture except for those surviving
obligations specified below.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company in Sections 7.07, 9.05 and 9.06
hereof shall survive.
Section 9.02 Legal Defeasance.
The Company may at its option, by Board Resolution, be
discharged from its obligations with respect to the Notes and the Guarantors
discharged from their obligations under the Guarantees on the date the
conditions set forth in Section 9.04 below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the Notes and to have satisfied all its other obligations under such Notes
and this Indenture
<PAGE> 70
-62-
insofar as such Notes are concerned (and the Trustee, at the expense of the
Company, shall, subject to Section 9.06 hereof, execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of
outstanding Notes to receive solely from the trust funds described in Section
9.04 hereof and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such
payments are due, (B) the Company's obligations with respect to such Notes
under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08 and 4.20 hereof, (C) the
rights, powers, trusts, duties, and immunities of the Trustee hereunder
(including claims of, or payments to, the Trustee under or pursuant to Section
7.07 hereof) and (D) this Article 9. Subject to compliance with this Article
9, the Company may exercise its option under this Section 9.02 with respect to
the Notes notwithstanding the prior exercise of its option under Section 9.03
below with respect to the Notes.
Section 9.03 Covenant Defeasance.
At the option of the Company, pursuant to a Board Resolution,
the Company and the Guarantors shall be released from their respective
obligations under Sections 4.02 through 4.19 hereof, inclusive, and clause
(a)(iii) of Section 5.01 hereof with respect to the outstanding Notes on and
after the date the conditions set forth in Section 9.04 hereof are satisfied
(hereinafter, "Covenant Defeasance"). For this purpose, such Covenant
Defeasance means that the Company and the Guarantors may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such specified Section or portion thereof, whether directly or
indirectly by reason of any reference elsewhere herein to any such specified
Section or portion thereof or by reason of any reference in any such specified
Section or portion thereof to any other provision herein or in any other
document, but the remainder of this Indenture and the Notes shall be unaffected
thereby.
Section 9.04 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of
Section 9.02 or Section 9.03 hereof to the outstanding Notes:
(1) the Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.10 hereof who shall agree to comply with
the provisions of this Article 9 applicable to it) as funds in trust
for the purpose of making the following payments, specifically pledged
as security for, and dedicated solely to, the benefit of the Holders
of the Notes, (A) money in an amount, or (B) U.S. Government
Obligations which through the scheduled payment of principal and
interest in respect thereof in accordance with their terms will
provide, not later than the due date of any payment, money in an
amount, or (C) a combination thereof, sufficient, in the opinion of a
nationally-recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee (or other
<PAGE> 71
-63-
qualifying trustee) to pay and discharge, the principal of, premium,
if any, and accrued interest on the outstanding Notes at the maturity
date of such principal, premium, if any, or interest, or on dates for
payment and redemption of such principal, premium, if any, and
interest selected in accordance with the terms of this Indenture and
of the Notes;
(2) no Event of Default or Default with respect to the
Notes shall have occurred and be continuing on the date of such
deposit, or shall have occurred and be continuing at any time during
the period ending on the 91st day after the date of such deposit or,
if longer, ending on the day following the expiration of the longest
preference period under any Bankruptcy Law applicable to the Company
in respect of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period);
(3) such Legal Defeasance or Covenant Defeasance shall
not cause the Trustee to have a conflicting interest for purposes of
the TIA with respect to any securities of the Company;
(4) such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute default under
any other agreement or instrument to which the Company is a party or
by which it is bound;
(5) the Company shall have delivered to the Trustee an
Opinion of Counsel stating that, as a result of such Legal Defeasance
or Covenant Defeasance, neither the trust nor the Trustee will be
required to register as an investment company under the Investment
Company Act of 1940, as amended;
(6) in the case of an election under Section 9.02 above,
the Company shall have delivered to the Trustee an Opinion of Counsel
stating that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling to the effect that
or (ii) there has been a change in any applicable Federal income tax
law with the effect that, and such opinion shall confirm that, the
Holders of the outstanding Notes or persons in their positions will
not recognize income, gain or loss for Federal income tax purposes
solely as a result of such Legal Defeasance and will be subject to
Federal income tax on the same amounts, in the same manner, including
as a result of prepayment, and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(7) in the case of an election under Section 9.03 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that the Holders of the outstanding Notes will not
recognize income, gain or loss for Federal income tax purposes as a
result of such Covenant Defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
<PAGE> 72
-64-
(8) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to either the Legal
Defeasance under Section 9.02 above or the Covenant Defeasance under
Section 9.03 hereof (as the case may be) have been complied with;
(9) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit under clause (1) was
not made by the Company with the intent of defeating, hindering,
delaying or defrauding any creditors of the Company or others; and
(10) the Company shall have paid or duly provided for
payment under terms mutually satisfactory to the Company and the
Trustee all amounts then due to the Trustee pursuant to Section 7.07
hereof.
Section 9.05 Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions.
All money and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee pursuant to Section 9.04 hereof in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent as the Trustee may
determine, to the Holders of such Notes, of all sums due and to become due
thereon in respect of principal, premium, if any, and accrued interest, but
such money need not be segregated from other funds except to the extent
required by law.
The Company and the Guarantors shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
U.S. Government Obligations deposited pursuant to Section 9.04 hereof or the
principal, premium, if any, and interest received in respect thereof other than
any such tax, fee or other charge which by law is for the account of the
Holders of the outstanding Notes.
Anything in this Article 9 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 9.04 hereof which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
Section 9.06 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 9.01, 9.02 or 9.03
hereof by reason of any legal pro-
<PAGE> 73
-65-
ceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's and each Guarantor's obligations under this Indenture, the Notes and
the Guarantees shall be revived and reinstated as though no deposit had
occurred pursuant to this Article 9 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with Section 9.01 hereof; provided, however, that if the Company or
the Guarantors have made any payment of principal of, premium, if any, or
accrued interest on any Notes because of the reinstatement of their
obligations, the Company or the Guarantors, as the case may be, shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.
Section 9.07 Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this
Indenture, all moneys then held by any Paying Agent under the provisions of
this Indenture shall, upon demand of the Company, be paid to the Trustee, or if
sufficient moneys have been deposited pursuant to Section 9.01 hereof, to the
Company (or, if such moneys had been deposited by the Guarantors, to such
Guarantors), and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
Section 9.08 Moneys Held by Trustee.
Any moneys deposited with the Trustee or any Paying Agent or
then held by the Company or the Guarantors in trust for the payment of the
principal of, or premium, if any, or interest on any Note that are not applied
but remain unclaimed by the Holder of such Note for two years after the date
upon which the principal of, or premium, if any, or interest on such Note shall
have respectively become due and payable shall be repaid to the Company (or, if
appropriate, the Guarantors) upon Company Request, or if such moneys are then
held by the Company or the Guarantors in trust, such moneys shall be released
from such trust; and the Holder of such Note entitled to receive such payment
shall thereafter, as an unsecured general creditor, look only to the Company
and the Guarantors for the payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Trustee or any such Paying Agent, before being
required to make any such repayment, may, at the expense of the Company and the
Guarantors, either mail to each Noteholder affected, at the address shown in
the register of the Notes maintained by the Registrar pursuant to Section 2.03
hereof, or cause to be published once a week for two successive weeks, in a
newspaper published in the English language, customarily published each
Business Day and of general circulation in the City of New York, New York, a
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such mailing or
publication, any unclaimed balance of such moneys then remaining will be repaid
to the Company. After payment to the Company or the Guarantors or the release
of any money held in trust by the Company or any Guarantors, as the case may
be, Noteholders entitled to the money must look only to the Company and the
<PAGE> 74
-66-
Guarantors for payment as general creditors unless applicable abandoned
property law designates another person.
ARTICLE 10.
GUARANTEE OF NOTES
Section 10.01 Guarantee.
Subject to the provisions of this Article 10, each Guarantor
hereby jointly and severally unconditionally guarantees to each Holder and to
the Trustee, on behalf of the Holders, (i) the due and punctual payment of the
principal of, and premium, if any, and interest on each Note, when and as the
same shall become due and payable, whether at maturity, by acceleration or
otherwise, the due and punctual payment of interest on the overdue principal
of, and premium, if any, and interest on the Notes, to the extent lawful, and
the due and punctual performance of all other Obligations of the Company to the
Holders or the Trustee all in accordance with the terms of such Note and this
Indenture, and (ii) in the case of any extension of time of payment or renewal
of any Notes or any of such other Obligations, that the same will be promptly
paid in full when due or performed in accordance with the terms of the
extension or renewal, at stated maturity, by acceleration or otherwise. Each
Guarantor hereby agrees that its obligations hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any such Note or this Indenture, any
failure to enforce the provisions of any such Note or this Indenture, any
waiver, modification or indulgence granted to the Company with respect thereto
by the Holder of such Note or the Trustee, or any other circumstances which may
otherwise constitute a legal or equitable discharge of a surety or such
Guarantor.
Each Guarantor hereby waives diligence, presentment, filing of
claims with a court in the event of merger or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest or notice with
respect to any such Note or the Indebtedness evidenced thereby and all demands
whatsoever, and covenants that this Guarantee will not be discharged as to any
such Note except by payment in full of the principal thereof, premium if any,
and interest thereon and as provided in Section 9.01 hereof. Each Guarantor
further agrees that, as between such Guarantor, on the one hand, and the
Holders and the Trustee, on the other hand, (i) the maturity of the Obligations
guaranteed hereby may be accelerated as provided in Article 6 hereof for the
purposes of this Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (ii) in the event of any declaration of acceleration of
such Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by each Guarantor
for the purpose of this Guarantee. In addition, without limiting the foregoing
provisions, upon the effectiveness of an acceleration under Article 6 hereof,
<PAGE> 75
-67-
the Trustee shall promptly make a demand for payment on the Notes under the
Guarantee provided for in this Article 10 and not discharged.
The Guarantee set forth in this Section 10.01 shall not be
valid or become obligatory for any purpose with respect to a Note until the
certificate of authentication on such Note shall have been signed by or on
behalf of the Trustee.
Section 10.02 Execution and Delivery of Guarantees.
To evidence the Guarantee set forth in this Article 10, each
Guarantor hereby agrees that a notation of such Guarantee shall be placed on
each Note authenticated and made available for delivery by the Trustee and that
this Guarantee shall be executed on behalf of each Guarantor by the manual or
facsimile signature of an Officer of each Guarantor.
Each Guarantor hereby agrees that the Guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on the
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which the Guarantee is endorsed, the Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Guarantee set forth in this Indenture on behalf of each Guarantor.
Section 10.03 Limitation of Guarantee.
The obligations of each Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor (including, without limitation, any guarantees of
Senior Indebtedness) and after giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to its
contribution obligations under this Indenture, result in the obligations of
such Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in a pro rata amount based on the Adjusted Net Assets
of each Subsidiary Guarantor.
Section 10.04 Additional Guarantors.
The Company covenants and agrees that it will cause any Person
which becomes obligated to guarantee the Notes, pursuant to the terms of
Section 4.14 hereof, to execute a
<PAGE> 76
-68-
guarantee satisfactory in form and substance to the Trustee pursuant to which
such Restricted Subsidiary shall guarantee the obligations of the Company under
the Notes and this Indenture in accordance with this Article 10 with the same
effect and to the same extent as if such Person had been named herein as a
Guarantor.
Section 10.05 Release of Guarantor.
A Guarantor shall be released from all of its obligations
under its Guarantee if:
(i) the Guarantor has sold all or substantially all of
its assets or the Company and its Restricted Subsidiaries have sold
all of the Capital Stock of the Guarantor owned by them, in each case
in a transaction in compliance with Sections 4.10 and 5.01 hereof; or
(ii) the Guarantor merges with or into or consolidates
with, or transfers all or substantially all of its assets to, the
Company or another Guarantor in a transaction in compliance with
Section 5.01 hereof;
and in each such case, the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to such transactions have been complied
with.
Section 10.06 Guarantee Obligations Subordinated to Guarantor Senior
Indebtedness.
Each Guarantor covenants and agrees, and each Holder of Notes,
by its acceptance thereof, likewise covenants and agrees, that to the extent
and in the manner hereinafter set forth in this Article 10, the Indebtedness
represented by the Guarantee and the payment of the principal of, premium, if
any, and interest on the Notes pursuant to the Guarantee by such Guarantor are
hereby expressly made subordinate and subject in right of payment as provided
in this Article 10 to the prior payment in full in cash or Cash Equivalents or,
as acceptable to the holders of Guarantor Senior Indebtedness of such
Guarantor, in any other manner, of all Guarantor Senior Indebtedness of such
Guarantor.
This Section 10.06 and the following Sections 10.07 through
10.11 shall constitute a continuing offer to all Persons who, in reliance upon
such provisions, become holders of or continue to hold Guarantor Senior
Indebtedness of any Guarantor; and such provisions are made for the benefit of
the holders of Guarantor Senior Indebtedness of each Guarantor; and such
holders are made obligees hereunder and they or each of them may enforce such
provisions.
<PAGE> 77
-69-
Section 10.07 Payment Over of Proceeds upon Dissolution, etc., of a Guarantor.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to any Guarantor or to its
creditors, as such, or to its assets, whether voluntary or involuntary, or (b)
any liquidation, dissolution or other winding-up of any Guarantor, whether
voluntary or involuntary and whether or not involving insolvency or bankruptcy
or (c) any general assignment for the benefit of creditors or any other
marshaling of assets or liabilities of any Guarantor, then and in any such
event:
(1) the holders of all Guarantor Senior Indebtedness of
such Guarantor shall be entitled to receive payment in full in cash or
Cash Equivalents or, as acceptable to the holders of such Guarantor
Senior Indebtedness, in any other manner, of all amounts due on or in
respect of all such Guarantor Senior Indebtedness, or provision shall
be made for such payment, before the Holders of the Notes are entitled
to receive, pursuant to the Guarantee of such Guarantor, any payment
or distribution of any kind or character by such Guarantor on account
of any of its Obligations on its Guarantee; and
(2) any payment or distribution of assets of such
Guarantor of any kind or character, whether in cash, property or
securities, by set-off or otherwise, to which the Holders or the
Trustee would be entitled but for the subordination provisions of this
Article 10 shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly
to the holders of Guarantor Senior Indebtedness of such Guarantor or
their representative or representatives or to the trustee or trustees
under any indenture under which any instruments evidencing any of such
Guarantor Senior Indebtedness may have been issued, ratably according
to the aggregate amounts remaining unpaid on account of such Guarantor
Senior Indebtedness held or represented by each, to the extent
necessary to make payment in full in cash, Cash Equivalents or, as
acceptable to the Holders of such Guarantor Senior Indebtedness of
such Guarantor, in any other manner, of all such Guarantor Senior
Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Guarantor Senior
Indebtedness; and
(3) in the event that, notwithstanding the foregoing
provisions of this Section 10.07, the Trustee or the Holder of any
Note shall have received any payment or distribution of assets of such
Guarantor of any kind or character, whether in cash, property or
securities, including, without limitation, by way of set-off or
otherwise, in respect of any of its Obligations on its Guarantee
before all Guarantor Senior Indebtedness of such Guarantor is paid in
full or payment thereof provided for, then and in such event such
payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian,
assignee, agent or other Person making payment or distribution of
assets of such Guarantor for application to the
<PAGE> 78
-70-
payment of all such Guarantor Senior Indebtedness remaining unpaid, to
the extent necessary to pay all of such Guarantor Senior Indebtedness
in full in cash, Cash Equivalents or, as acceptable to the holders of
such Guarantor Senior Indebtedness, any other manner, after giving
effect to any concurrent payment or distribution to or for the
holders of such Guarantor Senior Indebtedness.
The consolidation of a Guarantor with, or the merger of a
Guarantor with or into, another Person or the liquidation or dissolution of a
Guarantor following the conveyance, transfer or lease of its properties and
assets substantially as an entirety to another Person upon the terms and
conditions set forth in Article 5 hereof shall not be deemed a dissolution,
winding-up, liquidation, reorganization, assignment for the benefit of
creditors or marshaling of assets and liabilities of such Guarantor for the
purposes of this Article 10 if the Person formed by such consolidation or the
surviving entity of such merger or the Person which acquires by conveyance,
transfer or lease such properties and assets substantially as an entirety, as
the case may be, shall, as a part of such consolidation, merger, conveyance,
transfer or lease, comply with the conditions set forth in such Article 5
hereof.
Section 10.08 Suspension of Guarantee Obligations When Guarantor
Senior Indebtedness in Default.
(a) Unless Section 10.07 hereof shall be applicable,
after the occurrence of a Payment Default no payment or distribution of any
assets or securities of a Guarantor (or any Restricted Subsidiary or Subsidiary
of such Guarantor) of any kind or character (including, without limitation,
cash, property and any payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of such
Guarantor being subordinated to its Obligations on its Guarantee) may be made
by or on behalf of such Guarantor (or any Restricted Subsidiary or Subsidiary
of such Guarantor), including, without limitation, by way of set-off or
otherwise, for or on account of its Obligations on its Guarantee, and neither
the Trustee nor any holder or owner of any Notes shall take or receive from any
Guarantor (or any Restricted Subsidiary or Subsidiary of such Guarantor),
directly or indirectly in any manner, payment in respect of all or any portion
of its Obligations on its Guarantee following the delivery by the
representative of the holders of Guarantor Senior Indebtedness (the "Guarantor
Representative") to the Trustee of written notice of the occurrence of a
Payment Default, and in any such event, such prohibition shall continue until
such Payment Default is cured, waived in writing or ceases to exist. At such
time as the prohibition set forth in the preceding sentence shall no longer be
in effect, subject to the provisions of the following paragraph (b), such
Guarantor shall resume making any and all required payments in respect of its
Obligations under its Guarantee.
(b) Unless Section 10.07 hereof shall be applicable, upon
the occurrence of a Non-Payment Event of Default on Designated Senior
Indebtedness, no payment or distribution of any assets of such Guarantor of any
kind or character shall be made by such Guarantor, including, without
limitation, by way of set-off or otherwise, on account of any of its
<PAGE> 79
-71-
Obligations on its Guarantee for a period (the "Guarantee Payment Blockage
Period") commencing on the date of receipt by the Trustee of written notice
from the Guarantor Representative of such Non-Payment Event of Default, unless
and until (subject to any blockage of payments that may then be in effect under
the preceding paragraph (a)) the earliest to occur of the following events:
(w) more than 179 days shall have elapsed since the date of receipt of such
written notice by the Trustee, (x) such Non-Payment Event of Default shall have
been cured or waived in writing or shall have ceased to exist, (y) such
Designated Senior Indebtedness shall have been discharged or paid in full in
cash or Cash Equivalents or (z) such Guarantee Payment Blockage Period shall
have been terminated by written notice to such Guarantor or the Trustee from
the Guarantor Representative initiating such Guarantee Payment Blockage Period,
or the holders of at least a majority in principal amount of such issue of
Designated Senior Indebtedness, after which, in the case of clause (w), (x),
(y) or (z), such Guarantor shall resume making any and all required payments in
respect of its Obligations on its Guarantee. Notwithstanding any other
provisions of this Indenture, no Non-Payment Event of Default with respect to
Designated Senior Indebtedness which existed or was continuing on the date of
the commencement of any Guarantee Payment Blockage Period initiated by the
Guarantor Representative shall be, or be made, the basis for the commencement
of a second Guarantee Payment Blockage Period initiated by the Guarantor
Representative unless such event of default shall have been cured or waived for
a period of not less than 90 consecutive days. In no event shall a Guarantee
Payment Blockage Period extend beyond 179 days from the date of the receipt by
the Trustee of the notice referred to in this Section 10.08(b) or, in the event
of a Non-Payment Event of Default which formed the basis for a Payment Blockage
Period under Section 11.03(b) hereof, 179 days from the date of the receipt by
the Trustee of the notice referred to in Section 11.03(b) (the "Initial
Guarantee Blockage Period"). Any number of additional Guarantee Payment
Blockage Periods may be commenced during the Initial Guarantee Blockage
Period; provided, however, that no such additional Guarantee Payment Blockage
Period shall extend beyond the Initial Guarantee Blockage Period. After the
expiration of the Initial Guarantee Blockage Period, no Guarantee Payment
Blockage Period may be commenced under this Section 10.08(b) and no Payment
Blockage Period may be commenced under Section 11.03(b) hereof until at least
180 consecutive days have elapsed from the last day of the Initial Guarantee
Blockage Period.
(c) In the event that, notwithstanding the foregoing, the
Trustee or the Holder of any Note shall have received any payment from a
Guarantor prohibited by the foregoing provisions of this Section 10.08, then
and in such event such payment shall be paid over and delivered forthwith to
the Guarantor Representative initiating the Guarantee Payment Blockage Period,
in trust for distribution to the holders of Guarantor Senior Indebtedness or,
if no amounts are then due in respect of Guarantor Senior Indebtedness,
promptly returned to the Guarantor, or as a court of competent jurisdiction
shall direct.
<PAGE> 80
-72-
Section 10.09 Subrogation to Rights of Holders of Guarantor Senior
Indebtedness.
Upon the payment in full of all amounts payable under or in
respect of all Guarantor Senior Indebtedness of a Guarantor, the Holders shall
be subrogated to the rights of the holders of such Guarantor Senior
Indebtedness to receive payments and distributions of cash, property and
securities of such Guarantor made on such Guarantor Senior Indebtedness until
all amounts due to be paid under the Guarantee shall be paid in full. For the
purposes of such subrogation, no payments or distributions to holders of
Guarantor Senior Indebtedness of any cash, property or securities to which
Holders of the Notes or the Trustee would be entitled except for the provisions
of this Article 10, and no payments over pursuant to the provisions of this
Article 10 to holders of Guarantor Senior Indebtedness by Holders of the Notes
or the Trustee, shall, as among each Guarantor, its creditors other than
holders of Guarantor Senior Indebtedness and the Holders of the Notes, be
deemed to be a payment or distribution by such Guarantor to or on account of
such Guarantor Senior Indebtedness.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article 10 shall
have been applied, pursuant to the provisions of this Article 10, to the
payment of all amounts payable under Guarantor Senior Indebtedness, then and
in such case, the Holders shall be entitled to receive from the holders of such
Guarantor Senior Indebtedness at the time outstanding any payments or
distributions received by such holders of Guarantor Senior Indebtedness in
excess of the amount sufficient to pay all amounts payable under or in respect
of such Guarantor Senior Indebtedness in full in cash or Cash Equivalents.
Section 10.10 Guarantee Subordination Provisions Solely to Define Relative
Rights.
The subordination provisions of this Article 10 are and are
intended solely for the purpose of defining the relative rights of the Holders
of the Notes on the one hand and the holders of Guarantor Senior Indebtedness
on the other hand. Nothing contained in this Article 10 or elsewhere in this
Indenture or in the Notes is intended to or shall (a) impair, as among each
Guarantor, its creditors other than holders of its Guarantor Senior
Indebtedness and the Holders of the Notes, the obligation of such Guarantor,
which is absolute and unconditional, to make payments to the Holders in respect
of its Obligations on its Guarantee in accordance with its terms; or (b) affect
the relative rights against such Guarantor of the Holders of the Notes and
creditors of such Guarantor other than the holders of the Guarantor Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any Note from
exercising all remedies otherwise permitted by applicable law upon a Default or
an Event of Default under this Indenture, subject to the rights, if any, under
this Article 10 of the holders of Guarantor Senior Indebtedness (1) in any
case, proceeding, dissolution, liquidation or other winding-up, assignment for
the benefit of creditors or other marshaling of assets and liabilities of the
Company referred to in Section 10.07 hereof, to receive, pursuant to and in
accordance with such Section, cash, property and securities otherwise payable
or deliverable to the Trustee or such Holder, or (2) under the
<PAGE> 81
-73-
conditions specified in Section 10.08 hereof, to prevent any payment prohibited
by such Section or enforce their rights pursuant to Section 10.08(c) hereof.
The failure by any Guarantor to make a payment in respect of
its obligations on its Guarantee by reason of any provision of this Article 10
shall not be construed as preventing the occurrence of a Default or an Event of
Default hereunder.
Section 10.11 Application of Certain Article 11 Provisions.
The provisions of Sections 11.04, 11.07, 11.08, 11.09, 11.10,
11.12 and 11.13 hereof shall apply, mutatis mutandis, to each Guarantor and
their respective holders of Guarantor Senior Indebtedness and the rights,
duties and obligations set forth therein shall govern the rights, duties and
obligations of each Guarantor, the holders of Guarantor Senior Indebtedness,
the Holders and the Trustee with respect to the Guarantee and all references
therein to Article 11 hereof shall mean this Article 10.
ARTICLE 11.
SUBORDINATION OF NOTES
Section 11.01 Notes Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of Notes, by
its acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article 11, the Indebtedness
represented by the Notes and the payment of the principal of, premium, if any,
and interest on the Notes are hereby expressly made subordinate and subject in
right of payment as provided in this Article 11 to the prior payment in full in
cash or Cash Equivalents or, as acceptable to the holders of Senior
Indebtedness, in any other manner, of all Senior Indebtedness.
This Article 11 shall constitute a continuing offer to all
Persons who, in reliance upon such provisions, become holders of or continue to
hold Senior Indebtedness; and such provisions are made for the benefit of the
holders of Senior Indebtedness; and such holders are made obligees hereunder
and they or each of them may enforce such provisions.
Section 11.02 Payment Over of Proceeds upon Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, whether voluntary or involuntary or (b)
any liquidation, dissolution or other winding-up of the Company, whether
<PAGE> 82
-74-
voluntary or involuntary and whether or not involving insolvency or bankruptcy,
or (c) any general assignment for the benefit of creditors or any other
marshalling of assets or liabilities of the Company, then and in any such
event:
(1) the holders of Senior Indebtedness shall be entitled
to receive payment in full in cash or Cash Equivalents or, as
acceptable to the holders of Senior Indebtedness, in any other manner,
of all amounts due on or in respect of all Senior Indebtedness, or
provision shall be made for such payment, before the Holders of the
Notes are entitled to receive any payment or distribution of any kind
or character on account of principal of, premium, if any, or interest
on the Notes; and
(2) any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, by
set-off or otherwise, to which the Holders or the Trustee would be
entitled but for the provisions of this Article 11 shall be paid by
the liquidating trustee or agent or other Person making such payment
or distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior
Indebtedness or their representative or representatives or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued,
ratably according to the aggregate amounts remaining unpaid on account
of the Senior Indebtedness held or represented by each, to the extent
necessary to make payment in full in cash, Cash Equivalents or, as
acceptable to the holders of Senior Indebtedness, in any other manner,
of all Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution, or provision therefor, to the
holders of such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing
provisions of this Section 11.02, the Trustee or the Holder of any
Note shall have received any payment or distribution of assets of the
Company of any kind or character, whether in cash, property or
securities, including, without limitation, by way of set-off or
otherwise, in respect of principal of, premium, if any, and interest
on the Notes before all Senior Indebtedness is paid in full or payment
thereof provided for, then and in such event such payment or
distribution shall be paid over or delivered forthwith to the trustee
in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other Person making payment or distribution of assets of the
Company for application to the payment of all Senior Indebtedness
remaining unpaid, to the extent necessary to pay all Senior
Indebtedness in full in cash, Cash Equivalents or, as acceptable to
the holders of Senior Indebtedness, any other manner, after giving
effect to any concurrent payment or distribution, or provision
therefor, to or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of the
Company with or into, another Person or the liquidation or dissolution of the
Company following the conveyance, transfer or lease of its properties and
assets substantially as an entirety to another Person upon
<PAGE> 83
-75-
the terms and conditions set forth in Article 5 hereof shall not be deemed a
dissolution, winding-up, liquidation, reorganization, assignment for the
benefit of creditors or marshaling of assets and liabilities of the Company for
the purposes of this Article 11 if the Person formed by such consolidation or
the surviving entity of such merger or the Person which acquires by conveyance,
transfer or lease such properties and assets substantially as an entirety, as
the case may be, shall, as a part of such consolidation, merger, conveyance,
transfer or lease, comply with the conditions set forth in such Article 5
hereof.
Section 11.03 Suspension of Payment When Senior Indebtedness in Default.
(a) Unless Section 11.02 hereof shall be applicable,
after the occurrence of a Payment Default no payment or distribution of any
assets or securities of the Company or any Restricted Subsidiary of any kind or
character (including, without limitation, cash, property and any payment or
distribution which may be payable or deliverable by reason of the payment of
any other Indebtedness of the Company being subordinated to the payment of the
Notes by the Company) may be made by or on behalf of the Company or any
Restricted Subsidiary, including, without limitation, by way of set-off or
otherwise, for or on account of principal of, premium, if any, or interest on
the Notes, or for or on account of the purchase, redemption or other
acquisition of the Notes, and neither the Trustee nor any holder or owner of
any Notes shall take or receive from the Company or any Restricted Subsidiary,
directly or indirectly in any manner, payment in respect of all or any portion
of Notes following the delivery by the representative of the holders of
Designated Senior Indebtedness (the "Representative") to the Trustee of written
notice of the occurrence of a Payment Default, and in any such event, such
prohibition shall continue until such Payment Default is cured, waived in
writing or ceases to exist. At such time as the prohibition set forth in the
preceding sentence shall no longer be in effect, subject to the provisions of
the following paragraph (b), the Company shall resume making any and all
required payments in respect of the Notes, including any missed payments.
(b) Unless Section 11.02 hereof shall be applicable, upon
the occurrence of a Non-Payment Event of Default on Designated Senior
Indebtedness, no payment or distribution of any assets of the Company of any
kind or character shall be made by the Company, including, without limitation,
by way of set-off or otherwise, on account of any principal of, premium, if
any, or interest on the Notes or on account of the purchase, redemption,
defeasance or other acquisition of Notes for a period ("Payment Blockage
Period") commencing on the date of receipt by the Trustee of written notice
from the Representative of such Non-Payment Event of Default unless and until
(subject to any blockage of payments that may then be in effect under the
preceding paragraph (a)) the earliest to occur of the following events: (w)
more than 179 days shall have elapsed since the date of receipt of such written
notice by the Trustee, (x) such Non- Payment Event of Default shall have been
cured or waived in writing or shall have ceased to exist, (y) such Designated
Senior Indebtedness shall have been discharged or paid in full in cash or Cash
Equivalents or (z) such Payment Blockage Period shall have been terminated by
written notice to the Company or the Trustee from the Representative initiating
such Payment Blockage Period, or the holders of at least a majority in
principal amount of such issue of
<PAGE> 84
-76-
Designated Senior Indebtedness, after which, in the case of clause (w), (x),
(y) or (z), the Company shall resume making any and all required payments in
respect of the Notes, including any missed payments. Notwithstanding any other
provisions of this Indenture, no Non-Payment Event of Default with respect to
Designated Senior Indebtedness which existed or was continuing on the date of
the commencement of any Payment Blockage Period initiated by the Representative
shall be, or be made, the basis for the commencement of a second Payment
Blockage Period initiated by the Representative unless such event of default
shall have been cured or waived for a period of not less than 90 consecutive
days. In no event shall a Payment Blockage Period extend beyond 179 days from
the date of the receipt by the Trustee of the notice referred to in this
Section 11.03(b) (the "Initial Blockage Period"). Any number of additional
Payment Blockage Periods may be commenced during the Initial Blockage Period;
provided, however, that no such additional Payment Blockage Period shall extend
beyond the Initial Blockage Period. After the expiration of the Initial
Blockage Period, no Payment Blockage Period may be commenced under this Section
11.03(b) and no Guarantee Payment Blockage Period may be commenced under
Section 10.08(b) hereof until at least 180 consecutive days have elapsed from
the last day of the Initial Blockage Period.
(c) In the event that, notwithstanding the foregoing, the
Trustee or the Holder of any Note shall have received any payment prohibited by
the foregoing provisions of this Section 11.03, then and in such event such
payment shall be paid over and delivered forthwith to the Representative
initiating the Payment Blockage Period, in trust for distribution to the
holders of Senior Indebtedness or, if no amounts are then due in respect of
Senior Indebtedness, promptly returned to the Company, or otherwise as a court
of competent jurisdiction shall direct.
Section 11.04 Trustee's Relation to Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article 11, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and
the Trustee shall not be liable to any holder of Senior Indebtedness if it
shall mistakenly pay over or deliver to Holders, the Company or any other
Person moneys or assets to which any holder of Senior Indebtedness shall be
entitled by virtue of this Article 11 or otherwise.
Section 11.05 Subrogation to Rights of Holders of Senior Indebtedness.
Upon the payment in full of all Senior Indebtedness, the
Holders of the Notes shall be subrogated to the rights of the holders of such
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of,
premium, if any and interest on the Notes shall be paid in full. For purposes
of such subrogation, no payments or distributions to the holders of Senior
Indebtedness of any cash, property or securities to which the Holders of the
Notes or the Trustee would be entitled
<PAGE> 85
-77-
except for the provisions of this Article 11, and no payments over pursuant to
the provisions of this Article 11 to the holders of Senior Indebtedness by
Holders of the Notes or the Trustee, shall, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders of the Notes, be
deemed to be a payment or distribution by the Company to or on account of the
Senior Indebtedness.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article 11 shall
have been applied, pursuant to the provisions of this Article 11, to the
payment of all amounts payable under the Senior Indebtedness of the Company,
then and in such case the Holders shall be entitled to receive from the holders
of such Senior Indebtedness at the time outstanding any payments or
distributions received by such holders of such Senior Indebtedness in excess of
the amount sufficient to pay all amounts payable under or in respect of such
Senior Indebtedness in full in cash or Cash Equivalents.
Section 11.06 Provisions Solely to Define Relative Rights.
The provisions of this Article 11 are and are intended solely
for the purpose of defining the relative rights of the Holders of the Notes on
the one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Notes is
intended to or shall (a) impair, as among the Company, its creditors other than
holders of Senior Indebtedness and the Holders of the Notes, the obligation of
the Company, which is absolute and unconditional, to pay to the Holders of the
Notes the principal of, premium, if any, and interest on the Notes as and when
the same shall become due and payable in accordance with their terms; or (b)
affect the relative rights against the Company of the Holders of the Notes and
creditors of the Company other than the holders of Senior Indebtedness; or (c)
prevent the Trustee or the Holder of any Note from exercising all remedies
otherwise permitted by applicable law upon a Default or an Event of Default
under this Indenture, subject to the rights, if any, under this Article 11 of
the holders of Senior Indebtedness (1) in any case, proceeding, dissolution,
liquidation or other winding-up, assignment for the benefit of creditors or
other marshaling of assets and liabilities of the Company referred to in
Section 11.02 hereof, to receive, pursuant to and in accordance with such
Section, cash, property and securities otherwise payable or deliverable to the
Trustee or such Holder, or (2) under the conditions specified in Section 11.03,
to prevent any payment prohibited by such Section or enforce their rights
pursuant to Section 11.03(c) hereof.
The failure to make a payment on account of principal of,
premium, if any, or interest on the Notes by reason of any provision of this
Article 11 shall not be construed as preventing the occurrence of a Default or
an Event of Default hereunder.
Section 11.07 Trustee to Effectuate Subordination.
Each Holder of a Note by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the
<PAGE> 86
-78-
subordination provided in this Article and appoints the Trustee his
attorney-in-fact for any and all such purposes, including, in the event of any
dissolution, winding-up, liquidation or reorganization of the Company whether
in bankruptcy, insolvency, receivership proceedings, or otherwise, the timely
filing of a claim for the unpaid balance of the indebtedness of the Company
owing to such Holder in the form required in such proceedings and the causing
of such claim to be approved. If the Trustee does not file such a claim prior
to 30 days before the expiration of the time to file such a claim, the holders
of Senior Indebtedness, or any Representative, may file such a claim on behalf
of Holders of the Notes.
Section 11.08 No Waiver of Subordination Provisions.
(a) No right of any present or future holder of any
Senior Indebtedness to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act, in good faith, by any such
holder, or by any non-compliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
(b) Without limiting the generality of subsection (a) of
this Section 11.08, the holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the Trustee or the
Holders of the Notes, without incurring responsibility to the Holders of the
Notes and without impairing or releasing the subordination provided in this
Article 11 or the obligations hereunder of the Holders of the Notes to the
holders of Senior Indebtedness, do any one or more of the following: (1)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness or any instrument evidencing the same or
any agreement under which Senior Indebtedness is outstanding; (2) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (3) release any Person liable in any
manner for the collection or payment of Senior Indebtedness; and (4) exercise
or refrain from exercising any rights against the Company and any other Person;
provided, however, that in no event shall any such actions limit the right of
the Holders of the Notes to take any action to accelerate the maturity of the
Notes pursuant to Article 6 hereof or to pursue any rights or remedies
hereunder or under applicable laws if the taking of such action does not
otherwise violate the terms of this Indenture.
Section 11.09 Notice to Trustee.
(a) The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the making of any
payment to or by the Trustee at its Corporate Trust Office in respect of the
Notes. Notwithstanding the provisions of this Article 11 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee in respect of the Notes, unless and until the Trustee shall have
received written
<PAGE> 87
-79-
notice thereof from the Company or a holder of Senior Indebtedness or from any
trustee, fiduciary or agent therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of this Section 11.09,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section 11.09 at least five Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose under this
Indenture (including, without limitation, the payment of the principal of,
premium, if any, or interest on any Note), then, anything herein contained to
the contrary notwithstanding but without limiting the rights and remedies of
the holders of Senior Indebtedness or any trustee, fiduciary or agent therefor,
the Trustee shall have full power and authority to receive such money and to
apply the same to the purpose for which such money was received and shall not
be affected by any notice to the contrary which may be received by it within
five Business Days prior to such date; nor shall the Trustee be charged with
knowledge of the curing of any such default or the elimination of the act or
condition preventing any such payment unless and until the Trustee shall have
received an Officers' Certificate to such effect.
(b) Subject to the provisions of Section 7.01 hereof, the
Trustee shall be entitled to rely on the delivery to it of a written notice to
the Trustee and the Company by a Person representing itself to be a holder of
Senior Indebtedness (or a trustee, fiduciary or agent therefor) to establish
that such notice has been given by a holder of Senior Indebtedness (or a
trustee, fiduciary or agent therefor); provided, however, that failure to give
such notice to the Company shall not affect in any way the ability of the
Trustee to rely on such notice. In the event that the Trustee determines in
good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article 11, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article 11, and if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 11.10 Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company
referred to in this Article 11, the Trustee, subject to the provisions of
Section 7.01 hereof, and the Holders shall be entitled to rely upon any order
or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding-up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent
<PAGE> 88
-80-
thereto or to this Article 11; provided that the foregoing shall apply only if
such court has been fully apprised of the provisions of this Article 11.
Section 11.11 Rights of Trustee as a Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article 11 with respect to any Senior
Indebtedness which may at any time be held by it, to the same extent as any
other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder. Nothing in this
Article 11 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07 hereof.
Section 11.12 Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 11 shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article 11 in addition to or in place of the
Trustee.
Section 11.13 No Suspension of Remedies.
Nothing contained in this Article 11 shall limit the right of
the Trustee or the Holders of Notes to take any action to accelerate the
maturity of the Notes pursuant to Article 6 or to pursue any rights or remedies
hereunder or under applicable law, subject to the rights, if any, under this
Article 11 of the holders, from time to time, of Senior Indebtedness.
ARTICLE 12.
MISCELLANEOUS
Section 12.01 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control.
Section 12.02 Notices.
<PAGE> 89
-81-
Any notice or communication shall be given in writing and
delivered in person, sent by facsimile, delivered by commercial courier service
or mailed by first-class mail, postage prepaid, addressed as follows:
If to the Company or any Guarantor:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Chief Financial Officer
General Counsel
Copy to:
Holland & Knight
400 North Ashley
Suite 2300
Tampa, Florida 33602
Attention: Michael L. Jamieson, Esq.
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
Fax Number: (212) 815-5915
Such notices or communications shall be effective when
received and shall be sufficiently given if so given within the time prescribed
in this Indenture.
The Company, the Guarantors or the Trustee by written notice
to the others may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed to a Noteholder shall be
mailed to him by first-class mail, postage prepaid, at his address shown on the
register kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or
any defect in it shall not affect its sufficiency with respect to other
Noteholders. If a notice or communication to a Noteholder is mailed in the
manner provided above, it shall be deemed duly given, whether or not the
addressee receives it.
<PAGE> 90
-82-
In case by reason of the suspension of regular mail service,
or by reason of any other cause, it shall be impossible to mail any notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
Section 12.03 Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or the
Notes. The Company, the Guarantors, the Trustee, the Registrar and anyone else
shall have the protection of TIA Section 312(c).
Section 12.04 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or any
Guarantor to the Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 12.05 below) stating that, in the
opinion of the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel (which shall include the
statements set forth in Section 12.05 below) stating that, in the
opinion of such counsel, all such conditions precedent have been
complied with.
Section 12.05 Statements Required in Certificate and Opinion.
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, it
or he has made such examination or investigation as is necessary to
enable it or him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
such Person, such covenant or condition has been complied with.
<PAGE> 91
-83-
Section 12.06 When Treasury Notes Disregarded.
In determining whether the Holders of the required aggregate
principal amount of Notes have concurred in any direction, waiver or consent,
Notes owned by the Company, any Guarantor or any other obligor on the Notes or
by any Affiliate of any of them shall be disregarded, except that for the
purposes of determining whether the Trustee shall be protected in relying on
any such direction, waiver or consent, only Notes which the Trustee actually
knows are so owned shall be so disregarded. Notes so owned which have been
pledged in good faith shall not be disregarded if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to act with respect to
the Notes and that the pledgee is not the Company, a Guarantor or any other
obligor upon the Notes or any Affiliate of any of them.
Section 12.07 Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or
meetings of Noteholders. The Registrar and Paying Agent may make reasonable
rules for their functions.
Section 12.08 Business Days; Legal Holidays.
A "Business Day" is a day that is not a Legal Holiday. A
"Legal Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a
day on which banking institutions are not required to be open in the State of
New York. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Section 12.09 Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
Section 12.010 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan, security or debt agreement of the Company or any Subsidiary thereof. No
such indenture, loan, security or debt agreement may be used to interpret this
Indenture.
<PAGE> 92
-84-
Section 12.011 No Recourse Against Others.
No recourse for the payment of the principal of or premium, if
any, or interest on any of the Notes, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company or any Guarantor in this Indenture or in
any supplemental indenture, or in any of the Notes, or because of the creation
of any Indebtedness represented thereby, shall be had against any stockholder,
officer, director or employee, as such, past, present or future, of the Company
or of any successor corporation or against the property or assets of any such
stockholder, officer, employee or director, either directly or through the
Company or any Guarantor, or any successor corporation thereof, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that this
Indenture and the Notes are solely obligations of the Company and the
Guarantors, and that no such personal liability whatever shall attach to, or is
or shall be incurred by, any stockholder, officer, employee or director of the
Company or any Guarantor, or any successor corporation thereof, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or the Notes
or implied therefrom, and that any and all such personal liability of, and any
and all claims against every stockholder, officer, employee and director, are
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of this Indenture and the issuance of the Notes. It is
understood that this limitation on recourse is made expressly for the benefit
of any such shareholder, employee, officer or director and may be enforced by
any of them.
Section 12.012 Successors.
All agreements of the Company and the Guarantors in this
Indenture and the Notes shall bind their respective successors. All agreements
of the Trustee, any additional trustee and any Paying Agents in this Indenture
shall bind its successor.
Section 12.013 Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 12.014 Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
<PAGE> 93
-85-
Section 12.015 Separability.
Each provision of this Indenture shall be considered separable
and if for any reason any provision which is not essential to the effectuation
of the basic purpose of this Indenture or the Notes shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
<PAGE> 94
-86-
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed, and the Company's corporate seal to be hereunto affixed and
attested, all as of the date and year first written above.
<TABLE>
<S> <C>
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Arthur D. Tek
------------------------------------
Name: Arthur D. Tek
Title: Vice President and Treasurer
ATTEST:
/s/ Anthony L. Morrison
- --------------------------
Name: Anthony L. Morrison
Title: Vice President
Guarantors:
PAXSON COMMUNICATIONS TELEVISION, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FLORIDA, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS LP, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS MANAGEMENT
COMPANY
(a Florida corporation)
PAXSON COMMUNICATIONS MARKETING, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS NETWORKS, INC.
(a Florida corporation)
PAXSON OUTDOOR, INC.
(a Florida corporation)
PAXSON NETWORKS, INC.
(a Florida corporation)
</TABLE>
<PAGE> 95
-87-
<TABLE>
<S> <C>
EXCEL MARKETING ENTERPRISES, INC.
(a Florida corporation)
INFOMALL CABLE NETWORK, INC.
(a Delaware corporation)
INFOMALL TV NETWORK, INC.
(a Delaware corporation)
INFOMALL LOS ANGELES, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF AKRON-23, INC.
(a Florida corporation)
PAXSON AKRON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ATLANTA-14, INC.
(a Florida corporation)
PAXSON ATLANTA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BOSTON-60, INC.
(a Florida corporation)
PAXSON BOSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF CLEVELAND-67,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF COOKEVILLE, INC.
(a Florida corporation)
PAXSON COOKEVILLE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DALLAS-68, INC.
(a Florida corporation)
</TABLE>
<PAGE> 96
-88-
<TABLE>
<S> <C>
PAXSON DALLAS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DAYTON-26, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DENVER-59, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FT. PIERCE-34, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF HOUSTON-49, INC.
(a Florida corporation)
PAXSON HOUSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF LOS ANGELES-30,
INC.
(a Florida corporation)
PAXSON LOS ANGELES LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MIAMI-35, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MILWAUKEE-55,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MINNEAPOLIS-45,
INC.
(a Florida corporation)
PAXSON MINNEAPOLIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW LONDON-26,
INC.
(a Florida corporation)
</TABLE>
<PAGE> 97
-89-
<TABLE>
<S> <C>
PAXSON NEW LONDON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW YORK-43, INC.
(a Florida corporation)
PAXSON NEW YORK LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ORLANDO-56, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHILADELPHIA-61,
INC.
(a Florida corporation)
PAXSON PHILADELPHIA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHOENIX-13, INC.
(a Florida corporation)
PAXSON PHOENIX LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ST. LOUIS, INC.
(a Florida corporation)
PAXSON ST. LOUIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SAN JOSE-65, INC.
(a Florida corporation)
PAXSON SAN JOSE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF TAMPA-66, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WASHINGTON-60,
INC.
(a Florida corporation)
</TABLE>
<PAGE> 98
-90-
<TABLE>
<S> <C>
PAXSON WASHINGTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WEST PALM
BEACH-25, INC.
(a Florida corporation)
PAXSON WEST PALM BEACH LICENSE, INC.
(a Florida corporation)
By: /s/ Arthur D. Tek
-------------------------------------
Name: Arthur D. Tek
Title: Vice President and Treasurer
ATTEST:
/s/ Anthony L. Morrison
- --------------------------
Name: Anthony L. Morrison
Title: Vice President
PAXSON BROADCASTING OF JACKSONVILLE, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON JACKSONVILLE LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF MIAMI, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON MIAMI LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF ORLANDO,
LIMITED PARTNERSHIP
(a Florida partnership)
</TABLE>
<PAGE> 99
-91-
<TABLE>
<S> <C>
PAXSON ORLANDO LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF TAMPA,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON TAMPA LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
By: Paxson Communications of Florida,
Inc., their general partner
By: /s/ Arthur D. Tek
------------------------------------
Name: Arthur D. Tek
Title: Vice President and Treasurer
ATTEST:
/s/ Anthony L. Morrison
- ---------------------------
Name: Anthony L. Morrison
Title: Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Paul J. Schmalzel
------------------------------------
Name: Paul J. Schmalzel
Title: Assistant Treasurer
ATTEST:
/s/ Vivian Georges
- ----------------------
Name: Vivian Georges
Title: Assistant Vice President
</TABLE>
<PAGE> 100
EXHIBIT A
(FACE OF NOTE)
[FORM OF NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE ACT)
OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3)
OR (7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL
NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS NOTE RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE ACT, (C) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED
ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS NOTE WITHIN THREE YEARS AFTER ORIGINAL ISSUANCE OF THIS NOTE, IF THE
PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN A
TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANING GIVEN TO THEM BY REGULATION S UNDER THE ACT.
A-1
<PAGE> 101
CUSIP__________
Number
PAXSON COMMUNICATIONS CORPORATION
11 5/8% SENIOR SUBORDINATED NOTE DUE 2002
Paxson Communications Corporation, a Delaware corporation (the
"Company", which term includes any successor corporation), for value received
promises to pay to ________________________ or registered assigns the principal
sum of ___________________ Dollars, on October 1, 2002.
Interest Payment Dates: April 1 and October 1, commencing April 1,
1996
Record Dates: March 15 and September 15
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
A-2
<PAGE> 102
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
<TABLE>
<S> <C>
PAXSON COMMUNICATIONS CORPORATION
By:
---------------------------
By:
---------------------------
[SEAL]
Certificate of Authentication:
This is one of the 11 5/8% Senior
Subordinated Notes due 2002 referred to in
the within-mentioned Indenture
Dated:
THE BANK OF NEW YORK,
as Trustee
By:
----------------------
Authorized Signatory
</TABLE>
A-3
<PAGE> 103
(REVERSE SIDE)
PAXSON COMMUNICATIONS CORPORATION
11 5/8% SENIOR SUBORDINATED NOTE DUE 2002
1. INTEREST.
Paxson Communications Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note
semiannually on April 1 and October 1 of each year (each an "Interest Payment
Date"), commencing on April 1, 1996, at the rate of 11 5/8% per annum.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
original issuance of the Notes.
The Company shall pay interest on overdue principal, and on
overdue premium, if any, and overdue interest, to the extent lawful, at the
rate equal to 1% per annum in excess of the rate borne by the Notes.
2. METHOD OF PAYMENT.
The Company will pay interest on this Note provided for in
Paragraph 1 above (except defaulted interest) to the person who is the
registered Holder of this Note at the close of business on the March 15 or
September 15 preceding the Interest Payment Date (whether or not such day is a
Business Day). The Holder must surrender this Note to a Paying Agent to
collect principal payments. The Company will pay principal, premium, if any,
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts; provided, however, that the
Company may pay principal, premium, if any, and interest by check payable in
such money. It may mail an interest check to the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, The Bank of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to the Holders
of the Notes. Neither the Company nor any of its Subsidiaries or Affiliates
may act as Paying Agent but may act as registrar or co-registrar.
4. INDENTURE; RESTRICTIVE COVENANTS.
The Company issued this Note under an Indenture dated as of
September 28, 1995 (the "Indenture") among the Company, the Guarantors and the
Trustee. The terms of this Note
A-4
<PAGE> 104
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S. Code Section Section
77aaa-77bbbb) as in effect on the date of the Indenture. This Note is subject
to all such terms, and the Holder of this Note is referred to the Indenture and
said Trust Indenture Act for a statement of them. All capitalized terms in
this Note, unless otherwise defined, have the meanings assigned to them by the
Indenture.
The Notes are general unsecured obligations of the Company
limited to $230,000,000 aggregate principal amount. The Indenture imposes
certain restrictions on, among other things, the incurrence of indebtedness,
the incurrence of liens and the issuance of preferred stock by the Company and
its subsidiaries, mergers and sale of assets, the payments of dividends on, or
the repurchase of, capital stock of the Company and its subsidiaries, certain
other restricted payments by the Company and its subsidiaries, certain
transactions with, and investments in, its affiliates, certain sale and
lease-back transactions and a provision regarding change-of-control
transactions.
5. SUBORDINATION.
The Indebtedness evidenced by the Notes is, to the extent and
in the manner provided in the Indenture, subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness as defined in
the Indenture, and this Note is issued subject to such provisions. Each Holder
of this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder,
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note shall cease to be so subordinate and
subject in right of payment upon any defeasance of this Note referred to in
Paragraph 18 below.
6. OPTIONAL REDEMPTION.
The Company may redeem the Notes, in whole or in part, at any
time on or after October 1, 1999 at the redemption prices set forth in Section
3.07 of the Indenture, together, in each case, with accrued and unpaid
interest to the redemption date.
In addition, the Company may redeem Notes out of the Net
Proceeds of one or more Public Equity Offerings or Major Asset Sales at the
redemption price, in the amount and under the terms set forth in the Indenture.
7. NOTICE OF REDEMPTION.
Notice of redemption will be mailed via first class mail at
least 30 days but not more than 60 days prior to the redemption date to each
Holder of Notes to be redeemed at its registered address as it shall appear on
the register of the Notes maintained by the Registrar.
A-5
<PAGE> 105
On and after any Redemption Date, interest will cease to accrue on the Notes or
portions thereof called for redemption unless the Company shall fail to redeem
any such Note.
8. OFFERS TO PURCHASE.
The Indenture requires that certain proceeds from Asset Sales
be used, subject to further limitations contained therein, to make an offer to
purchase certain amounts of Notes in accordance with the procedures set forth
in the Indenture. The Company is also required to make an offer to purchase
Notes upon occurrence of a Change of Control in accordance with procedures set
forth in the Indenture.
9. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement among the
Company, the Guarantors and Wood Gundy Inc. and Smith Barney Inc., as initial
purchasers of the Notes, the Company and the Guarantors will be obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for Notes of a separate series issued
under the Indenture (or a trust indenture substantially identical to the
Indenture in accordance with the terms of the Registration Rights Agreement)
which have been registered under the Securities Act, in like principal amount
and having substantially identical terms as the Notes. The Holders shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in
denominations of $1,000 and integral multiples thereof. A Holder may register
the transfer or exchange of Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Note selected for redemption or register the
transfer of or exchange any Note for a period of 15 days before a selection of
Notes to be redeemed or any Note after it is called for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in part.
11. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner
of it for all purposes.
12. UNCLAIMED MONEY.
If money for the payment of principal, premium or interest on
any Note remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company
A-6
<PAGE> 106
at its request. After that, Holders entitled to money must look to the Company
for payment as general creditors unless an "abandoned property" law designates
another person.
13. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may
be modified, amended or supplemented by the Company, the Guarantors and the
Trustee with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding and any existing default or compliance
with any provision may be waived in a particular instance with the consent of
the Holders of a majority in principal amount of the Notes then outstanding.
Without the consent of Holders, the Company, the Guarantors and the Trustee may
amend the Indenture or the Notes or supplement the Indenture for certain
specified purposes including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or
making any other change that does not materially and adversely affect the
rights of any Holder.
14. SUCCESSOR ENTITY.
When a successor corporation assumes all the obligations of
its predecessor under the Notes and the Indenture and immediately before and
thereafter no Default exists and certain other conditions are satisfied, the
predecessor corporation will be released from those obligations.
15. DEFAULTS AND REMEDIES.
Events of Default are set forth in the Indenture. If an Event
of Default (other than an Event of Default pursuant to Section 6.01(6) or (7)
of the Indenture with respect to the Company) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of not less than 25% in
aggregate principal amount of the Notes then outstanding, may declare to be
immediately due and payable the entire principal amount of all the Notes then
outstanding plus accrued but unpaid interest to the date of acceleration;
provided, however, that after such acceleration but before judgement or decree
based on such acceleration is obtained by the Trustee, the Holders of a
majority in aggregate principal amount of the outstanding Notes may, under
certain circumstances, rescind and annul such acceleration and its consequences
if all existing Events of Default, other than the nonpayment of principal,
premium or interest that has become due solely because of the acceleration,
have been cured or waived and if the rescission would not conflict with any
judgment or decree. No such rescission shall affect any subsequent Default or
impair any right consequent thereto. In case an Event of Default specified in
Section 6.01(6) or (7) of the Indenture with respect to the Company occurs,
such principal amount, together with premium, if any, and interest with respect
to all of the Notes, shall be due and payable immediately without any
declaration or other act on the part of the Trustee or the Holders of the
Notes.
16. TRUSTEE DEALINGS WITH THE COMPANY.
A-7
<PAGE> 107
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company, any Guarantor or their Affiliates, and may otherwise deal with
the Company, any Guarantor or their Affiliates, as if it were not Trustee.
17. NO RECOURSE AGAINST OTHERS.
As more fully described in the Indenture, a director, officer,
employee or stockholder, as such, of the Company or any Guarantor shall not
have any liability for any obligations of the Company or any Guarantor under
the Notes or the Indenture or for any claim based on, in respect or by reason
of, such obligations or their creation. The Holder of this Note by accepting
this Note waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of this Note.
18. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Company with certain conditions set forth in
the Indenture.
19. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of
a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts
to Minors Act).
20. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on
Uniform Note Identification Procedures, the Company has caused CUSIP Numbers to
be printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of the Notes. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
21. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE
A-8
<PAGE> 108
COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE OR THE NOTES.
THE COMPANY WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:
PAXSON COMMUNICATIONS CORPORATION, 601 Clearwater Park Road, West Palm Beach,
Florida 33401, Attention:
A-9
<PAGE> 109
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
________________________________________________________________________________
________________________________________________________________________________
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption
from registration under the Securities Act provided by Rule 144A
thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with (a)
above and documents are being furnished which comply with the
conditions of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.15 of the Indenture shall have
been satisfied.
<PAGE> 110
-2-
<TABLE>
<S> <C> <C>
Date: Your Signature:
---------------------------- -------------------------------------------------------
----------------------------------------------------------------------
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:
------------------------------------------------------------------------------
</TABLE>
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
<TABLE>
<S> <C>
Dated:
---------------------------------------- ---------------------------------------------
NOTICE: To be executed by
an executive officer
</TABLE>
<PAGE> 111
FORM OF NOTATION ON NOTE
RELATING TO GUARANTEE
Each Guarantor (the "Guarantor", which term includes any
successor Person under the Indenture) has unconditionally guaranteed, on a
senior subordinated basis, jointly and severally, to the extent set forth in
the Indenture and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of and interest on the Notes, whether at
maturity, by acceleration or otherwise, the due and punctual payment of
interest on overdue principal, and, to the extent permitted by law, interest,
and the due and punctual performance of all other Obligations of the Company to
the Noteholders or the Trustee all in accordance with the terms set forth in
Article 10 of the Indenture, and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, that the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.
The obligations of each Guarantor to the Noteholders and to
the Trustee pursuant to this Guarantee and the Indenture are expressly set
forth in Article 10 of the Indenture and reference is hereby made to the
Indenture for the precise terms of this Guarantee.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized signatories.
<TABLE>
<S> <C>
Guarantors:
PAXSON COMMUNICATIONS TELEVISION, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FLORIDA, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS LP, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS MANAGEMENT
COMPANY
(a Florida corporation)
PAXSON COMMUNICATIONS MARKETING, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS NETWORKS, INC.
(a Florida corporation)
PAXSON OUTDOOR, INC.
</TABLE>
<PAGE> 112
-2-
<TABLE>
<S> <C>
(a Florida corporation)
PAXSON NETWORKS, INC.
(a Florida corporation)
EXCEL MARKETING ENTERPRISES, INC.
(a Florida corporation)
INFOMALL CABLE NETWORK, INC.
(a Delaware corporation)
INFOMALL TV NETWORK, INC.
(a Delaware corporation)
INFOMALL LOS ANGELES, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF AKRON-23, INC.
(a Florida corporation)
PAXSON AKRON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ATLANTA-14, INC.
(a Florida corporation)
PAXSON ATLANTA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BOSTON-60, INC.
(a Florida corporation)
PAXSON BOSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF CLEVELAND-67,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF COOKEVILLE, INC.
(a Florida corporation)
</TABLE>
<PAGE> 113
-3-
<TABLE>
<S> <C>
PAXSON COOKEVILLE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DALLAS-68, INC.
(a Florida corporation)
PAXSON DALLAS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DAYTON-26, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DENVER-59, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FT. PIERCE-34, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF HOUSTON-49, INC.
(a Florida corporation)
PAXSON HOUSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF LOS ANGELES-30,
INC.
(a Florida corporation)
PAXSON LOS ANGELES LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MIAMI-35, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MILWAUKEE-55,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MINNEAPOLIS-45,
INC.
(a Florida corporation)
</TABLE>
<PAGE> 114
-4-
<TABLE>
<S> <C>
PAXSON MINNEAPOLIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW LONDON-26,
INC.
(a Florida corporation)
PAXSON NEW LONDON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW YORK-43,
INC.
(a Florida corporation)
PAXSON NEW YORK LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ORLANDO-56,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHILADELPHIA-61,
INC.
(a Florida corporation)
PAXSON PHILADELPHIA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHOENIX-13,
INC.
(a Florida corporation)
PAXSON PHOENIX LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ST. LOUIS, INC.
(a Florida corporation)
PAXSON ST. LOUIS LICENSE, INC.
(a Florida corporation)
</TABLE>
<PAGE> 115
-5-
<TABLE>
<S> <C>
PAXSON COMMUNICATIONS OF SAN JOSE-65, INC.
(a Florida corporation)
PAXSON SAN JOSE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF TAMPA-66,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WASHINGTON-60,
INC.
(a Florida corporation)
PAXSON WASHINGTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WEST PALM
BEACH-25, INC.
(a Florida corporation)
PAXSON WEST PALM BEACH LICENSE, INC.
(a Florida corporation)
By:
-----------------------------------
Name:
Title:
PAXSON BROADCASTING OF JACKSONVILLE,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON JACKSONVILLE LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF MIAMI, LIMITED
PARTNERSHIP
(a Florida partnership)
</TABLE>
<PAGE> 116
-6-
<TABLE>
<S> <C>
PAXSON MIAMI LICENSE LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF ORLANDO, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON ORLANDO LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF TAMPA, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON TAMPA LICENSE LIMITED PARTNERSHIP
(a Florida partnership)
By: Paxson Communications of Florida,
Inc., their general partner
By:
------------------------------------
Name:
Title:
</TABLE>
<PAGE> 117
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Company pursuant to Section 4.10 or Section 4.19 of the
Indenture, check the appropriate box:
[ ] Section 4.10 [ ] Section 4.19
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.19 of the Indenture, state the
amount you elect to have purchased:
<TABLE>
<S> <C>
$
-----------------------
Date:
------------------
Your Signature:
--------------------------------
(Sign exactly as your name appears on the face
of this Note)
- ------------------------
Signature Guaranteed
</TABLE>
<PAGE> 118
EXHIBIT B
FORM OF LEGEND FOR GLOBAL NOTES
Any Global Security authenticated and delivered hereunder
shall bear a legend (which would be in addition to any other legends required
in the case of a Restricted Security) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE
OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
B-1
<PAGE> 119
EXHIBIT C
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
___________, __
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
Re: Paxson Communications Corporation
(the "Company") 11 5/8% Senior
Subordinated Notes due 2002 (the "Notes")
Dear Sirs:
In connection with our proposed purchase of $_______ aggregate
principal amount of the Notes, we confirm that:
1. We understand that any subsequent transfer of the
Notes is subject to certain restrictions and conditions set forth in
the Indenture dated as of September 28, 1995 relating to the Notes and
the undersigned agrees to be bound by, and not to resell, pledge or
otherwise transfer the Securities except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended
(the "Securities Act").
2. We understand that the Notes have not been registered
under the Securities Act, and that the Notes may not be offered or
sold except as permitted in the following sentence. We agree, on our
own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Notes within three
years after the original issuance of the Notes, we will do so only (A)
to the Company or any subsidiary thereof, (B) inside the United States
in compliance with Rule 144A under the Securities Act, to a "qualified
institutional buyer" (as defined in Rule 144A), (C) inside the United
States to an "accredited investor" (as defined below) that, prior to
such transfer, furnishes to you a signed letter substantially in the
form of this letter, (D) outside the United States to a foreign person
in compliance with Rule 904 of Regulation S under the
C-1
<PAGE> 120
Securities Act, (E) pursuant to the exemption from registration
provided by Rule 144 under the Securities Act (if available), or (F)
pursuant to an effective registration statement under the Securities
Act, and we further agree to provide to any person purchasing any of
the Notes from us a notice advising such purchaser that resales of the
Notes are restricted as stated herein.
3. We understand that, on any proposed resale of any
Notes, we will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that
the Notes purchased by us will bear a legend to the foregoing effect.
4. We are an "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) and have such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the
Notes, and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
5. We are acquiring the Notes purchased by us for our
own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise
sole investment discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
----------------------------------------
Authorized Signature
C-2
<PAGE> 121
EXHIBIT D
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
______________, __
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee
Administration
Re: Paxson Communications Corporation
(the "Company") 11 5/8% Senior
Subordinated Notes due 2002 (the "Notes")
Dear Sirs:
In connection with our proposed sale of $___________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act
of 1933, as amended (the "Securities Act"), and, accordingly, we represent
that:
(1) the offer of the Notes was not made to a person in
the United States;
(2) either (a) at the time the buy offer was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States, or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knows that the
transaction has been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable;
D-1
<PAGE> 122
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate
have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------------------------
Authorized Signature
D-2
<PAGE> 1
EXHIBIT 4.2.1
<PAGE> 2
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE
OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2)
AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
NOTE RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (C) INSIDE THE UNITED STATES
TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS
1
<PAGE> 3
NOTE WITHIN THREE YEARS AFTER ORIGINAL ISSUANCE OF THIS NOTE, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT
SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING
GIVEN TO THEM BY REGULATION S UNDER THE ACT.
CUSIP 704231-AA-7
Number 1
PAXSON COMMUNICATIONS CORPORATION
11 5/8% SENIOR SUBORDINATED NOTE DUE 2002
Paxson Communications Corporation, a Delaware corporation (the
"Company", which term includes any successor corporation), for value received
promises to pay to CEDE & CO. or registered assigns the principal sum of One
Hundred Fifteen Million Dollars, on October 1, 2002.
Interest Payment Dates: April 1 and October 1, commencing April 1,
1996
Record Dates: March 15 and September 15
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
2
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Lowell W. Paxson
--------------------------------
By: /s/ Arthur D. Tek
--------------------------------
[SEAL]
Certificate of Authentication:
This is one of the 11 5/8% Senior
Subordinated Notes due 2002 referred to in
the within-mentioned Indenture
Dated:
THE BANK OF NEW YORK,
as Trustee
By: /s/ Paul J. Schmalzel
------------------------------
Authorized Signatory
3
<PAGE> 5
(REVERSE SIDE)
PAXSON COMMUNICATIONS CORPORATION
11 5/8% SENIOR SUBORDINATED NOTE DUE 2002
1. INTEREST.
Paxson Communications Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note
semiannually on April 1 and October 1 of each year (each an "Interest Payment
Date"), commencing on April 1, 1996, at the rate of 11 5/8% per annum.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
original issuance of the Notes.
The Company shall pay interest on overdue principal, and on
overdue premium, if any, and overdue interest, to the extent lawful, at the
rate equal to 1% per annum in excess of the rate borne by the Notes.
2. METHOD OF PAYMENT.
The Company will pay interest on this Note provided for in
Paragraph 1 above (except defaulted interest) to the person who is the
registered Holder of this Note at the close of business on the March 15 or
September 15 preceding the Interest Payment Date (whether or not such day is a
Business Day). The Holder must surrender this Note to a Paying Agent to
collect principal payments. The Company will pay principal, premium, if any,
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts; provided, however, that the
Company may pay principal, premium, if any, and interest by check payable in
such money. It may mail an interest check to the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, The Bank of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to the Holders
of the Notes. Neither the Company nor any of its Subsidiaries or Affiliates
may act as Paying Agent but may act as registrar or co-registrar.
4. INDENTURE; RESTRICTIVE COVENANTS.
The Company issued this Note under an Indenture dated as of
September 28, 1995 (the "Indenture") among the Company, the
4
<PAGE> 6
Guarantors and the Trustee. The terms of this Note include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Section Section 77aaa-77bbbb) as in effect
on the date of the Indenture. This Note is subject to all such terms, and the
Holder of this Note is referred to the Indenture and said Trust Indenture Act
for a statement of them. All capitalized terms in this Note, unless otherwise
defined, have the meanings assigned to them by the Indenture.
The Notes are general unsecured obligations of the Company
limited to $230,000,000 aggregate principal amount. The Indenture imposes
certain restrictions on, among other things, the incurrence of indebtedness,
the incurrence of liens and the issuance of preferred stock by the Company and
its subsidiaries, mergers and sale of assets, the payments of dividends on, or
the repurchase of, capital stock of the Company and its subsidiaries, certain
other restricted payments by the Company and its subsidiaries, certain
transactions with, and investments in, its affiliates, certain sale and
lease-back transactions and a provision regarding change-of-control
transactions.
5. SUBORDINATION.
The Indebtedness evidenced by the Notes is, to the extent and
in the manner provided in the Indenture, subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness as defined in
the Indenture, and this Note is issued subject to such provisions. Each Holder
of this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder,
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note shall cease to be so subordinate and
subject in right of payment upon any defeasance of this Note referred to in
Paragraph 18 below.
6. OPTIONAL REDEMPTION.
The Company may redeem the Notes, in whole or in part, at any
time on or after October 1, 1999 at the redemption prices set forth in Section
3.07 of the Indenture, together, in each case, with accrued and unpaid
interest to the redemption date.
In addition, the Company may redeem Notes out of the Net
Proceeds of one or more Public Equity Offerings or Major Asset Sales at the
redemption price, in the amount and under the terms set forth in the Indenture.
5
<PAGE> 7
7. NOTICE OF REDEMPTION.
Notice of redemption will be mailed via first class mail at
least 30 days but not more than 60 days prior to the redemption date to each
Holder of Notes to be redeemed at its registered address as it shall appear on
the register of the Notes maintained by the Registrar. On and after any
Redemption Date, interest will cease to accrue on the Notes or portions thereof
called for redemption unless the Company shall fail to redeem any such Note.
8. OFFERS TO PURCHASE.
The Indenture requires that certain proceeds from Asset Sales
be used, subject to further limitations contained therein, to make an offer to
purchase certain amounts of Notes in accordance with the procedures set forth
in the Indenture. The Company is also required to make an offer to purchase
Notes upon occurrence of a Change of Control in accordance with procedures set
forth in the Indenture.
9. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement among the
Company, the Guarantors and Wood Gundy Inc. and Smith Barney Inc., as initial
purchasers of the Notes, the Company and the Guarantors will be obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for Notes of a separate series issued
under the Indenture (or a trust indenture substantially identical to the
Indenture in accordance with the terms of the Registration Rights Agreement)
which have been registered under the Securities Act, in like principal amount
and having substantially identical terms as the Notes. The Holders shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in
denominations of $1,000 and integral multiples thereof. A Holder may register
the transfer or exchange of Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Note selected for redemption or register the
transfer of or exchange any Note for a period of 15 days before a selection of
Notes to be redeemed or any Note after it is called for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in part.
6
<PAGE> 8
11. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner
of it for all purposes.
12. UNCLAIMED MONEY.
If money for the payment of principal, premium or interest on
any Note remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company at its request. After that, Holders entitled to
money must look to the Company for payment as general creditors unless an
"abandoned property" law designates another person.
13. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may
be modified, amended or supplemented by the Company, the Guarantors and the
Trustee with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding and any existing default or compliance
with any provision may be waived in a particular instance with the consent of
the Holders of a majority in principal amount of the Notes then outstanding.
Without the consent of Holders, the Company, the Guarantors and the Trustee may
amend the Indenture or the Notes or supplement the Indenture for certain
specified purposes including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or
making any other change that does not materially and adversely affect the
rights of any Holder.
14. SUCCESSOR ENTITY.
When a successor corporation assumes all the obligations of
its predecessor under the Notes and the Indenture and immediately before and
thereafter no Default exists and certain other conditions are satisfied, the
predecessor corporation will be released from those obligations.
15. DEFAULTS AND REMEDIES.
Events of Default are set forth in the Indenture. If an Event
of Default (other than an Event of Default pursuant to Section 6.01(6) or (7)
of the Indenture with respect to the Company) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of not less than 25% in
aggregate principal amount of the Notes then outstanding, may declare to be
immediately due and payable the entire principal amount of all the Notes then
outstanding plus accrued but unpaid interest to the date of acceleration;
provided, however, that after such acceleration but before judgement or decree
based on such acceleration is obtained by the Trustee, the Holders of a
majority in aggregate principal
7
<PAGE> 9
amount of the outstanding Notes may, under certain circumstances, rescind and
annul such acceleration and its consequences if all existing Events of Default,
other than the nonpayment of principal, premium or interest that has become due
solely because of the acceleration, have been cured or waived and if the
rescission would not conflict with any judgment or decree. No such rescission
shall affect any subsequent Default or impair any right consequent thereto. In
case an Event of Default specified in Section 6.01(6) or (7) of the Indenture
with respect to the Company occurs, such principal amount, together with
premium, if any, and interest with respect to all of the Notes, shall be due
and payable immediately without any declaration or other act on the part of the
Trustee or the Holders of the Notes.
16. TRUSTEE DEALINGS WITH THE COMPANY.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company, any Guarantor or their Affiliates, and may otherwise deal with
the Company, any Guarantor or their Affiliates, as if it were not Trustee.
17. NO RECOURSE AGAINST OTHERS.
As more fully described in the Indenture, a director, officer,
employee or stockholder, as such, of the Company or any Guarantor shall not
have any liability for any obligations of the Company or any Guarantor under
the Notes or the Indenture or for any claim based on, in respect or by reason
of, such obligations or their creation. The Holder of this Note by accepting
this Note waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of this Note.
18. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Company with certain conditions set forth in
the Indenture.
19. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of
a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts
to Minors Act).
20. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on
Uniform Note Identification Procedures, the Company has caused
8
<PAGE> 10
CUSIP Numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders of the
Notes. No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.
21. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
THE COMPANY WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:
PAXSON COMMUNICATIONS CORPORATION, 601 Clearwater Park Road, West Palm Beach,
Florida 33401, Attention:
9
<PAGE> 11
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act provided
by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with
(a) above and documents are being furnished which comply with
the conditions of transfer set forth in this Note and the
Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.15 of the Indenture shall have
been satisfied.
<PAGE> 12
Date: Your Signature:
---------------------------- -----------------------
--------------------------------------
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:
--------------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:
---------------------------- -------------------------------------
NOTICE: To be executed by
an executive officer
<PAGE> 13
FORM OF NOTATION ON NOTE
RELATING TO GUARANTEE
Each Guarantor (the "Guarantor", which term includes any
successor Person under the Indenture) has unconditionally guaranteed, on a
senior subordinated basis, jointly and severally, to the extent set forth in
the Indenture and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of and interest on the Notes, whether at
maturity, by acceleration or otherwise, the due and punctual payment of
interest on overdue principal, and, to the extent permitted by law, interest,
and the due and punctual performance of all other Obligations of the Company to
the Noteholders or the Trustee all in accordance with the terms set forth in
Article 10 of the Indenture, and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, that the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.
The obligations of each Guarantor to the Noteholders and to
the Trustee pursuant to this Guarantee and the Indenture are expressly set
forth in Article 10 of the Indenture and reference is hereby made to the
Indenture for the precise terms of this Guarantee.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized signatories.
Guarantors:
PAXSON COMMUNICATIONS TELEVISION, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FLORIDA, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS LP, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS MANAGEMENT
COMPANY
(a Florida corporation)
PAXSON COMMUNICATIONS MARKETING, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS NETWORKS, INC.
(a Florida corporation)
<PAGE> 14
-2-
PAXSON OUTDOOR, INC.
(a Florida corporation)
PAXSON NETWORKS, INC.
(a Florida corporation)
EXCEL MARKETING ENTERPRISES, INC.
(a Florida corporation)
INFOMALL CABLE NETWORK, INC.
(a Delaware corporation)
INFOMALL TV NETWORK, INC.
(a Delaware corporation)
INFOMALL LOS ANGELES, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF AKRON-23, INC.
(a Florida corporation)
PAXSON AKRON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ATLANTA-14, INC.
(a Florida corporation)
PAXSON ATLANTA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BOSTON-60, INC.
(a Florida corporation)
PAXSON BOSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF CLEVELAND-67,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF COOKEVILLE, INC.
(a Florida corporation)
PAXSON COOKEVILLE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DALLAS-68, INC.
(a Florida corporation)
<PAGE> 15
-3-
PAXSON DALLAS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DAYTON-26, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DENVER-59, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FT. PIERCE-34,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF HOUSTON-49, INC.
(a Florida corporation)
PAXSON HOUSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF LOS ANGELES-30,
INC.
(a Florida corporation)
PAXSON LOS ANGELES LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MIAMI-35, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MILWAUKEE-55,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MINNEAPOLIS-45,
INC.
(a Florida corporation)
PAXSON MINNEAPOLIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW LONDON-26,
INC.
(a Florida corporation)
PAXSON NEW LONDON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW YORK-43,
INC.
(a Florida corporation)
<PAGE> 16
-4-
PAXSON NEW YORK LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ORLANDO-56,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHILADELPHIA-61,
INC.
(a Florida corporation)
PAXSON PHILADELPHIA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHOENIX-13,
INC.
(a Florida corporation)
PAXSON PHOENIX LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ST. LOUIS, INC.
(a Florida corporation)
PAXSON ST. LOUIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SAN JOSE-65,
INC.
(a Florida corporation)
PAXSON SAN JOSE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF TAMPA-66,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WASHINGTON-60,
INC.
(a Florida corporation)
PAXSON WASHINGTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WEST PALM
BEACH-25, INC.
(a Florida corporation)
<PAGE> 17
-5-
PAXSON WEST PALM BEACH LICENSE, INC.
(a Florida corporation)
By: /s/ Arthur D. Tek
-------------------------------------
Name: Arthur D. Tek
Title: Vice President and Treasurer
PAXSON BROADCASTING OF JACKSONVILLE,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON JACKSONVILLE LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF MIAMI, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON MIAMI LICENSE LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF ORLANDO, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON ORLANDO LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF TAMPA, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON TAMPA LICENSE LIMITED PARTNERSHIP
(a Florida partnership)
By: Paxson Communications of Florida,
Inc., their general partner
By: /s/ Arthur D. Tek
--------------------------------
Name: Arthur D. Tek
Title: Vice President and Treasurer
<PAGE> 18
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Company pursuant to Section 4.10 or Section 4.19 of the
Indenture, check the appropriate box:
[ ] Section 4.10 [ ] Section 4.19
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.19 of the Indenture, state the
amount you elect to have purchased:
$
-------------------------
Date:
--------------------
Your Signature:
-----------------------------------
(Sign exactly as your name appears on the face
of this Note)
- -----------------------------------
Signature Guaranteed
<PAGE> 1
EXHIBIT 4.2.2
<PAGE> 2
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE
OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE ACT) OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE ACT) (AN "ACCREDITED INVESTOR") OR (C) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION, (2)
AGREES THAT IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
NOTE RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (C) INSIDE THE UNITED STATES
TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE ACT, (E) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT (IF AVAILABLE) OR (F) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THIS
1
<PAGE> 3
NOTE WITHIN THREE YEARS AFTER ORIGINAL ISSUANCE OF THIS NOTE, IF THE PROPOSED
TRANSFEREE IS AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT
SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING
GIVEN TO THEM BY REGULATION S UNDER THE ACT.
CUSIP 704231-AA-7
Number 2
PAXSON COMMUNICATIONS CORPORATION
11 5/8% SENIOR SUBORDINATED NOTE DUE 2002
Paxson Communications Corporation, a Delaware corporation (the
"Company", which term includes any successor corporation), for value received
promises to pay to CEDE & CO. or registered assigns the principal sum of One
Hundred Fifteen Million Dollars, on October 1, 2002.
Interest Payment Dates: April 1 and October 1, commencing April 1,
1996
Record Dates: March 15 and September 15
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
2
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Lowell W. Paxson
-------------------------------------
By: /s/ Arthur D. Tek
-------------------------------------
[SEAL]
Certificate of Authentication:
This is one of the 11 5/8% Senior
Subordinated Notes due 2002 referred to in
the within-mentioned Indenture
Dated:
THE BANK OF NEW YORK,
as Trustee
By: /s/ Paul J. Schmalzel
------------------------------
Authorized Signatory
3
<PAGE> 5
(REVERSE SIDE)
PAXSON COMMUNICATIONS CORPORATION
11 5/8% SENIOR SUBORDINATED NOTE DUE 2002
1. INTEREST.
Paxson Communications Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note
semiannually on April 1 and October 1 of each year (each an "Interest Payment
Date"), commencing on April 1, 1996, at the rate of 11 5/8% per annum.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
original issuance of the Notes.
The Company shall pay interest on overdue principal, and on
overdue premium, if any, and overdue interest, to the extent lawful, at the
rate equal to 1% per annum in excess of the rate borne by the Notes.
2. METHOD OF PAYMENT.
The Company will pay interest on this Note provided for in
Paragraph 1 above (except defaulted interest) to the person who is the
registered Holder of this Note at the close of business on the March 15 or
September 15 preceding the Interest Payment Date (whether or not such day is a
Business Day). The Holder must surrender this Note to a Paying Agent to
collect principal payments. The Company will pay principal, premium, if any,
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts; provided, however, that the
Company may pay principal, premium, if any, and interest by check payable in
such money. It may mail an interest check to the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, The Bank of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to the Holders
of the Notes. Neither the Company nor any of its Subsidiaries or Affiliates
may act as Paying Agent but may act as registrar or co-registrar.
4. INDENTURE; RESTRICTIVE COVENANTS.
The Company issued this Note under an Indenture dated as of
September 28, 1995 (the "Indenture") among the Company, the
4
<PAGE> 6
Guarantors and the Trustee. The terms of this Note include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Section Section 77aaa-77bbbb) as in effect
on the date of the Indenture. This Note is subject to all such terms, and the
Holder of this Note is referred to the Indenture and said Trust Indenture Act
for a statement of them. All capitalized terms in this Note, unless otherwise
defined, have the meanings assigned to them by the Indenture.
The Notes are general unsecured obligations of the Company
limited to $230,000,000 aggregate principal amount. The Indenture imposes
certain restrictions on, among other things, the incurrence of indebtedness,
the incurrence of liens and the issuance of preferred stock by the Company and
its subsidiaries, mergers and sale of assets, the payments of dividends on, or
the repurchase of, capital stock of the Company and its subsidiaries, certain
other restricted payments by the Company and its subsidiaries, certain
transactions with, and investments in, its affiliates, certain sale and
lease-back transactions and a provision regarding change-of-control
transactions.
5. SUBORDINATION.
The Indebtedness evidenced by the Notes is, to the extent and
in the manner provided in the Indenture, subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness as defined in
the Indenture, and this Note is issued subject to such provisions. Each Holder
of this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder,
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note shall cease to be so subordinate and
subject in right of payment upon any defeasance of this Note referred to in
Paragraph 18 below.
6. OPTIONAL REDEMPTION.
The Company may redeem the Notes, in whole or in part, at any
time on or after October 1, 1999 at the redemption prices set forth in Section
3.07 of the Indenture, together, in each case, with accrued and unpaid
interest to the redemption date.
In addition, the Company may redeem Notes out of the Net
Proceeds of one or more Public Equity Offerings or Major Asset Sales at the
redemption price, in the amount and under the terms set forth in the Indenture.
5
<PAGE> 7
7. NOTICE OF REDEMPTION.
Notice of redemption will be mailed via first class mail at
least 30 days but not more than 60 days prior to the redemption date to each
Holder of Notes to be redeemed at its registered address as it shall appear on
the register of the Notes maintained by the Registrar. On and after any
Redemption Date, interest will cease to accrue on the Notes or portions thereof
called for redemption unless the Company shall fail to redeem any such Note.
8. OFFERS TO PURCHASE.
The Indenture requires that certain proceeds from Asset Sales
be used, subject to further limitations contained therein, to make an offer to
purchase certain amounts of Notes in accordance with the procedures set forth
in the Indenture. The Company is also required to make an offer to purchase
Notes upon occurrence of a Change of Control in accordance with procedures set
forth in the Indenture.
9. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement among the
Company, the Guarantors and Wood Gundy Inc. and Smith Barney Inc., as initial
purchasers of the Notes, the Company and the Guarantors will be obligated to
consummate an exchange offer pursuant to which the Holder of this Note shall
have the right to exchange this Note for Notes of a separate series issued
under the Indenture (or a trust indenture substantially identical to the
Indenture in accordance with the terms of the Registration Rights Agreement)
which have been registered under the Securities Act, in like principal amount
and having substantially identical terms as the Notes. The Holders shall be
entitled to receive certain additional interest payments in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in
denominations of $1,000 and integral multiples thereof. A Holder may register
the transfer or exchange of Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Note selected for redemption or register the
transfer of or exchange any Note for a period of 15 days before a selection of
Notes to be redeemed or any Note after it is called for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in part.
6
<PAGE> 8
11. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner
of it for all purposes.
12. UNCLAIMED MONEY.
If money for the payment of principal, premium or interest on
any Note remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company at its request. After that, Holders entitled to
money must look to the Company for payment as general creditors unless an
"abandoned property" law designates another person.
13. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may
be modified, amended or supplemented by the Company, the Guarantors and the
Trustee with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding and any existing default or compliance
with any provision may be waived in a particular instance with the consent of
the Holders of a majority in principal amount of the Notes then outstanding.
Without the consent of Holders, the Company, the Guarantors and the Trustee may
amend the Indenture or the Notes or supplement the Indenture for certain
specified purposes including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or
making any other change that does not materially and adversely affect the
rights of any Holder.
14. SUCCESSOR ENTITY.
When a successor corporation assumes all the obligations of
its predecessor under the Notes and the Indenture and immediately before and
thereafter no Default exists and certain other conditions are satisfied, the
predecessor corporation will be released from those obligations.
15. DEFAULTS AND REMEDIES.
Events of Default are set forth in the Indenture. If an Event
of Default (other than an Event of Default pursuant to Section 6.01(6) or (7)
of the Indenture with respect to the Company) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of not less than 25% in
aggregate principal amount of the Notes then outstanding, may declare to be
immediately due and payable the entire principal amount of all the Notes then
outstanding plus accrued but unpaid interest to the date of acceleration;
provided, however, that after such acceleration but before judgement or decree
based on such acceleration is obtained by the Trustee, the Holders of a
majority in aggregate principal
7
<PAGE> 9
amount of the outstanding Notes may, under certain circumstances, rescind and
annul such acceleration and its consequences if all existing Events of Default,
other than the nonpayment of principal, premium or interest that has become due
solely because of the acceleration, have been cured or waived and if the
rescission would not conflict with any judgment or decree. No such rescission
shall affect any subsequent Default or impair any right consequent thereto. In
case an Event of Default specified in Section 6.01(6) or (7) of the Indenture
with respect to the Company occurs, such principal amount, together with
premium, if any, and interest with respect to all of the Notes, shall be due
and payable immediately without any declaration or other act on the part of the
Trustee or the Holders of the Notes.
16. TRUSTEE DEALINGS WITH THE COMPANY.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company, any Guarantor or their Affiliates, and may otherwise deal with
the Company, any Guarantor or their Affiliates, as if it were not Trustee.
17. NO RECOURSE AGAINST OTHERS.
As more fully described in the Indenture, a director, officer,
employee or stockholder, as such, of the Company or any Guarantor shall not
have any liability for any obligations of the Company or any Guarantor under
the Notes or the Indenture or for any claim based on, in respect or by reason
of, such obligations or their creation. The Holder of this Note by accepting
this Note waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of this Note.
18. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Company with certain conditions set forth in
the Indenture.
19. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of
a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts
to Minors Act).
20. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on
Uniform Note Identification Procedures, the Company has caused
8
<PAGE> 10
CUSIP Numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders of the
Notes. No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.
21. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
THE COMPANY WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:
PAXSON COMMUNICATIONS CORPORATION, 601 Clearwater Park Road, West Palm Beach,
Florida 33401, Attention:
9
<PAGE> 11
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act provided
by Rule 144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with
(a) above and documents are being furnished which comply with
the conditions of transfer set forth in this Note and the
Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.15 of the Indenture shall have
been satisfied.
<PAGE> 12
Date: Your Signature:
---------------------------- -----------------------
--------------------------------------
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:
--------------------------------------
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Date:
---------------------------- ------------------------------------------
NOTICE: To be executed by
an executive officer
<PAGE> 13
FORM OF NOTATION ON NOTE
RELATING TO GUARANTEE
Each Guarantor (the "Guarantor", which term includes any
successor Person under the Indenture) has unconditionally guaranteed, on a
senior subordinated basis, jointly and severally, to the extent set forth in
the Indenture and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of and interest on the Notes, whether at
maturity, by acceleration or otherwise, the due and punctual payment of
interest on overdue principal, and, to the extent permitted by law, interest,
and the due and punctual performance of all other Obligations of the Company to
the Noteholders or the Trustee all in accordance with the terms set forth in
Article 10 of the Indenture, and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, that the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.
The obligations of each Guarantor to the Noteholders and to
the Trustee pursuant to this Guarantee and the Indenture are expressly set
forth in Article 10 of the Indenture and reference is hereby made to the
Indenture for the precise terms of this Guarantee.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized signatories.
Guarantors:
PAXSON COMMUNICATIONS TELEVISION, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FLORIDA, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS LP, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS MANAGEMENT
COMPANY
(a Florida corporation)
PAXSON COMMUNICATIONS MARKETING, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS NETWORKS, INC.
(a Florida corporation)
<PAGE> 14
-2-
PAXSON OUTDOOR, INC.
(a Florida corporation)
PAXSON NETWORKS, INC.
(a Florida corporation)
EXCEL MARKETING ENTERPRISES, INC.
(a Florida corporation)
INFOMALL CABLE NETWORK, INC.
(a Delaware corporation)
INFOMALL TV NETWORK, INC.
(a Delaware corporation)
INFOMALL LOS ANGELES, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF AKRON-23, INC.
(a Florida corporation)
PAXSON AKRON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ATLANTA-14, INC.
(a Florida corporation)
PAXSON ATLANTA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BOSTON-60, INC.
(a Florida corporation)
PAXSON BOSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF CLEVELAND-67,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF COOKEVILLE, INC.
(a Florida corporation)
PAXSON COOKEVILLE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DALLAS-68, INC.
(a Florida corporation)
<PAGE> 15
-3-
PAXSON DALLAS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DAYTON-26, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DENVER-59, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FT. PIERCE-34,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF HOUSTON-49, INC.
(a Florida corporation)
PAXSON HOUSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF LOS ANGELES-30,
INC.
(a Florida corporation)
PAXSON LOS ANGELES LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MIAMI-35, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MILWAUKEE-55,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MINNEAPOLIS-45,
INC.
(a Florida corporation)
PAXSON MINNEAPOLIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW LONDON-26,
INC.
(a Florida corporation)
PAXSON NEW LONDON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW YORK-43,
INC.
(a Florida corporation)
<PAGE> 16
-4-
PAXSON NEW YORK LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ORLANDO-56,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHILADELPHIA-61,
INC.
(a Florida corporation)
PAXSON PHILADELPHIA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHOENIX-13,
INC.
(a Florida corporation)
PAXSON PHOENIX LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ST. LOUIS, INC.
(a Florida corporation)
PAXSON ST. LOUIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SAN JOSE-65,
INC.
(a Florida corporation)
PAXSON SAN JOSE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF TAMPA-66,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WASHINGTON-60,
INC.
(a Florida corporation)
PAXSON WASHINGTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WEST PALM
BEACH-25, INC.
(a Florida corporation)
<PAGE> 17
-5-
PAXSON WEST PALM BEACH LICENSE, INC.
(a Florida corporation)
By: /s/ Arthur D. Tek
-------------------------------------
Name: Arthur D. Tek
Title: Vice President and Treasurer
PAXSON BROADCASTING OF JACKSONVILLE,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON JACKSONVILLE LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF MIAMI, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON MIAMI LICENSE LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF ORLANDO, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON ORLANDO LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF TAMPA, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON TAMPA LICENSE LIMITED PARTNERSHIP
(a Florida partnership)
By: Paxson Communications of Florida,
Inc., their general partner
By: /s/ Arthur D. Tek
--------------------------------
Name: Arthur D. Tek
Title: Vice President and Treasurer
<PAGE> 18
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Company pursuant to Section 4.10 or Section 4.19 of the
Indenture, check the appropriate box:
[ ] Section 4.10 [ ] Section 4.19
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.19 of the Indenture, state the
amount you elect to have purchased:
$
--------------------------
Date:
---------------------
Your Signature:
-------------------------------------
(Sign exactly as your name appears on the face
of this Note)
- --------------------------------------------
Signature Guaranteed
<PAGE> 1
EXHIBIT 4.3
<PAGE> 2
(FACE OF NOTE)
[FORM OF NEW NOTE]
CUSIP
------------
Number
PAXSON COMMUNICATIONS CORPORATION
11 5/8% SENIOR SUBORDINATED NOTE DUE 2002
Paxson Communications Corporation, a Delaware corporation (the
"Company", which term includes any successor corporation), for value received
promises to pay to ________________________ or registered assigns the principal
sum of ___________________ Dollars, on October 1, 2002.
Interest Payment Dates: April 1 and October 1, commencing April 1,
1996
Record Dates: March 15 and September 15
Reference is made to the further provisions of this Security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
PAXSON COMMUNICATIONS CORPORATION
By:
--------------------------------
By:
--------------------------------
[SEAL]
Certificate of Authentication:
This is one of the 11 5/8% Senior
Subordinated Notes due 2002 referred to in
the within-mentioned Indenture
Dated:
THE BANK OF NEW YORK,
as Trustee
By:
------------------------------
Authorized Signatory
2
<PAGE> 4
(REVERSE SIDE)
PAXSON COMMUNICATIONS CORPORATION
11 5/8% SENIOR SUBORDINATED NOTE DUE 2002
1. INTEREST.
Paxson Communications Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note
semiannually on April 1 and October 1 of each year (each an "Interest Payment
Date"), commencing on April 1, 1996, at the rate of 11 5/8% per annum.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
original issuance of the Notes.
The Company shall pay interest on overdue principal, and on
overdue premium, if any, and overdue interest, to the extent lawful, at the
rate equal to 1% per annum in excess of the rate borne by the Notes.
2. METHOD OF PAYMENT.
The Company will pay interest on this Note provided for in
Paragraph 1 above (except defaulted interest) to the person who is the
registered Holder of this Note at the close of business on the March 15 or
September 15 preceding the Interest Payment Date (whether or not such day is a
Business Day). The Holder must surrender this Note to a Paying Agent to
collect principal payments. The Company will pay principal, premium, if any,
and interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts; provided, however, that the
Company may pay principal, premium, if any, and interest by check payable in
such money. It may mail an interest check to the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, The Bank of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to the Holders
of the Notes. Neither the Company nor any of its Subsidiaries or Affiliates
may act as Paying Agent but may act as registrar or co-registrar.
4. INDENTURE; RESTRICTIVE COVENANTS.
The Company issued this Note under an Indenture dated as of
September 28, 1995 (the "Indenture") among the Company, the
3
<PAGE> 5
Guarantors and the Trustee. The terms of this Note include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Section Section 77aaa-77bbbb) as in effect
on the date of the Indenture. This Note is subject to all such terms, and the
Holder of this Note is referred to the Indenture and said Trust Indenture Act
for a statement of them. All capitalized terms in this Note, unless otherwise
defined, have the meanings assigned to them by the Indenture.
The Notes are general unsecured obligations of the Company
limited to $230,000,000 aggregate principal amount. The Indenture imposes
certain restrictions on, among other things, the incurrence of indebtedness,
the incurrence of liens and the issuance of preferred stock by the Company and
its subsidiaries, mergers and sale of assets, the payments of dividends on, or
the repurchase of, capital stock of the Company and its subsidiaries, certain
other restricted payments by the Company and its subsidiaries, certain
transactions with, and investments in, its affiliates, certain sale and
lease-back transactions and a provision regarding change-of-control
transactions.
5. SUBORDINATION.
The Indebtedness evidenced by the Notes is, to the extent and
in the manner provided in the Indenture, subordinated and subject in right of
payment to the prior payment in full of all Senior Indebtedness as defined in
the Indenture, and this Note is issued subject to such provisions. Each Holder
of this Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder,
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note shall cease to be so subordinate and
subject in right of payment upon any defeasance of this Note referred to in
Paragraph 18 below.
6. OPTIONAL REDEMPTION.
The Company may redeem the Notes, in whole or in part, at any
time on or after October 1, 1999 at the redemption prices set forth in Section
3.07 of the Indenture, together, in each case, with accrued and unpaid
interest to the redemption date.
In addition, the Company may redeem Notes out of the Net
Proceeds of one or more Public Equity Offerings or Major Asset Sales at the
redemption price, in the amount and under the terms set forth in the Indenture.
4
<PAGE> 6
7. NOTICE OF REDEMPTION.
Notice of redemption will be mailed via first class mail at
least 30 days but not more than 60 days prior to the redemption date to each
Holder of Notes to be redeemed at its registered address as it shall appear on
the register of the Notes maintained by the Registrar. On and after any
Redemption Date, interest will cease to accrue on the Notes or portions thereof
called for redemption unless the Company shall fail to redeem any such Note.
8. OFFERS TO PURCHASE.
The Indenture requires that certain proceeds from Asset Sales
be used, subject to further limitations contained therein, to make an offer to
purchase certain amounts of Notes in accordance with the procedures set forth
in the Indenture. The Company is also required to make an offer to purchase
Notes upon occurrence of a Change of Control in accordance with procedures set
forth in the Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in
denominations of $1,000 and integral multiples thereof. A Holder may register
the transfer or exchange of Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Note selected for redemption or register the
transfer of or exchange any Note for a period of 15 days before a selection of
Notes to be redeemed or any Note after it is called for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in part.
10. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner
of it for all purposes.
11. UNCLAIMED MONEY.
If money for the payment of principal, premium or interest on
any Note remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company at its request. After that, Holders entitled to
money must look to the Company for payment as general creditors unless an
"abandoned property" law designates another person.
5
<PAGE> 7
12. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may
be modified, amended or supplemented by the Company, the Guarantors and the
Trustee with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding and any existing default or compliance
with any provision may be waived in a particular instance with the consent of
the Holders of a majority in principal amount of the Notes then outstanding.
Without the consent of Holders, the Company, the Guarantors and the Trustee may
amend the Indenture or the Notes or supplement the Indenture for certain
specified purposes including providing for uncertificated Notes in addition to
certificated Notes, and curing any ambiguity, defect or inconsistency, or
making any other change that does not materially and adversely affect the
rights of any Holder.
13. SUCCESSOR ENTITY.
When a successor corporation assumes all the obligations of
its predecessor under the Notes and the Indenture and immediately before and
thereafter no Default exists and certain other conditions are satisfied, the
predecessor corporation will be released from those obligations.
14. DEFAULTS AND REMEDIES.
Events of Default are set forth in the Indenture. If an Event
of Default (other than an Event of Default pursuant to Section 6.01(6) or (7)
of the Indenture with respect to the Company) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of not less than 25% in
aggregate principal amount of the Notes then outstanding, may declare to be
immediately due and payable the entire principal amount of all the Notes then
outstanding plus accrued but unpaid interest to the date of acceleration;
provided, however, that after such acceleration but before judgement or decree
based on such acceleration is obtained by the Trustee, the Holders of a
majority in aggregate principal amount of the outstanding Notes may, under
certain circumstances, rescind and annul such acceleration and its consequences
if all existing Events of Default, other than the nonpayment of principal,
premium or interest that has become due solely because of the acceleration,
have been cured or waived and if the rescission would not conflict with any
judgment or decree. No such rescission shall affect any subsequent Default or
impair any right consequent thereto. In case an Event of Default specified in
Section 6.01(6) or (7) of the Indenture with respect to the Company occurs,
such principal amount, together with premium, if any, and interest with respect
to all of the Notes, shall be due and payable immediately without any
declaration or other act on the part of the Trustee or the Holders of the
Notes.
6
<PAGE> 8
15. TRUSTEE DEALINGS WITH THE COMPANY.
The Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company, any Guarantor or their Affiliates, and may otherwise deal with
the Company, any Guarantor or their Affiliates, as if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS.
As more fully described in the Indenture, a director, officer,
employee or stockholder, as such, of the Company or any Guarantor shall not
have any liability for any obligations of the Company or any Guarantor under
the Notes or the Indenture or for any claim based on, in respect or by reason
of, such obligations or their creation. The Holder of this Note by accepting
this Note waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of this Note.
17. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Company with certain conditions set forth in
the Indenture.
18. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of
a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts
to Minors Act).
19. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on
Uniform Note Identification Procedures, the Company has caused CUSIP Numbers to
be printed on the Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of the Notes. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE
7
<PAGE> 9
COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE OR THE NOTES.
THE COMPANY WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN
REQUEST AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:
PAXSON COMMUNICATIONS CORPORATION, 601 Clearwater Park Road, West Palm Beach,
Florida 33401, Attention:
8
<PAGE> 10
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Company. The Agent may
substitute another to act for him.
Date: Your Signature:
--------------------- ------------------------------
---------------------------------------------
(Sign exactly as your name
appears on the other side of
this Note)
Signature Guarantee:
--------------------------------------
<PAGE> 11
FORM OF NOTATION ON NOTE
RELATING TO GUARANTEE
Each Guarantor (the "Guarantor", which term includes any
successor Person under the Indenture) has unconditionally guaranteed, on a
senior subordinated basis, jointly and severally, to the extent set forth in
the Indenture and subject to the provisions of the Indenture, (a) the due and
punctual payment of the principal of and interest on the Notes, whether at
maturity, by acceleration or otherwise, the due and punctual payment of
interest on overdue principal, and, to the extent permitted by law, interest,
and the due and punctual performance of all other Obligations of the Company to
the Noteholders or the Trustee all in accordance with the terms set forth in
Article 10 of the Indenture, and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, that the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.
The obligations of each Guarantor to the Noteholders and to
the Trustee pursuant to this Guarantee and the Indenture are expressly set
forth in Article 10 of the Indenture and reference is hereby made to the
Indenture for the precise terms of this Guarantee.
This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Note upon which this
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized signatories.
Guarantors:
PAXSON COMMUNICATIONS TELEVISION, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FLORIDA, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS LP, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS MANAGEMENT
COMPANY
(a Florida corporation)
PAXSON COMMUNICATIONS MARKETING, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS NETWORKS, INC.
(a Florida corporation)
<PAGE> 12
-2-
PAXSON OUTDOOR, INC.
(a Florida corporation)
PAXSON NETWORKS, INC.
(a Florida corporation)
EXCEL MARKETING ENTERPRISES, INC.
(a Florida corporation)
INFOMALL CABLE NETWORK, INC.
(a Delaware corporation)
INFOMALL TV NETWORK, INC.
(a Delaware corporation)
INFOMALL LOS ANGELES, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF AKRON-23, INC.
(a Florida corporation)
PAXSON AKRON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ATLANTA-14, INC.
(a Florida corporation)
PAXSON ATLANTA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BOSTON-60, INC.
(a Florida corporation)
PAXSON BOSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF CLEVELAND-67,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF COOKEVILLE, INC.
(a Florida corporation)
PAXSON COOKEVILLE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DALLAS-68, INC.
(a Florida corporation)
<PAGE> 13
-3-
PAXSON DALLAS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DAYTON-26, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DENVER-59, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FT. PIERCE-34, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF HOUSTON-49, INC.
(a Florida corporation)
PAXSON HOUSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF LOS ANGELES-30,
INC.
(a Florida corporation)
PAXSON LOS ANGELES LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MIAMI-35, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MILWAUKEE-55,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MINNEAPOLIS-45,
INC.
(a Florida corporation)
PAXSON MINNEAPOLIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW LONDON-26,
INC.
(a Florida corporation)
PAXSON NEW LONDON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW YORK-43,
INC.
(a Florida corporation)
<PAGE> 14
-4-
PAXSON NEW YORK LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ORLANDO-56,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHILADELPHIA-61,
INC.
(a Florida corporation)
PAXSON PHILADELPHIA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHOENIX-13,
INC.
(a Florida corporation)
PAXSON PHOENIX LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ST. LOUIS, INC.
(a Florida corporation)
PAXSON ST. LOUIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SAN JOSE-65,
INC.
(a Florida corporation)
PAXSON SAN JOSE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF TAMPA-66,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WASHINGTON-60,
INC.
(a Florida corporation)
PAXSON WASHINGTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WEST PALM
BEACH-25, INC.
(a Florida corporation)
<PAGE> 15
-5-
PAXSON WEST PALM BEACH LICENSE, INC.
(a Florida corporation)
By:
--------------------------------------
Name:
Title:
PAXSON BROADCASTING OF JACKSONVILLE,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON JACKSONVILLE LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF MIAMI, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON MIAMI LICENSE LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF ORLANDO, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON ORLANDO LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF TAMPA, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON TAMPA LICENSE LIMITED PARTNERSHIP
(a Florida partnership)
By: Paxson Communications of Florida,
Inc., their general partner
By:
--------------------------------------
Name:
Title:
<PAGE> 16
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note
purchased by the Company pursuant to Section 4.10 or Section 4.19 of the
Indenture, check the appropriate box:
[ ] Section 4.10 [ ] Section 4.19
If you want to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.19 of the Indenture, state the
amount you elect to have purchased:
$
--------------------------
Date:
---------------------
Your Signature:
------------------------------------
(Sign exactly as your name appears on the face
of this Note)
- --------------------------------------------
Signature Guaranteed
<PAGE> 1
EXHIBIT 4.4
<PAGE> 2
EXHIBIT 4.4
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of September 28, 1995
by and among
PAXSON COMMUNICATIONS CORPORATION,
THE GUARANTORS
named herein
and
WOOD GUNDY INC.
and SMITH BARNEY INC.
as Initial Purchasers
- --------------------------------------------------------------------------------
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. Additional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6. Registration Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8. Rules 144 and 144A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9. Underwritten Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
a. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
b. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
c. No Inconsistent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
d. Adjustments Affecting Registrable Notes . . . . . . . . . . . . . . . . . . . . . 23
e. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
f. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
g. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
h. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
i. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
j. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
k. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
l. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
m. Joint and Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 25
n. Notes Held by the Company or Its Affiliates . . . . . . . . . . . . . . . . . . . 25
</TABLE>
-i-
<PAGE> 4
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
September 28, 1995, by and among PAXSON COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Company"), its direct and indirect subsidiaries
(collectively, the "Guarantors"), and WOOD GUNDY INC. and SMITH BARNEY INC., as
initial purchasers (the "Initial Purchasers").
This Agreement is entered into in connection with the
Securities Purchase Agreement, dated as of September 22, 1995, among the
Company, the Guarantors and the Initial Purchasers (the "Purchase Agreement")
relating to the sale by the Company to the Initial Purchasers of $230,000,000
aggregate principal amount of the Company's 11 5/8% Senior Subordinated Notes
due 2002 (the "Notes") and the guarantee of the Notes by the Guarantors (the
"Guarantee"). In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company and the Guarantors have agreed to provide the
registration rights set forth in this Agreement for the benefit of the Initial
Purchasers. The execution and delivery of this Agreement is a condition to the
Initial Purchasers' obligation to purchase the Notes under the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a).
Advice: See Section 5.
Applicable Period: See Section 2(b).
Closing: See the Purchase Agreement.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 150th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
<PAGE> 5
-2-
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 30th day after the Issue Date.
Guarantors: The direct and indirect Subsidiaries of the
Company as defined in the introductory paragraph of this Agreement.
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of September 28, 1995,
among the Company, the Guarantors and The Bank of New York, as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time in accordance with the terms thereof.
Initial Purchasers: See the introductory paragraph to this
Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the original Notes are sold to
the Initial Purchasers pursuant to the Purchase Agreement.
Issuers: The Company and the Guarantors.
Lien: See the Indenture.
NASD: See Section 5(t).
Notes: See the introductory paragraphs to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
<PAGE> 6
-3-
Person: An individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization
or government (including any agency or political subdivision thereof).
Private Exchange: See Section 2(b).
Private Exchange Notes : See Section 2(b).
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Notes covered by such Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs to this
Agreement.
Records: See Section 5(o).
Registrable Notes: The Notes upon original issuance of the
Notes and at all times subsequent thereto and, if issued, the Private Exchange
Notes, until in the case of any such Notes or any such Private Exchange Notes,
as the case may be, (i) a Registration Statement covering such Notes or such
Private Exchange Notes has been declared effective by the SEC and such Notes or
such Private Exchange Notes, as the case may be, have been disposed of in
accordance with such effective Registration Statement, (ii) such Notes or such
Private Exchange Notes, as the case may be, are sold in compliance with Rule
144, (iii) in the case of any Note, such Note has been exchanged for an
Exchange Note or Exchange Notes pursuant to an Exchange Offer or (iv) such
Notes or such Private Exchange Notes, as the case may be, cease to be
outstanding.
Registration Default: See Section 4(a).
Registration Statement: Any registration statement of the
Issuers, including, but not limited to, the Exchange Registration Statement,
which covers any of the Registrable Notes pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
<PAGE> 7
-4-
Rule 144: Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the SEC providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the SEC providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders that are not affiliates of an issuer of such securities
being free of the registration and prospectus delivery requirements of the
Securities Act.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent,
the trustee under any indenture governing the Exchange Notes and Private
Exchange Notes (if any).
Underwritten registration or underwritten offering: A
registration in which securities of one or more of the Issuers are sold to an
underwriter(s) for reoffering to the public.
2. Exchange Offer
(a) Each of the Issuers agrees to use its best efforts to
file with the SEC as soon as practicable after the Closing, but in no event
later than the Filing Date, an offer to exchange (the "Exchange Offer") any and
all of the Registrable Notes for a like aggregate
<PAGE> 8
-5-
principal amount of debt securities of the Company, guaranteed by the
Guarantors, which are identical to the Notes (the "Exchange Notes") (and which
are entitled to the benefits of the Indenture or a trust indenture which is
substantially identical to the Indenture (other than such changes to the
Indenture or any such identical trust indenture as are necessary to comply with
any requirements of the SEC to effect or maintain the qualification thereof
under the TIA) and which, in either case, has been qualified under the TIA),
except that the Exchange Notes shall have been registered pursuant to an
effective Registration Statement under the Securities Act. The Exchange Offer
will be registered under the Securities Act on the appropriate form (the
"Exchange Registration Statement") and will comply with all applicable tender
offer rules and regulations under the Exchange Act. Each of the Issuers agrees
to use its best efforts to (x) cause the Exchange Registration Statement to
become effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 30 days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
Holders; and (z) consummate the Exchange Offer on or prior to the 60th day
following the date on which the Exchange Registration Statement is declared
effective. Each Holder who participates in the Exchange Offer will be required
to represent that any Exchange Notes received by it will be acquired in the
ordinary course of its business, that at the time of the consummation of the
Exchange Offer such Holder will have no arrangement or understanding with any
person to participate in the distribution of the Exchange Notes, and that such
Holder is not an affiliate of any of the Issuers within the meaning of Rule 405
promulgated under the Securities Act or if it is such an affiliate, that it
will comply with the registration and prospectus delivery requirements of the
Securities Act, to the extent applicable. Upon consummation of the Exchange
Offer in accordance with this Section 2, the provisions of this Agreement shall
continue to apply, mutatis mutandis, solely with respect to Registrable Notes
that are Private Exchange Notes and Exchange Notes held by Participating
Broker-Dealers (as defined below), and the Issuers shall have no further
obligation to register Registrable Notes (other than Private Exchange Notes)
pursuant to Section 3 of this Agreement.
(b) The Issuers shall include within the Prospectus
contained in the Exchange Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Initial Purchasers, which shall
contain a summary statement of the positions taken or policies made by the
staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act) of Exchange Notes received by such
broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"), whether
such positions or policies have been publicly disseminated by the staff of the
SEC or such positions or policies, in the reasonable judgment of the Initial
Purchasers, represent the prevailing views of the staff of the SEC. Such "Plan
of Distribution" section shall also allow the use of the Prospectus by all
persons subject to the prospectus delivery requirements of the Securities Act,
including all Participating Broker-Dealers, and include a statement describing
the means by which Participating Broker-Dealers may resell the Exchange Notes.
<PAGE> 9
-6-
Each of the Issuers shall use its best efforts to keep the
Exchange Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be lawfully
delivered by all persons subject to the prospectus delivery requirements of the
Securities Act for such period of time as such persons must comply with such
requirements in order to resell the Exchange Notes, provided that such period
shall not exceed 180 days (or such longer period if extended pursuant to the
last paragraph of Section 5) (the "Applicable Period").
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Notes acquired by them and having, or which are reasonably
likely to be determined to have, the status as an unsold allotment in the
initial distribution, the Issuers upon the request of either Initial Purchaser
shall, simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to such Initial Purchaser, in exchange (the "Private
Exchange") for the Notes held by such Initial Purchaser, a like principal
amount of debt securities of the Company, guaranteed by the Guarantors, that
are identical in all material respects to the Exchange Notes (the "Private
Exchange Notes") (and which are issued pursuant to the same indenture as the
Exchange Notes). The Private Exchange Notes shall bear the same CUSIP number
as the Exchange Notes. Interest on the Exchange Notes and Private Exchange
Notes will accrue from the last interest payment date on which interest was
paid on the Notes surrendered in exchange therefor or, if no interest has been
paid on the Notes, from the date of original issue.
In connection with the Exchange Offer, the Issuers shall:
(i) mail to each Holder a copy of the Prospectus forming
part of the Exchange Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York; and
(iii) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last business
day on which the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Issuers shall:
(i) accept for exchange all Notes tendered and not
validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(ii) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
<PAGE> 10
-7-
(iii) cause the Trustee to authenticate and deliver
promptly to each Holder of Notes, Exchange Notes or Private Exchange
Notes, as the case may be, equal in principal amount to the Notes of
such Holder so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be
issued under (i) the Indenture or (ii) an indenture substantially identical to
the Indenture, which in either event will provide that the Exchange Notes will
not be subject to the transfer restrictions set forth in the Indenture and that
the Exchange Notes, the Private Exchange Notes and the Notes will vote and
consent together on all matters as one class and that neither the Exchange
Notes, the Private Exchange Notes nor the Notes will have the right to vote or
consent as a separate class on any matter.
(c) If (1) prior to the consummation of the Exchange
Offer, the Issuers or Holders of at least a majority in aggregate principal
amount of the Registrable Notes reasonably determine in good faith that (i) the
Exchange Notes would not, upon receipt, be tradeable by such Holders which are
not affiliates (within the meaning of the Securities Act) of the Issuers
without restriction under the Securities Act and without restrictions under
applicable state securities laws, (ii) the interests of the Holders under this
Agreement would be adversely affected by the consummation of the Exchange Offer
or (iii) after conferring with counsel, the SEC is unlikely to permit the
consummation of the Exchange Offer prior to the Effectiveness Date, (2)
subsequent to the consummation of the Private Exchange, any holder of the
Private Exchange Notes so requests or (3) the Exchange Offer is commenced and
not consummated within 180 days of the date of this Agreement, then the Issuers
shall promptly deliver to the Holders and the Trustee written notice thereof
(the "Shelf Notice") and shall file an Initial Shelf Registration pursuant to
Section 3. Following the delivery of a Shelf Notice to the Holders of
Registrable Notes (in the circumstances contemplated by clauses (1) and (3) of
the preceding sentence), the Issuers shall not have any further obligation to
conduct the Exchange Offer or the Private Exchange under this Section 2.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section
2(c), then:
(a) Initial Shelf Registration. The Issuers shall
prepare and file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Registrable
Notes (the "Initial Shelf Registration"). If the Issuers shall have not yet
filed an Exchange Registration Statement, each of the Issuers shall use its
best efforts to file with the SEC the Initial Shelf Registration on or prior to
the Filing Date. In any other instance, each of the Issuers shall use its best
efforts to file with the SEC the Initial Shelf Registration within 30 days of
the delivery of the Shelf Notice. The Initial Shelf Registration shall be on
Form S-1 or another appropriate form permitting registration of such
Registrable Notes for resale by such Holders in the manner or manners
designated by them (including, without limitation, one or more underwritten
offerings). The Issuers shall
<PAGE> 11
-8-
not permit any securities other than the Registrable Notes to be included in
the Initial Shelf Registration or any Subsequent Shelf Registration (as defined
below). Each of the Issuers shall use its best efforts to cause the Initial
Shelf Registration to be declared effective under the Securities Act on or
prior to the Effectiveness Date and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the date which is 36
months from the date on which such Initial Shelf Registration is declared
effective (subject to extension pursuant to the last paragraph of Section 5
hereof) (the "Effectiveness Period"), or such shorter period ending when (i)
all Registrable Notes covered by the Initial Shelf Registration have been sold
in the manner set forth and as contemplated in the Initial Shelf Registration
or (ii) a Subsequent Shelf Registration covering all of the Registrable Notes
has been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for
any reason at any time during the Effectiveness Period (other than because of
the sale of all of the securities registered thereunder), each of the Issuers
shall use its best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within 45 days of
such cessation of effectiveness amend the Shelf Registration in a manner
reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Registrable Notes (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, each of the
Issuers shall use its best efforts to cause the Subsequent Shelf Registration
to be declared effective as soon as practicable after such filing and to keep
such Registration Statement continuously effective for a period equal to the
number of days in the Effectiveness Period less the aggregate number of days
during which the Initial Shelf Registration or any Subsequent Shelf
Registration was previously continuously effective. As used herein the term
"Shelf Registration" means the Initial Shelf Registration and any Subsequent
Shelf Registration.
(c) Supplements and Amendments. The Issuers shall
promptly supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if requested by the
Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement or by any underwriter(s) of such
Registrable Notes.
4. Additional Interest
(a) The Issuers and the Purchaser agree that the Holders
of Registrable Notes will suffer damages if the Issuers fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers, jointly and severally, agree to pay additional interest on the
Notes ("Additional Interest") under the circumstances set forth below:
<PAGE> 12
-9-
(i) if the Exchange Registration Statement or the Initial
Shelf Registration has not been filed on or prior to the Filing Date;
(ii) if the Exchange Registration Statement or the Initial
Shelf Registration has not been declared effective on or prior to the
Effectiveness Date; and/or
(iii) if either (A) the Company has not exchanged the
Exchange Notes for all Notes validly tendered in accordance with the
terms of the Exchange Offer on or prior to 60 days after the date on
which the Exchange Registration Statement was declared effective or
(B) the Exchange Registration Statement ceases to be effective at any
time prior to the time that the Exchange Offer is consummated or (C)
if applicable, the Shelf Registration has been declared effective and
such Shelf Registration ceases to be effective at any time during the
Effectiveness Period;
(each such events referred to in clauses (i) through (iii) above is a
"Registration Default"), the sole remedy available to holders of the Notes will
be the immediate accrual of Additional Interest as follows: the per annum
interest rate on the Notes will increase by 50 basis points; and the per annum
interest rate will increase by an additional 25 basis points for each
subsequent 90-day period during which the Registration Default remains uncured,
up to a maximum additional interest rate of 200 basis points per annum,
provided, however, that (1) upon the filing of the Exchange Registration
Statement or the Initial Shelf Registration (in the case of (i) above), (2)
upon the effectiveness of the Exchange Registration Statement or a Shelf
Registration (in the case of (ii) above) or (3) upon the exchange of Exchange
Notes for all Notes tendered (in the case of (iii)(A) above), or upon the
effectiveness of the Exchange Registration Statement which had ceased to remain
effective (in the case of (iii)(B) above), or upon the effectiveness of the
Shelf Registration which had ceased to remain effective (in the case of
(iii)(C) above), Additional Interest on the Notes as a result of such clause
(i), (ii) or (iii) (or the relevant subclause thereof), as the case may be,
shall cease to accrue and the interest rate on the Notes will revert to the
interest rate originally borne by the Notes.
(b) The Issuers shall notify the Trustee within one
business day after each and every date on which an event occurs in respect of
which Additional Interest is required to be paid (an "Event Date"). Any
amounts of Additional Interest due pursuant to (a)(i), (a)(ii) or (a)(iii) of
this Section 4 will be payable in cash semi-annually on each April 1 and
October 1 (to the Holders of record on the March 15 and September 15
immediately preceding such dates), commencing with the first such date
occurring after any such Additional Interest commences to accrue, by depositing
with the Trustee, in trust for the benefit of such Holders, immediately
available funds in sums sufficient to pay such Additional Interest. The amount
of Additional Interest will be determined by multiplying the applicable
Additional Interest rate by the principal amount of the Registrable Notes,
multiplied by a fraction, the numerator of which is the number of days such
Additional
<PAGE> 13
-10-
Interest rate was applicable during such period (determined on the basis of a
360-day year comprised of twelve 30-day months), and the denominator of which
is 360.
5. Registration Procedures
In connection with the registration of any Registrable Notes
or Private Exchange Notes pursuant to Section 2 or 3 hereof, the Issuers shall
effect such registrations to permit the sale of such Registrable Notes or
Private Exchange Notes in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Issuers shall:
(a) Prepare and file with the SEC, prior to the Filing
Date, a Registration Statement or Registration Statements as
prescribed by Section 2 or 3, and to use their respective best efforts
to cause each such Registration Statement to become effective and
remain effective as provided herein, provided that, if (1) such
filing is pursuant to Section 3, or (2) a Prospectus contained in an
Exchange Registration Statement filed pursuant to Section 2 is
required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Issuers
shall, if requested, furnish to and afford the Holders of the
Registrable Notes and each such Participating Broker-Dealer, as the
case may be, covered by such Registration Statement, their counsel and
the managing underwriter(s), if any, a reasonable opportunity to
review copies of all such documents (including copies of any documents
to be incorporated by reference therein and all exhibits thereto)
proposed to be filed (at least 5 business days prior to such filing).
The Issuers shall not file any Registration Statement or Prospectus or
any amendments or supplements thereto in respect of which the Holders
must be afforded an opportunity to review prior to the filing of such
document, if the Holders of a majority in aggregate principal amount
of the Registrable Notes covered by such Registration Statement, or
such Participating Broker-Dealer, as the case may be, their counsel,
or the managing underwriter(s), if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to
keep such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to be supplemented by any prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act; and comply with the provisions of the
Securities Act, the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to them with respect to the
disposition of all securities covered by such Registration Statement
as so amended or in such Prospectus as so supplemented and with
respect to the subsequent resale of any securities being sold by a
Participating Broker-Dealer covered by any such
<PAGE> 14
-11-
Prospectus; the Issuers shall be deemed not to have used their best
efforts to keep a Registration Statement effective during the
Applicable Period if any of them voluntarily takes any action that
would result in selling Holders of the Registrable Notes covered
thereby or Participating Broker-Dealers seeking to sell Exchange Notes
not being able to sell such Registrable Notes or such Exchange Notes
during that period unless such action is required by applicable law or
unless the Company complies with this Agreement, including without
limitation, the provisions of clause 5(c)(v) below.
(c) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, notify the
selling Holders of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
underwriter(s), if any, promptly (but in any event within two business
days), and confirm such notice in writing, (i) when a Prospectus or
any prospectus supplement or post-effective amendment thereto has been
filed, and, with respect to a Registration Statement or any
post-effective amendment thereto, when the same has become effective
(including in such notice a written statement that any Holder may,
upon request, obtain, without charge, one conformed copy of such
Registration Statement or post-effective amendment thereto including
financial statements and schedules, documents incorporated or deemed
to be incorporated by reference and exhibits), (ii) of the issuance by
the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the
use of any preliminary Prospectus or the initiation of any proceedings
for that purpose, (iii) if at any time when a Prospectus is required
by the Securities Act to be delivered in connection with sales of the
Registrable Notes the representations and warranties of the Issuers
contained in any agreement (including any underwriting agreement)
contemplated by Section 5(n) below cease to be true and correct, (iv)
of the receipt by any of the Issuers of any notification with respect
to the suspension of the qualification or exemption from qualification
of a Registration Statement or any of the Registrable Notes or the
Exchange Notes to be sold by any Participating Broker-Dealer for offer
or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event or any
information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in,
or amendments or supplements to, such Registration Statement,
Prospectus or documents so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated
<PAGE> 15
-12-
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (vi) of
any Issuer's reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, use their best
efforts to prevent the issuance of any order suspending the
effectiveness of a Registration Statement or of any order preventing
or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Notes or
the Exchange Notes to be sold by any Participating Broker-Dealer, for
sale in any jurisdiction, and, if any such order is issued, to use
their best efforts to obtain the withdrawal of any such order at the
earliest possible moment.
(e) If a Shelf Registration is filed pursuant to Section
3 and if requested by the managing underwriter(s), if any, or the
Holders of a majority in aggregate principal amount of the Registrable
Notes being sold in connection with an underwritten offering, (i)
promptly incorporate in a Prospectus supplement or post-effective
amendment thereto such information as the managing underwriter(s), if
any, or such Holders reasonably request to be included therein, (ii)
make all required filings of such Prospectus supplement or such
post-effective amendment thereto as soon as practicable after the
Company has received notification of the matters to be incorporated in
such Prospectus supplement or post-effective amendment thereto and
(iii) supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, furnish to each
selling Holder of Registrable Notes and to each such Participating
Broker-Dealer who so requests and to counsel and the managing
underwriter(s), if any, without charge, one conformed copy of the
Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to
be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period,
<PAGE> 16
-13-
deliver to each selling Holder of Registrable Notes, or each such
Participating Broker-Dealer, as the case may be, their counsel, and
the managing underwriter or underwriters, if any, without charge, as
many copies of the Prospectus or Prospectuses (including each form of
preliminary Prospectus) and each amendment or supplement thereto and
any documents incorporated by reference therein as such Persons may
reasonably request; and, subject to the last paragraph of this Section
5, each Issuer hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the
case may be, and the managing underwriter or underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale
of the Registrable Notes covered by or the sale by Participating
Broker-Dealers of the Exchange Notes pursuant to such Prospectus and
any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or
any delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, to use its best efforts
to register or qualify, and to cooperate with the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the
case may be, the managing underwriter or underwriters, if any, and
their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification)
of such Registrable Notes for offer and sale under the securities or
Blue Sky laws of such jurisdictions within the United States as any
selling Holder, Participating Broker-Dealer, or the managing
underwriter or underwriters, if any, reasonably request in writing,
provided that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered other than through an
underwritten offering, the Issuers agree to cause their counsel to
perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h);
keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions
of the Exchange Notes held by Participating Broker-Dealers or the
Registrable Notes covered by the applicable Registration Statement;
provided that none of the Issuers shall be required to (A) qualify
generally to do business in any jurisdiction where it is not then so
qualified, (B) take any action that would subject it to general
service of process in any such jurisdiction where it is not then so
subject or (C) subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction.
(i) If a Shelf Registration is filed pursuant to Section
3, cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Notes to be sold, which certificates shall not bear any restrictive
legends
<PAGE> 17
-14-
and shall be in a form eligible for deposit with The Depository Trust
Company; and enable such Registrable Notes to be in such denominations
and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request.
(j) Use its best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the managing
underwriter or underwriters, if any, to consummate the disposition of
such Registrable Notes, except as may be required solely as a
consequence of the nature of such selling Holder's business, in which
case each of the Issuers will cooperate in all reasonable respects
with the filing of such Registration Statement and the granting of
such approvals.
(k) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, upon the
occurrence of any event contemplated by paragraph 5(c)(v) or 5(c)(vi)
above, as promptly as reasonably practicable prepare and (subject to
Section 5(a) above) file with the SEC, at the joint and several
expense of each of the Issuers, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as
thereafter delivered to the purchasers of the Registrable Notes being
sold thereunder or to the purchasers of the Exchange Notes to whom
such Prospectus will be delivered by a Participating Broker-Dealer,
any such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(l) Use their best efforts to cause the Registrable Notes
covered by a Registration Statement or the Exchange Notes, as the case
may be, to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount
of Registrable Notes covered by such Registration Statement or the
Exchange Notes, as the case may be, or the managing underwriter or
underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with printed certificates for the Registrable Notes in a form eligible
for deposit with The Depository Trust Company and (ii) provide a CUSIP
number for the Registrable Notes.
<PAGE> 18
-15-
(n) In connection with an underwritten offering of
Registrable Notes pursuant to a Shelf Registration, enter into an
underwriting agreement as is customary in underwritten offerings of
debt securities similar to the Notes and take all such other actions
as are reasonably requested by the managing underwriter(s), if any, in
order to expedite or facilitate the registration or the disposition of
such Registrable Notes, and in such connection, (i) make such
representations and warranties to the managing underwriter or
underwriters on behalf of any underwriters, with respect to the
business of the Issuers and their respective subsidiaries and the
Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, as
are customarily made by issuers to underwriters in underwritten
offerings of debt securities, and confirm the same if and when
requested; (ii) obtain opinions of counsel to the Issuers and updates
thereof in form and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the managing underwriter or
underwriters covering the matters customarily covered in opinions
requested in underwritten offerings of debt securities and such other
matters as may be reasonably requested by underwriters; (iii) obtain
"cold comfort" letters and updates thereof in form and substance
reasonably satisfactory to the managing underwriter or underwriters
from the independent certified public accountants of the Issuers (and,
if necessary, any other independent certified public accountants of
any subsidiary of any of the Issuers or of any business acquired by
any of the Issuers for which financial statements and financial data
are, or are required to be, included in the Registration Statement),
addressed to the managing underwriter or underwriters on behalf of any
underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings of debt securities and such
other matters as reasonably requested by the managing underwriter or
underwriters; and (iv) if an underwriting agreement is entered into,
the same shall contain indemnification provisions and procedures no
less favorable than those set forth in Section 7 hereof (or such other
provisions and procedures acceptable to Holders of a majority in
aggregate principal amount of Registrable Notes covered by such
Registration Statement and the managing underwriter or underwriters or
agents) with respect to all parties to be indemnified pursuant to said
Section. The above shall be done at each closing under such
underwriting agreement, or as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to
Section 3, or (2) a Prospectus contained in an Exchange Registration
Statement filed pursuant to Section 2 is required to be delivered
under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, make available
for inspection by any selling Holder of such Registrable Notes being
sold, or each such Participating Broker-Dealer, as the case may be,
the managing underwriter or underwriters participating in any such
disposition of Registrable Notes, if any, and any attorney, accountant
or other agent retained by any such selling Holder or each
<PAGE> 19
-16-
such Participating Broker-Dealer, as the case may be (collectively,
the "Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent
corporate documents and properties of the Issuers and their respective
subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise any applicable due diligence
responsibilities, and cause the officers, directors and employees of
the Issuers and their respective subsidiaries to supply all
information in each case reasonably requested by any such Inspector in
connection with such Registration Statement. Records which the
Issuers determine, in good faith, to be confidential and any Records
which they notify the Inspectors are confidential shall not be
disclosed by the Inspectors unless (i) the disclosure of such Records
is necessary to avoid or correct a material misstatement or material
omission in such Registration Statement, (ii) the release of such
Records is ordered pursuant to a subpoena or other order from a court
of competent jurisdiction or (iii) the information in such Records has
been made generally available to the public. Each selling Holder of
such Registrable Notes and each such Participating Broker-Dealer or
underwriter will be required to agree that information obtained by it
as a result of such inspections shall be deemed confidential and shall
not be used by it as the basis for any market transactions in the
securities of the Issuers unless and until such is made generally
available to the public. Each selling Holder of such Registrable
Notes and each such Participating Broker-Dealer will be required to
further agree that it will, upon learning that disclosure of such
Records is sought in a court of competent jurisdiction, give notice
to the Issuers and allow the Issuers to undertake appropriate action
to prevent disclosure of the Records deemed confidential at their
expense.
(p) Provide an indenture trustee for the Registrable
Notes or the Exchange Notes, as the case may be, and cause the
Indenture or the trust indenture provided for in Section 2(a), as the
case may be, to be qualified under the TIA not later than the
effective date of the Exchange Offer or the first Registration
Statement relating to the Registrable Notes; and in connection
therewith, cooperate with the trustee under any such indenture and the
Holders of the Registrable Notes, to effect such changes to such
indenture as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use its best
efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(q) Comply with all applicable rules and regulations of
the SEC and make generally available to its securityholders earnings
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the
end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Notes are sold to underwriters
in a firm commitment or best efforts underwritten
<PAGE> 20
-17-
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.
(r) Upon consummation of an Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Issuers, in a form
customary for underwritten offerings of debt securities similar to the
Notes, addressed to the Trustee for the benefit of all Holders of
Registrable Notes participating in the Exchange Offer or the Private
Exchange, as the case may be, and which includes an opinion that (i)
each of the Issuers has duly authorized, executed and delivered the
Exchange Notes and Private Exchange Notes and the related indenture
and (ii) each of the Exchange Notes or the Private Exchange Notes, as
the case may be, and related indenture constitute a legal, valid and
binding obligation of each of the Issuers, enforceable against each of
the Issuers in accordance with its respective terms (with customary
exceptions).
(s) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Issuers (or to such other Person as directed by the Issuers) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Issuers shall mark, or cause to be marked, on such
Registrable Notes that such Registrable Notes are being canceled in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be; and, in no event shall such Registrable Notes be marked
as paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes
covered by any Registration Statement and the managing underwriter(s),
if any, participating in the disposition of such Registrable Notes and
their respective counsel in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. (the
"NASD").
(u) Use their respective best efforts to take all other
steps necessary to effect the registration of the Registrable Notes
covered by a Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes or
Participating Broker-Dealer as to which any registration is being effected to
furnish to the Issuers such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, as the
Issuers may, from time to time, reasonably request. The Issuers may exclude
from such registration the Registrable Notes of any seller or Participating
Broker-Dealer who unreasonably fails to furnish such information within a
reasonable time after receiving such request.
<PAGE> 21
-18-
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
receipt of any notice from the Company of the happening of any event of the
kind described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder
will forthwith discontinue disposition of such Registrable Notes covered by
such Registration Statement or Prospectus or Exchange Notes to be sold by such
Holder or Participating Broker-Dealer, as the case may be, until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 5(k), or until it is advised in writing (the "Advice") by the Company
that the use of the applicable Prospectus may be resumed, and has received
copies of any amendments or supplements thereto. In the event the Company
shall give any such notice, each of the Effectiveness Period and the
Applicable Period shall be extended by the number of days during such periods
from and including the date of the giving of such notice to and including the
date when each seller of Registrable Notes covered by such Registration
Statement or Exchange Notes to be sold by such Holder or Participating
Broker-Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) or (y) the
Advice.
6. Registration Expenses
(a) All fees and expenses incident to the performance of
or compliance with this Agreement by the Issuers shall be borne by the Issuers,
jointly and severally, whether or not the Exchange Offer or a Shelf
Registration is filed or becomes effective, including, without limitation, (i)
all registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility of the
Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the Holders of Registrable Notes are located, in the
case of the Exchange Notes, or (y) as provided in Section 5(h), in the case of
Registrable Notes or Exchange Notes to be sold by a Participating Broker-Dealer
during the Applicable Period)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Notes or Exchange
Notes in a form eligible for deposit with The Depository Trust Company and of
printing Prospectuses if the printing of Prospectuses is reasonably requested
by the managing underwriter or underwriters, if any, or, in respect of
Registrable Notes or Exchange Notes to be sold by any Participating
Broker-Dealer during the Applicable Period, by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any
Registration Statement or of such Exchange Notes, as the case may be), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company and fees and disbursements of special counsel for the
sellers of Registrable Notes (subject to the provisions of Section 6(b)), (v)
fees and disbursements of all independent certified public accountants referred
to in Section 5(n)(iii) (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or
<PAGE> 22
-19-
incident to such performance), (vi) rating agency fees, (vii) Securities Act
liability insurance, if the Issuers desire such insurance, (viii) fees and
expenses of the Trustee, (ix) fees and expenses of all other Persons retained
by the Issuers, (x) internal expenses of the Issuers (including, without
limitation, all salaries and expenses of officers and employees of the Issuers
performing legal or accounting duties), (xi) the expense of any annual audit,
(xii) the fees and expenses incurred in connection with any listing of the
securities to be registered on any securities exchange and (xiii) the expenses
relating to printing, word processing and distributing all Registration
Statements, underwriting agreements, securities sales agreements, indentures
and any other documents necessary in order to comply with this Agreement.
(b) In connection with any Shelf Registration hereunder,
the Issuers, jointly and severally, shall reimburse the Holders of the
Registrable Notes being registered in such registration for the fees and
disbursements, not to exceed $25,000, of not more than one counsel (in addition
to appropriate local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Registrable Notes to be included in such Registration
Statement and other reasonable out-of-pocket expenses of the Holders of
Registrable Notes incurred in connection with the registration of the
Registrable Notes.
7. Indemnification
(a) Each of the Issuers, jointly and severally, agrees to
indemnify and hold harmless each Holder of Registrable Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable
Period, the officers and directors of each such person, and each person, if
any, who controls any such person within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act (each, a "Participant"),
from and against any and all losses, claims, damages and liabilities
(including, without limitation, the reasonable legal fees and other expenses
actually incurred in connection with any suit, action or proceeding or any
claim asserted) caused by, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary Prospectus,
or caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Issuers in writing by such
Participant expressly for use therein; provided that the foregoing indemnity
with respect to any preliminary Prospectus shall not inure to the benefit of
any Participant (or to the benefit of any person controlling such Participant)
from whom the person asserting any such losses, claims, damages or liabilities
purchased Registrable Notes or Exchange Notes if such untrue statement or
omission or alleged untrue statement or omission made in such preliminary
Prospectus is eliminated or remedied in the related Prospectus (as amended or
supplemented
<PAGE> 23
-20-
if the Issuers shall have furnished any amendments or supplements thereto) and
a copy of the related Prospectus (as so amended or supplemented) shall have
been furnished to such Participant at or prior to the sale of such Registrable
or Exchange Notes, as the case may be, to such person.
(b) Each Participant will be required to agree, severally
and not jointly, to indemnify and hold harmless the Issuers, their respective
directors and officers and each person who controls any of the Issuers within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Issuers to each
Participant, but only with reference to information relating to such
Participant furnished to the Issuers in writing by such Participant expressly
for use in any Registration Statement or Prospectus, any amendment or
supplement thereto, or any preliminary Prospectus. The liability of any
Participant under this paragraph (b) shall in no event exceed the proceeds
received by such Participant from sales of Registrable Notes giving rise to
such obligations.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnity may be sought
pursuant to either paragraph (a) or (b) of this Section 7, such person (the
"Indemnified Person") shall promptly notify the person against whom such
indemnity may be sought (the "Indemnifying Person") in writing, and the
Indemnifying Person, upon request of the Indemnified Person, shall retain one
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may reasonably
designate in such proceeding and shall pay the reasonable fees and expenses
incurred by such counsel related to such proceeding. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Person unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed in writing to the contrary, (ii) the Indemnifying Person has
failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both the Indemnifying Person and the
Indemnified Person and representations of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the Indemnifying Person shall not, in connection
with any proceeding or related proceeding in the same jurisdiction, be liable
for the fees and expenses of more than one separate law firm (in addition to
any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred. Any such separate firm for
the Participants and such control persons of Participants shall be designated
in writing by Participants who sold a majority in interest of Registrable Notes
sold by all such Participants and any such separate firm for the Issuers, their
directors, their officers and such control persons of the Issuers shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final
<PAGE> 24
-21-
judgment for the plaintiff, the Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested an Indemnifying Person to reimburse
the Indemnified Person for reasonable fees and expenses incurred by counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Person
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Person of the aforesaid request and
(ii) such Indemnifying Person shall not have reimbursed the Indemnified Person
in accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any settlement
effected without its consent pursuant to this sentence if the Indemnifying
Party is contesting, in good faith, the request for reimbursement. No
Indemnifying Person shall, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Person, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability on claims that are the subject matter of such proceeding.
If the indemnification provided for in paragraphs (a) and (b)
of this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable
by such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Issuers on the one hand and the Participants on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of the Issuers on the one hand and the Participants on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Issuers or by the Participants and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The parties shall agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, in no
<PAGE> 25
-22-
event shall a Participant be required to contribute any amount in excess of the
amount by which proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes exceeds the amount of any damages that such Participant
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
Each of the Issuers covenants that it will file the reports
required to be filed by it under the Securities Act and the Exchange Act and
the rules and regulations adopted by the SEC thereunder in a timely manner and,
if at any time any of the Issuers is not required to file such reports, it
will, upon the request of any Holder of Registrable Notes, make publicly
available other information of a like nature so long as necessary to permit
sales pursuant to Rule 144 or Rule 144A. Each of the Issuers further covenants
that so long as any Registrable Notes remain outstanding to make available to
any Holder of Registrable Notes in connection with any sale thereof, the
information required by Rule 144A(d)(4) under the Securities Act in order to
permit resales of such Registrable Notes pursuant to (a) such Rule 144A, or (b)
any similar rule or regulation hereafter adopted by the SEC.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering
will be selected by the Holders of a majority in aggregate principal amount of
such Registrable Notes included in such offering and shall be reasonably
acceptable to the Issuers.
No Holder of Registrable Notes may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
<PAGE> 26
-23-
10. Miscellaneous
(a) Remedies. In the event of a breach by any Issuer of
any of its obligations under this Agreement, other than the occurrence of an
event which requires payment of Additional Interest, each Holder of Registrable
Notes, in addition to being entitled to exercise all rights provided herein, in
the Indenture or, in the case of the Initial Purchasers, in the Purchase
Agreement or granted by law, including recovery of damages, under this
Agreement.
(b) Enforcement. The Trustee shall be authorized to
enforce the provisions of this Agreement for the ratable benefit of the
Holders.
(c) No Inconsistent Agreements. None of the Issuers has,
as of the date hereof, and the Issuers shall not, after the date of this
Agreement, enter into any agreement with respect to any of its securities that
is inconsistent with the rights granted to the Holders of Registrable Notes in
this Agreement or otherwise conflicts with the provisions hereof. None of the
Issuers has entered or will enter into any agreement with respect to any of its
securities which will grant to any Person piggy-back rights with respect to a
Registration Statement.
(d) Adjustments Affecting Registrable Notes. Neither the
Company nor the Guarantors shall, directly or indirectly, take any action with
respect to the Registrable Notes as a class that would adversely affect the
ability of the Holders of Registrable Notes to include such Registrable Notes
in a registration undertaken pursuant to this Agreement.
(e) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Issuers have obtained the
written consent of Holders of at least a majority of the then outstanding
aggregate principal amount of Registrable Notes. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Notes whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable Notes may be given by
Holders of at least a majority in aggregate principal amount of the Registrable
Notes being sold by such Holders pursuant to such Registration Statement,
provided that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(f) Notices. All notices and other communications
(including without limitation any notices or other communications to the
Trustee) provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air courier or telecopier:
<PAGE> 27
-24-
(i) if to a Holder of Registrable Notes, at the most
current address given by the Trustee to the Company; and
(ii) if to an Issuer, Paxson Communications Corporation,
600 Clearwater Park Road, West Palm Beach, Florida 33401, Attention:
Chief Financial Officer and General Counsel, with a copy to Holland &
Knight, 400 North Ashley, Suite 2300, Tampa, Florida 33602, Attention:
Michael L. Jamieson, Esq.
All such notices and communications shall be deemed to have
been duly given: (i) when delivered by hand, if personally delivered; (ii)
five business days after being deposited in the mail, postage prepaid, if
mailed; (iii) one business day after being timely delivered to a next-day air
courier; and (iv) when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Notes.
(h) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth
<PAGE> 28
-25-
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction.
(l) Entire Agreement. This Agreement, together with the
Purchase Agreement and the Indenture, is intended by the parties as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein.
(m) Joint and Several Obligations. Unless otherwise
stated herein, each of the obligations of the Issuers under this Agreement
shall be joint and several obligations of each of them.
(n) Notes Held by the Company or Its Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Registrable Notes is required hereunder, Registrable Notes held by the Company
or its affiliates (as such term is defined in Rule 405 under the Securities
Act) shall not be counted in determining whether such consent or approval was
given by the Holders of such required percentage.
<PAGE> 29
-26-
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
PAXSON COMMUNICATIONS
CORPORATION
(a Delaware corporation)
By: /s/ Arthur D. Tek
-------------------------------------
Name: Arthur D. Tek
Title: Vice President and Treasurer
PAXSON COMMUNICATIONS TELEVISION, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FLORIDA, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS LP, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS MANAGEMENT
COMPANY
(a Florida corporation)
PAXSON COMMUNICATIONS MARKETING, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS NETWORKS, INC.
(a Florida corporation)
PAXSON OUTDOOR, INC.
(a Florida corporation)
PAXSON NETWORKS, INC.
(a Florida corporation)
EXCEL MARKETING ENTERPRISES, INC.
(a Florida corporation)
<PAGE> 30
-27-
INFOMALL CABLE NETWORK, INC.
(a Delaware corporation)
INFOMALL TV NETWORK, INC.
(a Delaware corporation)
INFOMALL LOS ANGELES, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF AKRON-23, INC.
(a Florida corporation)
PAXSON AKRON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ATLANTA-14,
INC.
(a Florida corporation)
PAXSON ATLANTA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BOSTON-60, INC.
(a Florida corporation)
PAXSON BOSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF CLEVELAND-67,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF COOKEVILLE,
INC.
(a Florida corporation)
PAXSON COOKEVILLE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DALLAS-68, INC.
(a Florida corporation)
<PAGE> 31
-28-
PAXSON DALLAS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DAYTON-26,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DENVER-59, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FT. PIERCE-34,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF HOUSTON-49,
INC.
(a Florida corporation)
PAXSON HOUSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF LOS
ANGELES-30, INC.
(a Florida corporation)
PAXSON LOS ANGELES LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MIAMI-35, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MILWAUKEE-55,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
MINNEAPOLIS-45, INC.
(a Florida corporation)
PAXSON MINNEAPOLIS LICENSE, INC.
(a Florida corporation)
<PAGE> 32
-29-
PAXSON COMMUNICATIONS OF NEW
LONDON-26, INC.
(a Florida corporation)
PAXSON NEW LONDON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW YORK-43,
INC.
(a Florida corporation)
PAXSON NEW YORK LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ORLANDO-56,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
PHILADELPHIA-61, INC.
(a Florida corporation)
PAXSON PHILADELPHIA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHOENIX-13,
INC.
(a Florida corporation)
PAXSON PHOENIX LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ST. LOUIS, INC.
(a Florida corporation)
PAXSON ST. LOUIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SAN JOSE-65,
INC.
(a Florida corporation)
<PAGE> 33
-30-
PAXSON SAN JOSE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF TAMPA-66, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
WASHINGTON-60, INC.
(a Florida corporation)
PAXSON WASHINGTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WEST PALM
BEACH-25, INC.
(a Florida corporation)
PAXSON WEST PALM BEACH LICENSE, INC.
(a Florida corporation)
By: /s/ Arthur D. Tek
-------------------------------------
Name: Arthur D. Tek
Title: Vice President and Treasurer
PAXSON BROADCASTING OF JACKSONVILLE,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON JACKSONVILLE LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF MIAMI, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON MIAMI LICENSE LIMITED PARTNERSHIP
(a Florida partnership)
<PAGE> 34
-31-
PAXSON BROADCASTING OF ORLANDO, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON ORLANDO LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF TAMPA, LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON TAMPA LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
By: Paxson Communications of Florida,
Inc., their general partner
By: /s/ Arthur D. Tek
-------------------------------------
Name: Arthur D. Tek
Title: Vice President and Treasurer
WOOD GUNDY INC.
By: /s/ R.J. Dobilas
--------------------
Name: R.J. Dobilas
Title: Director
SMITH BARNEY INC.
By: /s/ M.E. Anderson
--------------------
Name: M.E. Anderson
Title: Director
<PAGE> 1
EXHIBIT 10.1
<PAGE> 2
EXHIBIT 10.1
- --------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
by and among
PAXSON COMMUNICATIONS CORPORATION,
THE GUARANTORS
named herein
and
THE INITIAL PURCHASERS NAMED HEREIN
-----------------------------------
Dated as of September 22, 1995
- --------------------------------------------------------------------------------
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Accounting Terms; Financial Statements . . . . . . . . . . . . . . . . . 5
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE OF NOTES; RIGHTS OF
HOLDERS OF NOTES; OFFERING BY INITIAL PURCHASERS
Section 2.1. Issue of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2. Purchase, Sale and Delivery of Notes . . . . . . . . . . . . . . . . . . 6
Section 2.3. Registration Rights of Holders of Notes . . . . . . . . . . . . . . . . 7
Section 2.4. Offering by the Initial Purchasers . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of
the Company and the Guarantors . . . . . . . . . . . . . . . . . . . 7
Section 3.2. Resale of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations
of the Initial Purchasers . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company and the
Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
-i-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VI
FEES
Section 6.1 Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.2. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.3. Note Registration Rights Agreement . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.2. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.3. No Waiver; Modifications in Writing . . . . . . . . . . . . . . . . . . 31
Section 8.4 Information Supplied by the Initial
Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.5. Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.6. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.7. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.9. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.10. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
-ii-
<PAGE> 5
SCHEDULE I
EXHIBITS
Exhibit 1(a) Form of Opinion of Holland & Knight
Exhibit 1(b) Form of Opinion of Anthony L. Morrison, Esq.
Exhibit 2 Form of Opinion of Dow, Lohnes & Albertson
Exhibit 3 Form of Opinion of Cahill Gordon & Reindel
-iii-
<PAGE> 6
SECURITIES PURCHASE AGREEMENT, dated as of September 22, 1995
(the "Agreement"), among PAXSON COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Company"), the entities listed on the signature pages hereto
(collectively, the "Guarantors"), and WOOD GUNDY INC. and SMITH BARNEY INC.
(the "Initial Purchasers").
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, and
unless the context requires a different meaning, the following terms have the
meanings indicated:
"Accredited Investor" has the meaning provided therefor in
Section 3.2 of this Agreement.
"Acquisition Agreements" means, collectively, those agreements
and other instruments executed by the Company or any of its Subsidiaries in
connection with the Acquisitions (as defined in the Memorandum).
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Affiliate" means, with respect to any Person, any other
Person which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, the Person in
question. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of at least 10% of the voting securities of a Person
shall be deemed to be control.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof and in effect.
"Basic Documents" means, collectively, the Indenture, the
Notes, the Guarantees, the Note Registration Rights Agreement and this
Agreement.
<PAGE> 7
-2-
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in the City of New
York are authorized or obligated by law to close.
"Closing" has the meaning provided therefor in Section 2.2 of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Act.
"Common Stock" means, collectively, the Class A Common Stock,
Class B Common Stock and Class C Common Stock of the Company, each with a par
value of $.001.
"Default" means any event, act or condition which, with notice
or lapse of time or both, would constitute an Event of Default.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" means any event defined as an Event of
Default in the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"FCC" means the United States Federal Communications
Commission.
"Final Memorandum" has the meaning provided therefor in
Section 2.1 of this Agreement.
"Guarantees" has the meaning provided therefor in Section 2.1
of this Agreement.
"Guarantors" means all the current direct and indirect
Subsidiaries of the Company as defined in the introductory paragraph to this
Agreement.
"Indemnified Party" has the meaning provided therefor in
Section 7.1(c) of this Agreement.
<PAGE> 8
-3-
"Indemnifying Party" has the meaning provided therefor in
Section 7.1(c) of this Agreement.
"Indenture" means the indenture dated as of September 28, 1995
among the Company, the Guarantors and The Bank of New York, as Trustee, under
which the Notes will be issued.
"Initial Purchasers" has the meaning provided therefor in the
introductory paragraph of this Agreement.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement, encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including without limitation, any Capitalized Lease Obligation (as defined in
the Indenture)), conditional sales, or other title retention agreement having
substantially the same economic effect as any of the foregoing.
"Material Adverse Effect" means, with respect to the Company
and its Subsidiaries, a material adverse effect on the business, condition
(financial or otherwise), results of operations or prospects of the Company and
its Subsidiaries, taken as a whole; provided that, with respect to the Company,
"Material Adverse Effect" shall also mean a material adverse effect on the
ability of the Company to perform its obligations under this Agreement or the
Basic Documents or on the ability of the Guarantors, taken as a whole, to
perform their obligations under the Guarantees.
"Memorandum" has the meaning provided therefor in Section 2.1
of this Agreement.
"New Credit Facility" has the meaning provided therefor in the
Indenture.
"Note Registration Rights Agreement" means the registration
rights agreement among the Company, the Guarantors and the Initial Purchasers
relating to the Notes.
"Notes" means the 11 5/8% Senior Subordinated Notes due 2002 of the Company.
"Offering Materials" has the meaning provided therefor in
Section 7.1 of this Agreement.
<PAGE> 9
-4-
"Person" means any individual, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint-stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"PORTAL" means the Private Offerings Resales and Trading
through Automated Linkages Market.
"Preliminary Memorandum" has the meaning provided therefor in
Section 2.1 of this Agreement.
"Private Exchange Notes" shall have the meaning provided
thereto in the Note Registration Rights Agreement.
"Proceeding" has the meaning provided therefor in Section
7.1(c) of this Agreement.
"QIB" has the meaning provided therefor in Section 3.2 of this
Agreement.
"State" means each of the states of the United States, the
District of Columbia and the Commonwealth of Puerto Rico.
"State Commission" means any agency of any State having
jurisdiction to enforce such State's securities laws.
"Subsidiaries" means, with respect to any Person, any
corporation, partnership, joint venture, association or other business entity,
whether now existing or hereafter organized or acquired, (i) in the case of a
corporation, of which more than 50% of the total voting power of the capital
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, officers or trustees thereof is held by such
first-named Person or any of its Subsidiaries; or (ii) in the case of a
partnership, joint venture, association or other business entity, with respect
to which such first-named Person or any of its Subsidiaries has the power to
direct or cause the direction of the management and policies of such entity by
contract or otherwise or if in accordance with generally accepted accounting
principles such entity is consolidated with the first-named Person for
financial statement purposes.
"Taxes" has the meaning provided therefor in Section 3.1(v) of
this Agreement.
"Time of Purchase" has the meaning provided therefor in
Section 2.2 of this Agreement.
"Transactions" has the meaning assigned thereto in the
Memorandum.
<PAGE> 10
-5-
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, and the rules and regulations of the Commission thereunder.
Section 1.2. Accounting Terms; Financial Statements. All
accounting terms used herein not expressly defined in this Agreement shall have
the respective meanings given to them in accordance with sound accounting
practice. The term "sound accounting practice" shall mean such accounting
practice as, in the opinion of the independent accountants regularly retained
by the Company, conforms at the time to generally accepted accounting
principles in the United States applied on a consistent basis except for
changes with which such accountants concur. All determinations to which
accounting principles apply shall be made in accordance with sound accounting
practice.
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE
OF NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASERS
Section 2.1. Issue of Notes. The Company has authorized the
issuance of $230,000,000 aggregate principal amount of the Notes which are to
be issued pursuant to the Indenture. Each Note will be substantially in the
form of the Note set forth as Exhibit A to the Indenture. The Notes will be
unconditionally guaranteed by the Guarantors pursuant to the terms of the
Indenture (the "Guarantees").
The Notes will be offered and sold to the Initial Purchasers
without being registered under the Act, in reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company and the
Guarantors have prepared a preliminary offering memorandum dated August 30,
1995 (the "Preliminary Memorandum") and prepared a final offering memorandum
dated September 21, 1995 (the "Final Memorandum" and, together with the
Preliminary Memorandum, the "Memorandum") setting forth or including a
description of the terms of the Notes, the terms of the offering, a description
of the Company and the Guarantors and any material developments relating to the
Company and the Guarantors occurring after the date of the most recent
financial statements included therein.
Section 2.2. Purchase, Sale and Delivery of Notes. On the
basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Company
agrees that it will sell to each Initial Purchaser, and each Initial Purchaser
agrees, acting severally and not jointly, that it will purchase from the
Company at the Time of Purchase, the principal amount of the Notes set forth
opposite the name of such Initial Purchaser on Schedule I hereto at a price of
$958.65 per Note.
<PAGE> 11
-6-
The purchase, sale and delivery of the Notes will take place
at a closing (the "Closing") at the offices of Cahill Gordon & Reindel, 80 Pine
Street, New York, New York, at 10:00 A.M., New York time, on September 28,
1995, or such later date and time, if any, as the Initial Purchasers and the
Company shall agree. The time at which such Closing is concluded is herein
called the "Time of Purchase."
One or more certificates in definitive form for the Notes that
the Initial Purchasers have agreed to purchase hereunder, and in such
denomination or denominations and registered in such name or names as the
Initial Purchasers request upon notice to the Company at least 24 hours prior
to the Closing, shall be delivered by or on behalf of the Company to the
Initial Purchasers, against payment by or on behalf of the Initial Purchasers
of the purchase price therefor by certified or official bank check or checks
drawn on or by a New York Clearing House bank and payable in next day funds;
provided that at the request of the Company such payment will be made by wire
transfer of immediately available funds wired in accordance with the written
instructions of the Company, in which case the Company shall reimburse the
Initial Purchasers for any actual out-of-pocket costs for obtaining such funds.
The Company will make such certificate or certificates for the Notes available
for checking and packaging by the Initial Purchasers at the offices of CIBC
Wood Gundy Securities Corp., or such other place as CIBC Wood Gundy Securities
Corp. may designate, at least 24 hours prior to the Closing.
Section 2.3. Registration Rights of Holders of Notes. The
Initial Purchasers and their direct and indirect transferees of the Notes will
have such rights with respect to the registration thereof under the Act and
qualification of the Indenture under the Trust Indenture Act as are set forth
in the Note Registration Rights Agreement.
Section 2.4. Offering by the Initial Purchasers. The Initial
Purchasers propose to make an offering of the Notes at the price and upon the
terms set forth in the Final Memorandum, as soon as practicable after this
Agreement is entered into and as in the judgment of the Initial Purchasers is
advisable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties of the Company
and the Guarantors. The Company and the Guarantors, jointly and severally,
represent and warrant to and agree with each of the Initial Purchasers as
follows:
(a) The Final Memorandum, except as to the information
contained in the Final Memorandum under the caption "Pro Forma and
Projected Financial Data," which the Company and the Guarantors make
only such representations as are set forth under such caption, as of
its date and at the Time of Purchase, will not
<PAGE> 12
-7-
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading,
except that the representations and warranties set forth in this
Section 3.1(a) do not apply to statements or omissions made in
reliance upon and in conformity with information relating to the
Initial Purchasers furnished to the Company or the Guarantors in
writing by the Initial Purchasers expressly for use in the Final
Memorandum or any amendment or supplement thereto.
(b) The consolidated financial statements of the Company and
its Subsidiaries together with related notes and schedules, set forth
in the Final Memorandum fairly present the financial condition of the
Company and its Subsidiaries as of the dates indicated and the results
of operations and changes in financial position for the periods
therein specified in conformity with generally accepted accounting
principles consistently applied throughout the periods involved
(except as otherwise stated therein), except that the unaudited
interim financial statements are subject to normal year-end
adjustments; and the pro forma financial statements and the related
notes thereto included in the Final Memorandum have been prepared
using reasonable assumptions and in accordance with the applicable
requirements of the Act and include all adjustments necessary to
present fairly the pro forma financial information included within the
Final Memorandum at the respective dates and for the respective
periods indicated. Each of Price Waterhouse LLP and Ryals, Brimmer,
Burek and Keelan, each of which is reporting upon certain of the
audited financial statements and schedules included in each
Memorandum, is an independent public accounting firm as required by
the Act and the rules and regulations thereunder.
(c) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has filed all reports with the Secretary of State of Delaware
required to obtain a certificate of existence from that office. Each
Subsidiary is either (i) a corporation duly incorporated or organized,
validly existing and in good standing under the laws of the state or
other jurisdiction of its incorporation or organization or (ii) a
partnership duly organized and validly existing under the applicable
laws of the State of Florida. Each of the Company and the
Subsidiaries is duly qualified and in good standing as a foreign
corporation or partnership, and is authorized to do business, in each
jurisdiction in which the ownership or leasing of any property or the
character of its operations makes such qualification necessary and in
which the failure so to qualify could have a Material Adverse Effect.
(d) As of the Time of Purchase (after giving pro forma effect
to the incurrence of indebtedness under the New Credit Facility and
the retirement of the Existing Senior Indebtedness (as defined in the
Memorandum)), the Company will
<PAGE> 13
-8-
have the authorized, issued and outstanding capitalization as set
forth in the Final Memorandum. All of the issued and outstanding
shares of capital stock of the Company and its Subsidiaries are
validly issued, fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights. The Company has no
Subsidiaries other than the Guarantors. Except as set forth in the
Final Memorandum, (i) all of the capital stock of the Guarantors is
owned directly or indirectly by the Company, free and clear of any
Liens, (ii) there are no outstanding subscriptions, options, warrants,
rights, convertible securities or other binding agreements or
commitments of any character obligating the Company or its
Subsidiaries to issue any securities and (iii) there is no agreement,
understanding or arrangement among the Company or its Subsidiaries and
their respective stockholders or any other Person relating to the
ownership or disposition of any capital stock in the Company or any
Subsidiary, the election of directors of the Company or any of its
Subsidiaries or the governance of the Company's or any Subsidiary's
affairs, and such agreements, arrangements or understandings will not
be breached or violated as a result of the execution and delivery of,
or the consummation of the transactions contemplated by, this
Agreement, the Basic Documents and the Transactions.
(e) This Agreement has been duly authorized by the Company
and the Guarantors and when executed and delivered by the Company and
the Guarantors (assuming the due authorization, execution and delivery
by the Initial Purchasers), will constitute a valid and legally
binding agreement of the Company and the Guarantors, enforceable
against each of them in accordance with its terms except (i) that the
enforcement hereof may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally, and to general principles of equity and the discretion of
the court before which any proceeding therefor may be brought and (ii)
as any rights to indemnity or contribution hereunder may be limited by
federal and state securities laws and public policy considerations.
(f) The Indenture has been duly authorized by the Company and
the Guarantors and when executed and delivered by the Company and the
Guarantors (assuming the due authorization, execution and delivery by
the Trustee), will constitute a valid and legally binding agreement of
the Company and the Guarantors, enforceable against each of them in
accordance with its terms except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
<PAGE> 14
-9-
(g) The Note Registration Rights Agreement has been duly
authorized by the Company and the Guarantors and when executed and
delivered by the Company and the Guarantors (assuming the due
authorization, execution and delivery by the Initial Purchasers) will
constitute a valid and legally binding agreement of the Company and
the Guarantors, enforceable against each of them in accordance with
its terms except (i) that the enforcement thereof may be subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, and to general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought and (ii) as any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and
public policy considerations.
(h) The Notes have each been duly authorized by the Company
and, when the Notes are executed by the Company and authenticated by
the Trustee in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchasers in accordance with
the terms of this Agreement, the Notes will be entitled to the
benefits of the Indenture and will constitute valid and legally
binding obligations of the Company enforceable in accordance with
their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating
to creditors' rights generally, and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought.
(i) The Guarantees endorsed on the Notes have each been duly
authorized by each of the Guarantors and, when the Notes are executed
by the Company and authenticated by the Trustee in accordance with the
provisions of the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement, the
Guarantees will be entitled to the benefits of the Indenture and will
constitute valid and legally binding obligations of the Guarantors
enforceable in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of
the court before which any proceeding therefor may be brought.
(j) Immediately after the consummation of the transactions
contemplated by this Agreement (including the use of proceeds from the
sale of Notes at the Time of Purchase), the fair value and present
fair saleable value of the assets of the Company (on a consolidated
basis) will exceed the sum of its stated liabilities and identified
contingent liabilities; the Company (on a consolidated basis) will not
be, after giving effect to the execution, delivery and performance of
this Agreement
<PAGE> 15
-10-
and the consummation of the transactions contemplated hereby
(including the use of proceeds from the sale of Notes at the Time of
Purchase), (i) left with unreasonably small capital with which to
carry on its business as it is proposed to be conducted, (ii) unable
to pay its debts (contingent or otherwise) as they mature or (iii)
otherwise insolvent.
(k) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate each of the other Transactions. Each of
the Company and the Guarantors (to the extent a party thereto) has all
requisite corporate power and authority to (i) execute, deliver and
perform its obligations under this Agreement and each of the Basic
Documents, (ii) execute, deliver and perform its obligations under all
other agreements and instruments executed and delivered by the Company
pursuant to or in connection with this Agreement, each of the Basic
Documents and the Transactions and (iii) issue the Notes and the
Guarantees, as the case may be, in the manner and for the purpose
contemplated by this Agreement.
(l) Subsequent to the date as of which information is given
in the Final Memorandum there has not been (i) any event or condition
that has had or that could reasonably be expected to have a Material
Adverse Effect, (ii) any transaction entered into by the Company or
any Subsidiary, other than in the ordinary course of business, that is
material to the Company and its Subsidiaries, taken as a whole, or
(iii) any dividend or distribution of any kind declared, paid or made
by the Company on its Common Stock.
(m) Except as set forth in the Final Memorandum or with
respect to certain pending acquisitions, there is no action, suit,
investigation or proceeding, governmental or otherwise, pending or, to
the best knowledge of the Company, threatened to which the Company or
any of its Subsidiaries is or would be a party or of which the
properties of the Company or its Subsidiaries are or may be subject,
that (i) seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance and sale of the Notes by the Company
or any of the other transactions contemplated hereby, (ii) questions
the legality or validity of any such transactions or seeks to recover
damages or obtain other relief in connection with any such
transactions or (iii) could reasonably be expected to have a Material
Adverse Effect.
(n) The execution, delivery and performance by the Company
and the Guarantors (to the extent a party thereto) of this Agreement
and the Basic Documents, and the issuance and sale by the Company of
the Notes, the making of the Guarantees by the Guarantors, and the
execution, delivery and performance by the Company and each of the
Guarantors (to the extent each is a party thereto) of all other
agreements and instruments to be executed and delivered by the Company
<PAGE> 16
-11-
and the Guarantors, pursuant hereto or thereto or in connection
herewith or therewith or in connection with any of the other
Transactions, and compliance by the Company and the Guarantors (to the
extent a party thereto) with the terms and provisions hereof and
thereof, do not and will not (i) violate any provision of any law,
rule or regulation (including, without limitation, Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System), order,
writ, judgment, decree, determination or award presently in effect or
in effect at the Time of Purchase having applicability to the Company
or any of its Subsidiaries, (ii) conflict with or result in a breach
of or constitute a default under the certificate of incorporation or
by-laws of the Company or any of the Subsidiaries, or, as of the Time
of Purchase, any indenture or loan or credit agreement, or any other
material agreement or instrument, to which the Company or any of its
Subsidiaries is a party or by which the Company or any of the
Subsidiaries or any of their respective properties may be bound or
affected, or (iii) except as contemplated by this Agreement and the
Basic Documents, result in, or require the creation or imposition of,
any Lien upon or with respect to any of the properties now owned or
hereafter acquired by the Company or any of the Subsidiaries, except,
in each case, where such violation, conflict, default or creation or
imposition of any Lien would not (individually or in the aggregate)
have a Material Adverse Effect.
(o) Each agreement or instrument executed and delivered by
the Company or the Guarantors (to the extent a party thereto) in
connection with this Agreement, the Basic Documents or the
Transactions has been duly and validly authorized, executed and
delivered by the Company and the Guarantors (to the extent a party
thereto) and constitutes or will constitute a valid and legally
binding obligation of the Company and the Guarantors (to the extent a
party thereto), enforceable against them in accordance with its terms,
except (i) that the enforcement thereof may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and to general principles of equity and the discretion of
the court before which any proceeding therefor may be brought and (ii)
as any rights to indemnity and contribution hereunder and thereunder
may be limited by applicable law.
(p) Neither the Company nor any of the Subsidiaries is
currently or, after giving effect to the consummation of the
transactions contemplated by this Agreement and the other
Transactions, will be, (i) in violation of its respective certificate
of incorporation or by-laws, (ii) in default (nor will an event occur
which with notice or passage of time or both would constitute such a
default) under or in violation of any indenture or loan or credit
agreement or any other material agreement or instrument to which it is
a party or by which it or any of its properties may be bound or
affected (except as set forth in the Final Memorandum), (iii) in
violation of any order of any court, arbitrator or
<PAGE> 17
-12-
governmental body or subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding
under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iv) in
violation of or will have violated any such statute, rule or
regulation of any governmental authority, which default or violation
(individually or in the aggregate) could reasonably be expected to (y)
affect the legality, validity or enforceability of this Agreement or
any of the Basic Documents or (z) have a Material Adverse Effect.
(q) Except as set forth in the Final Memorandum, no
authorization, consent, approval, license, qualification or formal
exemption from, nor any filing, declaration or registration with, any
court, governmental agency or regulatory authority or any securities
exchange is required in connection with the execution, delivery or
performance by the Company or any of the Subsidiaries (to the extent
they are a party thereto) of this Agreement, any of the Basic
Documents or any of the Transactions, except (i) as may be required
under state securities or "blue sky" laws or the laws of any foreign
jurisdiction in connection with the offer and sale of the Notes or
(ii) as would not (individually or in the aggregate) have a Material
Adverse Effect. All such authorizations, consents, approvals,
licenses, qualifications, exemptions, filings, declarations and
registrations set forth in the Final Memorandum (other than as
disclosed therein) which are required to have been obtained by the
date hereof have been obtained or made, as the case may be, and are in
full force and effect and not the subject of any pending or, to the
knowledge of the Company, threatened attack by appeal or direct
proceeding or otherwise.
(r) The Company is not and immediately after the Time of
Purchase will not be an "investment company" or a company "controlled"
by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
(s) The execution and delivery of this Agreement and and the
other Basic Documents and the sale of the Notes to the Initial
Purchasers will not involve any non-exempt prohibited transaction
within the meaning of Section 406 of ERISA, or Section 4975 of the
Code on the part of the Company or any of its Subsidiaries. No
Reportable Event (as defined in ERISA) has occurred during the
five-year period prior to the date on which this representation is
made or deemed made with respect to any Employee Benefit Plan (as
defined in ERISA), and each Employee Benefit Plan has complied in all
material respects with the applicable provisions of ERISA and the
Code. The present value of all benefits vested under each Employee
Benefit Plan maintained by the Company or any Commonly Controlled
Entity (as defined in ERISA) (based on the current liability, interest
rate and other assumptions used in preparation of the plan's Form 5500
Annual Report) did not,
<PAGE> 18
-13-
as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets
of such plan allocable to such accrued benefits. Neither the Company
nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan (as defined in ERISA), and
neither the Company nor any Commonly Controlled Entity would become
subject to any liability under ERISA if the Company or any such
Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding
the date on which such representation is made or deemed made. No such
Multiemployer Plan is in reorganization or insolvent. There are no
material liabilities of the Company or any Commonly Controlled Entity
for post-retirement benefits to be provided to their current and
former employees under Plans which are welfare benefit plans (as
described in Section 3(1) of ERISA).
(t) Other than assets to be acquired in connection with the
Acquisitions, the Company and each of its Subsidiaries have good and
valid title to, or valid and enforceable leasehold interests, in, all
properties and assets identified in the Memorandum as owned or leased
by each of them which are material to the business of the Company and
its Subsidiaries, taken as a whole, free and clear of all Liens,
except (i) such Liens as are described in the Final Memorandum or (ii)
Liens created in the ordinary course of business which are Permitted
Liens (as defined in the Indenture). All of the leases material to
the business of the Company and the Subsidiaries, taken as a whole,
and under which the Company or any Subsidiary holds properties
described in the Final Memorandum, are valid and binding as leased by
them, with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such properties by the
Company and its Subsidiaries.
(u) No form of general solicitation or general advertising
was used by the Company or its representatives in connection with the
offer and sale of the Notes. Neither the Company nor any Person
authorized to act for it has, either directly or indirectly, sold or
offered for sale any of the Notes or any other similar security of the
Company to, or solicited any offers to buy any thereof from, or has
otherwise approached or negotiated in respect thereof with, any Person
or Persons other than with or through the Initial Purchasers; and the
Company agrees that neither it nor any Person acting on its behalf
will sell or offer for sale any Notes to, or solicit any offers to buy
any Notes from, or otherwise approach or negotiate in respect thereof
with, any Person or Persons so as thereby to bring the issuance or
sale of any of the Notes within the provisions of Section 5 of the
Act.
(v) All tax returns required to be filed by the Company or
any of its Subsidiaries in any jurisdiction (including foreign
jurisdictions) have been so filed and all taxes, assessments, fees and
other charges including, without limitation,
<PAGE> 19
-14-
withholding taxes, penalties, and interest ("Taxes") due or claimed to
be due have been paid, other than those Taxes being contested in good
faith and those Taxes for which adequate reserves or accruals have
been established in accordance with generally accepted accounting
principles, except where the failure to file such returns or to pay
such Taxes is not reasonably likely to have, singly or in the
aggregate, a Material Adverse Effect. The Company knows of no actual
or proposed additional tax assessments for any fiscal period against
the Company or any of the Subsidiaries that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect.
(w) The Company and its Subsidiaries are the sole and
exclusive owners or licensees of all trade names, unregistered
trademarks and service marks, brand names, patents, registered and
unregistered copyrights, registered trademarks and service marks, and
all applications for any of the foregoing, and all permits, grants and
licenses or other rights with respect thereto, the absence of which
would have or could reasonably be expected to have a Material Adverse
Effect. Except as set forth in the Final Memorandum neither the
Company nor any of its Subsidiaries has been charged with any material
infringement of any intangible property of the character described
above or been notified or advised of any material claim of any other
Person relating to any of the intangible property which infringements
or claims (individually or in the aggregate) would have a Material
Adverse Effect.
(x) Except as set forth in the Final Memorandum, the Company
and its Subsidiaries comply with all laws, rules and regulations
(including, without limitation, all applicable environmental laws,
rules and regulations) applicable to the Company and each such
Subsidiary, and the Company and its Subsidiaries own or possess and
are operating in compliance in all material respects with the terms,
provisions, conditions, restrictions and limitations contained in all
licenses, franchises, approvals, certificates and permits (including,
without limitation, environmental permits) from all Federal, state,
territorial, foreign and local governmental and regulatory authorities
which are necessary to own or lease their respective properties and
assets and to the conduct of their respective businesses (other than
such laws, rules, regulations, licenses, franchises, approvals,
certificates or permits that are immaterial in scope or application to
the Company and its Subsidiaries, taken as a whole), including,
without limitation, licenses, franchises and approvals from the FCC
except where the failure to so comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect. There are no citations or notices of forfeiture or other
proceedings pending or, to the best knowledge of the Company,
threatened or any basis therefor, which would lead to the revocation,
termination, suspension or non-renewal of any such license, franchise,
approval, certificate or permit except where all such revocations,
terminations, suspensions or non-renewals, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
<PAGE> 20
-15-
Other than as disclosed in the Final Memorandum, (i) there are no
license renewal or rate or tariff proceedings existing, pending or,
to the best knowledge of the Company, threatened against the Company
or any Guarantor that could reasonably be expected to have a Material
Adverse Effect, and (ii) there are no restrictions or limitations
contained in any applicable license, franchise, approval, certificate
or permit, or, to the best knowledge of the Company, threatened or
proposed in any pending or contemplated hearing, proceeding or
procedure, that could reasonably be expected to have a Material
Adverse Effect.
(y) Neither the Company nor any of its Affiliates (as defined
in Rule 501(b) of Regulation D under the Act) has directly, or through
any agent, (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the
Act) which is or will be integrated with the sale of the Notes in a
manner that would require the registration under the Act of the Notes
or (ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Notes (as those
terms are used in Regulation D under the Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Act.
(z) The Notes, the Guarantees, the Indenture, the Note
Registration Rights Agreement and this Agreement conform in all
material respects to the descriptions thereof in the Final Memorandum.
(aa) Assuming the accuracy of each Initial Purchaser's
representations and warranties set forth in Section 3.2 hereof and the
due performance by each Initial Purchaser of the covenants and
agreements set forth in Section 3.2 hereof the offer and sale of the
Notes to the Initial Purchasers in the manner contemplated by this
Agreement and the Memorandum does not require registration under the
Act and the Indenture does not require qualification under the Trust
Indenture Act of 1939, as amended.
(ab) Neither the Company nor any of its Subsidiaries conducts
business with the government of Cuba or any Person or affiliate
located in Cuba. In the event the Company or any of its Subsidiaries
commences engaging in business with the government of Cuba or with any
Person or affiliate located in Cuba, the Company will provide the
Florida Department of Banking and Finance notice of such business in a
form acceptable to such Department.
Section 3.2. Resale of Notes. Each of the Initial Purchasers
represents and warrants (as to itself only) that it is a "qualified
institutional buyer" as defined in Rule 144A of the Act ("QIB"). Each of the
Initial Purchasers agrees with the Company (as to itself only) that (a) it has
not and will not solicit offers for, or offer or sell, the Notes by any form of
general solicitation or general advertising (as those terms are used in
<PAGE> 21
-16-
Regulation D under the Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Act; and (b) it has and will solicit offers
for the Notes only from, and will offer the Notes only to (A) in the case of
offers inside the United States, (i) Persons whom the Initial Purchasers
reasonably believe to be QIBs or, if any such Person is buying for one or more
institutional accounts for which such Person is acting as fiduciary or agent,
only when such Person has represented to the Initial Purchasers that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A or (ii) a limited number of other institutional investors reasonably
believed by the Initial Purchasers to be "Accredited Investors" (as defined in
Rule 501(a)(1), (2), (3) or (7) of the Act) that, prior to their purchase of
the Notes, deliver to the Initial Purchasers a letter containing the
representations and agreements set forth in Annex A to the Final Memorandum and
(B) in the case of offers outside the United States, to Persons other than U.S.
Persons ("foreign purchasers," which term shall include dealers or other
professional fiduciaries in the United States acting on a discretionary basis
for foreign beneficial owners (other than an estate or trust)); provided,
however, that, in the case of this clause (B), in purchasing such Notes such
Persons are deemed to have represented and agreed as provided under the caption
"Transfer Restrictions" contained in the Final Memorandum.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the
Initial Purchasers. The obligation of each Initial Purchaser to purchase the
Notes to be purchased by it hereunder is subject, at the Time of Purchase, to
the satisfaction of the following conditions:
(a) The Initial Purchasers shall have received an opinion,
addressed to the Initial Purchasers in form and substance reasonably
satisfactory to counsel to the Initial Purchasers and dated the Time
of Purchase, from each of Holland & Knight, special counsel to the
Company and the Guarantors, substantially in the form of Exhibit 1(a)
hereto and Anthony L. Morrison, Esq., General Counsel to the Company
and the Guarantors, substantially in the form of Exhibit 1(b) hereto.
(b) The Initial Purchasers shall have received an opinion,
addressed to the Initial Purchasers in form and substance satisfactory
to counsel to the Initial Purchasers and dated the Time of Purchase,
of Dow, Lohnes & Albertson, special communications counsel to the
Company and the Guarantors, substantially in the form of Exhibit 2
hereto.
<PAGE> 22
-17-
(c) The Initial Purchasers shall have received an opinion,
addressed to the Initial Purchasers in form and substance satisfactory
to the Initial Purchasers and dated the Time of Purchase, of Cahill
Gordon & Reindel, counsel to the Initial Purchasers, substantially in
the form of Exhibit 3 hereto.
In rendering such opinions in accordance with Sections 4.1(a),
(b) and (c), each such counsel may rely as to factual matters upon
certificates or other documents furnished by officers and directors of
the Company and representations of the Initial Purchasers and by
government officials, and upon such other documents as such counsel
deem appropriate as a basis for their opinion. Each such counsel may
specify the jurisdictions in which it is admitted to practice and that
it is not admitted to practice in any other jurisdiction or an expert
in the law of any other jurisdiction. To the extent such opinion
concerns the laws of any other such jurisdiction such counsel may rely
upon the opinion of counsel (reasonably satisfactory to the Initial
Purchasers) admitted to practice in such jurisdiction. Any opinion
relied upon by such counsel as aforesaid shall be delivered to the
Initial Purchasers together with the opinion of such counsel, which
opinion shall state that such counsel believes that their and the
Initial Purchasers' reliance thereon is justified.
(d) The Initial Purchasers shall have received from Price
Waterhouse LLP a comfort letter or letters dated the date hereof and
the Closing in form and substance reasonably satisfactory to counsel
to the Initial Purchasers.
(e) The representations and warranties made by the Company or
any Guarantor herein shall be true and correct in all material
respects (except for changes expressly provided for in this Agreement)
on and as of the Time of Purchase with the same effect as though such
representations and warranties had been made on and as of the Time of
Purchase, the Company and the Guarantors shall have complied in all
material respects with all agreements as set forth in or contemplated
hereunder and in the Basic Documents required to be performed by it at
or prior to the Time of Purchase and the Company shall have furnished
to each Purchaser a certificate, dated the Time of Purchase, to such
effect.
(f) Subsequent to the date of the Final Memorandum, (i) there
shall not have been any change, or any development involving a
prospective change, which has affected or may affect materially and
adversely the businesses, properties or prospects or the financial
condition or the results of operations of the Company and the
Subsidiaries, taken as a whole, and (ii) the Company and the
Subsidiaries shall have conducted their respective businesses only in
the ordinary course.
<PAGE> 23
-18-
(g) At the Time of Purchase and after giving effect to the
consummation of the transactions contemplated by this Agreement and
the Basic Documents, there shall exist no Default or Event of Default.
(h) The purchase of and payment for the Notes by the Initial
Purchasers hereunder shall not be prohibited or enjoined (temporarily
or permanently) by any applicable law or governmental regulation
(including, without limitation, Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System).
(i) At the Time of Purchase, the Initial Purchasers shall
have received a certificate, dated the Time of Purchase, from the
Company stating that the conditions specified in Sections 4.1(e), (f)
and (g) have been satisfied or duly waived at the Time of Purchase.
(j) Each of the Basic Documents shall be satisfactory in form
and substance to each of the Initial Purchasers and shall have been
executed and delivered by all the respective parties thereto and shall
be in full force and effect.
(k) All proceedings taken in connection with the issuance of
the Notes and the transactions contemplated by this Agreement, the
Basic Documents and all documents and papers relating thereto shall be
reasonably satisfactory to the Initial Purchasers and counsel to the
Initial Purchasers. The Initial Purchasers and counsel to the Initial
Purchasers shall have received copies of such papers and documents as
they may reasonably request in connection therewith, all in form and
substance reasonably satisfactory to them.
(l) (i) There shall not have been any announcement by any
"nationally recognized statistical rating organization", as defined
for purposes of Rule 436(g) under the Act, that (A) it is downgrading
its rating assigned to any debt securities of the Company, or (B) it
is reviewing its rating assigned to any debt securities of the Company
with a view to possible downgrading, or with negative implications, or
direction not determined.
(m) Wood Gundy Inc. shall have sold the principal amount of
the Notes set forth opposite its name on Schedule I hereto in
accordance with the provisions of Section 3.2 hereof.
On or before the Closing, the Initial Purchasers and counsel
to the Initial Purchasers shall have received such further documents, opinions,
certificates and schedules or other instruments relating to the business,
corporate, legal and financial affairs of the Company and its Subsidiaries as
they may reasonably request.
<PAGE> 24
-19-
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company and the Guarantors.
The Company and the Guarantors covenant and agree with each of the Initial
Purchasers that:
(a) The Company will not amend or supplement the Final
Memorandum or any amendment or supplement thereto of which the Initial
Purchasers shall not previously have been advised and furnished a copy
for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchasers shall not have given
their consent, which consent shall not be unreasonably withheld. The
Company will promptly, upon the reasonable request of the Initial
Purchasers or counsel to the Initial Purchasers, make any amendments
or supplements to the Preliminary Memorandum or the Final Memorandum
that may be necessary or advisable in connection with the resale of
the Notes by the Initial Purchasers.
(b) The Company will cooperate with the Initial Purchasers in
arranging for the qualification of the Notes for offering and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchasers may designate and will continue such qualifications
in effect for as long as may be reasonably necessary to complete the
resale of the Notes; provided, however, that in connection therewith,
the Company shall not be required to qualify as a foreign corporation
or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation in excess of a nominal
dollar amount in any such jurisdiction where it is not then so
subject.
(c) If, at any time prior to the completion of the
distribution by the Initial Purchasers of the Notes or the Private
Exchange Notes, any event occurs or information becomes known as a
result of which the Final Memorandum as then amended or supplemented
would include any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
or if for any other reason it is necessary at any time to amend or
supplement the Final Memorandum to comply with applicable law, the
Company will promptly notify the Initial Purchasers thereof (who
thereafter will not use such Final Memorandum until appropriately
amended or supplemented) and will prepare, at the expense of the
Company, an amendment or supplement to the Final Memorandum that
corrects such statement or omission or effects such compliance.
<PAGE> 25
-20-
(d) The Company will, without charge, provide to the Initial
Purchasers and to counsel to the Initial Purchasers as many copies of
the Preliminary Memorandum and the Final Memorandum or any amendment
or supplement thereto as the Initial Purchasers may reasonably
request.
(e) The Company will apply the net proceeds from the sale of
the Notes as set forth under "Use of Proceeds" in the Final
Memorandum.
(f) For and during the period ending on the date no Notes are
outstanding, the Company will furnish to the Initial Purchasers copies
of all reports and other communications (financial or otherwise)
furnished by the Company to the Trustee or the holders of the Notes
and, promptly after available, copies of any reports or financial
statements furnished to or filed by the Company with the Commission or
any national securities exchange on which any class of securities of
the Company may be listed.
(g) Prior to the Closing Date, the Company will furnish to
the Initial Purchasers, as soon as they have been prepared, a copy of
any unaudited interim financial statements of the Company for any
period subsequent to the period covered by the most recent financial
statements appearing in the Final Memorandum.
(h) None of the Company or any of its Affiliates will sell,
offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Act) which could be
integrated with the sale of the Notes in a manner which would require
the registration under the Act of the Notes.
(i) The Company will not, and will not permit any of its
Subsidiaries to, solicit any offer to buy or offer to sell the Notes
by means of any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Act) or in any
manner involving a public offering within the meaning of Section 4(2)
of the Act.
(j) The Company will use its best efforts to (i) permit the
Notes to be included for quotation on PORTAL and (ii) permit the Notes
to be eligible for clearance and settlement through The Depository
Trust Company.
(k) The Company and the Guarantors (to the extent a party
thereto) will do and perform all things required to be done and
performed by them under this Agreement and the Basic Documents prior
to or after the Closing and to satisfy all conditions precedent on
their part to the obligations of the Initial Purchasers to purchase
and accept delivery of the Notes.
<PAGE> 26
-21-
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes. The Company and the
Guarantors, jointly and severally, agree to pay all costs and expenses incident
to the performance of their obligations under this Agreement, whether or not
the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 8.2 hereof, including, but not limited to, all
costs and expenses incident to (i) the negotiation, preparation, printing,
typing, reproduction, execution and delivery of this Agreement and each of the
Basic Documents, any amendment or supplement to or modification of any of the
foregoing and any and all other documents furnished pursuant hereto or thereto
or in connection herewith or therewith, (ii) any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto, and any "Blue Sky" memoranda (which shall include the reasonable
disbursements of counsel to the Initial Purchasers in respect thereof), (iii)
all arrangements relating to the delivery to the Initial Purchasers of copies
of the foregoing documents, (iv) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Company, (v)
preparation (including printing), issuance and delivery to the Initial
Purchasers of the Notes, (vi) the qualification of the Notes under state
securities and "Blue Sky" laws, including filing fees and fees and
disbursements of counsel to the Initial Purchasers relating thereto, (vii)
expenses in connection with any meetings with prospective investors in the
Notes, (viii) fees and expenses of the trustee including fees and expenses of
counsel, (ix) all expenses and listing fees incurred in connection with the
application for quotation of the Notes on PORTAL, (x) any fees charged by
investment rating agencies for the rating of the Notes, (xi) the disbursements
(excluding road show related and printing expenses) of the Initial Purchasers
in an amount not to exceed $150,000 and (xii) except as limited by Article VII,
all costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses), if any, in connection with the enforcement of this
Agreement, the Notes or any other agreement furnished pursuant hereto or
thereto or in connection herewith or therewith. In addition, the Company shall
pay any and all stamp, transfer and other similar taxes payable or determined
to be payable in connection with the execution and delivery of this Agreement,
any Basic Document or the issuance of the Notes, and shall save and hold each
Initial Purchaser harmless from and against any and all liabilities with
respect to or resulting from any delay in paying, or omission to pay, such
taxes.
<PAGE> 27
-22-
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity.
(a) Indemnification by the Company and the Guarantors. The
Company and the Guarantors, jointly and severally, agree and covenant to hold
harmless and indemnify each of the Initial Purchasers and any Affiliates
thereof (including any director, officer, employee, agent or controlling Person
of any of the foregoing) from and against any losses, claims, damages,
liabilities and expenses (including expenses of investigation) to which such
Initial Purchaser and its Affiliates may become subject arising out of or based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Memorandum and any amendments or supplements thereto, the
Basic Documents, any documents filed with the Commission or any State
Commission (collectively, the "Offering Materials") or arising out of or based
upon the omission or alleged omission to state in any of the Offering Materials
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company and the
Guarantors shall not be liable under this paragraph (a) to the extent that such
losses, claims, damages or liabilities arose out of or are based upon an untrue
statement or omission made in any of the documents referred to in this
paragraph (a) in reliance upon and in conformity with the information relating
to the Initial Purchasers furnished in writing by such Initial Purchasers for
inclusion therein; provided, further, that the Company and the Guarantors shall
not be liable under this paragraph (a) to the extent that such losses, claims,
damages or liabilities arose out of or are based upon an untrue statement or
omission made in any Memorandum that is corrected in the Final Memorandum (or
any amendment or supplement thereto) if the person asserting such loss, claim,
damage or liability purchased Notes from an Initial Purchaser in reliance on
such Memorandum but was not given the Final Memorandum (or any amendment or
supplement thereto) on or prior to the confirmation of the sale of such Notes.
The Company and the Guarantors further agree to reimburse each Initial
Purchaser for any reasonable legal and other expenses as they are incurred by
it in connection with investigating, preparing to defend or defending any
lawsuits, claims or other proceedings or investigations arising in any manner
out of or in connection with such Person being an Initial Purchaser; provided
that if the Company or the Guarantors reimburse an Initial Purchaser hereunder
for any expenses incurred in connection with a lawsuit, claim or other
proceeding for which indemnification is sought, such Initial Purchaser hereby
agrees to refund such reimbursement of expenses to the extent that the losses,
claims, damages or liabilities arise out of or are based upon an untrue
statement or omission made in any of the documents referred to in this
paragraph (a) in reliance upon and in conformity with the information relating
to the Initial Purchasers furnished in writing by such Initial Purchasers for
inclusion therein. The Company and the Guarantors further agree that the
indemnification, contribution and reimbursement commitments set forth in this
Article VII
<PAGE> 28
-23-
shall apply whether or not an Initial Purchaser is a formal party to any such
lawsuits, claims or other proceedings. The indemnity, contribution and expense
reimbursement obligations of the Company and the Guarantors under this Article
VII shall be in addition to any liability the Company may otherwise have.
(b) Indemnification by the Initial Purchasers. Each of the
Initial Purchasers agrees and covenants, severally and not jointly, to hold
harmless and indemnify the Company and the Guarantors and any Affiliates
thereof (including any director, officer, employee, agent or controlling Person
of any of the foregoing) from and against any losses, claims, damages,
liabilities and expenses insofar as such losses, claims, damages, liabilities
or expenses arise out of or are based upon any untrue statement of any material
fact contained in the Offering Materials, or upon the omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or omission was made in reliance upon and in
conformity with the information relating to such Initial Purchaser furnished in
writing by such Initial Purchaser for inclusion therein. The indemnity,
contribution and expense reimbursement obligations of the Initial Purchasers
under this Article VII shall be in addition to any liability the Initial
Purchasers may otherwise have.
(c) Procedure. If any Person shall be entitled to indemnity
hereunder (each an "Indemnified Party"), such Indemnified Party shall give
prompt written notice to the party or parties from which such indemnity is
sought (each an "Indemnifying Party") of the commencement of any action, suit,
investigation or proceeding, governmental or otherwise (a "Proceeding"), with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure so to notify the
Indemnifying Parties shall not relieve the Indemnifying Parties from any
obligation or liability except to the extent that the Indemnifying Parties have
been prejudiced materially by such failure. The Indemnifying Parties shall
have the right, exercisable by giving written notice to an Indemnified Party
promptly after the receipt of written notice from such Indemnified Party of
such Proceeding, to assume, at the Indemnifying Parties' expense, the defense
of any such Proceeding, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that an Indemnified Party or parties (if
more than one such Indemnified Party is named in any Proceeding) shall have the
right to employ separate counsel in any such Proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or parties unless: (1) the Indemnifying
Parties agree to pay such fees and expenses; or (2) the Indemnifying Parties
fail promptly to assume the defense of such Proceeding or fail to employ
counsel reasonably satisfactory to such Indemnified Party or parties; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party or parties and the Indemnifying Party or an
Affiliate of the Indemnifying Party and such Indemnified Parties, and the
Indemnified Parties shall have been advised in writing by counsel that there
may be one or more legal
<PAGE> 29
-24-
defenses available to such Indemnified Party or parties that are different from
or additional to those available to the Indemnifying Parties, in which case, if
such Indemnified Party or parties notifies the Indemnifying Parties in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Parties, the Indemnifying Parties shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the Indemnifying
Parties, it being understood, however, that, unless there exists a conflict
among Indemnified Parties, the Indemnifying Parties shall not, in connection
with any one such Proceeding or separate but substantially similar or related
Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such Indemnified Party or parties, or for fees and expenses that are
not reasonable. No Indemnified Party or parties will settle any Proceeding
without the consent of the Indemnifying Party or parties (but such consent
shall not be unreasonably withheld). No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened Proceeding in respect of which any Indemnified Party is
or could have been or a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability or claims that are the
subject of such Proceeding.
Section 7.2. Contribution. If for any reason the
indemnification provided for in Section 7.1 of this Agreement is unavailable to
an Indemnified Party, or insufficient to hold it harmless, in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then each
applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other, but
also the relative fault of the Indemnifying and Indemnified Parties in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Indemnifying and
Indemnified Parties shall be deemed to be in the same proportion as the total
proceeds from the offering of the Notes (before deducting expenses) received by
the Company bear to the total discounts and commissions received by each
Initial Purchaser. The relative fault of the Indemnifying and Indemnified
Parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Indemnifying or Indemnified Parties and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages and liabilities referred to above shall be deemed
to include any legal or other fees or expenses incurred by such party in
connection with investigating or defending any such claim.
<PAGE> 30
-25-
The Company and each of the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to the immediately
preceding paragraph were determined pro rata or per capita or by any other
method of allocation which does not take into account the equitable
considerations referred to in such paragraph. Notwithstanding any other
provision of this Section 7.2, no Initial Purchaser shall be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Initial Purchaser under
this Agreement, less the aggregate amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of the untrue or alleged
untrue statements or the omissions or alleged omissions to state a material
fact. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.
Section 7.3. Note Registration Rights Agreement.
Notwithstanding anything to the contrary in this Article 7, the indemnification
and contribution provisions of the Note Registration Rights Agreement shall
govern any claim with respect thereto.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions. The representations,
warranties and covenants of the Company, its officers and the Initial
Purchasers made herein, the indemnity and contribution agreements contained
herein and each of the provisions of Articles V, VII and VIII shall remain
operative and in full force and effect regardless of (a) any investigation made
by or on behalf of the Company, any Initial Purchaser or any Indemnified Party,
(b) acceptance of any of the Notes and payment therefor, (c) any termination of
this Agreement, or (d) disposition of the Notes by the Initial Purchasers
whether by redemption, exchange, sale or otherwise.
Section 8.2. Termination. 1. This Agreement may be terminated
in the sole discretion of the Initial Purchasers by notice to the Company given
prior to the Time of Purchase in the event that the Company shall have failed,
refused or been unable to perform all obligations and satisfy all conditions on
its part to be performed or satisfied hereunder at or prior thereto or, if at
or prior to the Closing:
(i) the Company or any of its Subsidiaries shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor
dispute, slow down or work stoppage or any legal or governmental
proceeding, which loss or interference, in the sole judgment of the
Initial Purchasers, has had or has a Material Adverse Effect, or there
shall have been, in the sole judgment of the Initial Purchasers, any
event or development
<PAGE> 31
-26-
that, individually or in the aggregate, has or could be reasonably
likely to have a Material Adverse Effect (including without limitation
a change in control of the Company or any of its Subsidiaries), except
in each case as described in the Final Memorandum (exclusive of any
amendment or supplement thereto);
(ii) trading in securities of the Company or in securities
generally on the New York Stock Exchange, American Stock Exchange or
the Nasdaq National Market shall have been suspended or minimum or
maximum prices shall have been established on any such exchange or
market;
(iii) a banking moratorium shall have been declared by New
York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial
markets of the United States which, in the case of (A), (B) or (C)
above and in the sole judgment of the Initial Purchasers, makes it
impracticable or inadvisable to proceed with the public offering or
the delivery of the Notes as contemplated by the Final Memorandum; or
(v) any securities of the Company shall have been downgraded
or placed on any "watch list" for possible downgrading by any
nationally recognized statistical rating organization.
(vi) Termination of this Agreement pursuant to this Section
8.2 shall be without liability of any party to any other party except
as provided in Section 8.1 hereof.
Section 8.3. No Waiver; Modifications in Writing. No failure
or delay on the part of the Company or any Initial Purchaser in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to the Company or any Initial Purchaser
at law or in equity or otherwise. No waiver of or consent to any departure by
the Company from any provision of this Agreement shall be effective unless
signed in writing by the party entitled to the benefit thereof, provided that
notice of any such waiver shall be given to each party hereto as set forth
below. Except as otherwise provided herein, no amendment, modification or
termination of any provision of this Agreement shall be effective unless signed
in writing by or on behalf of each of the Company and each Initial Purchaser.
Any amendment, supplement or modification of or to any
<PAGE> 32
-27-
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by the Company from the terms of any provision of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on the Company in any case
shall entitle the Company to any other or further notice or demand in similar
or other circumstances.
Section 8.4. Information Supplied by the Initial Purchasers.
The statements set forth in the last paragraph on the front cover page and in
the second and third sentences of the third paragraph and the seventh paragraph
under the heading "Plan of Distribution" in the Final Memorandum (to the extent
such statements relate to the Initial Purchasers) constitute the only
information furnished by the Initial Purchasers to the Company for the purposes
of Sections 3.1(a) and 7.1(a) hereof.
Section 8.5. Communications. All notices, demands and other
communications provided for hereunder shall be in writing, and, (a) if to the
Initial Purchasers, shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
delivery, addressed to CIBC Wood Gundy Securities Corp., 1325 Avenue of the
Americas, New York, New York 10019, (b) if to the Company, shall be given by
similar means to 601 Clearwater Park Road, West Palm Beach, Florida 33401,
attn: Chief Financial Officer and General Counsel with copies to Holland &
Knight, 400 North Ashley Drive, Suite 2300, Tampa, Florida 33602, attn: Michael
L. Jamieson. In each case notices, demands and other communications shall be
deemed given when received.
Section 8.6. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
Section 8.7. Successors. This Agreement shall inure to the
benefit of and be binding upon the Initial Purchasers, the Company and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
Person any legal or equitable right, remedy or claim under or in respect of
this Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such Persons and for the benefit of no other Person
except that (i) the indemnities of the Company contained in Section 7.1(a) of
this Agreement shall also be for the benefit of the directors, officers,
employees and agents of the Initial Purchasers and any Person or Persons who
control the Initial Purchasers within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and (ii) the indemnities of the Initial
Purchasers contained in Section 7.1(b) of this Agreement shall also be for the
<PAGE> 33
-28-
benefit of the directors of the Company, its officers and any Person or Persons
who control the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act. No purchaser of Notes from the Initial Purchasers will
be deemed a successor because of such purchase.
Section 8.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL
PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 8.9. Severability of Provisions. 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 provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.10. Headings. The Article and Section headings and
Table of Contents used or contained in this Agreement are for convenience of
reference only and shall not affect the construction of this Agreement.
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
PAXSON COMMUNICATIONS CORPORATION
(a Delaware corporation)
By: /s/ Arthur Tek
-------------------------------
Name: Arthur Tek
Title: Treasurer
PAXSON COMMUNICATIONS TELEVISION,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FLORIDA,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS LP, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS MANAGEMENT
COMPANY
(a Florida corporation)
PAXSON COMMUNICATIONS MARKETING,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS NETWORKS, INC.
(a Florida corporation)
PAXSON OUTDOOR, INC.
(a Florida corporation)
PAXSON NETWORKS, INC.
(a Florida corporation)
EXCEL MARKETING ENTERPRISES, INC.
(a Florida corporation)
<PAGE> 35
INFOMALL CABLE NETWORK, INC.
(a Delaware corporation)
INFOMALL TV NETWORK, INC.
(a Delaware corporation)
INFOMALL LOS ANGELES, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF AKRON-23,
INC.
(a Florida corporation)
PAXSON AKRON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ATLANTA-14,
INC.
(a Florida corporation)
PAXSON ATLANTA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF BOSTON-60,
INC.
(a Florida corporation)
PAXSON BOSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF CLEVELAND-
67, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF COOKEVILLE,
INC.
(a Florida corporation)
PAXSON COOKEVILLE LICENSE, INC.
(a Florida corporation)
<PAGE> 36
PAXSON COMMUNICATIONS OF DALLAS-68,
INC.
(a Florida corporation)
PAXSON DALLAS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DAYTON-26,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF DENVER-59,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF FT.
PIERCE-34, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF HOUSTON-49,
INC.
(a Florida corporation)
PAXSON HOUSTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF LOS
ANGELES-30, INC.
(a Florida corporation)
PAXSON LOS ANGELES LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MIAMI-35,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF MILWAUKEE-
55, INC.
(a Florida corporation)
<PAGE> 37
PAXSON COMMUNICATIONS OF
MINNEAPOLIS-45, INC.
(a Florida corporation)
PAXSON MINNEAPOLIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW
LONDON-26, INC.
(a Florida corporation)
PAXSON NEW LONDON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF NEW YORK-
43, INC.
(a Florida corporation)
PAXSON NEW YORK LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ORLANDO-56,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
PHILADELPHIA-61, INC.
(a Florida corporation)
PAXSON PHILADELPHIA LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF PHOENIX-13,
INC.
(a Florida corporation)
PAXSON PHOENIX LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF ST. LOUIS,
INC.
(a Florida corporation)
<PAGE> 38
PAXSON ST. LOUIS LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF SAN JOSE-65,
INC.
(a Florida corporation)
PAXSON SAN JOSE LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF TAMPA-66,
INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF
WASHINGTON-60, INC.
(a Florida corporation)
PAXSON WASHINGTON LICENSE, INC.
(a Florida corporation)
PAXSON COMMUNICATIONS OF WEST PALM
BEACH-25, INC.
(a Florida corporation)
PAXSON WEST PALM BEACH LICENSE, INC.
(a Florida corporation)
By: /s/ Arthur Tek
--------------------------------
Name: Arthur Tek
Title: Treasurer
PAXSON BROADCASTING OF JACKSONVILLE,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON JACKSONVILLE LICENSE
LIMITED PARTNERSHIP
(a Florida partnership)
<PAGE> 39
PAXSON BROADCASTING OF MIAMI,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON MIAMI LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF ORLANDO,
LIMITED PARTNERSHIP
(a Florida partnership)
PAXSON ORLANDO LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
PAXSON BROADCASTING OF TAMPA,
LIMITED PARTNERSHIP
(a Florida partnership)
<PAGE> 40
PAXSON TAMPA LICENSE LIMITED
PARTNERSHIP
(a Florida partnership)
By: Paxson Communications of Florida,
Inc., their general partner
By: /s/ Arthur Tek
-------------------------------
Name: Arthur Tek
Title: Treasurer
WOOD GUNDY INC.
By: /s/ R.J. Dobilas
----------------------------------------
Name: R. J. Dobilas
Title: Director
SMITH BARNEY INC.
By: /s/ M.E. Anderson
------------------------------------------
Name: M.E. Anderson
Title: Director
<PAGE> 41
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
Initial Purchaser of Notes
- ----------------- ----------------
<S> <C>
Wood Gundy Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . $138,000,000
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 92,000,000
------------
Total . . . . . . . . . . . . . . . . . . . $230,000,000
============
</TABLE>
<PAGE> 1
EXHIBIT 10.46
<PAGE> 2
EXHIBIT 10.46
AGREEMENT
This Agreement (the "Agreement") is entered into by and between PAXSON
COMMUNICATIONS CORPORATION ("PCC") and LOWELL W. PAXSON ("Paxson"), as of this
18th day of August, 1995.
BACKGROUND. On or about October 10, 1990, Home Shopping Network, Inc.
("HSN") and Paxson executed a Consulting Agreement (the "Consulting
Agreement"). Section 16 of the Consulting Agreement was entitled
"Non-Competition" (the "Non-Competition Provision") and pursuant thereto Paxson
agreed for a period of five (5) years following the termination of his services
under the Consulting Agreement that he would not, directly or indirectly, do
certain things that related to the business or activities of HSN. For example,
the Non-Competition Provision, in part, generally purports to prohibit Paxson
and entities in which he has an interest from competing with HSN and from
investing in competitive enterprises.
Paxson indirectly has invested substantial amounts in PCC and is a key
employee of PCC. PCC and its affiliates desire to engage in business
activities, and PCC desires to retain the benefits of Paxson's investment and
employment, free from any possible basis for HSN to assert claims under the
Consulting Agreement. PCC desires to provide certainty for the scope of its
activities and to avoid needless expense resulting from claims by HSN pursuant
to the Non-Competition Provision. PCC also desires to restrict Paxson and his
other affiliates from competing with PCC and from investing in competitive
enterprises. Paxson is not willing to expand the scope of the Non-Competition
Provision but would like to clarify its terms and is willing to amend the terms
of the Non-Competition Provision if PCC is the beneficiary. The Consulting
Agreement is not assignable by HSN except in limited circumstances without
Paxson's consent. Paxson and PCC believe it will be in their mutual interest
for PCC to acquire HSN's rights under the Consulting Agreement pertaining to
the Non-Competition Provision and Paxson is willing to consent to such
acquisition, or whatever other arrangements PCC may make, in consideration for
Paxson's agreement with PCC for a modified Non-Competition Provision.
Therefore, Paxson and PCC agree as follows:
1. TRANSACTIONS. Paxson authorizes PCC to acquire, at its
expense, HSN's rights under the Consulting Agreement with respect to the
Non-Competition Provision, or to make arrangements for the termination of HSN's
rights under the Non-Competition Provision as applied to Paxson and PCC.
2. REVISED NON-COMPETITION. Effective concurrently with (a) the
termination of HSN's rights under the Non-Competition Provision with respect to
Paxson and PCC, or (b) the acquisition by PCC of HSN's rights with respect to
the Non-Competition Provision, Paxson and PCC agree as follows:
<PAGE> 3
(a) Paxson agrees with PCC that for a period ending upon
the earlier of (i) a Change in Control, as defined below, or (ii) December 31,
1999, which is five years after HSN terminated Paxson's services pursuant to
the Consulting Agreement, he will not, directly or indirectly, (a) solicit,
interfere with, or endeavor to entice away from PCC or its affiliates, any
employees, customers, or any other person, firm or corporation doing business
with PCC on the date hereof, unless such employment or business relationship
shall have terminated, or (b) make, directly or indirectly, an investment in an
enterprise that engages in any business in which PCC is engaged on the date of
this Agreement, (c) serve as a vendor for an enterprise that engages in any
business in which PCC or its affiliates are engaged on the date of this
Agreement, or (d) accept any employment whatsoever with, advise, consult with,
or serve as an officer or director, or otherwise do business with a company
that engages in any business, in which PCC and any of its affiliates or either
of them are so engaged on the date of this Agreement. Subject to the
foregoing, Paxson will be free from the provisions of this paragraph to engage
in any business or other endeavor for profit or for eleemosynary purposes or
otherwise.
(b) Notwithstanding the foregoing, Paxson may, during the
period described above and thereafter, own, manage, serve as an officer,
director, consultant, adviser, or employee of, or otherwise have an interest in
any enterprise or activity engaged in religious broadcasting.
(c) It is Paxson's and PCC's intent that this paragraph 2
replaces and supersedes the Non-Competition Provision, but shall be effective
only if and when PCC and Paxson, or either of them, enter into an agreement
with HSN pursuant to which PCC has either acquired HSN's rights under the
Consulting Agreement with respect to the Non-Competition Provision or has
obtained the release or discharge of Paxson and PCC from the Non-Competition
Provision contained in the Consulting Agreement.
3. CHANGE IN CONTROL. Change in Control means the date on which
(1) any person, including a "group" as defined in section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, becomes the beneficial owner of
forty percent or more of the total number of shares entitled to vote in the
election of directors of the Board of Directors of PCC, (2) PCC is merged into
any other company or substantially all of its assets are acquired by any other
company, or (3) three or more directors nominated by the Board of Directors of
PCC to serve as a director, each having agreed to serve in such capacity, fail
to be elected in a contested election of directors.
4. SUCCESSORS. This Agreement shall be binding upon the heirs,
administrators, successors and assigns of each party hereto.
5. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the Paxson and PCC with regard to the matters set forth
herein and shall be binding upon the successors and assigns of each. PCC and
Paxson acknowledge and
-2-
<PAGE> 4
agree that they will make no claim at any time or place that this Agreement has
been orally altered or modified in any respect whatsoever. Any modification of
this Agreement must be in writing and signed by both parties.
6. MISCELLANEOUS.
(a) This Agreement shall be construed in accordance with,
and all disputes hereunder shall be governed by, the laws of the State of
Florida (not including the choice of law principles thereof).
(b) In the event of any controversy or dispute arising
out of this Agreement, the prevailing party shall be entitled to recover from
the non-prevailing party or parties his reasonable expenses, including, without
limitation, attorneys' fees.
(c) Should any provision of this Agreement be declared or
determined by any court to be illegal or invalid, the validity of the remaining
parts, terms, or provisions shall not be affected thereby and said illegal or
invalid part, term, or provision shall be deemed not to be a part of this
Agreement.
(d) As used in this Agreement, the masculine, feminine,
or neuter gender, and the singular or plural number, shall be deemed to include
the others whenever the context so indicates or requires.
(e) The headings used in this Agreement are intended
solely for convenience of reference and shall not in any manner amplify, limit,
modify or otherwise be used in the interpretation of any of the provisions
hereof.
IN WITNESS WHEREOF, Paxson and PCC have signed and sealed this
Agreement as of the day and year first mentioned above.
/s/ Lowell W. Paxson
----------------------------------------------
LOWELL W. PAXSON
601 Clearwater Park Road
West Palm Beach, FL 33401-6233
PAXSON COMMUNICATIONS
CORPORATION
By:/s/ Arthur D. Tek
----------------------------------------------
Arthur D. Tek, Treasurer
601 Clearwater Park Road
West Palm Beach, FL 33401-6233
-3-
<PAGE> 1
EXHIBIT 10.47
<PAGE> 2
EXHIBIT 10.47
ASSET PURCHASE AGREEMENT
DATED AS OF AUGUST 23, 1995
BY AND AMONG
VALUEVISION INTERNATIONAL, INC.,
VVI BRIDGEPORT, INC., VVI AKRON, INC., AND PAXSON
COMMUNICATIONS CORPORATION
<PAGE> 3
ASSET PURCHASE AGREEMENT
DATED AS OF AUGUST 23, 1995
BY AND AMONG
VALUEVISION INTERNATIONAL, INC.,
VVI BRIDGEPORT, INC., VVI AKRON, INC., AND PAXSON
COMMUNICATIONS CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Terms Defined in this Section . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Terms Defined Elsewhere in this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2 PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Working Capital Credits and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.12 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.13 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.15 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.17 Conduct of Business in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 4
<TABLE>
Page
----
<S> <C> <C>
3.18 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.19 Disclaimer of Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Licensee Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Acknowledgment of "As-Is-Where-Is" Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5 OPERATIONS OF THE STATIONS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.6 Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.7 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.8 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.9 Maintenance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.11 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.12 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.13 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.14 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.15 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Control of the Stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.5 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.8 HSR Act Filing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.9 Title to Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.10 Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.11 Engineering Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.12 Sales Tax Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.13 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.14 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . 27
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Conditions to Obligations of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 8 CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
<PAGE> 5
<TABLE>
Page
----
<S> <C> <C>
8.2 Deliveries by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 9 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.1 Termination by ValueVision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.3 Escrow Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.4 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.6 No Special Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . . . 33
10.1 Indemnification by Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.2 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.3 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.3 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.6 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.12 Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
<PAGE> 6
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of August 23, 1995, by and
between ValueVision International, Inc., a Minnesota corporation, VVI
Bridgeport, Inc., a Minnesota corporation, and VVI Akron, Inc., a Minnesota
corporation (each, a "Seller," and, collectively, the "Sellers"); and Paxson
Communications Corporation, a Delaware corporation ("Buyer").
PRELIMINARY STATEMENT
ValueVision, either directly or through its subsidiaries, owns and
operates television stations WHAI-TV, Bridgeport, Connecticut, and WAKC-TV,
Akron, Ohio, pursuant to licenses issued by the Federal Communications
Commission. Sellers desire to sell, and Buyer wishes to buy, substantially all
the assets that are used or useful in the business or operations of the
Stations, for the price and on the terms and conditions set forth in this
Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Sellers, intending to be
bound legally, agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
1.1 Terms Defined in this Section. The following terms, as used
in this Agreement, shall have the meanings set forth in this Section:
"Affiliate" means "affiliate" as defined in Rule 12b-2 promulgated
under the Securities and Exchange Act of 1934.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (a) all Material Contracts, (b) any other
Contract listed on Schedule 3.7 with respect to which Sellers are able to
obtain and deliver to Buyer at or prior to the Closing any Consent required for
the assignment of such Contract to Buyer, (c) contracts entered into prior to
the date of this Agreement with advertisers for the sale of advertising time or
production services for cash at rates consistent with past practices, (d) any
Contracts entered into by any Seller between the date of this Agreement and the
Closing Date that Buyer agrees in writing to assume, and (e) other contracts
entered into by any Seller between the date of this Agreement and the Closing
Date in compliance with Section 5.2.
<PAGE> 7
"Closing" means the consummation of the purchase and sale of the
Assets pursuant to this Agreement in accordance with the provisions of Section
8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer
or otherwise to consummate the transactions contemplated by this Agreement,
including consents to the assignment of the Assumed Contracts.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including any amendments and other
modifications thereto) to which any Seller is a party or that are binding upon
any Seller and that relate to or affect the Assets or the business or
operations of either Station, and (a) that are in effect on the date of this
Agreement or (b) that are entered into by any Seller between the date of this
Agreement and the Closing Date.
"Effective Time" means 12:01 a.m., Eastern time, on the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union National Bank of Florida.
"Escrow Agreement" means the Escrow Agreement to be entered into among
Buyer, ValueVision, and the Escrow Agent in accordance with Section 9.3.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action or actions by the FCC granting its consent
to the assignment of all the FCC Licenses to Buyer as contemplated by this
Agreement.
"FCC Licenses" means all Licenses issued by the FCC to any Seller in
connection with the existing or currently authorized business or operations of
either Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
- 2 -
<PAGE> 8
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by any Seller or under which any Seller is licensed or franchised and that are
used or useful in the business and operations of either Station, together with
any additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, construction permits, and
other authorizations issued by the FCC, the Federal Aviation Administration, or
any other federal, state, or local governmental authorities to any Seller,
currently in effect and used in connection with the conduct of the business or
operations of either Station, together with any additions thereto between the
date of this Agreement and the Closing Date.
"Material Contracts" means those Assumed Contracts that are designated
on Schedule 3.7 as "Material Contracts."
"Permitted Encumbrances" means (a) liens for current taxes not yet due
and payable, (b) easements, covenants, conditions, and restrictions that are
disclosed on Schedule 3.5, (c) other easements, covenants, conditions, and
restrictions of record that affect any Real Property Interest and do not have a
material adverse effect on the use of such Real Property Interest in the
conduct of the business of either Station or materially detract from the value
of such Real Property Interest in the conduct of the business of either
Station, and (d) other Title Defects that constitute Permitted Encumbrances
pursuant to Section 6.9(c).
"Person" means an individual, corporation, association, partnership,
joint venture, joint stock company, trust, estate, limited liability company,
limited liability partnership, governmental entity, or other entity or
organization.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property, and all buildings and other
improvements thereon, whether or not owned or held by any Seller, used or
useful in the business or operations of either Station.
"Real Property Interests" means all interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights
- 3 -
<PAGE> 9
of way, and all buildings and other improvements thereon, owned or held by any
Seller that are used or useful in the business or operations of either Station,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"Station" means television station WHAI-TV, Bridgeport, Connecticut,
or television station WAKC-TV, Akron, Ohio, and "Stations" means both
television station WHAI-TV, Bridgeport, Connecticut, and television station
WAKC-TV, Akron, Ohio.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property owned or held by
any Seller that is used or useful in the conduct of the business or operations
of either Station, together with any additions thereto between the date of this
Agreement and the Closing Date.
"ValueVision" means ValueVision International, Inc., a Minnesota
corporation.
1.2 Terms Defined Elsewhere in this Agreement. For purposes of
this Agreement, the following terms have the meanings set forth in the sections
indicated:
Term Section
- ---- -------
Buyer Preamble
Buyer's Working Capital Credits Section 2.4(a)
Claimant Section 10.3(a)
Collection Period Section 6.13(a)
DOJ Section 6.8
Financial Statements Section 3.10
FTC Section 6.8
Indemnifying Party Section 10.3(a)
Seller Preamble
Sellers' Working Capital Credits Section 2.4(a)
Stations' Receivables Section 6.13(a)
Title Defect Section 6.9(b)
Working Capital Credits Section 2.4(a)
- 4 -
<PAGE> 10
SECTION 2. PURCHASE AND SALE OF ASSETS.
2.1 Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, Sellers hereby agree to sell, transfer,
convey, assign, and deliver to Buyer on the Closing Date (and ValueVision
agrees to cause each other Seller to sell, transfer, convey, assign, and
deliver to Buyer on the Closing Date), and Buyer agrees to purchase, all of
each Seller's right, title, and interest in the tangible and intangible assets
used or useful in connection with the conduct of the business or operations of
either Station, together with any additions thereto between the date of this
Agreement and the Closing Date, but excluding the assets described in Section
2.2, free and clear of any claims, liabilities, security interests, mortgages,
liens, pledges, conditions, charges, covenants, easements, restrictions,
encroachments, leases, or encumbrances of any nature (except for Permitted
Encumbrances), including the following:
(a) The Tangible Personal Property;
(b) The Real Property Interests;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of any
Seller relating to the operation of either Station that are not specifically
included within the Intangibles, including the goodwill of each Station, if
any;
(f) All of each Seller's proprietary information,
technical information and data, machinery and equipment warranties, maps,
computer discs and tapes, plans, diagrams, blueprints, and schematics,
including filings with the FCC relating to the business and operation of either
Station;
(g) All choses in action of any Seller relating to the
ownership or operations of either Station to the extent they relate to the
period after the Effective Time; and
(h) Copies of all books and records relating to the
business or operations of either Station, including executed copies of the
Assumed Contracts, and all records required by the FCC to be kept by either
Station.
2.2 Excluded Assets. The Assets shall exclude the following:
(a) Any Seller's cash on hand as of the Closing and any
Seller's interest in its bank accounts;
- 5 -
<PAGE> 11
(b) Any insurance policies, promissory notes, amounts due
from employees, bonds, letters of credit, certificates of deposit, other
similar items, or deposits or prepaid items (except to the extent that Sellers
receive a Working Capital Credit for any such deposit or prepaid item pursuant
to Section 2.4(a)), and any cash surrender value in regard thereto;
(c) Any pension, profit-sharing, or employee benefit
plans, including any Seller's interest in any Welfare Plan, Pension Plan, or
Benefit Arrangement (each as defined in Section 3.13);
(d) Any collective bargaining agreements;
(e) All tax returns and supporting materials, all
original financial statements and supporting materials, all books and records
that any Seller is required by law to retain, and all records of any Seller
relating to the sale of the Assets;
(f) Any interest in and to any refunds of federal, state,
or local franchise, income, or other taxes for periods prior to the Closing
Date;
(g) All accounts receivable of Sellers as of the Closing
Date and any intercompany accounts between the Sellers or any Affiliates
thereof; and
(h) Any claim or cause of action by any Seller relating
to the period before the Effective Time, including all claims arising under the
purchase agreements pursuant to which Sellers purchased the Stations.
2.3 Purchase Price. The Purchase Price for the Assets shall be
Forty Million Dollars. At the Closing, Buyer shall pay or cause to be paid to
or for the account of Sellers the Purchase Price by federal wire transfer of
same-day funds pursuant to wire instructions which shall be delivered by
ValueVision to Buyer at least two business days prior to the Closing Date.
2.4 Working Capital Credits and Payment.
(a) Prorations. All revenues and expenses arising from
the operation of each Station, including tower rental, business and license
fees, utility charges, real and personal property taxes and assessments levied
against the Assets, property and equipment rentals, applicable copyright or
other fees, sales and service charges, taxes (except for taxes arising from the
transfer of the Assets under this Agreement), and similar prepaid and deferred
items, shall be prorated between Buyer and Sellers in accordance with the
principle that Sellers shall receive all revenues and shall be responsible for
all expenses, costs, and liabilities allocable to the operations of each
Station for the period prior to the Effective Time, and Buyer shall receive all
revenues and shall
- 6 -
<PAGE> 12
be responsible for all expenses, costs, and obligations allocable to the
operations of each Station for the period after the Effective Time, subject to
Section 2.4(b). To effectuate the proration of expenses and revenues pursuant
to this Section 2.4(a), but subject to Section 2.4(b), Sellers shall receive a
credit equal to the amount of any expenses, costs, or liabilities that are paid
or incurred by Sellers and are allocable to the operations of either Station
for the period after the Effective Time plus the amount of any revenues that
are received by Buyer and are allocable to the operations of either Station for
the period before the Effective Time, and Buyer shall receive a credit equal to
the amount of any expenses, costs, or liabilities that are paid or incurred by
Buyer and are allocable to the operations of either Station for the period
before the Effective Time plus the amount of any revenues that are received by
Sellers and are allocable to the operations of either Station for the period
after the Effective Time. The credits to Sellers pursuant to this Section
2.4(a) are referred to as "Sellers' Working Capital Credits," the credits to
Buyer pursuant to this Section 2.4(a) are referred to as "Buyer's Working
Capital Credits," and Sellers' Working Capital Credits and Buyer's Working
Capital Credits are referred to collectively as the "Working Capital Credits."
(b) Expenses and Revenues Not Prorated.
(1) There shall be no proration of, and Sellers
shall remain solely liable with respect to, liabilities and obligations arising
under any Contracts not included in the Assumed Contracts and any other
obligation or liability not being assumed by Buyer in accordance with Section
2.5.
(2) Buyer shall receive a credit pursuant to
Section 2.4(a) to the extent that Buyer assumes any liability under any Assumed
Contract to refund (or to credit against payments otherwise due) any security
deposit or similar prepayment paid to any Seller by any lessee or other third
party.
(3) No proration shall be made in favor of either
Sellers or Buyer for any difference between the value of the goods or services
to be received by either Station under its trade or barter agreements as of the
Effective Time and the value of any advertising time remaining to be run by
such Station as of the Effective Time.
(4) There shall be no proration of earned
vacation time or other employee compensation. Sellers shall be solely
responsible for the payment of all compensation and commissions owed to each
Station's employees up to the Effective Time. Buyer may, as of the Effective
Time, employ those employees of such Station as Buyer may elect on terms and
conditions determined by Buyer.
- 7 -
<PAGE> 13
(5) There shall be no proration of music license
fees (ASCAP, BMI, SESAC, etc.); Sellers shall be responsible for filing and
paying all music license fees due and payable as of the Effective Time, and
Buyer shall be responsible for filing and paying all such fees after the
Effective Time.
(c) Manner of Determining Prorations and Credits. The
prorations and Working Capital Credits required by Section 2.4(a) will be
determined finally in accordance with the following procedures:
(1) ValueVision, on behalf of all Sellers, shall
prepare and deliver to Buyer not later than five days before the Closing Date a
preliminary settlement statement which shall set forth ValueVision's good faith
estimate of the Working Capital Credits, taking into account all prorations
under Section 2.4(a). The preliminary settlement statement (A) shall contain
all information reasonably necessary to determine the Working Capital Credits,
taking into account all prorations under Section 2.4(a), to the extent such
prorations can be determined or estimated as of the date of the preliminary
settlement statement, and such other information as may be reasonably requested
by Buyer, and (B) shall be certified by ValueVision to be true and complete to
ValueVision's knowledge as of the date thereof.
(2) Not later than sixty days after the Closing
Date, Buyer will deliver to ValueVision a statement setting forth Buyer's
determination of the Working Capital Credits pursuant to Section 2.4(a).
Buyer's statement (A) shall contain all information reasonably necessary to
determine the Working Capital Credits, taking into account all prorations under
Section 2.4(a), and such other information as may be reasonably requested by
ValueVision, and (B) shall be certified by Buyer to be true and complete to
Buyer's knowledge as of the date thereof. If ValueVision disputes the amount
of the Working Capital Credits determined by Buyer, it shall deliver to Buyer
within thirty days after its receipt of Buyer's statement a statement setting
forth its determination of the amount of the Working Capital Credits. If
ValueVision notifies Buyer of its acceptance of Buyer's statement, or if
ValueVision fails to deliver its statement within the thirty-day period
specified in the preceding sentence, Buyer's determination of the Working
Capital Credits shall be conclusive and binding on all Sellers as of the last
day of the thirty-day period.
(3) If ValueVision disputes the amount of the
Working Capital Credits determined by Buyer, Buyer and ValueVision shall use
good faith efforts to resolve any dispute involving the determination of the
Working Capital Credits as expeditiously as practicable.
- 8 -
<PAGE> 14
(d) Payments at Closing With Respect to Working Capital
Credits. At Closing:
(1) Sellers shall pay or cause to be paid to or
for the account of Buyer the amount, if any, by which Buyer's Working Capital
Credits exceed Sellers' Working Capital Credits, each as estimated in
ValueVision's preliminary settlement statement pursuant to Section 2.4(c)(1),
by federal wire transfer of same-day funds pursuant to wire instructions which
shall be delivered by Buyer to ValueVision at least two business days prior to
the Closing Date.
(2) Buyer shall pay or cause to be paid to or for
the account of Sellers the amount, if any, by which Sellers' Working Capital
Credits exceed Buyer's Working Capital Credits, each as estimated in
ValueVision's preliminary settlement statement pursuant to Section 2.4(c)(1),
by federal wire transfer of same-day funds pursuant to wire instructions which
shall be delivered by ValueVision to Buyer at least two business days prior to
the Closing Date.
(e) Payments to Reflect Final Determination of Working
Capital Credits. Within five business days after the date on which the Working
Capital Credits are finally determined pursuant to Section 2.4(c):
(1) Sellers shall pay or cause to be paid to or
for the account of Buyer, in immediately available funds, the amount, if any,
by which the sum of the amount of Buyer's Working Capital Credits, as finally
determined pursuant to Section 2.4(c), plus the amount of any payment made by
Buyer pursuant to Section 2.4(d)(2) exceeds the sum of amount of Sellers'
Working Capital Credits, as finally determined pursuant to Section 2.4(c), plus
the amount of any payment made by Sellers pursuant to Section 2.4(d)(1).
(2) Buyer shall pay or cause to be paid to or for
the account of Sellers, in immediately available funds, the amount, if any, by
which the sum of the amount of Sellers' Working Capital Credits, as finally
determined pursuant to Section 2.4(c), plus the amount of any payment made by
Sellers pursuant to Section 2.4(d)(1) exceeds the sum of amount of Buyer's
Working Capital Credits, as finally determined pursuant to Section 2.4(c), plus
the amount of any payment made by Buyer pursuant to Section 2.4(d)(2).
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of any Seller under the Licenses and the Assumed
Contracts to the extent that either (a) the obligations and liabilities relate
to the time after the Effective Time or (b) Buyer received a Working Capital
Credit therefor under Section 2.4(a) as a result of the proration of such
obligations and liabilities. Buyer shall not assume any other
- 9 -
<PAGE> 15
obligations or liabilities of any Seller, including (i) any obligations or
liabilities under any Contract (including any film or programming license
agreement) not included in the Assumed Contracts, (ii) any obligations or
liabilities under the Assumed Contracts relating to the period prior to the
Effective Time except insofar as Buyer receives a Working Capital Credit
therefor under Section 2.4(a), (iii) any claims, litigation, or proceedings
relating to the operation of either Station prior to the Closing, whether
asserted or filed before or after the Effective Time, (iv) any obligations or
liabilities of any Seller under any management incentive, employee pension,
retirement, or other benefit plans, (v) any obligations or liabilities of any
Seller under any collective bargaining agreements, (vi) any obligation to any
employee of either Station for severance benefits, vacation time, or sick leave
accrued prior to the Closing Date, (vii) any credit agreements, note purchase
agreements, indentures, or other financing arrangements, other than leases or
agreements listed on Schedule 3.7 and included in the Assumed Contracts, (viii)
any agreements entered into other than in the ordinary course of business of
either Station, or (ix) any obligations or liabilities caused by, arising out
of, or resulting from any action or omission of any Seller prior to the
Closing, and all such obligations and liabilities shall remain and be the
obligations and liabilities solely of Sellers.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers, jointly and severally, represent and warrant to Buyer as
follows:
3.1 Organization, Standing, and Authority. Each Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Minnesota, and is duly qualified to conduct business as a
foreign corporation in each state in which the nature of its business or the
ownership of its assets requires it to be so qualified, all of which are
identified on Schedule 3.1. Each Seller has all requisite corporate power and
authority (a) to own, lease, and use the Assets as now owned, leased, and used
by it, (b) to conduct the business and operations of each Station as now
conducted by it, and (c) to execute and deliver this Agreement and the
documents contemplated hereby, and to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by such Seller
hereunder and thereunder. ValueVision owns all of the outstanding capital
stock of each other Seller.
3.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by each Seller have been duly
authorized by all necessary actions on the part of such Seller. This Agreement
has been duly executed and delivered by each Seller and constitutes the legal,
valid, and binding obligation of each Seller, enforceable against it in
accordance
- 10 -
<PAGE> 16
with its terms except as the enforceability of this Agreement may be affected
by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally, and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
governmental Consents provided for in Section 6.1 and Section 6.8 and the other
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both): (a) do not require the consent
of any third party; (b) will not conflict with any provision of the Articles of
Incorporation or By-Laws of any Seller; (c) will not conflict with, result in a
breach of, or constitute a default under, any law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court 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,
instrument, license, or permit to which any Seller is a party or by which any
Seller may be bound legally; and (e) will not create any claim, liability,
mortgage, lien, pledge, condition, charge, or encumbrance of any nature upon
any of the Assets.
3.4 Governmental Licenses.
(a) Schedule 3.4 includes a true and complete list of the
Licenses. Sellers have made available to Buyer true and complete copies of the
Licenses (including any amendments and other modifications thereto). The
Licenses have been validly issued, and the Seller designated as such on
Schedule 3.4 is the authorized legal holder thereof. The Licenses listed on
Schedule 3.4 comprise all licenses, permits, and other authorizations required
from the FCC and, to each Seller's knowledge, from any other governmental or
regulatory authority for the lawful conduct in all material respects of the
business and operations of each Station in the manner and to the full extent
they are now conducted, and none of the Licenses is subject to any unusual or
special restriction or condition that could reasonably be expected to limit the
full operation of either Station as now operated. The Licenses are in full
force and effect. Sellers have timely paid to the FCC all annual regulatory
fees payable with respect to the FCC Licenses. No Seller has any reason to
believe that, under existing law, rules, regulations, policies, and procedures
of the FCC, any of the Licenses would not be renewed by the FCC or other
granting authority in the ordinary course.
(b) Schedule 3.4 also includes a true and complete list,
to each Seller's knowledge, of (i) all cable television systems that carry the
signal of either Station, (ii) all cable television systems to which any Seller
has delivered a must-carry notice or
- 11 -
<PAGE> 17
retransmission consent notice in accordance with the Cable Television Consumer
Protection and Competition Act of 1992, and the applicable rules and
regulations promulgated by the FCC thereunder, and (iii) all retransmission
consent and other similar agreements entered into by any Seller with respect to
either Station.
3.5 Real Property. Schedule 3.5 contains a complete and accurate
description of all Real Property and all Real Property Interests (including
street address, legal description (where known), owner, and Sellers' use
thereof), and all claims, liabilities, security interests, mortgages, liens,
pledges, conditions, charges, covenants, easements, restrictions,
encroachments, leases, or encumbrances known to any Seller.
3.6 Tangible Personal Property. Schedule 3.6 lists all material
items of Tangible Personal Property, to the best of Seller's knowledge without
inquiry. Except as described in Schedule 3.6, one of the Sellers, as
designated on Schedule 3.6, owns and has good title to each item of Tangible
Personal Property and none of the Tangible Personal Property owned by any
Seller is subject to any security interest, mortgage, pledge, conditional sales
agreement, or other lien or encumbrance, except for liens for current taxes not
yet due and payable.
3.7 Contracts. Schedule 3.7 is a true and complete list of all
Contracts except contracts with advertisers for production or the sale of
advertising time on either Station for cash at rates consistent with past
practices and that may be canceled by Sellers without penalty on not more than
thirty days' notice. Sellers have delivered to Buyer true and complete copies
of all written Assumed Contracts and true and complete descriptions of all oral
Assumed Contracts (including any amendments and other modifications to such
Contracts). Schedule 3.7 also includes (a) a schedule summarizing as of the
date of such schedule all contracts with advertisers for production or the sale
of advertising time on either Station and (b) a schedule setting forth the
following information as of the date of such schedule with respect to each
Assumed Contract under which either Station is licensed to broadcast any
programming: (i) the identity of the licensed programming, (ii) the number of
exhibitions thereof originally licensed, (iii) the number of exhibitions on
such Station then available to Sellers, (iv) the unpaid license fees on a
monthly basis, (v) the expiration of the license, (vi) the purchase price for
each program, and (vii) the purchase price for additional episodes for which
Buyer may be liable. Except for the need to obtain the Consents listed on
Schedule 3.3, the Seller that is a party to each Assumed Contract has full
legal power and authority to assign its rights under such Assumed Contracts to
Buyer in accordance with this Agreement, and such assignment will not affect
the validity, enforceability, or continuation of such Assumed Contract.
- 12 -
<PAGE> 18
3.8 Consents. Except for the governmental Consents provided for
in Section 6.1 and Section 6.8 and the other Consents described in Schedule
3.3, to each Seller's knowledge, no consent, approval, permit, or authorization
of, or declaration to, or filing with any governmental or regulatory authority
or any other third party is required to consummate this Agreement and the
transactions contemplated hereby or to permit Sellers to assign or transfer the
Assets to Buyer.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of Licenses listed in Schedule 3.4) that are used in the
conduct the business and operations of either Station as now conducted.
Sellers have made available to Buyer copies of all documents establishing or
evidencing the Intangibles listed on Schedule 3.9. There is no claim or action
pending, or to the knowledge of any Seller threatened, relating to either
Station with respect to any actual or alleged infringement by any Seller upon
any trademark, trade name, service mark, service name, copyright, patent,
patent application, know-how, method, or process owned by any other Person.
3.10 Financial Statements. Sellers have furnished Buyer with true
and complete copies of the unaudited financial statements of the Stations, each
containing a balance sheet and a statement of income, as at and for the period
from each Station's acquisition by Sellers through January 31, 1995 and the
five months ended June 30, 1995 (collectively, the "Financial Statements").
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of any Seller that insure any part of the Assets or the
business of either Station. All policies of insurance listed in Schedule 3.11
are in full force and effect.
3.12 Reports. All reporting requirements of the FCC and, to
Seller's knowledge, any other governmental authority with respect to either
Station have been complied with by Sellers in all material respects.
3.13 Labor Relations. No labor union or other collective
bargaining unit represents or claims to represent any of the employees of
either Station. To each Seller's knowledge, there is no union campaign being
conducted to solicit cards from employees to authorize a union to request a
National Labor Relations Board certification election with respect to any
employees at either Station.
3.14 Taxes. Each Seller has filed or caused to be filed all
federal, state, county, local, or city tax returns that are required to be
filed with respect to the ownership and operation of either Station, and each
Seller has paid or caused to be paid all taxes shown on those returns or on any
tax assessment received by it to the extent that such taxes have become due.
There are no
- 13 -
<PAGE> 19
legal, administrative, or tax proceedings pursuant to which any Seller is or
could be made liable for any taxes, penalties, interest, or other charges, the
liability for which could extend to Buyer as transferee of the business of the
Stations, and no event has occurred that could impose on Buyer any transferee
liability for any taxes, penalties, or interest due or to become due from any
Seller.
3.15 Claims and Legal Actions. Except as disclosed on Schedule
3.15 and except for any FCC rulemaking proceedings generally affecting the
television broadcasting industry and not particular to any Seller, there is no
claim, legal action, counterclaim, suit, arbitration, or other legal,
administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or to the knowledge of any Seller threatened, against or
relating to any Seller with respect to its ownership or operation of either
Station or otherwise relating to the Assets or the business or operations of
either Station, nor does any Seller know of any basis for the same.
3.16 Compliance with Laws. Each Seller has complied in all
material respects with the Licenses.
3.17 Conduct of Business in Ordinary Course. Since June 30, 1995,
the Sellers have conducted the business and operations of each Station only in
the ordinary course and, except as disclosed in Schedule 3.17:
(a) neither Station has suffered any material damage,
destruction, or loss affecting any assets or transferred any material assets
used or useful in the conduct of the business of either Station;
(b) neither Station has suffered any material write-down
of the value of any Assets; or
(c) neither Station has transferred or granted any right
under, or entered into any settlement regarding the breach or infringement of,
any license, patent, copyright, trademark, trade name, franchise, or similar
right, or modified any existing right relating to either Station.
3.18 Transactions with Affiliates. No Seller has been involved in
any business arrangement or relationship relating to either Station with any
Affiliate of any Seller (other than another Seller), and no Affiliate of any
Seller (other than another Seller) owns any property or right, tangible or
intangible, that is used in the business of either Station.
3.19 Disclaimer of Warranties. Except for the foregoing
representations and warranties specifically set forth in Section 3.1 through
Section 3.18 of this Agreement and the representations
- 14 -
<PAGE> 20
and warranties in the certificate delivered by Sellers pursuant to Section
8.2(f), the Assets are being transferred by Sellers to Buyer on an
"as-is-where-is" basis without any representation or warranty, all other
representations and warranties of any kind, either express or implied,
including warranties of fitness, being hereby expressly disclaimed.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Sellers as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and, on the Closing Date, will be duly qualified to conduct
business in the States of Ohio and Connecticut. Buyer has all requisite
corporate power and authority to execute and deliver this Agreement and the
documents contemplated hereby, and to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by Buyer hereunder
and thereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Buyer have been duly authorized
by all necessary actions on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
governmental Consents provided for in Section 6.1 and Section 6.8 and the other
Consents listed on Schedule 4.3, the execution, delivery, and performance by
Buyer of this Agreement and the documents contemplated hereby (with or without
the giving of notice, the lapse of time, or both): (a) do not require the
consent of any third party; (b) will not conflict with the Certificate of
Incorporation or By-Laws of Buyer; (c) will not conflict with, result in a
breach of, or constitute a default under, any law, judgment, order, injunction,
decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (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 Buyer is a party or
by which Buyer may be bound legally, such that Buyer could not acquire or
operate the Assets.
4.4 Licensee Qualifications. To Buyer's knowledge, there is no
fact that would, under the Communications Act of 1934 and the
- 15 -
<PAGE> 21
rules and regulations of the FCC, each as in effect on the date of this
Agreement, disqualify Buyer from being the licensee of the Stations, other than
Buyer's interests in the television stations described on Schedule 4.3. Buyer
has sufficient net liquid assets on hand or available from committed sources to
consummate the transactions contemplated by this Agreement and to operate the
Stations for three months after Closing and is otherwise financially qualified
under the Communications Act of 1934 and the rules and regulations of the FCC,
each as in effect on the date of this Agreement, to be the licensee of the
Stations.
4.5 Acknowledgment of "As-Is-Where-Is" Sale. Buyer acknowledges
and agrees that it is purchasing and accepting the Assets on an
"as-is-where-is" basis, except for the representations and warranties
specifically set forth in Section 3.1 through Section 3.18 of this Agreement
and the representations and warranties in the certificate delivered by Sellers
pursuant to Section 8.2(f). To the fullest extent permitted by law, Buyer
hereby unconditionally and irrevocably waives and releases any and all actual
or potential claims that it might have against Sellers regarding any form of
warranty, express or implied, of any kind or type, including warranties of
fitness, relating to or in connection with the purchase of the Assets, other
than the representations and warranties specifically set forth in Section 3.1
through Section 3.18 of this Agreement and the representations and warranties
in the certificate delivered by Sellers pursuant to Section 8.2(f). This
waiver and release is, to the fullest extent permitted by law, absolute,
complete, total, and unlimited in every way and includes, to the fullest extent
permitted by law, a waiver and release of express warranties (other than the
representations and warranties specifically set forth in Section 3.1 through
Section 3.18 of this Agreement and the representations and warranties in the
certificate delivered by Sellers pursuant to Section 8.2(f)), implied
warranties, warranties of fitness for a particular use, warranties of
merchantability, warranties of habitability, claims based on apparent or latent
defects or deficiencies, whether now or hereafter existing, and strict
liability rights and claims of every kind and type (including claims regarding
defects that were not or are not discoverable and all other extant or later
created or conceived of strict liability or strict liability-type claims and
rights).
SECTION 5. OPERATIONS OF THE STATIONS PRIOR TO CLOSING.
Between the date of this Agreement and the Closing Date, Sellers shall
comply, and ValueVision shall cause each other Seller to comply, with the
covenants in this Section 5:
5.1 Generally. Sellers shall operate each Station diligently in
the ordinary course of business in accordance with their past practices (except
where such conduct would conflict with the
- 16 -
<PAGE> 22
following covenants or with Sellers' other obligations under this Agreement).
5.2 Contracts. Sellers will not amend or terminate any Material
Contract (or waive any material right thereunder), or enter into any contract
or commitment relating to either Station or the Assets, or incur any obligation
(including obligations relating to the borrowing of money or the guaranteeing
of indebtedness and obligations arising from the amendment of any existing
Contract, regardless whether such Contract is a Material Contract) that will be
binding on Buyer after Closing, except for (a) cash time sales agreements and
production agreements made in the ordinary course of business consistent with
Sellers' past practices, and (b) other contracts (excluding film or programming
license agreements and trade or barter agreements) entered into in the ordinary
course of business consistent with Sellers' past practices that do not involve
consideration, in the aggregate, in excess of $25,000 measured at Closing.
Prior to the Closing Date, Sellers shall deliver to Buyer a list of all
Contracts entered into between the date of this Agreement and the Closing Date
and shall make available to Buyer copies of such Contracts.
5.3 Disposition of Assets. No Seller shall sell, assign, lease,
or otherwise transfer or dispose of any assets that are used or useful in
connection with the conduct of the business or operations of either Station,
except for (a) dispositions of assets in connection with the acquisition of
replacement property of equivalent kind and value and (b) the assignment and
transfer by VVI Bridgeport, Inc. of all its assets and liabilities to
ValueVision.
5.4 Encumbrances. No Seller shall create, assume, or permit to
exist any claim, liability, security interest, mortgage, lien, pledge,
condition, charge, covenant, easement, restriction, encroachment, lease, or
encumbrance of any nature upon the Assets, except for (a) liens disclosed on
Schedule 3.5 or Schedule 3.6 that will be removed prior to the Closing Date,
and (b) Permitted Encumbrances.
5.5 Licenses. No Seller shall cause or permit, by any act or
failure to act, any of the Licenses required to be listed on Schedule 3.4 to
expire or to be revoked, suspended, or modified, or take any action that could
reasonably be expected to cause the FCC or any other governmental authority to
institute proceedings for the suspension, revocation, or material adverse
modification of any of the Licenses. Sellers shall use reasonable efforts to
prosecute (a) any applications to any governmental authority necessary for the
operation of either Station and (b) the must-carry proceedings described on
Schedule 5.5.
5.6 Obligations. Sellers shall pay all obligations relating to
either Station as they become due, consistent with past
- 17 -
<PAGE> 23
practices, so that all such obligations shall be current as of the Closing
Date.
5.7 Exclusivity.
(a) Neither any Seller nor any officer, director,
representative, or agent of any Seller shall, directly or indirectly, (i)
solicit, initiate, or encourage the submission of any proposal or offer
relating to (A) any liquidation, dissolution, or recapitalization of any
Seller, (B) any merger or consolidation of any Seller with any other Person,
(C) any acquisition or purchase of securities or assets by any Person from any
Seller, or (D) any similar transaction or business combination involving any
Seller, or (ii) participate in any discussions or negotiations regarding,
furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any Person to do or
seek any of the foregoing. Sellers shall notify Buyer as soon as practicable
if any Person makes any proposal with respect to any of the foregoing.
(b) Section 5.7(a) shall not apply to any action by any
Seller or any officer, director, representative, or agent of any Seller with
respect to (i) the assignment and transfer by VVI Bridgeport, Inc. of all its
assets and liabilities to ValueVision, or (ii) so long as ValueVision's ability
to perform its obligations under this Agreement is not adversely affected, any
recapitalization of ValueVision, any merger or consolidation of ValueVision
with any other Person, or any acquisition or purchase of securities or assets
(other than Assets) by any Person from ValueVision.
5.8 Access to Information.
(a) Each Seller shall give Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
to the Assets and to all other books, records, and documents relating to either
Station for the purpose of audit and inspection, and will furnish or cause to
be furnished to Buyer or its authorized representatives all information with
respect to the affairs and business of either Station that Buyer may reasonably
request (including any financial reports and operations reports produced with
respect to the affairs and business of either Station, a list of all employees
of each Station and a description of their base compensation).
(b) Without limiting the generality of the foregoing,
Sellers shall give Buyer and its counsel, accountants, and other authorized
representatives reasonable access to Sellers' financial records relating to the
operations of the Stations and the Stations' employees, counsel, accountants,
and other representatives for the purpose of preparing and auditing such
financial statements as Buyer determines, in its reasonable
- 18 -
<PAGE> 24
judgment, are required or advisable to comply with federal or state securities
laws and the rules and regulations of securities markets as a result of the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. Sellers agree to provide financial
statements concerning the operations of the Stations, reviewed by Sellers'
accountants, containing reasonably requested customary representations;
provided, however, that the parties hereto agree that Buyer shall have no right
under any circumstance to delay the Closing or terminate this Agreement on
account of the information contained in any such financial statement or the
inability of Sellers or their accountants in good faith to make any
representation requested by Buyer. The preparation and auditing of any
financial statements pursuant to this Section 5.8(b) shall be at Buyer's sole
cost and expense.
5.9 Maintenance of Assets. Sellers shall maintain all of the
Assets in their condition on the date of this Agreement (ordinary wear and tear
excepted), and use, operate, and maintain all of the Assets in a reasonable
manner. Seller shall maintain inventories of spare parts and expendable
supplies at levels consistent with past practices. If any insured or
indemnified loss, damage, impairment, confiscation, or condemnation of or to
any of the Assets occurs, Sellers shall repair, replace, or restore the Assets
to their prior condition as soon thereafter as possible, and Sellers shall use
the proceeds of any claim under any property damage insurance policy or other
recovery solely to repair, replace, or restore any of the Assets that are lost,
damaged, impaired, or destroyed.
5.10 Insurance. Sellers shall maintain the existing insurance
policies on each Station and the Assets.
5.11 Consents. Sellers shall use their respective reasonable
efforts to obtain all Consents, without any change in the terms or conditions
of any Assumed Contract or License that could reasonably be expected to be less
advantageous to Buyer than those pertaining under the Assumed Contract or
License as in effect on the date of this Agreement. Sellers shall request
estoppel certificates from the lessors of all leasehold and subleasehold
interests included in the Real Property Interests, consents of such lessors to
the collateral assignment by Buyer to its lenders of such leasehold and
subleasehold interests, and estoppel certificates of contracting parties to all
Material Contracts. Sellers shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents.
5.12 Books and Records. Each Seller shall maintain its books and
records relating to each Station in accordance with past practices.
- 19 -
<PAGE> 25
5.13 Notification. Sellers shall promptly notify Buyer in writing
of any material change in any of the information contained in Sellers'
representations and warranties contained in Section 3 of this Agreement.
5.14 Financial Information. Sellers shall furnish to Buyer within
forty-five days after the end of each month ending between the date of this
Agreement and the Closing Date a statement of income and expense and a balance
sheet for and as of the end of such month. All financial information delivered
by any Seller to Buyer pursuant to this Section shall be prepared from the
books and records of Sellers in accordance with generally accepted accounting
principles consistently applied, shall accurately reflect the books, records,
and accounts of each Station, shall be complete and correct in all material
respects, and shall present fairly the financial condition of each Station as
at their respective dates and the results of operations for the periods then
ended.
5.15 Compliance with Laws. Each Seller shall comply in all
material respects with all laws, rules, and regulations applicable or relating
to the ownership and operation of each Station.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS.
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with
the purchase and sale of the Assets pursuant to this Agreement shall be subject
to the prior consent and approval of the FCC.
(b) Sellers and Buyer shall prepare and within five
business days after the date of this Agreement shall file with the FCC
appropriate applications for the FCC Consent. The parties shall prosecute the
applications with all reasonable diligence and otherwise use their reasonable
efforts to obtain a grant of the applications as expeditiously as practicable.
Each party agrees to comply with any condition imposed on it by the FCC Consent
and Buyer further agrees to comply with any condition imposed on it by the FCC
in granting the waiver described in Section 6.1(c), except that Buyer shall not
be required by the terms of this Agreement to divest itself of its interests in
the television stations described on Schedule 4.3 at any time within twelve
months after the Closing. If the Closing shall not have occurred for any
reason within the original effective period of the FCC Consent, and neither
Buyer nor ValueVision shall have terminated this Agreement under Section 9, the
parties shall jointly request an extension of the effective period of the FCC
Consent. No extension of the FCC Consent shall limit the exercise by either
Buyer or ValueVision of its rights under Section 9.
(c) In its portion of the application for the FCC
Consent, Buyer shall request from the FCC a temporary waiver,
- 20 -
<PAGE> 26
extending for a period of twelve months after the Closing, of Section
73.3555(b) of the FCC's rules and regulations to the extent such section would
otherwise prohibit Buyer's simultaneous ownership of the Stations and Buyer's
interests in the television stations described on Schedule 4.3.
6.2 Control of the Stations. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of either Station; such operations,
including complete control and supervision of all of each Station's programs,
employees, and policies, shall be the sole responsibility of Sellers until the
Closing.
6.3 Risk of Loss.
(a) The risk of any loss, damage or impairment,
confiscation, or condemnation of any of the Assets from any cause shall be
borne by Sellers at all times prior to the completion of the Closing, except
that Buyer will be required to purchase the Assets notwithstanding any such
loss, damage or impairment, confiscation, or condemnation if the conditions
contained in Section 7.1 to the obligations of Buyer at the Closing are
nonetheless satisfied.
(b) In the event of any damage or destruction of the Assets
described above, if the damaged or destroyed Assets have not been restored or
replaced prior to the Closing Date, Sellers shall deliver to Buyer all
insurance proceeds received in connection with such damage or destruction of
the Assets to the extent of the costs and expenses arising in connection with
such restoration and replacement.
6.4 Confidentiality.
(a) Except as necessary for the consummation of the
transactions contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including disclosure requirements of federal or state securities laws and rules
and regulations of securities markets, each party will keep confidential any
information obtained from any other party in connection with the transactions
contemplated by this Agreement. If this Agreement is terminated, each party
will return to any other party that furnished it with information in connection
with the transactions contemplated by this Agreement all such information.
(b) No party shall publish any press release or make any
other public announcement concerning this Agreement or the transactions
contemplated hereby without the prior written consent of each other party,
which shall not be withheld unreasonably; provided, however, that nothing
contained in this Agreement shall prevent any party, after notification to each
other party, from
- 21 -
<PAGE> 27
making any filings with governmental authorities that, in its judgment, may be
required or advisable in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
6.5 Cooperation. Buyer and Sellers shall cooperate fully with
each other party and their respective counsel and accountants in connection
with any actions required to be taken as part of their respective obligations
under this Agreement, and Buyer and Sellers shall execute such other documents
as may be necessary and desirable to the implementation and consummation of
this Agreement, and otherwise use their reasonable efforts to consummate the
transactions contemplated hereby and to fulfill their obligations under this
Agreement. Notwithstanding the foregoing, and except as otherwise expressly
provided in this Agreement, (a) Buyer shall have no obligation to expend funds
to obtain any of the Consents (other than any fee payable to the FCC in
connection with the filing of the applications for FCC Consent and any fee
imposed by the FTC in connection with filings made pursuant to the HSR Act, in
each case to the extent provided in Section 11.1), and (b) Sellers shall have
no obligation to expend funds to obtain any of the Consents (other than any fee
payable to the FCC in connection with the filing of the applications for FCC
Consent and any fee imposed by the FTC in connection with filings made pursuant
to the HSR Act, in each case to the extent provided in Section 11.1).
6.6 Access to Books and Records. Each Seller shall provide Buyer
access and the right to copy for a period of two years from the Closing Date
any books and records relating to the Assets but not included in the Assets.
Buyer shall provide Sellers access and the right to copy for a period of two
years after the Closing Date any books and records relating to the Assets that
are included in the Assets.
6.7 Allocation of Purchase Price. Buyer and Seller shall
allocate the Purchase Price between the Assets of television station WHAI-TV,
Bridgeport, Connecticut, and the Assets of television station WAKC-TV, Akron,
Ohio, for purposes of Section 1060 of the Internal Revenue Code of 1986, as
amended, and Temporary Treasury Regulation Section 1.1060-1T, as set forth on
Schedule 6.7. Buyer and Seller shall allocate the Purchase Price among the
respective Assets of the Stations for purposes of Section 1060 of the Internal
Revenue Code of 1986, as amended, and Temporary Treasury Regulation Section
1.1060-1T in accordance with an appraisal to be conducted within six months
after Closing by an appraisal firm selected and retained by Buyer, at Buyer's
expense, with experience in the valuation and appraisal of television
station assets. Buyer and Sellers agree to file with their respective federal
income tax returns an initial asset acquisition statement and any supplemental
statements on Internal Revenue Service Form 8594 required by Temporary
Treasury Regulation Section
- 22 -
<PAGE> 28
1.1060-1T, all in accordance with and accurately reflecting such allocation of
Purchase Price.
6.8 HSR Act Filing. ValueVision and Buyer agree to (a) file, or
cause to be filed, with the U.S. Department of Justice ("DOJ") and Federal
Trade Commission ("FTC") all filings, if any, that are required in connection
with the transactions contemplated hereby under the HSR Act within forty-five
days of the date of this Agreement; (b) submit to the other party, prior to
filing, their respective HSR Act filings to be made hereunder, and to discuss
with the other any comments the reviewing party may have; (c) cooperate with
each other in connection with such HSR Act filings, which cooperation shall
include furnishing the other with any information or documents that may be
reasonably required in connection with such filings; (d) promptly file,
after any request by the FTC or DOJ, any information or documents requested by
the FTC or DOJ; and (e) furnish each other with any correspondence from or to,
and notify each other of any other communications with, the FTC or DOJ that
relates to the transactions contemplated hereunder, and to the extent
practicable, to permit each other to participate in any conferences with the
FTC or DOJ.
6.9 Title to Real Property.
(a) Buyer may, at its option and expense, obtain the
following title commitments, surveys, and related information:
(1) with respect to each fee estate included in
the Real Property Interests, a title commitment issued by a title insurer
satisfactory to Buyer disclosing the condition of title to such fee estate and
all easements, rights-of-way, and restrictions of record with respect thereto,
as of a date not earlier than the date of this Agreement;
(2) with respect to each leasehold included in
the Real Property Interests, a title commitment issued by a title insurer
satisfactory to Buyer disclosing the condition of title to such leasehold as of
a date not earlier than the date of this Agreement;
(3) with respect to each Real Property Interest
as to which a title commitment is obtained pursuant to this Section 6.9(a),
copies of all instruments evidencing the scope and extent of all easements,
rights-of-way, and restrictions of record with respect thereto; and
(4) with respect to each Real Property Interest
as to which a title commitment is obtained pursuant to this Section 6.9(a), a
current survey of the relevant parcel, prepared and certified to Buyer and to
the title insurer of such Real Property Interest by a licensed surveyor and
conforming to current ALTA Minimum Detail Requirements for Land Title Surveys,
disclosing the
- 23 -
<PAGE> 29
location of all improvements, easements, party walls, sidewalks, roadways,
utility lines, and other matters customarily shown on such surveys.
(a) If the title commitments, surveys, and related
information obtained by Buyer pursuant to Section 6.9(a) reveal (i) any
easement, covenant, condition, restriction, encroachment, lack of practical
access to public roads, or other encumbrance, defect, or condition with respect
to any Real Property Interest (other than any easement, covenant, condition, or
restriction that is disclosed on Schedule 3.5) that, individually or in the
aggregate, has a material adverse effect on the use of such Real Property
Interest in the conduct of the business of either Station or materially
detracts from the value of such Real Property Interest in the conduct of the
business of either Station (each, a "Title Defect"), Buyer may give Sellers
written notice of its objection to any such Title Defect at any time within
thirty days after the date of this Agreement. Within seven days after their
receipt of Buyer's objection to any such Title Defect, Sellers shall notify
Buyer whether they agree to cure or correct such Title Defect prior to the
Closing. If Sellers do not agree to cure or correct any such Title Defect,
Buyer may terminate this Agreement pursuant to Section 9.2(a).
(b) For purposes of this Agreement, "Permitted
Encumbrances" shall include, in addition to the matters described in Section
1.1, any Title Defect (other than any claim, liability, security interest,
mortgage, lien (including any tax or judgment lien), pledge, or other monetary
charge) that is disclosed in the title commitments, surveys, and related
information obtained by Buyer pursuant to Section 6.9(a) if (i) Buyer does not
object to such Title Defect on or before the date specified above for Buyer's
objection, or (ii) Buyer objects to such Title Defect and Sellers notify Buyer
within seven days after their receipt of Buyer's objection of Sellers' election
not to cure or correct such Title Defect.
(c) Sellers shall remove prior to Closing any claim,
liability, security interest, mortgage, lien (including any tax or judgment
lien), pledge, or other monetary charge except for Permitted Encumbrances with
respect to any Real Property Interest.
6.10 Environmental Audit.
(a) Buyer may, at its option and expense, retain an
environmental consultant to be selected by Buyer to perform Phase I
environmental surveys of the properties of the Stations. If either survey
discloses any material environmental hazard or material possibility of future
material liability for environmental damages or clean-up costs (each, an
"Environmental Hazard"), Buyer shall so notify Sellers as soon as practicable.
- 24 -
<PAGE> 30
(b) If Buyer notifies Sellers pursuant to Section 6.10(a)
of any Environmental Hazard, as indicated in either environmental study
described in Section 6.10(a), within thirty days after the date of this
Agreement, then Sellers may, by notice delivered to Buyer within seven days
after their receipt of such notice from Buyer, agree to remedy such
Environmental Hazard prior to the Closing Date. If Sellers do not agree prior
to the end of such seven-day period to remedy such Environmental Hazard prior
to the Closing Date, then Buyer may terminate this Agreement pursuant to
Section 9.2(b).
6.11 Engineering Study.
(a) Buyer may, at its option and expense, retain an
engineering firm or other broadcast engineer to conduct proof of performance
studies of the Stations and to prepare a report on each Station's compliance
with customary engineering practices and all applicable FCC rules, regulations,
prescribed practices, and technical standards. If either study discloses any
material deficiencies in the operations or equipment of either Station (each,
an "Technical Deficiency"), Buyer shall so notify Sellers as soon as
practicable.
(b) If Buyer notifies Sellers pursuant to Section 6.11(a)
of any Technical Deficiency, as indicated in either engineering study described
in Section 6.11(a), within thirty days after the date of this Agreement, then
Sellers may, by notice delivered to Buyer within seven days after Sellers'
receipt of such notice from Buyer, agree to remedy such Technical Deficiency
prior to the Closing Date. If Sellers do not agree pursuant to this Section
6.11(b) prior to the end of such seven-day period to remedy any Technical
Deficiency prior to the Closing Date, then Buyer may terminate this Agreement
pursuant to Section 9.2(c).
6.12 Sales Tax Filings. Sellers shall continue to file Connecticut
and Ohio sales tax returns with respect to the Stations in accordance with all
applicable legal requirements and shall concurrently deliver copies of all such
returns to Buyer.
6.13 Accounts Receivable.
(a) Collection. At the Closing, each Seller shall
designate Buyer as its agent to collect any accounts receivable of Sellers in
existence on the Closing Date and arising from the sale of advertising time by
either Station prior to the Closing Date (the "Stations' Receivables"). Buyer
shall use reasonable efforts to collect the Stations' Receivables during the
"Collection Period," which shall be the period beginning on the Closing Date
and ending on the last day of the fourth calendar month beginning after the
Closing Date. Buyer shall not be obligated to use any extraordinary efforts to
collect any of the Stations' Receivables or to refer any of the Stations'
Receivables to a collection agency
- 25 -
<PAGE> 31
or attorney for collection, and Buyer shall not make any such referral or
compromise, nor settle or adjust the amount of any of the Stations'
Receivables, except with the approval of ValueVision. Sellers and their
respective representatives and agents may undertake to collect any of the
Stations' Receivables during the Collection Period so long as Sellers first
notify and consult with Buyer concerning Sellers' proposed collection efforts.
(b) Payments to ValueVision. On or before the twentieth
day after the end of each full calendar month during the Collection Period,
Buyer shall furnish to ValueVision (i) a list of the amounts collected before
the end of such month with respect to the Stations' Receivables, and (ii) the
amount collected during such month with respect to the Stations' Receivables.
On or before the twentieth day after the end of the Collection Period, Buyer
shall furnish ValueVision with a list of all of the Stations' Receivables that
remain uncollected at the end of the Collection Period.
(c) Further Obligations. After the expiration of the
Collection Period, Buyer shall have no further obligation hereunder other than
to make the payment under Section 6.13(b) and to remit to ValueVision any
payments with respect to any of the Stations' Receivables that Buyer
subsequently receives, and any Seller itself may act to collect any of the
Stations' Receivables that remain uncollected without restriction.
6.14 No Inconsistent Action. Between the date of this Agreement
and the Closing Date, no party shall take any action that is inconsistent with
its obligations under this Agreement in any material respect or that could
reasonably be expected to hinder or delay the consummation of the transactions
contemplated by this Agreement. Between the date of this Agreement and the
Closing Date, Buyer shall not take any action that would disqualify Buyer from
being the licensee of the Stations under the Communications Act of 1934 and the
rules and regulations of the FCC, each as in effect on the date of this
Agreement.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS AT CLOSING.
7.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing are subject to the fulfillment prior to or at the Closing Date
of each of the following conditions, any of which may be waived by Buyer in
writing:
(a) FCC Consent. The FCC Consent shall have been granted.
(b) Ownership Waiver. Buyer shall have obtained from the
FCC a temporary waiver, extending for a period of twelve months after the
Closing, of Section 73.3555(b) of the FCC's rules and regulations to the extent
such section would otherwise prohibit
- 26 -
<PAGE> 32
Buyer's simultaneous ownership of the Stations and Buyer's interests in the
television stations described on Schedule 4.3.
(c) HSR Act. The waiting period under the HSR Act shall
have expired or been terminated without action by the DOJ or the FTC to prevent
the Closing.
(d) Deliveries. Sellers shall have made or stand willing
to make all the deliveries to Buyer set forth in Section 8.2(a), (b), and (e).
7.2 Conditions to Obligations of Sellers. All obligations of
Sellers at the Closing are subject to the fulfillment prior to or at the
Closing Date of each of the following conditions, any of which may be waived by
ValueVision in writing:
(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time, and Sellers shall have received a certificate, executed on behalf
of Buyer by an authorized officer, to that effect.
(b) Covenants and Conditions. Buyer shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date, and Sellers shall have received a certificate,
executed on behalf of Buyer by an authorized officer, to that effect.
(c) Deliveries. Buyer shall have made or stand willing
to make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted.
(e) HSR Act. The waiting period under the HSR Act shall
have expired or been terminated without action by the DOJ or the FTC to prevent
the Closing.
(f) Judgments. There shall not be in effect any
judgment, decree, or order that would prevent or make unlawful the Closing.
SECTION 8. CLOSING AND CLOSING DELIVERIES.
8.1 Closing.
(a) Closing Date.
(1) Except as provided in the following sentence
or as otherwise agreed to by Buyer and ValueVision, but subject to
- 27 -
<PAGE> 33
Section 8.1(a)(2), the Closing shall take place at 10:00 a.m. on a date, to be
set by Buyer on at least five days' written notice to ValueVision, which shall
be not earlier than the later of January 1, 1996 or the first business day
after the FCC Consent is granted and not later than twenty business days
following the date upon which the FCC Consent has become a Final Order. Except
as otherwise agreed to by Buyer and ValueVision, but subject to Section
8.1(a)(2), if Buyer fails to specify the date for Closing pursuant to the
preceding sentence prior to the fifteenth business day after the date upon
which the FCC Consent has become a Final Order, the Closing shall take place on
the twentieth business day after the date upon which the FCC Consent has become
a Final Order.
(1) Notwithstanding Section 8.1(a)(1), if on the
date that, but for this Section 8.1(a)(2), would be the Closing Date pursuant
to Section 8.1(a)(1), the certificate provided to Buyer under Section 8.2(f)
discloses, or the Buyer has notified Sellers in writing that it has determined
that, any representation or warranty of Seller contained in this Agreement is
not true and complete In A Material Way, or that Seller has failed to comply
with its obligations and covenants to be performed under this Agreement In A
Material Way, then (A) Sellers shall take any actions necessary or appropriate
to make such representation or warranty true and complete or to comply with
such obligations and covenants, and (B) the Closing shall be postponed for such
period as is required to cure the conditions warranting such postponement.
(a) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson in Washington, D.C., or any other place that
is agreed upon by Buyer and ValueVision.
8.2 Deliveries by Sellers. Prior to or on the Closing Date,
Sellers shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Deeds. Duly executed quitclaim deeds that are
sufficient to vest all of any Seller's right, title, and interest in and to all
Real Property Interests in the name of Buyer, free and clear of all claims,
liabilities, security interests, mortgages, liens, pledges, conditions,
charges, covenants, easements, restrictions, encroachments, leases, or
encumbrances of any nature, except for Permitted Encumbrances.
(b) Other Conveyancing Documents. Duly executed bills of
sale, motor vehicle titles, assignments, and other transfer documents that are
sufficient to vest good title to all Assets (other than Real Property
Interests) in the name of Buyer, free and clear of all claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges, covenants,
easements, restrictions, encroachments, leases, or encumbrances of any nature.
- 28 -
<PAGE> 34
(c) Working Capital Payment. Any payment required to be
made by Sellers pursuant to Section 2.4(d)(1), as provided in Section
2.4(d)(1).
(d) Estoppel Certificates and Lessor's Consents. Any
estoppel certificates and consents of lessors that Sellers shall have obtained
pursuant to Section 5.11.
(e) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent.
(f) Certificate. A certificate, dated as of the Closing
Date, executed on behalf of each Seller by an authorized officer, certifying
that, except as specifically stated in such certificate, (1) the
representations and warranties of each Seller contained in this Agreement are
true and complete in all material respects as of the Closing Date as though
made on and as of that date, and (2) each Seller has in all material respects
performed and complied with all of its obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to
the Closing Date; provided, however, that if such certificate shall disclose,
or Buyer shall notify Sellers in writing prior to the Closing Date that Buyer
has determined that, any representation or warranty of Seller contained in this
Agreement is not true and complete as of the Closing Date In A Material Way, or
that Seller has failed to comply with its obligations and covenants to be
performed under this Agreement as of the Closing Date In A Material Way, Buyer
may elect to delay the Closing until such representation or warranty is made
materially true and complete or such obligation or covenant is complied with in
all material respects, as the case may be, and Buyer's sole remedy hereunder
shall be the remedy of specific performance to compel Sellers to make such
representation or warranty materially true and complete or such obligation or
covenant to be complied with in all material respects. For purposes of this
Section 8.2(f), "In A Material Way" shall mean that an expenditure in excess of
$100,000.00 is reasonably estimated to be required to make such representation
or warranty materially true and complete or to materially comply with such
obligation or covenant.
(g) Licenses, Contracts, Business Records, Etc. Copies
of all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by any
Seller in connection with its operation of either Station and included in the
Assets.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Sellers the following, in form and substance reasonably
satisfactory to Sellers and their counsel:
(a) Purchase Price. The Purchase Price as provided in
Section 2.4(d).
- 29 -
<PAGE> 35
(b) Working Capital Payment. Any payment required to be
made by Buyer pursuant to Section 2.4(d)(2), as provided in Section 2.4(d)(2).
(c) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform each
Seller's obligations under the Licenses and Assumed Contracts to the extent
provided in Section 2.5.
(d) Certificate. A certificate, dated as of the Closing
Date, executed on behalf of Buyer by an authorized officer, certifying that,
except as specifically stated in such certificate, (1) the representations and
warranties of Buyer contained in this Agreement are true and complete in all
material respects as of the Closing Date as though made on and as of that date,
and (2) Buyer has in all material respects performed and complied with all of
its obligations, covenants, and agreements set forth in this Agreement to be
performed and complied with on or prior to the Closing Date.
SECTION 9. TERMINATION.
9.1 Termination by ValueVision. This Agreement may be terminated
by ValueVision and the purchase and sale of the Stations abandoned, upon
written notice to Buyer, upon the occurrence of any of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Sellers
set forth in this Agreement have not been satisfied or waived in writing by
Sellers.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
on or prior to January 31, 1996; provided, however, that ValueVision shall not
be entitled to terminate this Agreement pursuant to this Section 9.1(c) if (a)
the Closing shall not have occurred on or prior to January 31, 1996, as a
result of the intentional breach of this Agreement by Sellers or (b) the
Closing has been postponed beyond January 31, 1996 pursuant to Section
8.1(a)(2), but only for such period as is required to cure the condition
warranting such postponement.
(d) Breach. If Buyer is in breach in any material
respect of any of its representations, warranties, or covenants under this
Agreement.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Stations abandoned, if
- 30 -
<PAGE> 36
Buyer is not then in material default, upon written notice to ValueVision, upon
the occurrence of any of the following:
(a) Title Defects. If Buyer shall have notified Sellers
pursuant to Section 6.9(b) of any Title Defect within thirty days after the
date of this Agreement and Sellers shall not have agreed within the period
specified in Section 6.9(b) to cure or correct such Title Defect; provided,
however, that Buyer may only terminate this Agreement pursuant to this Section
9.2(a) by delivering written notice to ValueVision within seven days after the
end of the period specified in Section 6.9(b) during which Sellers had the
right to elect to cure or correct such Title Defect.
(b) Environmental Hazards. If Buyer shall have notified
Sellers pursuant to Section 6.10(a) of any Environmental Hazard within thirty
days after the date of this Agreement and Sellers shall not have agreed within
the period specified in Section 6.10(b) to remedy such Environmental Hazard;
provided, however, that Buyer may only terminate this Agreement pursuant to
this Section 9.2(b) by delivering written notice to ValueVision within seven
days after the end of the period specified in Section 6.10(b) during which
Sellers had the right to elect to remedy such Environmental Hazard.
(c) Technical Deficiencies. If Buyer shall have notified
Sellers pursuant to Section 6.10(a) of any Technical Deficiency within thirty
days after the date of this Agreement and Sellers shall not have agreed within
the period specified in Section 6.11(b) to remedy such Technical Deficiency;
provided, however, that Buyer may only terminate this Agreement pursuant to
this Section 9.2(c) by delivering written notice to ValueVision within seven
days after the end of the period specified in Section 6.11(b) during which
Sellers had the right to elect to remedy such Technical Deficiency.
(d) Material Contracts. If Sellers shall not have
obtained and delivered to Buyer, within thirty days after the date of this
Agreement, with respect to each Material Contract, any Consent required for the
assignment to Buyer of such Material Contract, without any change in the terms
or conditions of such Material Contract that could reasonably be expected to be
less advantageous to Buyer than those pertaining under the Material Contract as
in effect on the date of this Agreement; provided, however, that Buyer may only
terminate this Agreement pursuant to this Section 9.2(d) by delivering written
notice to ValueVision within seven days after the end of such thirty-day period
if such Consent has not been delivered to Buyer.
9.3 Escrow Deposit. Simultaneously with the execution and
delivery of this Agreement, Buyer has deposited with the Escrow Agent the
amount of Two Million Dollars in accordance with the Escrow Agreement. All
funds and documents deposited with the
- 31 -
<PAGE> 37
Escrow Agent shall be held and disbursed in accordance with the terms of the
Escrow Agreement and the following provisions:
(a) At the Closing, Buyer and ValueVision shall jointly
instruct the Escrow Agent to disburse all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, to or at the direction of
Buyer.
(b) If this Agreement is terminated pursuant to Section
9.1 by ValueVision, Buyer and ValueVision shall jointly instruct the Escrow
Agent to disburse all amounts held by the Escrow Agent pursuant to the Escrow
Agreement, including any interest or other proceeds from the investment of
funds held by the Escrow Agent, to or at the direction of ValueVision.
(c) If this Agreement is terminated by Buyer pursuant to
Section 9.2, then Buyer and ValueVision shall jointly instruct the Escrow Agent
to disburse all amounts held by the Escrow Agent pursuant to the Escrow
Agreement, including any interest or other proceeds from the investment of
funds held by the Escrow Agent, to or at the direction of Buyer.
9.4 Rights on Termination.
(a) If this Agreement is terminated by ValueVision
pursuant to Section 9.1, Buyer shall promptly pay or cause to be paid to
Sellers the sum of Four Million Dollars, which amount shall be liquidated
damages and shall constitute full payment and the exclusive remedy for any
damages suffered by Sellers by reason of such event. Sellers and Buyer agree
in advance that actual damages would be difficult to ascertain and that the sum
of Four Million Dollars is a fair and equitable amount to reimburse Sellers for
damages sustained due to such event. Any payment to ValueVision pursuant to
Section 9.3(b) shall be credited against Buyer's obligation to Sellers pursuant
to this Section 9.4(a).
(b) Termination of this Agreement by Buyer pursuant to
Section 9.2 shall be without liability or obligation on the part of any Seller
to Buyer.
9.5 Specific Performance. The parties recognize that if any
Seller breaches this Agreement and refuses to perform under the provisions of
this Agreement, monetary damages alone would not be adequate to compensate
Buyer for its injury. Buyer shall therefore be entitled to obtain specific
performance of the terms of this Agreement, which shall be Buyer's exclusive
remedy hereunder. If any action is brought by Buyer to enforce this Agreement,
each Seller shall waive the defense that there is an adequate remedy at law.
- 32 -
<PAGE> 38
9.6 No Special Damages. No party to this Agreement shall be
entitled to any special, incidental, or consequential damages as a result of
the breach of this Agreement by any other party to this Agreement.
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES.
10.1 Indemnification by Sellers. After the Closing, and regardless
of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, each Seller hereby agrees, jointly and severally,
to indemnify and hold Buyer and its officers, directors, employees, and
representatives harmless against and with respect to, and shall reimburse Buyer
and its officers, directors, employees, and representatives for:
(a) Any and all losses, liabilities, or damages resulting
from the operation or ownership of either Station prior to the Closing,
including any liabilities arising under the Licenses or the Assumed Contracts
that relate to events occurring prior the Closing Date, or resulting from any
other obligations of any Seller that are not assumed by Buyer pursuant to this
Agreement, including any liabilities arising at any time under any Contract
that is not included in the Assumed Contracts.
(b) Any loss, liability, obligation, or cost resulting
from any agreement with any finder, broker, advisor, or similar Person retained
by or on behalf of any Seller relating to the transactions contemplated by this
Agreement.
(c) Any and all out-of-pocket costs and expenses,
including reasonable legal fees and expenses, incident to any action, suit,
proceeding, claim, demand, assessment, or judgment incident to the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
10.2 Indemnification by Buyer. After the Closing, and regardless
of any investigation made at any time by or on behalf of any Seller or any
information any Seller may have, Buyer hereby agrees to indemnify and hold each
Seller and each Seller's officers, directors, employees, and representatives
harmless against and with respect to, and shall reimburse each Seller and each
Seller's officers, directors, employees, and representatives for:
(a) Any and all obligations of such Seller assumed by
Buyer pursuant to this Agreement.
(b) Any and all losses, liabilities, or damages resulting
from the operation or ownership of either Station after the Closing.
- 33 -
<PAGE> 39
(c) Any loss, liability, obligation, or cost resulting
from any agreement with any finder, broker, advisor, or similar Person retained
by or on behalf of Buyer relating to the transactions contemplated by this
Agreement.
(d) Any and all out-of-pocket costs and expenses,
including reasonable legal fees and expenses, incident to any action, suit,
proceeding, claim, demand, assessment, or judgment incident to the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
10.3 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree at
or prior to the expiration of the thirty-day period (or any mutually agreed
upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, if the
Indemnifying Party notifies the Claimant in writing within ten days of its
receipt of notice from the Claimant of the third-party claim that the
Indemnifying Party acknowledges its potential liability to the Claimant under
this Agreement, the Indemnifying Party shall have the right at its own expense,
to participate in or assume control of the defense of such claim, and the
Claimant shall cooperate fully with the Indemnifying Party, subject to
reimbursement for actual out-of-pocket expenses incurred by the Claimant as the
result of a request by the Indemnifying Party. If the Indemnifying Party
elects to assume control of the defense of any third- party claim, the Claimant
shall have the right to participate in the defense of such claim at its own
expense. If
- 34 -
<PAGE> 40
the Indemnifying Party fails timely to notify the Claimant in writing that the
Indemnifying Party acknowledges its potential liability to the Claimant under
this Agreement or if the Indemnifying Party does not elect to assume control or
otherwise participate in the defense of any third-party claim, the Indemnifying
Party shall be bound by the results obtained by the Claimant with respect to
such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) For the purpose of the procedures set forth in this
Section, any indemnification claim by any officer, director, employee, or
representative of Buyer shall be made by and through Buyer, and any
indemnification claim by any officer, director, employee, or representative of
any Seller shall be made by and through such Seller.
SECTION 11. MISCELLANEOUS.
11.1 Fees and Expenses. ValueVision and Buyer shall each pay
one-half of any filing fees, transfer taxes, recordation taxes, sales taxes,
document stamps, or other charges levied by any governmental entity in
connection with the transactions contemplated by this Agreement, including any
fees payable to the FCC in connection with the filing of the applications for
FCC Consent and the fee imposed by the FTC in connection with filings made
pursuant to the HSR Act. Except as otherwise provided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents and representatives, and each
party shall be responsible for all fees or commissions payable to any finder,
broker, advisor, or similar Person retained by or on behalf of such party.
11.2 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by telecopier, by personal delivery, by commercial
delivery service, or by registered or certified mail, return receipt requested,
(c) deemed to have been given on the date on which the telecopy is confirmed,
the date of personal delivery, or the date set forth in the records of the
delivery service or on the return receipt, as applicable, and (d) addressed as
follows:
If to any Seller: ValueVision International, Inc.
6740 Shady Oak Road
Eden Prairie, Minnesota 55344
- 35 -
<PAGE> 41
Attention: Robert L. Johander
Telecopier: 1-612-947-0188
With copies to: Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037-1420
Attention: William R. Richardson, Jr.
Telecopier: 1-202-663-6454
If to Buyer: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson, Chairman
Telecopier: 1-407-659-4252
With a copy to: Dow, Lohnes & Albertson
1255 Twenty-Third Street, N.W.
Suite 500
Washington, D.C. 20037-1194
Attention: John R. Feore, Jr.
Telecopier: 1-202-857-2900
or to any other or additional Persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.2.
11.3 Arbitration. Except as otherwise provided to the contrary
below, any dispute arising out of or related to this Agreement that Sellers and
Buyer are unable to resolve by themselves shall be settled by arbitration in
Washington, D.C., by a panel of three arbitrators. ValueVision and Buyer shall
each designate one disinterested arbitrator, and the two. arbitrators so
designated shall select the third arbitrator. The persons selected as
arbitrators need not be professional arbitrators, and persons such as lawyers,
accountants, brokers, and bankers shall be acceptable. Before undertaking to
resolve the dispute, each arbitrator shall be duly sworn faithfully and fairly
to hear and examine the matters in controversy and to make a just award
according to the best of his or her understanding. The arbitration hearing
shall be conducted in accordance with the commercial arbitration rules for
large cases of the American Arbitration Association. The written decision of a
majority of the arbitrators shall be final and binding on all Sellers and
Buyer. The costs and expenses of the arbitration proceeding shall be assessed
between Sellers and Buyer in a manner to be decided by a majority of the
arbitrators, and the assessment shall be set forth in the decision and award of
the arbitrators. Judgment on the award, if it is not paid within thirty days,
may be entered in any court having jurisdiction over the matter. No action at
law or suit in equity based upon any claim arising out of or related to this
Agreement
- 36 -
<PAGE> 42
shall be instituted in any court by any Seller or Buyer against any other party
except (a) an action to compel arbitration pursuant to this Section, (b) an
action to enforce the award of the arbitration panel rendered in accordance
with this Section, or (c) a suit for specific performance pursuant to Section
9.5.
11.4 Benefit and Binding Effect. No party may assign this
Agreement without the prior written consent of the other parties hereto, except
that (a) without the consent of any Seller, Buyer may (i) assign its rights and
interests under this Agreement to one or more subsidiaries of Buyer or other
entities commonly controlled with Buyer and (ii) collaterally assign its rights
and interests under this Agreement to its lenders, and (b) without the consent
of Buyer, VVI Bridgeport, Inc. may assign its rights and interests under this
Agreement to ValueVision in connection with the assignment by VVI Bridgeport,
Inc. of all its assets and liabilities to ValueVision. If VVI Bridgeport, Inc.
assigns all its assets to ValueVision as contemplated by the preceding sentence
and, in connection therewith, ValueVision assumes all obligations and
liabilities of VVI Bridgeport, Inc. under this Agreement, Buyer and Sellers
agree to amend this Agreement so as to eliminate VVI Bridgeport, Inc. as a
party hereto and to reflect the assumption by ValueVision of all obligations
and liabilities of VVI Bridgeport, Inc. under this Agreement. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
Sellers, any additional deeds, bills of sale, or other transfer documents that,
in the reasonable opinion of Buyer, may be necessary to ensure, complete, and
evidence the full and effective transfer of the Assets to Buyer pursuant to
this Agreement.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT
REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for
ease of reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless
of the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the Escrow Agreement, the
schedules, hereto, and all documents, certificates, and other
- 37 -
<PAGE> 43
documents to be delivered by the parties pursuant hereto, collectively
represent the entire understanding and agreement between Buyer and Sellers with
respect to the subject matter of this Agreement. This Agreement supersedes all
prior negotiations between Buyer and Sellers and cannot be amended,
supplemented, or changed except by an agreement in writing that makes specific
reference to this Agreement and that is signed by the party against which
enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition in this
Agreement may be waived by the party entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
11.12 Counsel. By executing this Agreement, each party hereto
represents and acknowledges that it is knowledgeable and experienced in the
execution and performance of agreements for the purchase and sale of assets and
that it has consulted counsel of its choice to the extent it has deemed it
appropriate or necessary to do so. Buyer further acknowledges that it has
neither sought nor obtained any legal advice from the law firm of Wilmer,
Cutler & Pickering.
- 38 -
<PAGE> 44
This Page Intentionally Left Blank
- 39 -
<PAGE> 45
IN WITNESS WHEREOF, this Agreement has been executed by Sellers and
Buyer as of the date first written above.
VALUEVISION INTERNATIONAL, INC.
By: /s/ Robert L. Johander
---------------------------------
Name: Robert L. Johander
---------------------------------
Title: Chairman, Chief Executive Officer
---------------------------------
VVI BRIDGEPORT, INC.
By: /s/ Robert L. Johander
---------------------------------
Name: Robert L. Johander
---------------------------------
Title: Chairman, Chief Executive Officer
---------------------------------
VVI AKRON, INC.
By: /s/ Robert L. Johander
---------------------------------
Name: Robert L. Johander
---------------------------------
Title: Chairman, Chief Executive Officer
---------------------------------
PAXSON COMMUNICATIONS CORPORATION
By: /s/ Lowell W. Paxson
---------------------------------
Name: Lowell W. Paxson
---------------------------------
Title: Chairman
---------------------------------
- 40 -
<PAGE> 1
EXHIBIT 10.48
<PAGE> 2
EXHIBIT 10.48
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
CHANNEL 56 OF ORLANDO, INC.
AND
PAXSON COMMUNICATIONS OF ORLANDO-56, INC.
FOR
TELEVISION STATION WIRB(TV), MELBOURNE, FLORIDA
AUGUST 31, 1995
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. LEASE OF STATION AIR TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Option to Renew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Licensee Operation of Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Licensee Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Programmer Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Licensee Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Additional Licensee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Responsibility for Employees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. STATION PROGRAMMING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Broadcast Station Programming Policy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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>
- i -
<PAGE> 4
<TABLE>
<S> <C>
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.3 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Call Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.10 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.11 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
- ii -
<PAGE> 5
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this ____ day of August, 1995, by and
between Channel 56 of Orlando, Inc., a Florida corporation (the "Licensee") and
Paxson Communications of Orlando-56, Inc., a Florida corporation (the
"Programmer").
WHEREAS, Licensee is seeking to acquire Television Station WIRB(TV),
Melbourne, Florida (the "Station") pursuant to authorizations issued by the
Federal Communications Commission ("FCC").
WHEREAS, Programmer is involved in television station ownership 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 ten 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 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
<PAGE> 6
- 2 -
matter, news, public service announcements and other suitable programming to
the Licensee up to ninety-eight 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.
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,
<PAGE> 7
- 3 -
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 Melbourne,
Florida, 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
<PAGE> 8
- 4 -
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.
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 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
<PAGE> 9
- 5 -
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 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,
<PAGE> 10
- 6 -
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 Melbourne 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 Melbourne 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 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
<PAGE> 11
- 7 -
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 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
<PAGE> 12
- 8 -
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) 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 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 an amount equal to six times the
monthly compensation due for the month preceding the notice of termination by
Programmer pursuant to Attachment I.
<PAGE> 13
- 9 -
(b) Licensee may terminate this Agreement pursuant to
Section 6.1(e) hereof only if it pays Programmer an amount equal to six times
the monthly compensation due for the month preceding the notice of termination
by Licensee pursuant to Attachment I.
(c) 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.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
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.
<PAGE> 14
- 10 -
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 of Orlando-56, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Telecopy: (407) 659-4252
Telephone: (407) 659-4122
<PAGE> 15
- 11 -
To Licensee: Channel 56 of Orlando, Inc.
14444 66th Street North
Clearwater, FL 34624
Telecopy: (813) 530-0671
Telephone: (813) 536-0036
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
the parties as embodied in the provision of this Agreement which is to be so
modified.
<PAGE> 16
- 12 -
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: CHANNEL 56 OF ORLANDO, INC.
By: /s/ James L. West
--------------------------------
James L. West
Chairman
PROGRAMMER: PAXSON COMMUNICATIONS OF
ORLANDO-56, INC.
By: /s/ William L. Watson
--------------------------------
William L. Watson
Secretary
<PAGE> 17
ATTACHMENT I
Compensation Schedule
Upon execution of this Agreement, Programmer shall have paid Licensee
a fee equal to Seven Thousand Dollars ($7,000). 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.
Payments shall be made by delivery of a check to Licensee at an
address to be designated.
<PAGE> 18
ATTACHMENT II
Categories of Anticipated Station Expenses
(1) Lease and Utility Payments
(2) Employee Salaries and Benefits
(3) Property Insurance and Taxes
(4) Fees, Licenses and Professional Fees
(5) Miscellaneous Station Expenses
(6) Equipment Repair and Replacement
(7) Programming Expenses
<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 WIRB(TV),
Melbourne, 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, WIRB);
followed immediately by (2) the station's city of license (Melbourne, 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
- 2 -
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
- 3 -
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
- 4 -
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
- 3 -
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).
7. 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> 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 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
- 2 -
(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> 1
EXHIBIT 10.49
<PAGE> 2
EXHIBIT 10.49
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 31st day of August, 1995, is by
and among PAXSON COMMUNICATIONS OF ORLANDO-56, INC., a Florida corporation
having its principal offices at 601 Clearwater Park Road, West Palm Beach, FL
33401 (the "Lender"), and CHANNEL 56 OF ORLANDO, INC., a Florida corporation
having its principal offices at 14444 66th Street North, Clearwater, Florida
34624 (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower is purchasing substantially all of the assets
and properties, including all broadcast licenses issued by the Federal
Communications Commission ("FCC Licenses") and other governmental authorities,
of Television Station WIRB-TV, Melbourne, Florida (the "Station");
WHEREAS, the Lender is willing to lend the Borrower sufficient funds
to acquire the station on which Lender will provide programming pursuant to a
Time Brokerage Agreement; and
WHEREAS, the Lender is obtaining the funds to make the Loan (as
defined below) to the Borrower pursuant to a Credit Agreement (as amended and
in effect from time to time, the "Credit Agreement") among the Lender, as
borrower, the lending institutions party thereto and one or more of such
lending institutions acting in the capacity of agent for and on behalf of such
lending institutions (the "Agents");
WHEREAS, the Agents (as defined in the Credit Agreement) and the
Lenders (as defined in the Credit Agreement) have agreed to make the loans
under the Credit Agreement in reliance upon the representations, warranties,
covenants and agreements of the Borrower herein and upon their status as third
party beneficiaries of such representations, warranties, covenants and
agreements; 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:
1. AMOUNT AND TERMS OF THE LOANS
1.1 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 Four
Million Three Hundred Thousand Dollars ($4,300,000.00) plus such additional
amounts that are reasonably
<PAGE> 3
- 2 -
requested by Borrower for the purposes set forth in Section 1.05 and are
approved by Lender in its sole discretion (the "Loan").
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 (as amended, renewed, restated, increased,
consolidated or substituted from time to time, 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.
All references to the "Note" in this Loan Agreement, the Security Agreement,
the Pledge Agreement, and the Leasehold Mortgage or Mortgage (each as defined
in this Loan Agreement), the mortgages or deeds of trust referred to in Section
3.04 of the Loan Agreement and in such other agreements and documents executed
and delivered in connection with this Loan Agreement shall be deemed to be
references to the Note referred to in this Section.
1.3 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 highest interest rate per annum paid by Lender or its
affiliates on outstanding debt, public or private, as such rate may be adjusted
from time to time. Interest shall be calculated on the basis of a year of
three-hundred and sixty (360) days and the 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 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 thirty (30) 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 or before the first day of each month until all principal and
interest hereunder is paid in full and at the repayment or maturity of the
Loan. 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 date due
thereof until paid in full.
1.4 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. In the event that the Borrower does not acquire the Station,
Borrower
<PAGE> 4
- 3 -
shall repay to Lender the outstanding principal amount of the Loan no later
than one-hundred eighty (180) days after such other party acquires the Station.
The principal amount of the Loan plus any accrued and unpaid interest shall be
due and payable on the first day of the 84th month following the acquisition of
the Station by the Borrower (the "Term Date"). In the event of a termination
of the Time Brokerage Agreement dated as of August __, 1995, between Borrower
and Lender, Borrower shall, in addition to payments of interest required under
Section 1.03 hereof, repay the outstanding principal balance of the Loan in
consecutive, equal monthly installments commencing on the first day of the
month following such termination (the "Amortization Commencement Date") and
ending on the Term Date, with each such monthly principal installment payment
equal to (x) the principal amount of the Loans outstanding hereunder as of the
first day of the month following such termination divided by (y) the total
number of consecutive months included in the period commencing on the
Amortization Commencement Date, through and including the Term Date.
1.5 Use of Proceeds and Advancement of Funds.
(a) The proceeds of the Loan are to be used by
the Borrower exclusively for financing the 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"), at the closing of the acquisition of the Station, following
final and nonappealable FCC approval of the assignment of the FCC licenses of
the Station to the Borrower.
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.
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 that 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, provided, however, that if any such prepayment is made within three
years of the Borrower's acquisition of the Station, Borrower shall reimburse
Lender for any prepayment penalty imposed on Lender or its affiliates under
their debt agreements or instruments as a result of Borrower's prepayment.
Each prepayment on the Note shall be applied to installments of principal
payable on the Note in the inverse order of maturity.
<PAGE> 5
- 4 -
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.
1.9 Preferred Contingent Facility Fee. In consideration
for Lender's agreement to make the Loan, Borrower agrees to pay Lender a
preferred contingent facility fee (the "Contingent Facility Fee") in an amount
equal to twenty-five percent (25%) of the Loan payable to the extent available
out of the Net Sale Price received by Borrower or any Affiliate of Borrower in
connection with any Sale that is consummated at any time prior to August __,
2003, whether or not any portion of the Loan is outstanding as of such date.
The Contingent Facility Fee shall be due and payable by Borrower to Lender by
confirmed wire transfer of immediately available funds on the date of closing
of a Sale and prior to the payment by Borrower of any other obligations or
distributions. For the purpose of this Section 1.09, the following terms shall
have the following meanings:
"Affiliate", as applied to any entity or individual, means any other
entity or individual directly or indirectly controlling, controlled
by, or under common control with, that entity or individual. For the
purposes of this definition, "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any entity or individual, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that entity or
individual, whether through the ownership of voting securities,
partnership interests or by contract or otherwise.
"Net Sale Price" means (a) the aggregate value of all consideration of
whatsoever nature (whether in cash, other property, services or
otherwise) directly or indirectly paid or payable to the Borrower and
any Affiliate of Borrower (or either of them) in connection with a
Sale and whether such amounts are payable as purchase price (whether
in cash at closing or on a deferred basis), non-compete payments,
payments for the provision of future services or the rental of
property or otherwise, or any combination thereof, plus (b) an amount
equal to the sum of all accounts receivable of the Station if such
accounts receivable are retained by Borrower or any Affiliate of
Borrower in connection with a Sale, minus (c) an amount equal to the
sum of all reasonable and necessary fees and expenses incurred by the
Borrower or any Affiliate of Borrower (other than any fee payable to
an Affiliate of the Borrower) in connection with the consummation of a
Sale, minus
<PAGE> 6
- 5 -
(d) an amount equal to all liabilities of the Station (as determined
in accordance with generally accepted principles consistently applied)
that are retained by Borrower or any Affiliate of Borrower in
connection with a Sale, and minus (e) an amount equal to the sum of
the principal balance of, and all accrued but unpaid interest on, the
Loans as of the date the Contingent Facility Fee is due.
"Sale" means any (a) sale, exchange, transfer or other disposition to
any third party unaffiliated with Borrower or any Affiliate of
Borrower of all or substantially all of the Station's assets or of the
equity of (i) Borrower or (ii) any Affiliate of Borrower that acquires
the Station's assets in accordance with the requirements of this Loan
Agreement and any collateral document executed and delivered in
connection with this Loan Agreement (a "WIRB Affiliate") or (b)
merger, consolidation or similar transaction between a third party
unaffiliated with Borrower and Borrower or any WIRB Affiliate, whether
or not Borrower or such WIRB Affiliate is the surviving corporation.
2. CLOSING
2.1 Closing Date. Closing of this transaction shall
occur on a date agreed upon by the parties hereto (the "Closing Date").
3. SECURITY
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 2 hereto (the "Security
Agreement").
3.2 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 hereto, duly executed by The
Christian Network, Inc. (the "Shareholder"), the sole shareholder of the
Borrower (the "Pledge Agreement").
3.3 Leasehold Mortgages. At such time as the Borrower
enters into or assumes the Lessee's interest under any lease, it shall execute
with respect to such lease a leasehold mortgage substantially in the form of
Exhibit 4 hereto (a "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. The Borrower shall also deliver to the Lender with respect to
any lease to which the Borrower becomes a party the following documents, each
of which
<PAGE> 7
- 6 -
shall be in form and substance satisfactory to the Lender: (i) evidence of the
filing of the lease or a memorandum of lease, (ii) an estoppel certificate
executed by the landlord under such lease or any sublessee, (iii) an executed
landlord's consent and waiver, (iv) fixture filing UCC-1 financing statements,
(v) copies of such lease and any sublease, (vi) executed tenant subordination
agreements, (vii) a title encumbrance report with respect to the real property
subject to such lease, and (viii) any other document required by applicable law
to create or perfect a mortgage lien with respect to such lease or reasonably
required by the Lender.
3.4 Mortgages. At 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, substantially in the form of
Exhibit 4 hereto (a "Mortgage"). The Borrower shall also deliver to the Lender
with respect to such property the following documents, each of which shall be
in form and substance satisfactory to the Lender: (i) fixture filing UCC-1
financing statements, (ii) copies of any lease relating to such property, if
any, (iii) executed tenant subordination agreements and estoppel certificates,
if applicable, (iv) a survey of such real property, (v) a mortgagee title
insurance policy, with such coverage and with such endorsements, including,
without limitation, usury, first loss, last dollar, revolving credit, variable
rate, doing business, zoning comprehensive, contiguity (as applicable) and
survey, to the extent available in the state where the property is located, as
the Lender may require, and (vi) any other document required by applicable law
to create or perfect a mortgage lien with respect to such property or
reasonably required by the Lender.
4. CONDITIONS OF LENDING
4.1 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:
(a) The Note, duly executed and delivered by the
Borrower;
(b) The Security Agreement, together with
appropriate UCC-1 forms and, if applicable, landlord lien waivers, 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;
<PAGE> 8
- 7 -
(d) Certified copies of the resolutions of (i)
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, and (ii) the Board of Stewards of
Shareholder evidencing approval of the execution, delivery and performance of
this Loan Agreement and the Pledge Agreement;
(e) A Certificate of Good Standing for the
Borrower and Shareholder;
(f) A copy of the Asset Purchase Agreement dated
as of December 23, 1994, between Borrower and Treasure Coast Communications,
Inc. (the "Purchase Agreement"), pursuant to which Borrower is purchasing the
Station;
(g) Copies of UCC, judgment and tax lien searches
in each jurisdiction in which collateral covered by the Security Agreement is
located, naming the Borrower and the Seller of the Station as debtor; and
(h) Such other agreements, certificates, opinions
of counsel and documents that the Lender may reasonably require.
4.2 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) With respect to each leased real property,
the documents required by Section 3.03, and with respect to each owned real
property, the documents required by Section 3.04;
(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) Evidence, in form and substance acceptable to
Lender, that Borrower has received the approval of the Federal Communications
Commission to be the licensee of the Station and that approval has become a
final, non-appealable order no longer subject to administrative or judicial
review, reconsideration or appeal;
<PAGE> 9
- 8 -
(e) A copy of the Purchase Agreement and each
other contract, certificate and other document executed by the Borrower or the
seller of the Station in connection with the Borrower's acquisition of the
Station; and
(f) Such other agreements, certificates, opinions
of counsel and documents that the Lender may reasonably require.
4.3 Compliance. All of the representations and warranties of the
Borrower and Shareholder in this Loan 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 and Shareholder shall deliver to the Lender and
to the Agents and the Lenders under the Credit Agreement a certificate, dated
as of such date and signed by an executive officer of the Borrower and
Shareholder, 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 and
Shareholder as of the date of such Loan, is in compliance with this Section and
if the Borrower or Shareholder is not in compliance with this Section, the
Lender shall not be required to disburse such Loan to the Borrower.
5. REPRESENTATIONS AND WARRANTIES
5.1 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 Florida and is qualified to do business and in good
standing under the laws of 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 Mortgage or
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.
<PAGE> 10
- 9 -
(b) Authorizations, Compliance with Laws. The
execution, delivery and performance by the Borrower of this Agreement, the
Note, any Mortgage or 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 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 Mortgage or 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, any Mortgage, the Security Agreement, the Pledge
Agreement and all other documents required to be executed and delivered by the
Borrower (or, in the case of the Pledge Agreement, of the Shareholder) pursuant
to this Agreement have been or, on or prior to the Closing Date, will be
executed and delivered by duly authorized officers of the Borrower (or, in the
case of the Pledge Agreement, of the Shareholder) and constitute or, on or
prior to the Closing Date, will constitute, legal, valid and binding
obligations of the Borrower (or, in the case of the Pledge Agreement, of the
Shareholder) 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, prospects, operation or condition (financial or
otherwise) of the Borrower.
(f) No Default. The Borrower is not in default
in the performance, observance or fulfillment of any of the obligations or
<PAGE> 11
- 10 -
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. 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 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, 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.
6. COVENANTS OF THE BORROWER
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,
<PAGE> 12
- 11 -
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 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, any 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, any Mortgage or Leasehold Mortgage or any
other document delivered to the Lender in connection herewith or therewith or
as a result of any action which
<PAGE> 13
- 12 -
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) Purchase Agreement. Comply with its obligations
under the Purchase Agreement.
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; (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; (iii)
obligations or liabilities arising under the indemnification provisions of the
Purchase Agreement.
(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 with respect to property or assets other
than the Stock (as defined in the Pledge Agreement):
(i) any security interest or lien
created pursuant to or in connection with this Agreement or securing the Loan,
the Security Agreement, the Pledge Agreement, any Leasehold Mortgage or any
Mortgage;
(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;
<PAGE> 14
- 13 -
(iv) deposits or pledges to secure payment of
workers' compensation, unemployment insurance or other social security benefits
or obligations; or
(v) any judgment lien, singly or aggregated
with other judgment liens, in an amount less than $100,000, 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 any of its assets or properties other than sales of
assets in the ordinary course of business (which shall expressly not include
any transfer or assignment of any FCC License).
(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. Issue or permit the
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 issuances or transfers to the
Lender.
(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 capital stock of the Borrower) in respect of the Borrower's capital
stock.
(i) Transactions with Affiliates. Enter into any
transaction or agreement with any affiliate of the Borrower.
<PAGE> 15
- 14 -
(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
to 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 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 (as defined in Section 7.01(d) below), if
any, to which the Station is a party.
(q) Purchase Agreement. Terminate, amend, commit
any material breach or default under or waive any term of the Purchase
Agreement.
<PAGE> 16
- 15 -
(r) Subsidiaries. Create or acquire any
subsidiary of Borrower, unless Lender shall have approved such action in
advance and Borrower shall have taken all actions required by Lender to grant
Lender a first priority security interest in all of the issued and outstanding
stock of such subsidiary. Borrower acknowledges and agrees that until such
time as such security interest is granted and perfected, Lender shall have an
equitable lien in the stock of any subsidiary created or acquired by Borrower.
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 and
to the Agents:
(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 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 5.01(e).
(d) Budget. An annual budget 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 or the Administrative Agents may from
time to time reasonably request.
<PAGE> 17
- 16 -
7. EVENTS OF DEFAULT
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 including, without limitation, the obligation to pay the Contingent
Facility Fee as set forth in Section 1.09 hereof, when due whether at the due
date thereof or by acceleration or otherwise, and, in the case of any
installment of interest, such default shall remain unremedied for a period of
five (5) days; 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 or 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 Shareholder (or any of its officers) herein, in the Security
Agreement, any Leasehold Mortgage or Mortgage, or by the Shareholder in the
Pledge 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 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 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 or the Shareholder shall fail to
pay any indebtedness for borrowed money owing by the Borrower or the
Shareholder 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 the Shareholder 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 or the Shareholder 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
<PAGE> 18
- 17 -
(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) Either (i) Borrower or the Shareholder shall
fail to pay its debts as they mature in the ordinary course of business; or
(ii) Borrower or the Shareholder shall file a petition commencing a voluntary
case concerning it under any Chapter of Title 11 of the United States Code
entitled "Bankruptcy"; or (iii) Borrower or the Shareholder 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 or the Shareholder and such appointment
shall continue undischarged for a period of thirty (30) days; or (v) an
involuntary case is commenced against the Borrower or the Shareholder 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 or the Shareholder 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 or the Shareholder and
shall remain undismissed for a period of thirty (30) days; or (viii) the
Borrower or the Shareholder 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 money judgment, writ or warrant of
attachment, or similar process involving (i) in any individual case an amount
in excess of One Hundred Thousand Dollars ($100,000.00), or (ii) in the
aggregate at any time an amount in excess of One Hundred Thousand Dollars
($100,000.00), and in either case not adequately covered by insurance as to
which the insurance company has acknowledged coverage, shall be entered or
filed against Borrower
<PAGE> 19
- 18 -
or its assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of 30 days or in any event later than five days prior to the date
of any proposed sale thereunder.
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, 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 Mortgage or Leasehold Mortgage, which provisions are
hereby incorporated by reference.
8. MISCELLANEOUS
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.
8.2 Amendments. No amendment, modification, termination
or waiver of any provision of this Agreement, the Note, the Security Agreement
or any Mortgage or Leasehold Mortgage, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless (x) in writing,
signed by the Lender and then only in the specific instance and for the
specific purpose for which given and (y) not adverse in any material respect to
the Agents and the Lenders under the Credit Agreement. 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.
8.3 Conflicts. In the event of any conflict or
inconsistency between any provision of this Agreement and a provision of the
<PAGE> 20
- 19 -
Note, the Security Agreement or any Mortgage or Leasehold Mortgage, the
provisions of this Agreement shall control.
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:
If to the Borrower:
James L. West
The Christian Network, Inc.
14444 66th Street North
Clearwater, Florida 34624
If to the Lender:
Lowell W. Paxson
Paxson Communications of Orlando-56, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 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 when deposited in
the mails.
8.5 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 Mortgage or 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 out of court, in trial,
on appeal or in proceedings under any bankruptcy or insolvency law or
otherwise. In addition, the Borrower shall pay any and all taxes and fees
payable or determined to be payable in connection with the execution, delivery
or recordation of any instruments and documents to be delivered hereunder. In
addition, Borrower agrees to pay (i) all the actual and reasonable costs and
expenses of Lender in connection with the negotiation, preparation and
execution of this Loan Agreement, the Note, the Security Agreement, the Pledge
Agreement, any Mortgage or Leasehold Mortgage and all other documents and
instruments to be delivered hereunder (collectively, the "Loan Documents") and
all the costs of furnishing all opinions by counsel for Borrower, and of
Borrower's performance of and compliance with all agreements and conditions
contained herein and in the other Loan Documents on its part to be performed or
complied
<PAGE> 21
- 20 -
with including, without limitation, confirming compliance with environmental
and insurance requirements; (ii) the reasonable fees, expenses and
disbursements of counsel to Lender (including allocated costs of internal
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 actual and
reasonable costs and expenses of creating and perfecting liens in favor of
Lender pursuant to any Loan Document.
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 and
the Agents. Lender shall be permitted to assign, without Borrower's consent,
all or any portion of Lender's rights and interests hereunder and under each
other document executed in connection with this Loan Agreement (x) to one or
more other Affiliates (as defined in Section 1.09) of Lender, and, upon any
such assignment, each reference herein or in such other document to "Lender"
shall be deemed to be and include a reference to such other Affiliate and (y)
to creditors of Lender or its Affiliates as security for indebtedness of Lender
or such Affiliates.
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 recordation shall
be determined by the State thereof.
8.8 Severability of Provisions. Any provision of this
Agreement, the Note, the Security Agreement, or any Mortgage or 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.
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.
<PAGE> 22
- 21 -
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.
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.
8.12 [INTENTIONALLY OMITTED]
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.
8.14 Indemnification. The Borrower hereby indemnifies and
holds harmless the Lender, the Agents and the Lenders under the Credit
Agreement and their respective 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.
8.15 Waiver. EACH OF LENDER, BORROWER AND SHAREHOLDER
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
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
<PAGE> 23
- 22 -
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.
8.16 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;
<PAGE> 24
- 23 -
(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 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.
9. GUARANTY
9.1 Guaranty. In consideration for Lender's execution and
delivery of this Loan Agreement and Lender's agreement to make the Loan,
Shareholder agrees as follows:
(a) Shareholder hereby guarantees the full, complete and
timely payment and performance by Borrower of each and every obligation of
Borrower under this Loan Agreement, the Note, the Security Agreement, each
Mortgage and Leasehold Mortgage executed and delivered pursuant to this Loan
Agreement and each other agreement or instrument executed and delivered by
Borrower in connection with this Loan Agreement (individually, a "Loan
Document" and collectively, the "Loan Documents"). If any default shall be
made by Borrower in the payment or performance of any of such obligations, then
Shareholder will itself pay or perform or cause to be paid or performed such
obligation upon receipt of notice from Lender specifying in summary form the
default. Lender may proceed to enforce its rights against Shareholder from
time to time prior to, contemporaneously with, or after any enforcement against
Borrower, or without any enforcement against Borrower. The obligations of
Shareholder under this Guaranty shall be absolute and unconditional and shall
remain in full force and effect without regard to and shall not be released,
discharged, or in any way affected by (and Shareholder expressly waives any and
all defenses arising out of, or based on): (i) any amendment or modification
of or supplement to any Loan Document; (ii) any exercise or non-exercise of, or
delay in exercising any, right, remedy, power, or privilege under or in respect
of any Loan Document; (iii) any bankruptcy, insolvency, arrangement,
composition, assignment for the benefit of creditors, or similar proceeding
commenced by or against Borrower or Shareholder; (iv) the dissolution
(voluntarily or involuntarily) of Lender; (v) the genuineness, validity, or
enforceability of any Loan Document; or (vi) any other circumstance which might
otherwise constitute a legal or equitable discharge of a guarantor or surety.
If payment of any sum by Borrower pursuant to any Loan Document is recovered as
a preference or fraudulent transfer under any applicable bankruptcy or
insolvency law, the
<PAGE> 25
- 24 -
liability of Shareholder under such Loan Document shall continue and remain in
full force and effect notwithstanding such recovery.
(b) Shareholder waives presentment, protest,
demand, or action or delinquency in respect of any of the obligations of
Borrower under the Loan Documents. Shareholder waives all set-offs and
counterclaims and all notices of nonperformance, notices of protest, notices of
dishonor, and notices of acceptance of this guaranty.
(c) This guaranty shall be deemed a continuing
guaranty, and the above consents and waivers of Shareholder shall remain in
full force and effect until the satisfaction in full of all obligations of
Borrower under the Loan Documents.
(d) Shareholder agrees that any and all claims in
its favor against Borrower, any endorser or any other guarantor of all or any
part of the obligations of Borrower under the Loan Documents, or against any of
their respective properties, arising by reason of any payment by Shareholder to
Lender pursuant to the provisions hereof or otherwise, shall be subordinate and
subject in right of payment to the prior payment, in full in cash, of all
obligations of Borrower under the Loan Documents. Shareholder agrees that any
right of subrogation arising as a result of its performance hereunder shall not
exist unless and until all obligations of the Borrower under the Loan Documents
are paid in full in cash.
9.2 Representations and Warranties. Shareholder hereby represents
and warrants to Lender as follows:
(a) This Loan Agreement has been duly and validly
executed and delivered by Shareholder and constitutes its legal, valid, and
binding agreement with respect to the provisions contained in Article IX,
enforceable in accordance with its terms, except as the enforceability of this
Loan Agreement may be affected by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally, and by judicial discretion in the
enforcement of equitable remedies.
(b) The execution, delivery, and performance by
Shareholder of this Loan Agreement: (i) do not require the consent of any third
party; (ii) will not conflict with any provision of the Articles of
Incorporation or Bylaws of Shareholder; (iii) will not conflict with, result in
a breach of, or constitute a default under, any law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality; and (iv) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of any
<PAGE> 26
- 25 -
performance required by the terms of, any agreement, instrument, license, or
permit to which Shareholder is a party or by which Shareholder may be bound.
9.3 Limited Recourse. Notwithstanding anything to the
contrary contained in this Article IX, in any action or proceeding commenced
with reference to any Loan Document, no judgment obtained against Shareholder
shall be enforced against any of its separate assets, other than Shareholder's
interest in all of the issued and outstanding capital stock of Borrower
(whether outstanding on the date hereof or hereafter), and Shareholder's
liability under any Loan Document shall be limited to such interest. In any
legal action or suit in equity which the Lender may undertake against
Shareholder to enforce its rights and remedies under any Loan Document, any
judgment obtained by Lender may be satisfied by recourse only to Shareholder's
interest in all of the issued and outstanding capital stock of Borrower
(whether outstanding on the date hereof or hereafter) and not by recourse to
any other assets of Shareholder.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 27
- 26 -
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.
PAXSON COMMUNICATIONS OF
ORLANDO-56, INC.
By: /s/ William L. Watson
-------------------------
William L. Watson
Secretary
CHANNEL 56 OF ORLANDO, INC.
By: /s/ James L. West
-------------------------
James L. West
Chairman
THE CHRISTIAN NETWORK, INC. HEREBY
JOINS IN THE EXECUTION OF THE FOREGOING
AGREEMENT TO AGREE TO THE PROVISIONS OF
ARTICLE IX ONLY, AS OF THE DATE FIRST
ABOVE WRITTEN.
THE CHRISTIAN NETWORK, INC.
By: /s/ James L. West
-------------------------
James L. West
Chairman
<PAGE> 1
EXHIBIT 10.50
<PAGE> 2
EXHIBIT 10.50
- --------------------------------------------------------------------------------
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
UHF CHANNEL 59 CORP.
AND
PAXSON COMMUNICATIONS OF DENVER-59, INC.
FOR
TELEVISION STATION KUBD(TV), DENVER, COLORADO
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. LEASE OF STATION AIR TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Option to Renew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Licensee Operation of Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Licensee Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Programmer Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Licensee Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Additional Licensee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Responsibility for Employees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. STATION PROGRAMMING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Broadcast Station Programming Policy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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>
- i -
<PAGE> 4
<TABLE>
<S> <C>
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.3 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Call Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.10 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.11 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
- ii -
<PAGE> 5
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this 31st day of August 1995, by and
between UHF Channel 59 Corp., a Denver corporation (the "Licensee"), and Paxson
Communications of Denver-59, Inc., a Florida corporation (the "Programmer").
WHEREAS, Licensee owns and operates Television Station KUBD(TV),
Denver, Colorado (the "Station"), pursuant to authorizations issued by the
Federal Communications Commission ("FCC").
WHEREAS, Programmer is involved in television station ownership 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 ten 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 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
<PAGE> 6
-2-
matter, news, public service announcements and other suitable programming to
the Licensee up to ninety-eight 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.
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,
<PAGE> 7
-3-
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 Denver,
Colorado, 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
<PAGE> 8
-4-
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.
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 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
<PAGE> 9
-5-
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 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,
<PAGE> 10
-6-
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 Denver 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 Denver 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 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
<PAGE> 11
-7-
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 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
<PAGE> 12
-8-
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> 13
-9-
(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 and not the subject of an appeal or
further administrative review and this Agreement cannot be reformed, in a
manner acceptable to Programmer and Licensee, 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 an amount equal to six times the
monthly compensation due for the month preceding the notice of termination by
Programmer pursuant to Attachment I.
(b) Licensee may terminate this Agreement pursuant to
Section 6.1(e) hereof only if it pays Programmer an amount equal to six times
the monthly compensation due for the month preceding the notice of termination
by Licensee pursuant to Attachment I.
(c) 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.
<PAGE> 14
-10-
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.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
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 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.
<PAGE> 15
-11-
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 Corporation
601 Clearwater Park Road
West Palm Beach, FL 33401
Telecopy: (407) 659-4252
Telephone: (407) 659-4122
To Licensee: Channel 59 of Denver, Inc.
14444 66th Street North
Clearwater, FL 34624
Telecopy: (813) 530-0671
Telephone: (813) 536-0036
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
the parties as embodied in the provision of this Agreement which is to be so
modified.
<PAGE> 16
-12-
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: UHF CHANNEL 59 CORP.
By:/s/ James L. West
------------------------------------------
James L. West
Chairman
PROGRAMMER: PAXSON COMMUNICATIONS OF
DENVER-59, INC.
By:/s/ William L. Watson
------------------------------------------
William L. Watson
Secretary
<PAGE> 17
ATTACHMENT I
Compensation Schedule
Upon execution of this Agreement, Programmer shall have paid Licensee
a fee equal to Seven Thousand Dollars ($7,000). 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.
Payments shall be made by delivery of a check to Licensee at an
address to be designated.
<PAGE> 18
ATTACHMENT II
Categories of Anticipated Station Expenses
(1) Lease and Utility Payments
(2) Employee Salaries and Benefits
(3) Property Insurance and Taxes
(4) Fees, Licenses and Professional Fees
(5) Miscellaneous Station Expenses
(6) Equipment Repair and Replacement
(7) Programming Expenses
<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 KUBD(TV),
Denver, Colorado. All programming and advertising broadcast by the station
must conform to these policies and to the provisions of the Communications Act
of 1934, 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, KUBD);
followed immediately by (2) the station's city of license (Denver, Colorado).
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
- 2 -
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
-3-
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
-4-
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
-3-
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> 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
-2-
(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
<PAGE> 29
-3-
of 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 10.51
<PAGE> 2
EXHIBIT 10.51
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 31st day of August, 1995, is by
and between PAXSON COMMUNICATIONS OF DENVER-59, INC., a Florida corporation
having its principal offices at 601 Clearwater Park Road, West Palm Beach,
Florida 33401 (the "Lender"), and CHANNEL 59 OF DENVER, INC., a Florida
corporation having its principal offices at 14444 66th Street North,
Clearwater, Florida 34624 (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower is purchasing (a) all of the issued and
outstanding capital stock of UHF Channel 59 Corp. (the "Subsidiary"), a
Colorado corporation and the licensee of Television Station KUBD-TV, Denver,
Colorado ("KUBD-TV") and (b) substantially all of the assets and properties,
including the low power television license issued by the Federal Communications
Commission ("FCC Licenses"), of Low Power Television Station K54CQ, Fort
Collins, Colorado ("K54CQ" and, together with KUBD-TV, collectively the
"Station");
WHEREAS, the Lender is willing to lend the Borrower sufficient funds
to acquire the stock of the Subsidiary and the assets of K54CQ;
WHEREAS, Lender will provide programming for broadcast on the Station
pursuant to a Time Brokerage Agreement;
WHEREAS, the Borrower, the Subsidiary and the Lender have entered into
an Option Agreement dated as of the date hereof pursuant to which the Borrower
and the Subsidiary have granted to the Lender an exclusive and irrevocable
option to acquire the assets of the Station upon the terms and conditions
specified therein (the "Option Agreement");
WHEREAS, the Lender is obtaining the funds to make the Loan (as
defined below) to the Borrower pursuant to a Credit Agreement (as amended and
in effect from time to time, the "Credit Agreement") among the Lender, as
borrower, the lending institutions party thereto and one or more of such
lending institutions acting in the capacity of agent for and on behalf of such
lending institutions (the "Agents");
WHEREAS, the Agents (as defined in the Credit Agreement) and the
Lenders (as defined in the Credit Agreement) have agreed to make the loans
under the Credit Agreement in reliance upon the representations, warranties,
covenants and agreements of the Borrower herein and upon their status as third
party beneficiaries of such representations, warranties, covenants and
agreements; and
<PAGE> 3
-2-
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:
I
AMOUNT AND TERMS OF THE LOANS
1.1 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").
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
(as amended, renewed, restated, increased, consolidated or substituted from
time to time, 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. All references to the "Note"
in this Loan Agreement, the Security Agreements, the Pledge Agreements, and the
Leasehold Mortgage or Mortgage (each as defined in this Loan Agreement), the
mortgages or deeds of trust referred to in Section 3.04 of the Loan Agreement
and in such other agreements and documents executed and delivered in connection
with this Loan Agreement shall be deemed to be references to the Note referred
to in this Section.
1.3 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 highest interest rate per annum paid by Lender or its
affiliates on outstanding debt, public or private, as such rate may be adjusted
from time to time. Interest shall be calculated on the basis of a year of
three-hundred and sixty (360) days and the 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 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 thirty (30) days after the acquisition of the
Station by the Borrower and the Subsidiary pursuant to Federal Communications
Commission ("FCC") authority, at which time all interest accrued from the Final
Installment Date shall become due and payable.
<PAGE> 4
-3-
Thereafter, accrued interest shall be paid monthly on or before the first day
of each month until all principal and interest hereunder is paid in full and at
the repayment or maturity of the Loan. 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 date due thereof until paid in full.
1.4 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. In
the event that the Borrower and the Subsidiary do not acquire the Station,
Borrower shall repay to Lender the outstanding principal amount of the Loan no
later than one-hundred eighty (180) days after such other party acquires the
Station. The principal amount of the Loan plus any accrued and unpaid interest
shall be due and payable on the first day of the 84th month following the
acquisition of the Station by the Borrower and the Subsidiary (the "Term
Date"). In the event of a termination of the Time Brokerage Agreement dated as
of August 31, 1995, between Subsidiary and Lender, Borrower shall, in addition
to payments of interest required under Section 1.03 hereof, repay the
outstanding principal balance of the Loan in consecutive, equal monthly
installments commencing on the first day of the month following such
termination (the "Amortization Commencement Date") and ending on the Term Date,
with each such monthly principal installment payment equal to (x) the principal
amount of the Loans outstanding hereunder as of the first day of the month
following such termination divided by (y) the total number of consecutive
months included in the period commencing on the Amortization Commencement Date,
through and including the Term Date.
1.5 Use of Proceeds and Advancement of Funds.
(a) The proceeds of the Loan are to be used by the
Borrower and the Subsidiary exclusively for financing the 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"), at
the closing of the acquisition of the Station, following final and
nonappealable FCC approval of the transfer of control of the Subsidiary of the
FCC licenses to the Borrower and the FCC approval of the assignment of the FCC
licenses for K54CQ to the Borrower.
<PAGE> 5
-4-
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.
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 that 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,
provided, however, that if any such prepayment is made within three years of
the Borrower's and the Subsidiary's acquisition of the Station, Borrower shall
reimburse Lender for any prepayment penalty imposed on Lender or its affiliates
under their debt agreements or instruments as a result of Borrower's
prepayment. Each prepayment on the Note shall be applied to installments of
principal payable on the Note in the inverse order of maturity.
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.
1.9 Preferred Contingent Facility Fee. In consideration for Lender's
agreement to make the Loan, Borrower agrees to pay Lender a preferred
contingent facility fee (the "Contingent Facility Fee") in an amount equal to
twenty- five percent (25%) of the Loan payable to the extent available out of
the Net Sale Price received by Borrower or any Affiliate of Borrower, including
the Subsidiary, in connection with any Sale that is consummated at any time
prior to August 31, 2003, whether or not any portion of the Loan is outstanding
as of such date. The Contingent Facility Fee shall be due and payable by
Borrower to Lender by confirmed wire transfer of immediately available funds on
the date of closing of a Sale and prior to the payment by Borrower of any other
obligations or distributions. For the purpose of this Section 1.09, the
following terms shall have the following meanings:
"Affiliate", as applied to any entity or individual, means any other
entity or individual directly or indirectly controlling, controlled
by, or under common control with, that entity or individual. For the
purposes of this definition, "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any entity or individual, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that entity or
individual,
<PAGE> 6
-5-
whether through the ownership of voting securities, partnership
interests or by contract or otherwise.
"Net Sale Price" means (a) the aggregate value of all consideration of
whatsoever nature (whether in cash, other property, services or
otherwise) directly or indirectly paid or payable to the Borrower and
any Affiliate of Borrower (or either of them) in connection with a
Sale and whether such amounts are payable as purchase price (whether
in cash at closing or on a deferred basis), non-compete payments,
payments for the provision of future services or the rental of
property or otherwise, or any combination thereof, plus (b) an amount
equal to the sum of all accounts receivable of the Station if such
accounts receivable are retained by Borrower or any Affiliate of
Borrower in connection with a Sale, minus (c) an amount equal to the
sum of all reasonable and necessary fees and expenses incurred by the
Borrower or any Affiliate of Borrower (other than any fee payable to
an Affiliate of the Borrower) in connection with the consummation of a
Sale, minus (d) an amount equal to all liabilities of the Station (as
determined in accordance with generally accepted principles
consistently applied) that are retained by Borrower or any Affiliate of
Borrower in connection with a Sale, and minus (e) an amount equal to
the sum of the principal balance of, and all accrued but unpaid
interest on, the Loans as of the date the Contingent Facility Fee is
due.
"Sale" means any (a) sale, exchange, transfer or other disposition to
any third party unaffiliated with Borrower or any Affiliate of
Borrower of all or substantially all of the Station's assets or of the
equity of (i) Borrower or the Subsidiary or (ii) any Affiliate of
Borrower or the Subsidiary that acquires the Station's assets in
accordance with the requirements of this Loan Agreement and any
collateral document executed and delivered in connection with this
Loan Agreement (a "KUBD Affiliate") or (b) merger, consolidation or
similar transaction between a third party unaffiliated with Borrower
and Borrower, the Subsidiary or any KUBD Affiliate, whether or not
Borrower, the Subsidiary or such KUBD Affiliate is the surviving
corporation.
II
CLOSING
2.1 Closing Date. Closing of this transaction shall occur on a date
agreed upon by the parties hereto (the "Closing Date").
<PAGE> 7
-6-
III
SECURITY
3.1 Security Interest. As security for the Loan, (a) 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 "Borrower Security
Agreement") and (b) the Subsidiary shall execute and deliver to the Lender, on
or before the Closing Date, a security agreement in the form of Exhibit 3
hereto (the "Subsidiary Security Agreement" and, together with the Borrower
Security Agreement, collectively the "Security Agreements").
3.2 Pledge Agreement. As further security for the Loan, on or before
the Closing Date, (a) the Borrower shall deliver to the Lender a pledge
agreement in the form of Exhibit 4 hereto, duly executed by The Christian
Network, Inc. (the "Shareholder"), the sole shareholder of the Borrower (the
"Parent Pledge Agreement") and (b) the Borrower shall deliver to the Lender a
pledge agreement in the form of Exhibit 5 hereto, duly executed by the Borrower
(the "Borrower Pledge Agreement" and, together with the Parent Pledge
Agreement, collectively the "Pledge Agreements").
3.3 Leasehold Mortgages. At such time as the Borrower or the
Subsidiary enters into or assumes the Lessee's interest under any lease, it
shall execute with respect to such lease a leasehold mortgage substantially in
the form of Exhibit 6 hereto (a "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 and the Subsidiary shall
execute a Leasehold Mortgage with respect to each lease, if any, that it
assumes as part of the acquisition of the Station. The Borrower and the
Subsidiary shall also deliver to the Lender with respect to any lease to which
the Borrower or the Subsidiary becomes a party the following documents, each of
which shall be in form and substance satisfactory to the Lender: (i) evidence
of the filing of the lease or a memorandum of lease, (ii) an estoppel
certificate executed by the landlord under such lease or any sublessee, (iii)
an executed landlord's consent and waiver, (iv) fixture filing UCC-1 financing
statements, (v) copies of such lease and any sublease, (vi) executed tenant
subordination agreements, (vii) a title encumbrance report with respect to the
real property subject to such lease, and (viii) any other document required by
applicable law to create or perfect a mortgage lien with respect to such lease
or reasonably required by the Lender.
3.4 Mortgages. At such time as the Borrower or the Subsidiary
acquires any parcel of real estate, the Borrower or the Subsidiary, as the case
may be, shall execute a first mortgage or deed of trust in favor of the Lender
on such parcel, substantially in the form of Exhibit 6 hereto (a "Mortgage").
The Borrower or
<PAGE> 8
-7-
the Subsidiary shall also deliver to the Lender with respect to such property
the following documents, each of which shall be in form and substance
satisfactory to the Lender: (i) fixture filing UCC-1 financing statements,
(ii) copies of any lease relating to such property, if any, (iii) executed
tenant subordination agreements and estoppel certificates, if applicable, (iv)
a survey of such real property, (v) a mortgagee title insurance policy, with
such coverage and with such endorsements, including, without limitation, usury,
first loss, last dollar, revolving credit, variable rate, doing business,
zoning comprehensive, contiguity (as applicable) and survey, to the extent
available in the state where the property is located, as the Lender may
require, and (vi) any other document required by applicable law to create or
perfect a mortgage lien with respect to such property or reasonably required by
the Lender.
IV
CONDITIONS OF LENDING
4.1 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:
(a) The Note, duly executed and delivered by the Borrower;
(b) The Security Agreements, together with appropriate
UCC-1 forms and, if applicable, landlord lien waivers, duly executed and
delivered by the Borrower and the Subsidiary;
(c) The Pledge Agreements, duly executed and delivered by
the Shareholder and the Borrower together with stock certificates and blank
stock powers;
(d) Certified copies of the resolutions of (i) the Board
of Directors of Borrower evidencing approval of the execution, delivery and
performance of this Agreement, the Note, the Borrower Security Agreement, the
Borrower Pledge Agreement and other matters contemplated hereby, (ii) the Board
of Directors of the Subsidiary evidencing approval of the execution, delivery
and performance of this Agreement, the Subsidiary Security Agreement and other
matters contemplated hereby, and (iii) the Board of Stewards of Shareholder
evidencing approval of the execution, delivery and performance of this Loan
Agreement and the Pledge Agreement;
(e) A Certificate of Good Standing for the Borrower, the
Subsidiary and Shareholder;
<PAGE> 9
-8-
(f) Copies of (a) the Asset Purchase Agreement dated as
of April 30, 1995, between Borrower and Echonet Corporation (the "Asset
Purchase Agreement") and (b) the Stock Purchase Agreement dated as of April 30,
1995, among Borrower, David M. Drucker and Charles Ergen (the "Stock Purchase
Agreement" and, together with the Asset Purchase Agreement, collectively the
"Purchase Agreement");
(g) Copies of UCC, judgment and tax lien searches in each
jurisdiction in which collateral covered by the Security Agreements is located,
naming the Borrower and the sellers of the Station as debtor;
(h) The Option Agreement, duly executed and delivered by
the Borrower and the Subsidiary; and
(i) Such other agreements, certificates, opinions of
counsel and documents that the Lender may reasonably require.
4.2 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) With respect to each leased real property, the
documents required by Section 3.03, and with respect to each owned real
property, the documents required by Section 3.04;
(b) A Certificate of Good Standing for the Borrower and
the Subsidiary in the States of Florida and Colorado, respectively, 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 and the Subsidiary pursuant to
Section 6.01(e);
(d) Evidence, in form and substance acceptable to Lender,
that Borrower has received the approval of the Federal Communications
Commission to be the licensee of the Station and, in the case of KUBD-TV, that
approval has become a final, non-appealable order no longer subject to
administrative or judicial review, reconsideration or appeal;
(e) A copy of the Purchase Agreements and each other
contract, certificate and other document executed by the Borrower or the
sellers of the Station in connection with the Borrower's acquisition of the
Station; and
<PAGE> 10
-9-
(f) Such other agreements, certificates, opinions of
counsel and documents that the Lender may reasonably require.
4.3 Compliance. All of the representations and warranties of the
Borrower, Subsidiary and Shareholder in this Loan 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, Shareholder and the Subsidiary shall deliver to
the Lender and to the Agents and the Lenders under the Credit Agreement a
certificate, dated as of such date and signed by an executive officer of the
Borrower, Subsidiary and Shareholder, 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, Subsidiary and Shareholder as of the date of such Loan, is in
compliance with this Section and if the Borrower, Subsidiary or Shareholder is
not in compliance with this Section, the Lender shall not be required to
disburse such Loan to the Borrower.
V
REPRESENTATIONS AND WARRANTIES
5.1 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 and the Subsidiary
are corporations duly incorporated, validly existing and in good standing under
the laws of the States of Florida and Colorado, respectively, and each is
qualified to do business and in good standing under the laws of any other
jurisdiction in which it conducts its business, and each 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 Mortgage or Leasehold Mortgage,
the Borrower Pledge Agreement, the Security Agreements, the Option Agreement
and all other documents that have been or will be executed and delivered by the
Borrower and the Subsidiary pursuant to this Agreement.
<PAGE> 11
-10-
(b) Authorizations, Compliance with Laws. The execution,
delivery and performance by the Borrower and the Subsidiary of this Agreement,
the Note, any Mortgage or Leasehold Mortgage, the Borrower Pledge Agreement,
the Security Agreements, the Option Agreement and all other documents required
to be executed and delivered by the Borrower and the Subsidiary 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 the Subsidiary or (B) any
provision of the charter or by-laws of the Borrower or the Subsidiary; or (ii)
result in a breach of or constitute a default under any agreement or instrument
to which the Borrower or the Subsidiary 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 or the Subsidiary'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 or the
Subsidiary of this Agreement, the Note, any Mortgage or Leasehold Mortgage, the
Borrower Pledge Agreement, the Security Agreements, the Option Agreement or any
other document required to be executed and delivered by the Borrower or the
Subsidiary pursuant to this Agreement, except for the consent of the FCC as may
be described in the foregoing documents.
(d) Binding Obligations. This Agreement, the Note, any
Leasehold Mortgage, any Mortgage, the Security Agreements, the Pledge
Agreements and all other documents required to be executed and delivered by the
Borrower and the Subsidiary, as the case may be, (or, in the case of the Parent
Pledge Agreement, of the Shareholder) pursuant to this Agreement have been or,
on or prior to the Closing Date, will be executed and delivered by duly
authorized officers of the Borrower and the Subsidiary, as the case may be,
(or, in the case of the Parent Pledge Agreement, of the Shareholder) and
constitute or, on or prior to the Closing Date, will constitute, legal, valid
and binding obligations of the Borrower and the Subsidiary, as the case may be,
(or, in the case of the Parent Pledge Agreement, of the Shareholder)
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
<PAGE> 12
-11-
materially adversely affects the transactions contemplated by this Agreement or
which would have a material adverse effect on the business, properties,
prospects, operation or condition (financial or otherwise) 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. 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 and, to the best knowledge of
the Borrower, the Subsidiary each 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 or the Subsidiary in
conformity with generally accepted accounting principles).
(i) Title to Properties. The Borrower and, to the best
knowledge of the Borrower, the Subsidiary each 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 those 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.
<PAGE> 13
-12-
VI
COVENANTS OF THE BORROWER
6.1 Affirmative Covenants. So long as the Note shall remain unpaid,
the Borrower hereby covenants and agrees that it will, and will cause the
Subsidiary to, 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 or the Subsidiary; 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 and the Subsidiary 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 the Subsidiary, 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.
<PAGE> 14
-13-
(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 Agreements, the Pledge Agreements, any
Leasehold Mortgage, any 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 Agreements, any Mortgage or Leasehold Mortgage 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) Purchase Agreement. Comply with its obligations
under the Purchase Agreements.
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, and will cause the Subsidiary to 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; (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; (iii)
obligations or liabilities arising under the indemnification provisions of the
Purchase Agreements.
(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 with respect to property or assets other
than the Stock (as defined in the Pledge Agreements):
(i) any security interest or lien created
pursuant to or in connection with this Agreement or securing the Loan, the
Security Agreements, the Pledge Agreements, any Leasehold Mortgage or any
Mortgage;
<PAGE> 15
-14-
(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; or
(v) any judgment lien, singly or aggregated with
other judgment liens, in an amount less than $100,000, 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 any of its assets or properties other than sales of assets
in the ordinary course of business (which shall expressly not include any
transfer or assignment of any FCC License).
(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. Issue or permit the
transfer of any shares of the capital stock of the Borrower or the Subsidiary,
or any options, warrants, convertible securities or other rights to purchase
the Borrower's or the Subsidiary's stock. The preceding sentence shall not
apply to issuances or transfers to the Lender.
(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
<PAGE> 16
-15-
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 the Subsidiary 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 capital stock of the Borrower or the Subsidiary)
in respect of the Borrower's or the Subsidiary's capital stock.
(i) Transactions with Affiliates. Enter into any
transaction or agreement with any affiliate of the Borrower or the Subsidiary.
(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, the Subsidiary or the Station, or any damage,
destruction or loss affecting any assets used or useful in the conduct of the
business of the Borrower or the Subsidiary.
(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 or the Subsidiary.
(m) Cancellation of Debts. Cancel any debts owed to or
claims held by the Borrower or the Subsidiary.
(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
<PAGE> 17
-16-
consent of the Lender except and as required by generally accepted accounting
principles as required to present accurate financial information on the
Borrower or the Subsidiary.
(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 (as defined in Section 7.01(d) below), if any,
to which the Station is a party.
(q) Purchase Agreement. Terminate, amend, commit any
material breach or default under or waive any term of the Purchase Agreements
or the Option Agreement.
(r) Subsidiaries. Create or acquire any subsidiary of
Borrower (other than the Subsidiary), unless Lender shall have approved such
action in advance and Borrower shall have taken all actions required by Lender
to grant Lender a first priority security interest in all of the issued and
outstanding stock of such subsidiary. Borrower acknowledges and agrees that
until such time as such security interest is granted and perfected, Lender
shall have an equitable lien in the stock of any subsidiary created or acquired
by Borrower.
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 and to the
Agents:
(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 audited financial statements
for such year for the Borrower and the Subsidiary, including therein a balance
sheet of the Borrower and the Subsidiary as of the end of such fiscal year,
statements of income and expense of the Borrower and the Subsidiary for such
fiscal year, and a statement of cash flow of the Borrower and the
<PAGE> 18
-17-
Subsidiary 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
and the Subsidiary'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
or the Subsidiary 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 within thirty (30) days of
the beginning of each fiscal year of the Borrower and the Subsidiary. 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 or the Subsidiary as the Lender or the Administrative Agents
may from time to time reasonably request.
VII
EVENTS OF DEFAULT
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
including, without limitation, the obligation to pay the Contingent Facility
Fee as set forth in Section 1.09 hereof, when due whether at the due date
thereof or by acceleration or otherwise, and, in the case of any installment of
interest, such default shall remain unremedied for a period of five (5) days;
or
(b) The security interest or lien of the Lender in any
material portion of the collateral covered by the Security Agreements, Pledge
Agreements or any Leasehold Mortgage or Mortgage shall at any time not
constitute a legal, valid and enforceable security interest or lien; or
(c) Any representation or warranty made by, as the case
may be, the Borrower, the Subsidiary or Shareholder (or any of their officers)
herein, in the Security Agreements, any Leasehold Mortgage or Mortgage, in the
Pledge Agreements, the Option Agreement or in any certificate, agreement,
instrument or statement contemplated by or made or delivered pursuant to or in
connection
<PAGE> 19
-18-
with this Agreement, the Note, any Leasehold Mortgage or Mortgage or the
Security Agreements, in the Pledge Agreements, or the Option Agreement, shall
prove to have been incorrect in any material respect when made; or
(d) The Borrower or the Subsidiary, as the case may be,
shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement, the Note, Borrower Pledge Agreement, the Security
Agreements, any Leasehold Mortgage or Mortgage, Option Agreement 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, the Subsidiary or the Shareholder shall
fail to pay any indebtedness for borrowed money owing by the Borrower, the
Subsidiary or the Shareholder 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, the
Subsidiary or the Shareholder 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, the Subsidiary or the
Shareholder 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 or the Subsidiary 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) Either (i) Borrower, the Subsidiary or the
Shareholder shall fail to pay its debts as they mature in the ordinary course
of business; or (ii) Borrower, the Subsidiary or the Shareholder shall file a
petition commencing a voluntary case concerning it under any Chapter of Title
11 of the United States Code entitled "Bankruptcy"; or (iii) Borrower, the
Subsidiary or the Shareholder 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, the Subsidiary or the Shareholder and such appointment shall continue
undischarged for a period of thirty (30) days; or (v) an involuntary case is
commenced against the Borrower, the Subsidiary or the Shareholder under any
<PAGE> 20
-19-
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, the Subsidiary or the Shareholder 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, the Subsidiary or
the Shareholder and shall remain undismissed for a period of thirty (30) days;
or (viii) the Borrower, the Subsidiary or the Shareholder 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 Subsidiary; or
(i) There shall be a cancellation, denial or revocation
of any material broadcast license for the Station, the Borrower or the
Subsidiary 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 money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an amount in excess of One
Hundred Thousand Dollars ($100,000.00), or (ii) in the aggregate at any time an
amount in excess of One Hundred Thousand Dollars ($100,000.00), and in either
case not adequately covered by insurance as to which the insurance company has
acknowledged coverage, shall be entered or filed against Borrower, the
Subsidiary or their assets and shall remain undischarged, unvacated, unbonded
or unstayed for a period of 30 days or in any event later than five days prior
to the date of any proposed sale thereunder; or
(k) The Shareholder and the Subsidiary shall default in
the due performance or observance of any term, covenant or agreement on either
of their parts to be performed or observed pursuant to Article IX hereof or any
obligation of the Shareholder or Subsidiary under Article IX hereof shall, for
any reason other than the full satisfaction thereof, not be or shall cease to
be in full force and effect or is, or is declared to be, null and void, or the
Shareholder and the Subsidiary shall, or shall purport to, terminate, revoke,
repudiate, declare voidable or void, deny, disaffirm or otherwise contest
Article IX hereof or any term or provision thereof or any of their respective
obligations or liabilities under Article IX hereof.
<PAGE> 21
-20-
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, 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 Agreements, Pledge Agreements,
and any Mortgage or Leasehold Mortgage, which provisions are hereby
incorporated by reference.
VIII
MISCELLANEOUS
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.
8.2 Amendments. No amendment, modification, termination or waiver of
any provision of this Agreement, the Note, the Pledge Agreements, the Security
Agreements or any Mortgage or Leasehold Mortgage, nor consent to any departure
by the Borrower or the Subsidiary therefrom, shall in any event be effective
unless (x) in writing, signed by the Lender and then only in the specific
instance and for the specific purpose for which given and (y) not adverse in
any material respect to the Agents and the Lenders under the Credit Agreement.
No notice to or demand on the Borrower or the Subsidiary in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances.
8.3 Conflicts. In the event of any conflict or inconsistency between
any provision of this Agreement and a provision of the Note, the Pledge
Agreements, the Security Agreements or any
<PAGE> 22
-21-
Mortgage or Leasehold Mortgage, the provisions of this Agreement shall control.
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:
If to the Borrower or the Subsidiary:
James L. West
Channel 59 of Denver, Inc.
14444 66th Street North
Clearwater, Florida 34624
If to the Lender:
Lowell W. Paxson
Paxson Communications of Denver-59, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 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 when deposited in
the mails.
8.5 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 Agreements, any Mortgage or Leasehold Mortgage, the
Pledge Agreements 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 out of court, in trial, on
appeal or in proceedings under any bankruptcy or insolvency law or otherwise.
In addition, the Borrower shall pay any and all taxes and fees payable or
determined to be payable in connection with the execution, delivery or
recordation of any instruments and documents to be delivered hereunder. In
addition, Borrower agrees to pay (i) all the actual and reasonable costs and
expenses of Lender in connection with the negotiation, preparation and
execution of this Loan Agreement, the Note, the Security Agreements, the Pledge
Agreements, any Mortgage or Leasehold Mortgage and all other documents and
instruments to be delivered hereunder (collectively, the "Loan Documents") and
all the costs of furnishing all opinions by counsel for Borrower and the
Subsidiary, and of Borrower's and the Subsidiary's performance of and
compliance with all agreements and conditions contained herein and in the other
Loan Documents on
<PAGE> 23
-22-
its part to be performed or complied with including, without limitation,
confirming compliance with environmental and insurance requirements; (ii) the
reasonable fees, expenses and disbursements of counsel to Lender (including
allocated costs of internal 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 actual and reasonable costs and expenses of creating and
perfecting liens in favor of Lender pursuant to any Loan Document.
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 and
the Agents. Lender shall be permitted to assign, without Borrower's consent,
all or any portion of Lender's rights and interests hereunder and under each
other document executed in connection with this Loan Agreement (x) to one or
more other Affiliates (as defined in Section 1.09) of Lender, and, upon any
such assignment, each reference herein or in such other document to "Lender"
shall be deemed to be and include a reference to such other Affiliate and (y)
to creditors of Lender or its Affiliates as security for indebtedness of Lender
or such Affiliates.
8.7 Governing Law. This Agreement, the Note, the Pledge Agreements,
the Security Agreements 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.
8.8 Severability of Provisions. Any provision of this Agreement, the
Note, the Pledge Agreements, the Security Agreements, or any Mortgage or
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.
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.
<PAGE> 24
-23-
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.
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.
8.12 [INTENTIONALLY OMITTED]
8.13 Further Assurances. From time to time, the Borrower shall, and
shall cause the Subsidiary to, 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.
8.14 Indemnification. The Borrower hereby indemnifies and holds
harmless the Lender, the Agents and the Lenders under the Credit Agreement and
their respective 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.
8.15 WAIVER. EACH OF LENDER, BORROWER, SUBSIDIARY AND SHAREHOLDER
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
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
<PAGE> 25
-24-
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.
8.16 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:
(a) 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;
(b) 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;
(c) 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;
<PAGE> 26
-25-
(d) 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 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
(e) 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.
IX
GUARANTY
9.1. Guaranty. In consideration for Lender's execution and delivery
of this Loan Agreement and Lender's agreement to make the Loan, Shareholder and
Subsidiary each agrees as follows:
(a) Shareholder and Subsidiary hereby guarantee the full,
complete and timely payment and performance by Borrower of each and every
obligation of Borrower under this Loan Agreement, the Note, the Borrower
Security Agreement, the Borrower Pledge Agreement, each Mortgage and Leasehold
Mortgage executed and delivered pursuant to this Loan Agreement and each other
agreement or instrument executed and delivered by Borrower in connection with
this Loan Agreement (individually, a "Loan Document" and collectively, the
"Loan Documents"). If any default shall be made by Borrower in the payment or
performance of any of such obligations, then Shareholder and Subsidiary will
themselves pay or perform or cause to be paid or performed such obligation upon
receipt of notice from Lender specifying in summary form the default. Lender
may proceed to enforce its rights against Shareholder and Subsidiary from time
to time prior to, contemporaneously with, or after any enforcement against
Borrower, or without any enforcement against Borrower. The obligations of
Shareholder and Subsidiary under this Guaranty shall be absolute and
unconditional and shall remain in full force and effect without regard to and
shall not be released, discharged, or in any way affected by (and Shareholder
and Subsidiary expressly waive any and all defenses arising out of, or based
on): (i) any amendment or modification of or supplement to any Loan Document;
(ii) any exercise or non-exercise of, or delay in exercising any, right,
remedy, power, or privilege under or in respect of any Loan Document; (iii) any
bankruptcy, insolvency, arrangement, composition, assignment for the benefit of
creditors, or similar proceeding commenced by or against Borrower, Subsidiary
or Shareholder; (iv) the dissolution (voluntarily or involuntarily) of Lender;
(v) the genuineness, validity, or enforceability of any Loan Document; or (vi)
any other circumstance which might otherwise constitute a legal or equitable
discharge of a guarantor or surety.
<PAGE> 27
-26-
If payment of any sum by Borrower pursuant to any Loan Document is recovered as
a preference or fraudulent transfer under any applicable bankruptcy or
insolvency law, the liability of Shareholder or Subsidiary under such Loan
Document shall continue and remain in full force and effect notwithstanding
such recovery.
(b) Shareholder and Subsidiary each waives presentment,
protest, demand, or action or delinquency in respect of any of the obligations
of Borrower under the Loan Documents. Shareholder and Subsidiary each waives
all set-offs and counterclaims and all notices of nonperformance, notices of
protest, notices of dishonor, and notices of acceptance of this guaranty.
(c) This guaranty shall be deemed a continuing guaranty,
and the above consents and waivers of Shareholder and Subsidiary shall remain
in full force and effect until the satisfaction in full of all obligations of
Borrower under the Loan Documents.
(d) Shareholder and Subsidiary each agrees that any and
all claims in its favor against Borrower, any endorser or any other guarantor
of all or any part of the obligations of Borrower under the Loan Documents, or
against any of their respective properties, arising by reason of any payment by
Shareholder or Subsidiary to Lender pursuant to the provisions hereof or
otherwise, shall be subordinate and subject in right of payment to the prior
payment, in full in cash, of all obligations of Borrower under the Loan
Documents. Shareholder and Subsidiary each agrees that any right of
subrogation arising as a result of its performance hereunder shall not exist
unless and until all obligations of the Borrower under the Loan Documents are
paid in full in cash.
9.2 Representations and Warranties. Shareholder and Subsidiary each
hereby represents and warrants to Lender as follows:
(a) This Loan Agreement has been duly and validly
executed and delivered by Shareholder and Subsidiary and constitutes its legal,
valid, and binding agreement with respect to the provisions contained in
Article IX, enforceable in accordance with its terms, except as the
enforceability of this Loan Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally, and by
judicial discretion in the enforcement of equitable remedies.
(b) The execution, delivery, and performance by
Shareholder and Subsidiary of this Loan Agreement: (i) do not require the
consent of any third party; (ii) will not conflict with any provision of the
Articles of Incorporation or Bylaws of Shareholder or Subsidiary; (iii) will
not conflict with, result in a breach of, or constitute a default under, any
law, judgment,
<PAGE> 28
-27-
order, ordinance, injunction, decree, rule, regulation, or ruling of any court
or governmental instrumentality; and (iv) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of any performance required by the
terms of, any agreement, instrument, license, or permit to which Shareholder or
Subsidiary is a party or by which Shareholder or Subsidiary may be bound.
9.3 Limited Recourse. Notwithstanding anything to the contrary
contained in this Article IX, in any action or proceeding commenced with
reference to any Loan Document, no judgment obtained against Shareholder shall
be enforced against any of its separate assets, other than Shareholder's
interest in all of the issued and outstanding capital stock of Borrower
(whether outstanding on the date hereof or hereafter), and Shareholder's
liability under any Loan Document shall be limited to such interest. In any
legal action or suit in equity which the Lender may undertake against
Shareholder to enforce its rights and remedies under any Loan Document, any
judgment obtained by Lender may be satisfied by recourse only to Shareholder's
interest in all of the issued and outstanding capital stock of Borrower
(whether outstanding on the date hereof or hereafter) and not by recourse to
any other assets of Shareholder.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 29
-28-
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.
PAXSON COMMUNICATIONS OF
DENVER-59, INC.
By: /s/ William L. Watson
--------------------------------------
William L. Watson
Secretary
CHANNEL 59 OF DENVER, INC.
By: /s/ James L. West
--------------------------------------
James L. West
Chairman
THE CHRISTIAN NETWORK, INC. AND UHF
CHANNEL 59 CORP. EACH HEREBY JOINS IN THE
EXECUTION OF THE FOREGOING AGREEMENT TO
AGREE TO THE PROVISIONS OF ARTICLE IX
ONLY, AS OF THE DATE FIRST ABOVE WRITTEN.
THE CHRISTIAN NETWORK, INC.
By: /s/ James L. West
--------------------------------------
James L. West
Chairman
UHF CHANNEL 59 CORP.
By: /s/ James L. West
--------------------------------------
James L. West
Chairman
<PAGE> 1
EXHIBIT 10.52
<PAGE> 2
EXHIBIT 10.52
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement") is entered into as of
August 31, 1995 by and among PAXSON COMMUNICATIONS OF DENVER-59, INC., a
Florida corporation ("Paxson"); CHANNEL 59 OF DENVER, INC., a Florida
corporation ("CNI-59"); and UHF CHANNEL 59 CORP., a Colorado corporation
("UHF-59").
R E C I T A L S
A. UHF-59 is the licensee of Television Station KUBD-TV, Denver,
Colorado, and CNI-59 is the licensee of Low Power Television Station K54CQ,
Fort Collins, Colorado (collectively, the "Station"), and CNI-59 and UHF-59
(collectively, the "Licensee") own or hold certain assets that are used or
useful in the business and operations of the Station (the "Assets"), including,
without limitation, licenses issued by the Federal Communications Commission
("FCC") for the Station (the "FCC Licenses").
B. Paxson and CNI-59 have entered into a Loan Agreement of even
date herewith (the "Loan Agreement"), pursuant to which Paxson has agreed to
make a loan or loans to CNI-59 to enable CNI-59 to purchase the Station and for
working capital and operating expenses relating to the Station (the "Loans").
C. Paxson and UHF-59 have entered into a Time Brokerage Agreement
of even date herewith, pursuant to which Paxson shall provide programming for
broadcast on the Station (the "Time Brokerage Agreement").
D. Licensee desires to grant to Paxson an exclusive and
irrevocable option to purchase the Assets, including the FCC Licenses, on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Grant of Option. In consideration for the making of the
Loans, the receipt and sufficiency of which are hereby acknowledged, Licensee
hereby grants to Paxson an exclusive and irrevocable option to acquire the
Assets, including the FCC Licenses (the "Option") for a purchase price of One
Hundred Thousand Dollars ($100,000) payable upon the closing of the Option
Purchase Agreement (as defined in Section 3 below) and the forgiveness of the
Loans upon the closing of the Option Purchase Agreement.
2. Notice of Exercise. Paxson may deliver to Licensee written
notice of Paxson's intention to exercise the Option (the
<PAGE> 3
"Option Notice") at any time following the date hereof and prior to the
termination of the Option as set forth in Section 4.
3. Option Purchase Agreement. Within three (3) business days
following Licensee's receipt of the Option Notice, Licensee and Paxson shall
enter into an Asset Purchase Agreement that contains such terms and conditions
as are customarily included in such agreements and is in form and substance
reasonably acceptable to Paxson and Licensee (the "Option Purchase Agreement"),
and thereafter Licensee and Paxson shall perform their respective obligations
under the Option Purchase Agreement, including, without limitation, filing and
prosecuting an appropriate application for FCC consent to the assignment of the
FCC Licenses from Licensee to Paxson (the "FCC Consent").
4. Termination of Option. The Option shall remain in full force
and effect until the tenth anniversary of the date hereof.
5. Representations and Warranties of Licensee. CNI-59 and UHF-59
represent and warrant to Paxson as follows:
(a) CNI-59 is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and is
duly qualified to conduct business as a foreign corporation in the State of
Colorado. UHF-59 is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado. Licensee has full
corporate power and authority to execute and deliver this Option Agreement and
to consummate the transactions contemplated hereby. The execution and delivery
of this Option Agreement and the consummation of the transactions contemplated
hereby by Licensee has been duly and validly authorized by all necessary
corporate action on the part of Licensee. This Option Agreement has been duly
and validly executed and delivered by Licensee and constitutes a legal, valid
and binding agreement of Licensee enforceable against Licensee in accordance
with its terms, except as such enforceability may be affected by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
(b) Except for the FCC Consent, there is no requirement
applicable to Licensee to make any filing with, or to obtain any permit,
authorization, consent or approval of, any governmental or regulatory authority
or any other third party as a condition to the consummation by Licensee of the
transactions contemplated by this Option Agreement and the Option Purchase
Agreement.
-2-
<PAGE> 4
(c) Subject to obtaining the FCC Consent, the execution,
delivery and performance of this Option Agreement and the Option Purchase
Agreement by Licensee will not (i) conflict with Licensee's organizational
documents, (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, agreement, or lease to which Licensee is a party
or by which any of the FCC Licenses or the other Assets are bound, or (iii)
violate any statute, law, rule, regulation, order, writ, injunction or decree
applicable to Licensee, the FCC Licenses or the other Assets.
6. Representations and Warranties of Paxson. Paxson represents
and warrants to Licensee as follows:
(a) Paxson has full corporate power and authority to
execute and deliver this Option Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Option Agreement and
the consummation of the transactions contemplated hereby by Paxson have been
duly and validly authorized by all necessary corporate action on the part of
Paxson. This Option Agreement has been duly and validly executed and delivered
by Paxson and constitutes a legal, valid and binding agreement of Paxson
enforceable against Paxson in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by judicial discretion in the
enforcement of equitable remedies.
(b) Except for the FCC Consent, there is no requirement
applicable to Paxson to make any filing with, or to obtain any permit,
authorization, consent or approval of, any governmental or regulatory authority
or any other third party as a condition to the consummation by Paxson of the
transactions contemplated by this Option Agreement and the Option Purchase
Agreement.
(c) Subject to obtaining the FCC Consent, the execution,
delivery and performance of this Option Agreement and the Option Purchase
Agreement by Paxson will not (i) conflict with Paxson's organizational
documents, (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, agreement, or lease to which Paxson is a party or
by which any of its assets are bound, or (iii) violate any statute, law, rule,
regulation, order, writ, injunction or decree applicable to Paxson.
7. Covenants of Licensee. Licensee will not commit any act that
is inconsistent with the grant of the Option to Paxson or the
- 3 -
<PAGE> 5
transactions contemplated by this Option Agreement and the Option Purchase
Agreement.
8. Cooperation. Licensee and Paxson shall cooperate fully with
each other and their respective counsel and accountants in connection with any
steps required to be taken as part of their respective obligations under this
Option Agreement and the Option Purchase Agreement and will each use their
respective best efforts to perform or fulfill all conditions and obligations to
be performed or fulfilled by them under this Option Agreement and the Option
Purchase Agreement so that the transactions contemplated hereby shall be
consummated.
9. Specific Performance. The parties recognize that if Licensee
breaches this Option Agreement and refuses to perform under the provisions of
this Option Agreement, monetary damages alone would not be adequate to
compensate Paxson for its injury. Paxson 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 Option Agreement. If any
action is brought by Paxson to enforce this Option Agreement, Licensee shall
waive the defense that there is an adequate remedy at law.
10. Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Option Agreement shall be
(a) in writing, (b) delivered by personal delivery, or sent by commercial
delivery service or registered or certified mail, return receipt requested, (c)
deemed to have been given on the date of personal delivery or the date set
forth in the records of the delivery service or on the return receipt, and (d)
addressed as follows:
If to Licensee: James L. West
The Christian Network, Inc.
14444 66th Street North
Clearwater, Florida 34624
If to Paxson:
- 4 -
<PAGE> 6
Lowell W. Paxson
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
10.
11. Entire Agreement; Amendment. This Option Agreement and the
Option Purchase Agreement supersede all prior agreements and understandings of
the parties, oral and written, with respect to its subject matter. This Option
Agreement and the Option Purchase Agreement may be modified only by an
agreement in writing executed by all of the parties hereto. No waiver of
compliance with any provision of this Option Agreement or the Option Purchase
Agreement will be effective unless evidenced by an instrument evidenced in
writing and signed by the parties hereto.
12. Further Assurances. From time to time after the date of
execution hereof, the parties shall take such further action and execute such
further documents, assurances and certificates as either party reasonably may
request of the other to effectuate the purposes of this Option Agreement.
13. Counterparts. This Option Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and shall become
effective when each of the parties hereto shall have delivered to it this
Option Agreement duly executed by the other parties hereto.
14. Headings. The headings in this Option Agreement are for the
sole purpose of convenience of reference and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Option Agreement.
15. Governing Law. This Option Agreement shall be construed under
and in accordance with the laws of the State of Florida, without giving effect
to the principles of conflicts of law.
16. Benefit and Binding Effect; Assignability. This Option
Agreement shall inure to the benefit of and be binding upon Licensee, Paxson
and their respective successors and permitted assigns. No party hereto may
assign this Option Agreement without the prior written consent of the other
parties hereto, except that Paxson at any time prior to the consummation of the
transactions
- 5 -
<PAGE> 7
contemplated by this Option Agreement may assign its rights and obligations
under this Option Agreement without Licensee's consent to any entity controlled
by or under common control with Paxson. Upon any permitted assignment by a
party in accordance with this Section 16, all references to "Paxson" herein
shall be deemed to be references to Paxson's assignee and all references to
"Licensee" herein shall be deemed to be references to Licensee's assignee, as
the case may be. Notwithstanding the foregoing, Licensee and Paxson may
collaterally assign their respective rights, benefits, duties or obligations
hereunder to their respective lenders.
17. Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Option Agreement, and except as and to the
extent required by law, each party will keep confidential any information
obtained from the other party in connection with the transactions contemplated
by this Option Agreement. If this Option Agreement is terminated, each party
will return to the other party all information obtained by the such party from
the other party in connection with the transactions contemplated by this Option
Agreement.
18. Press Release. No party shall publish any press release, make
any other public announcement or otherwise communicate with any news media
concerning this Option Agreement or the transactions contemplated hereby
without the prior written consent of the other party.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 6 -
<PAGE> 8
IN WITNESS WHEREOF the parties hereto have executed this Option
Agreement as of the date first above written.
PAXSON COMMUNICATIONS OF
DENVER-59, INC.
By: /s/ William L. Watson
---------------------------------------
William L. Watson
Secretary
CHANNEL 59 OF DENVER, INC.
By: /s/ James L. West
---------------------------------------
James L. West
Chairman
UHF CHANNEL 59 CORP.
By: /s/ James L. West
---------------------------------------
James L. West
Chairman
- 7 -
<PAGE> 1
EXHIBIT 10.53
<PAGE> 2
EXHIBIT 10.53
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of August 31, 1995 by and
between Channel 13 of Flagstaff, Inc., a Florida corporation ("Buyer"), Michael
C. Gelfand, M. D., an individual ("Gelfand") and Del Ray Television Company,
Inc., a Maryland corporation ("Del Ray"; Gelfand and Delray are collectively
referred to herein as "Sellers" and individually referred to as a "Seller").
RECITALS
A. Gelfand is the licensee of, and together with Del Ray, owns and
operates television station KWBF-TV, Flagstaff, AZ, (the "Station") pursuant to
licenses issued by the Federal Communications Commission ("FCC").
B. Sellers desire to sell, and Buyer wishes to buy, substantially all
the assets of Sellers that are used or useful in the business or operations of
the Station, for the price and on the terms and conditions set forth in this
Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Seller, intending to be
bound legally, agree as follows:
SECTION 1 DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"Accounts Receivable" means the rights of Sellers to payment for the
sale of advertising time run on the Station by Sellers prior to the Closing
Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) Contracts for the sale of advertising
time on the Station in exchange for merchandise or services entered into in the
ordinary course of business ("Trade Agreements") and that, as of the Closing
Date, do not involve a negative Trade Balance in excess of Ten Thousand Dollars
($10,000) in the aggregate, (ii) all Contracts listed in Schedule 3.7 that are
specifically designated as Contracts to be assumed by Buyer upon its purchase
of the Station, (iii) any Contracts entered into by Sellers between the date of
this Agreement and the Closing Date that Buyer agrees in writing to assume, and
(iv) time sales contracts entered into by Sellers in compliance with Section
5.3.
"Closing" means the consummation of the purchase and sale of the
Assets pursuant to this Agreement in accordance with the provisions of Section
8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
<PAGE> 3
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer
or otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including any amendments and other
modifications thereto) to which a Seller is a party or which are binding upon a
Seller and which relate to or effect the Assets or the business or operations
of the Station, and (i) which are in effect on the date of this Agreement or
(ii) which are entered into by a Seller between the date of this Agreement and
the Closing Date.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to a Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by a Seller or under which a Seller is licensed or franchised and which are
used or useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local governmental authorities to a Seller in connection with the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests of Sellers in
real property, including fee estates, leaseholds and subleaseholds, purchase
options, easements, licenses, rights to access, and rights of way, and all
buildings and other improvements thereon, and other real property interests
which are used or useful in the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property of Sellers which
is used or useful in the conduct of the business or operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date.
2
<PAGE> 4
"Trade Balance" means the difference between the aggregate value of
time owed pursuant to the Trade Agreements and the aggregate value of goods and
services to be received pursuant to the Trade Agreements, determined in
accordance with generally accepted accounting principles. The Trade Balance is
"negative" if the value of time owed exceeds the value of goods and services to
be received.
SECTION 2 PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
set forth in this Agreement, Sellers hereby agree to sell, transfer, and
deliver to Buyer on the Closing Date, and Buyer agrees to purchase, all of the
tangible and intangible assets of Sellers used or useful in connection with the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date, but
excluding the assets described in Section 2.2, free and clear of any claims,
liabilities, security interests, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for liens for current
taxes not yet due and payable), including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of Sellers
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
(f) All of Sellers' proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station;
(g) All choses in action of Sellers relating to the Station;
and
(h) All books and records relating to the business or
operations of the Station, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept by the Station.
2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Sellers' cash on hand as of the Closing and all other
cash in any of Sellers's bank or savings accounts; any insurance policies,
letters of credit, or other similar items and cash surrender value in regard
thereto; and any stocks, bonds, certificates of deposit and similar
investments;
(b) All books and records that Sellers are required by law to
retain and that pertain to Delray's corporate organization;
(c) Any pension, profit-sharing, or employee benefit plans,
and any collective bargaining agreements;
3
<PAGE> 5
(d) The Accounts Receivable as of 11:59 p.m., local time, on
the day prior to the Closing Date ("Sellers' Receivables"); and
(e) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets and the
covenants of Sellers set forth in the Non-competition Agreement referred to in
Section 6.14 shall be One Million Four Hundred Thousand Dollars ($1,400,000),
adjusted as provided below:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses. All expenses
arising from the operation of the Station, including business and license fees,
utility charges, FCC License Fees, real and personal property taxes and
assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, taxes (except
for taxes arising from the transfer of the Assets under this Agreement), and
similar prepaid and deferred items, shall be prorated between Buyer and Sellers
in accordance with the principle that Sellers shall be responsible for all
expenses, costs, and liabilities allocable to the period prior to the Closing
Date, and Buyer shall be responsible for all expenses, costs, and obligations
allocable to the period on and after the Closing Date. Notwithstanding the
preceding sentence, there shall be no adjustment for, and Sellers shall remain
solely liable with respect to, any Contracts not included in the Assumed
Contracts and any other obligation or liability not being assumed by Buyer in
accordance with Section 2.5.
(b) Manner of Determining Adjustments. Any adjustments
will, insofar as feasible, be determined and paid on the Closing Date, with
final settlement and payment by the appropriate party occurring no later than
ninety (90) days after the Closing Date or such other date as the parties shall
mutually agree upon.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Sellers at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Sellers to Buyer, at
least two days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of Sellers under the Licenses and the Assumed
Contracts insofar as they relate to the time on and after the Closing Date, and
arise out of events related to Buyer's ownership of the Assets or its operation
of the Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Sellers, including (I) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or
proceedings relating to the operation of the Station prior to the Closing, (iv)
any obligations or liabilities arising under capitalized leases or other
financing agreements, (v) any obligations or liabilities arising under
agreements entered into other than in the ordinary course of business, (vi) any
obligations or liabilities of Sellers under any employee pension, retirement,
or other benefit plans or collective bargaining agreements, (vii) any
obligation to any employee of the Station for severance benefits, vacation
time, or sick leave accrued prior to the Closing Date, or (viii) any
obligations or liabilities caused by, arising out of, or resulting from any
action or omission of Sellers prior to the Closing, and all such obligations
and liabilities shall remain and be the obligations and liabilities solely of
Sellers.
4
<PAGE> 6
SECTION 3 REPRESENTATIONS AND WARRANTIES OF Sellers
Sellers represent and warrant to Buyer as follows:
3.1 Organization, Standing, and Authority. Gelfand is an individual.
Delray is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Maryland, is qualified to conduct business as a
foreign corporation in the State of Arizona and is in good standing under the
laws of the State of Arizona. Sellers have all requisite power and authority
(i) to own, lease, and use the Assets as now owned, leased, and used, (ii) to
conduct the business and operations of the Station as now conducted, and (iii)
to execute and deliver this Agreement, the Escrow Agreement and the documents
contemplated hereby and thereby, and to perform and comply with all of the
terms, covenants, and conditions to be performed and complied with by Sellers
hereunder and thereunder.
3.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement and the Escrow Agreement by Sellers have been
duly authorized by all necessary actions on the part of Sellers. This
Agreement and the Escrow Agreement have been duly executed and delivered by
Sellers and constitute the legal, valid, and binding obligations of Sellers,
enforceable against them in accordance with their respective terms except as
the enforceability of this Agreement and the Escrow Agreement may be affected
by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally, and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the Escrow Agreement and the documents contemplated hereby
and thereby(with or without the giving of notice, the lapse of time, or both):
(i) do not require the consent of any third party; (ii) will not conflict with
the Articles of Incorporation or Bylaws of Delray; (iii) will not conflict
with, result in a breach of, or constitute a default under, any law, judgment,
order, ordinance, injunction, decree, rule, regulation, or ruling of any court
or governmental instrumentality (iv) will not conflict with, constitute grounds
for termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Sellers are a party
or by which Sellers may be bound; and (v) will not create any claim, liability,
mortgage, lien, pledge, condition, charge, or encumbrance of any nature
whatsoever upon any of the Assets.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete
list of the Licenses. Sellers have delivered to Buyer true and complete copies
of the Licenses (including any amendments and other modifications thereto).
The Licenses have been validly issued, and Gelfand is the authorized legal
holder thereof. The Licenses listed on Schedule 3.4 comprise all of the
licenses, permits, and other authorizations required from any governmental or
regulatory authority for the lawful conduct of the business and operations of
the Station in the manner and to the full extent they are now conducted, and
none of the Licenses is subject to any restriction or condition that would
limit the full operation of the Station as now operated. The Licenses are in
full force and effect, and the conduct of the business and operations of the
Station is in accordance therewith. Sellers have no reason to believe that any
of the Licenses would not be renewed by the FCC or other granting authority in
the ordinary course. On or before June 17, 1993, Sellers made a valid election
of must-carry with respect to each cable system located within the Station's
Area of Dominant Influence, no cable system has advised Sellers of any signal
quality or copyright indemnity or other prerequisite to cable carriage of the
Station's signal and no cable system has declined or threatened to decline such
carriage or failed to respond to a request for carriage or sought any form of
relief from carriage from
5
<PAGE> 7
the FCC. The Station's city of license, as determined by the FCC, is not
currently located within the Phoenix, Arizona Area of Dominant Influence as
defined by the 1991-1992 Area of Dominant Influence Market Guide published by
The Arbitron Co., however Flagstaff is within the Phoenix, Arizona Designated
Market Area as defined by the 1994 United States Television Household Estimates
published by Nielsen Media Research. The Sellers shall fully cooperate with
Buyer to obtain carriage of the Station on as many additional cable systems
within the Phoenix ADI as is possible prior to Closing. Further, Sellers shall
fully cooperate with Buyer should Buyer wish to seek an expansion of the
Phoenix ADI to include Flagstaff. Schedule 3.4 also contains a listing of the
cable systems currently carrying the Station along with the approximate number
of subscribers per system.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains a
complete and accurate description of all the Real Property and Sellers'
interests therein (including street address, legal description, owner, and use
and the location of all improvements thereon). The Real Property listed on
Schedule 3.5 comprises all real property interests necessary to conduct the
business and operations of the Station as now conducted. With respect to each
leasehold or subleasehold interest included in the Real Property being conveyed
under this Agreement so long as Sellers fulfill their obligations under the
lease therefor, Sellers have enforceable rights to non-disturbance and quiet
enjoyment, and no third party holds any interest in the leased premises with
the right to foreclose upon Sellers' leasehold or subleasehold interest. All
towers, guy anchors, and buildings and other improvements included in the
Assets are located entirely on the Real Property listed in Schedule 3.5. All
Real Property (including the improvements thereon) (i) is in good condition and
repair consistent with its present use, (ii) is available for immediate use in
the conduct of the business and operations of the Station, and (iii) complies
with all applicable building or zoning codes and the regulations of any
governmental authority having jurisdiction. Sellers have full legal and
practical access to the Real Property. All easements, rights-of-way, and real
property licenses have been properly recorded in the appropriate public
recording offices.
3.6 Title to and Condition of Tangible Personal Property. Schedule
3.6 lists all material items of Tangible Personal Property. The Tangible
Personal Property listed on Schedule 3.6 comprises all material items of
tangible personal property necessary to conduct the business and operations of
the Station as now conducted. Except as described in Schedule 3.6, Sellers own
and have good title to each item of Tangible Personal Property, and none of the
Tangible Personal Property owned by Sellers is subject to any security
interest, mortgage, pledge, conditional sales agreement, or other lien or
encumbrance, except for liens for current taxes not yet due and payable. Each
item of Tangible Personal Property is available for immediate use in the
business and operations of the Station. All items of transmitting and studio
equipment included in the Tangible Personal Property (i) have been maintained
in a manner consistent with generally accepted standards of good engineering
practice, and (ii) will permit the Station and any unit auxiliaries thereto to
operate in accordance with the terms of the FCC Licenses and the rules and
regulations of the FCC, and with all other applicable federal, state, and local
statutes, ordinances, rules, and regulations.
3.7 Assumed Contracts. Schedule 3.7 is a true and complete list of
all Assumed Contracts except contracts with advertisers for the sale of
advertising time on the Station for cash at prevailing rates and which have not
been prepaid and which may be canceled by the Station without penalty on not
more than thirty days' notice. Sellers have delivered to Buyer true and
complete copies of all written Assumed Contracts, true and complete memoranda
of all oral Assumed Contracts (including any amendments and other modifications
to such Assumed Contracts), and a schedule summarizing Sellers' obligations
under trade and barter agreements relating to the Station. Other than the
Assumed Contracts listed on Schedule 3.7, Sellers require no contract, lease,
or other agreement to enable it to
6
<PAGE> 8
carry on its business as now conducted. All of the Assumed Contracts are in
full force and effect, and are valid, binding, and enforceable in accordance
with their terms. There is not under any Assumed Contract any default by any
party thereto or any event that, after notice or lapse of time or both, could
constitute a default. Sellers are not aware of any intention by any party to
any Assumed Contract (i) to terminate such contract or amend the terms thereof,
(ii) to refuse to renew the Assumed Contract upon expiration of its term, or
(iii) to renew the Assumed Contract upon expiration only on terms and
conditions which are more onerous than those now existing. Except for the need
to obtain the Consents listed in Schedule 3.3, Sellers have full legal power
and authority to assign their rights under the Assumed Contracts to Buyer in
accordance with this Agreement, and such assignment will not affect the
validity, enforceability, or continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1
and the other Consents described in Schedule 3.3, no consent, approval, permit,
or authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Sellers
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Station in essentially the same manner as
such business and operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Sellers have delivered to Buyer copies
of all documents establishing or evidencing all Intangibles. Sellers are not
infringing upon or otherwise acting adversely to any trademarks, trade names,
service marks, service names, copyrights, patents, patent applications,
know-how, methods, or processes owned by any other person or persons, and there
is no claim or action pending, or to the knowledge of Sellers threatened, with
respect thereto. The Intangibles listed on Schedule 3.9 comprise all
intangible property interests necessary to conduct the business and operations
of the Station as now conducted.
3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of financial statements including balance sheets, statements of
operations and a statement of operating cash flow for the period ending December
31, 1994 and March 31, 1995 (collectively, the "Financial Statements"). The
Financial Statements have been prepared from the books and records of Sellers,
have been prepared in accordance with generally accepted accounting principles
consistently applied and maintained throughout the periods indicated, accurately
reflect the books, records, and accounts of the Station (which books, records,
and accounts are complete and correct), are complete and correct in all material
respects, and present fairly the financial condition of the Station as at their
respective dates and the results of operations for the periods then ended. None
of the Financial Statements understates the true costs and expenses of
conducting the business or operations of the Station, fails to disclose any
material contingent liabilities, or inflates the revenues of the Station.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Sellers that insure any part of the Assets or the business
of the Station. All policies of insurance listed in Schedule 3.11 are in full
force and effect. The insurance policies listed in Schedule 3.11 are adequate
in amount with respect to, and for the full value (subject to customary
deductibles) of, the Assets, and insure the Assets and the business of the
Station against all customary and foreseeable risks. During the past three
years, no insurance policy of Sellers on the Assets or the Station has been
canceled by the insurer and no application of Sellers for insurance has been
rejected by any insurer.
3.12 Reports. All returns, reports, and statements that the Station
is currently required to file with the FCC or with any other governmental agency
have been filed, and all reporting
7
<PAGE> 9
requirements of the FCC and other governmental authorities having jurisdiction
over Sellers and the Station have been complied with. All of such returns,
reports, and statements are substantially complete and correct as filed.
Sellers have timely paid to the FCC all annual regulatory fees payable with
respect to the FCC Licenses.
3.13 Personnel.
(a) Employees and Compensation. Schedule 3.13 contains a
true and complete list of all employees of the Station, their job titles, date
of hire, current salary and date and amount of last salary increase. Schedule
3.13 also contains a true and complete list as of the date of this Agreement of
all employee benefit plans or arrangements applicable to the employees of the
Station and all fixed or contingent liabilities or obligations of Sellers with
respect to any person now or formerly employed by Sellers at the Station,
including pension or thrift plans, individual or supplemental pension or
accrued compensation arrangements, contributions to hospitalization or other
health or life insurance programs, incentive plans, bonus arrangements, and
vacation, sick leave, disability and termination arrangements or policies,
including workers' compensation policies, and a description of all fixed or
contingent liabilities or obligations of Sellers with respect to any person now
or formerly employed at the Station or any person now or formerly retained as
an independent contractor at the Station. Sellers have furnished Buyer with
true and complete copies of all employee handbooks, employee rules and
regulations, and summary plan descriptions of the written plans and
arrangements listed in Schedule 3.13, and with descriptions, in writing, of the
unwritten plans and arrangements listed in Schedule 3.13. At Buyer's request,
Sellers will furnish Buyer with true and complete copies of all applicable plan
documents, trust documents, and insurance contracts with respect to the plans
and arrangements listed on Schedule 3.13. All employee benefits and welfare
plans or arrangements listed in Schedule 3.13 were established and have been
executed, managed and administered in accordance with the Internal Revenue Code
of 1986, as amended, the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and all other laws. Sellers are not aware of the existence
of any governmental audit or examination of any of such plans or arrangements
or of any facts which would lead it to believe that any such audit or
examination is pending or threatened. No action, suit, or claim with respect
to any of such plans or arrangements (other than routine claims for benefits)
is pending or, to the knowledge of Sellers, threatened, and Sellers possess no
knowledge of any facts which could give rise to any such action, suit or claim.
(b) Labor Relations. Sellers are not a party to or subject
to any collective bargaining agreements with respect to the Station. Sellers
have no written or oral contracts of employment with any employee of the
Station, other than those listed in Schedule 3.7. Sellers have complied with
all laws, rules, and regulations relating to the employment of labor, including
those related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payroll related
taxes, and they have not received any notice alleging that it has failed to
comply in any material respect with any such laws, rules, or regulations. No
controversies, disputes, or proceedings are pending or, to the best of their
knowledge, threatened, between Sellers and any employee (singly or
collectively) of the Station. No labor union or other collective bargaining
unit represents or claims to represent any of the employees of the Station. To
Sellers' knowledge, there is no union campaign being conducted to solicit cards
from employees to authorize a union to request a National Labor Relations Board
certification election with respect to any employees at the Station.
(c) Liabilities. Sellers have no liability of any kind to or
in respect of any employee benefit plan, including withdrawal liability under
Section 4201 of ERISA. Sellers have not incurred any accumulated funding
deficiency within the meaning of ERISA or Section 4971 of the Internal Revenue
Code. Sellers have not failed to make any required contributions to any
employee benefit
8
<PAGE> 10
plan. The Pension Benefit Guaranty Corporation has not asserted that Sellers
have incurred any liability in connection with any such plan. No lien has been
attached and no person has threatened to attach a lien on any property of
Sellers as a result of a failure to comply with ERISA.
3.14 Taxes. Sellers have filed or caused to be filed all federal
income tax returns and all other federal, state, county, local, or city tax
returns relating to the Station which are required to be filed, and they have
paid or caused to be paid all taxes shown on those returns or on any tax
assessment received by them to the extent that such taxes have become due, or
have set aside on their books adequate reserves (segregated to the extent
required by generally accepted accounting principles) with respect thereto.
There are no governmental investigations or other legal, administrative, or tax
proceedings pursuant to which Sellers are or could be made liable for any taxes,
penalties, interest, or other charges, the liability for which could extend to
Buyer as transferee of the business of the Station, and no event has occurred
that could impose on Buyer any transferee liability for any taxes, penalties, or
interest due or to become due from Sellers.
3.15 Claims and Legal Actions. Except for any FCC rule-making
proceedings generally affecting the broadcasting industry, there is no claim,
legal action, counterclaim, suit, arbitration, governmental investigation or
other legal, administrative, or tax proceeding, nor any order, decree or
judgment, in progress or pending, or to the knowledge of Sellers threatened,
against or relating to Sellers with respect to the ownership or operation of the
Station or otherwise relating to the Assets or the business or operations of the
Station, nor do Sellers know or have reason to be aware of any basis for the
same. In particular, but without limiting the generality of the foregoing,
there are no applications, complaints or proceedings pending or, to the best of
their knowledge, threatened (i) before the FCC relating to the business or
operations of the Station other than rule making proceedings which affect the
radio industry generally, (ii) before any federal or state agency relating to
the business or operations of the Station involving charges of illegal
discrimination under any federal or state employment laws or regulations, or
(iii) before any federal, state, or local agency relating to the business or
operations of the Station involving zoning issues under any federal, state, or
local zoning law, rule, or regulation.
3.16 Environmental Matters.
(a) Sellers have complied in all material respects with all
laws, rules, and regulations of all federal, state, and local governments (and
all agencies thereof) concerning the environment, public health and safety, and
employee health and safety, and no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been filed or commenced
against Sellers in connection with the ownership or operation of the Station
alleging any failure to comply with any such law, rule, or regulation.
(b) To the best of Sellers' knowledge, Sellers have no
liability relating to the ownership and operation of the Station (and there is
no basis related to the past or present operations, properties, or facilities
of Sellers for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against Sellers giving
rise to any such liability) under any law, rule, or regulation of any federal,
state, or local government (or agency thereof) concerning release or threatened
release of hazardous substances, public health and safety, or pollution or
protection of the environment.
(c) To the best of Sellers's knowledge, Sellers have no
liability relating to the ownership and operation of the Station (and Sellers
have not handled or disposed of any substance, arranged for the disposal of any
substance, or owned or operated any property or facility in any
9
<PAGE> 11
manner that could form the basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand (under the
common law or pursuant to any statute) against Sellers giving rise to any such
liability) for damage to any site, location, or body of water (surface of
subsurface) or for illness or personal injury.
(d) To the best of Sellers' knowledge, Sellers have no
liability relating to the ownership and operation of the Station (and there is
no basis for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against Sellers giving rise to any
such liability) under any law, rule, or regulation of any federal, state, or
local government (or agency thereof) concerning employee health and safety.
(e) To the best of Sellers' knowledge, Sellers have no
liability relating to its ownership and operation of the Station (and Sellers
have not exposed any employee to any substance or condition that could form the
basis for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand (under the common law or pursuant to
statute) against Sellers giving rise to any such liability) for any illness or
personal injury to any employee.
(f) In connection with its ownership or operation of the
Station, Sellers have obtained and been in compliance with all of the terms and
conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all federal, state, and local laws, rules,
and regulations (including all codes, plans, judgments, orders, decrees,
stipulations, injunctions, and charges thereunder) relating to public health
and safety, worker health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes.
(g) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by Sellers in
connection with its ownership and operation of the Station or, to the best of
Sellers' knowledge, by any other party on any Real Property.
3.17 Compliance with Laws. Sellers have complied in all material
respects with the Licenses and all federal, state, and local laws, rules,
regulations, and ordinances applicable or relating to the ownership and
operation of the Station. Neither the ownership or use of the properties of the
Station nor the conduct of the business or operations of the Station conflicts
with the rights of any other person or entity.
3.18 Conduct of Business in Ordinary Course. Since January 1, 1995,
Sellers have conducted the business and operations of the Station only in the
ordinary course and have not:
(a) Suffered any material adverse change in the business,
assets, or properties of the Station, including any damage, destruction, or
loss affecting any assets used or useful in the conduct of the business of the
Station;
(b) Made any material increase in compensation payable or to
become payable to any of the employees of the Station, or any bonus payment
made or promised to any employee of the
10
<PAGE> 12
Station, or any material change in personnel policies, employee benefits, or
other compensation arrangements affecting the employees of the Station;
(c) Made any sale, assignment, lease, or other transfer of
any of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(d) Canceled any debts owed to or claims held by Sellers with
respect to the Station, except in the normal and usual course of business;
(e) Suffered any material write-down of the value of any
Assets or any material write-off as uncollectible of any accounts receivable of
the Station; or
(f) Transferred or granted any right under, or entered into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right relating to the Station.
3.19 Transactions with Affiliates. Except as disclosed on Schedule
3.19, Sellers have not been involved in any business arrangement or relationship
relating to the Station with any affiliate of Sellers, and no affiliate of
Sellers owns any property or right, tangible or intangible, which is used in the
business of the Station. As used in this paragraph, "affiliate" has the meaning
set forth in Rule 12b-2 promulgated under the Securities and Exchange Act of
1934.
3.20 Broker. Neither Sellers nor any person acting on Sellers' behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement, except for a
commission payable by Sellers to Media Venture Partners.
3.21 Full Disclosure. No representation or warranty made by Sellers
in this Agreement or in any certificate, document, or other instrument furnished
or to be furnished by Sellers pursuant hereto contains or will contain any
untrue statement of a material fact, or omits or will omit to state any material
fact and required to make any statement made herein or therein not misleading.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida and at Closing will be duly qualified to conduct business as a
foreign corporation in the State of Arizona. Buyer has all requisite power and
authority to execute and deliver this Agreement and the Escrow Agreement and
the documents contemplated hereby and thereby, and to perform and comply with
all of the terms, covenants, and conditions to be performed and complied with
by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement and the Escrow Agreement by Buyer have been
duly authorized by all necessary actions on the part of Buyer. This Agreement
and the Escrow Agreement have been duly executed and delivered by Buyer and
constitute the legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms except as the
enforceability of this Agreement
11
<PAGE> 13
and the Escrow Agreement may be affected by bankruptcy, insolvency, or similar
laws affecting creditors' rights generally and by judicial discretion in the
enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the Escrow Agreement and the documents contemplated hereby and thereby
(with or without the giving of notice, the lapse of time, or both): (i) do not
require the consent of any third party; (ii) will not conflict with the
Articles of Incorporation or Bylaws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Full Disclosure. No representation or warranty made by Buyer in
this Agreement or in any certificate, document, or other instrument furnished
or to be furnished by Buyer pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
4.5 Buyer Qualifications. Buyer is legally, financially and
otherwise qualified to be the licensee of, acquire, own and operate the Station
under the Communications Act of 1934, as now in effect, and the rules,
regulations and policies of the FCC as now in effect. Buyer knows of no fact
that would, under existing law and the existing rules, regulations, policies
and procedures of the FCC disqualify Buyer as an assignee of the FCC Licenses
or as the owner and operator of the Station.
SECTION 5 OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Sellers agree that, between the date of this
Agreement and the Closing Date, Sellers shall operate the Station diligently in
the ordinary course of business in accordance with past practices (except where
such conduct would conflict with the following covenants or with Sellers' other
obligations under this Agreement), and in accordance with the other covenants
in this Section 5.
5.2 Compensation. Sellers shall not increase the compensation,
bonuses, or other benefits payable or to be payable to any person employed in
connection with the conduct of the business or operations of the Station,
except in accordance with past practices.
5.3 Contracts. Sellers will not enter into any contract or
commitment relating to the Station or the Assets, or amend or terminate any
Contract (or waive any material right thereunder), or incur any obligation
(including obligations relating to the borrowing of money or the guaranteeing
of indebtedness) that will be binding on Buyer after Closing, except for cash
time sales agreements made in the ordinary course of business. Prior to the
Closing Date, Sellers shall deliver to Buyer a list of all Contracts entered
into between the date of this Agreement and the Closing Date, together with
copies of such Contracts.
5.4 Disposition of Assets. Sellers shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except where no longer used
or useful in the business or operations of the Station or in connection with
the acquisition of replacement property of equivalent kind and value.
5.5 Encumbrances. Sellers shall not create, assume or permit to
exist any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets,
12
<PAGE> 14
except for (i) liens disclosed on Schedule 3.5 and Schedule 3.6, which shall be
removed prior to the Closing Date, (ii) liens for current taxes not yet due and
payable, and (iii) mechanics' liens and other similar liens, which shall be
removed prior to the Closing Date.
5.6 Licenses. Sellers shall not cause or permit, by any act or
failure to act, any of the Licenses to expire or to be revoked, suspended, or
modified, or take any action that could cause the FCC or any other governmental
authority to institute proceedings for the suspension, revocation, or adverse
modification of any of the Licenses. Sellers shall not fail to prosecute with
due diligence any applications to any governmental authority in connection with
the operation of the Station.
5.7 Rights. Sellers shall not waive any right relating to the
Station or any of the Assets. Sellers shall not cause, by any act or failure
to act, any cable system located within the Station's Area of Dominant
Influence to refuse to carry the Station's signal.
5.8 No Inconsistent Action. Sellers shall not take any action that
is inconsistent with its obligations under this Agreement or that could hinder
or delay the consummation of the transactions contemplated by this Agreement.
5.9 Access to Information. Sellers shall give Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
to the Assets and to all other properties, equipment, books, records,
Contracts, and documents relating to the Station for the purpose of audit and
inspection, including inspections incident to the environmental study described
in Section 6.6 and the engineering study described in Section 6.7, and will
furnish or cause to be furnished to Buyer or its authorized representatives all
information with respect to the affairs and business of the Station that Buyer
may reasonably request (including any financial reports and operations reports
produced with respect to the affairs and business of the Station). Without
limiting the generality of the foregoing, Sellers shall give Buyer and its
counsel, accountants and other authorized representatives reasonable access to
Sellers' financial records and Sellers' employees, counsel, accountants and
other representatives for the purpose of preparing and auditing such financial
statements as Buyer determines, in its sole judgment, are required or advisable
to comply with federal or state securities laws and the rules and regulations
of securities markets as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
5.10 Maintenance of Assets. Sellers shall use their best efforts and
take all reasonable actions to maintain all of the Assets in good condition
(ordinary wear and tear excepted), and use, operate, and maintain all of the
Assets in a reasonable manner and in accordance with the terms of the FCC
Licenses, all rules and regulations of the FCC and generally accepted standards
of good engineering practice. Sellers shall maintain inventories of spare
parts and expendable supplies at levels consistent with past practices. If any
loss, damage, impairment, confiscation, or condemnation of or to any of the
Assets occurs, Sellers shall repair, replace, or restore the Assets to their
prior condition as represented in this Agreement as soon thereafter as possible,
and Sellers shall use the proceeds of any claim under any insurance policy
solely to repair, replace, or restore any of the Assets that are lost, damaged,
impaired, or destroyed.
5.11 Insurance. Sellers shall maintain the existing insurance
policies on the Station and the Assets.
5.12 Consents. Sellers shall obtain the Consents and the estoppel
certificates described in Section 8.2(b), without any change in the terms or
conditions of any Contract or License that could be less advantageous to the
Station than those pertaining under the Contract or License as in effect on
13
<PAGE> 15
the date of this Agreement. Sellers shall promptly advise Buyer of any
difficulties experienced in obtaining any of the Consents and of any conditions
proposed, considered, or requested for any of the Consents. Upon Buyer's
request, Sellers shall cooperate with Buyer and use their best efforts to
obtain from the lessors under each Real Property lease such estoppel
certificates and consents to the collateral assignment of the lessee's interest
under each such lease as Buyer's senior lenders may request.
5.13 Books and Records. Sellers shall maintain their books and
records relating to the Station in accordance with past practices.
5.14 Notification. Sellers shall promptly notify Buyer in writing of
any unusual or material developments with respect to the business or operations
of the Station, and of any material change in any of the information contained
in Sellers' representations and warranties contained in Section 3 of this
Agreement.
5.15 Financial Information. Sellers shall furnish to Buyer within
twenty days after the end of each month ending between the date of this
Agreement and the Closing Date a statement of income and expense and a statement
of Operating Cash Flow for the month just ended and such other financial
information (including information on payables and receivables) as Buyer may
reasonably request. All financial information delivered by Sellers to Buyer
pursuant to this Section shall be prepared from the books and records of Sellers
in accordance with generally accepted accounting principles consistently
applied, shall accurately reflect the books, records, and accounts of the
Station, shall be complete and correct in all material respects, and shall
present fairly the financial condition of the Station as at their respective
dates and the results of operations for the periods then ended.
5.16 Compliance with Laws. Sellers shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Station.
5.17 Financing Leases. Sellers will satisfy at or prior to Closing
all outstanding obligations under capital and financing leases with respect to
any of the Assets and obtain good title to the Assets leased by Sellers pursuant
to those leases so that those Assets shall be transferred to Buyer at Closing
free of any interest of the lessors.
5.18 Programming. Sellers shall not make any material changes in the
broadcast hours or in the percentages of types of programming broadcast by the
Station, or make any other material change in the Station's programming
policies, except such changes as in the good faith judgment of the Sellers are
required by the public interest.
5.19 Preservation of Business. Sellers shall use their best efforts
to preserve the business and organization of the Station and use their best
efforts to keep available to the Station its present employees and to preserve
the audience of the Station and the Station's present relationships with
suppliers, advertisers, and others having business relations with it, to the end
that the business, operations, and prospects of the Station shall be unimpaired
at the Closing Date. The ordinary and customary operating, marketing,
promotional, sales, and advertising practices of the Station shall be
maintained.
5.20 Collection of Accounts Receivable. Sellers shall collect the
accounts receivable of the Station only in the ordinary course consistent with
its past practices and will not take any action designed or likely to accelerate
the collection of its accounts receivable.
14
<PAGE> 16
5.21 Personnel Recommendations. Sellers shall promptly notify Buyer
as personnel vacancies occur at the Station and consider for employment all
personnel recommended by Buyer for such vacant positions.
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC.
(b) Sellers and Buyer shall promptly prepare an appropriate
application for the FCC Consent and shall file the application with the FCC
within five (5) business days of the execution of this Agreement. The parties
shall prosecute the application with all reasonable diligence and otherwise use
their best efforts to obtain a grant of the application as expeditiously as
practicable. Each party agrees to comply with any condition imposed on it by
the FCC Consent, except that no party shall be required to comply with a
condition if (1) the condition was imposed on it as the result of a
circumstance the existence of which does not constitute a breach by the party
of any of its representations, warranties, or covenants under this Agreement,
and (2) compliance with the condition would have a material adverse effect upon
it. Buyer and Sellers shall oppose any requests for reconsideration or
judicial review of the FCC Consent. If the Closing shall not have occurred for
any reason within the original effective period of the FCC Consent, and neither
party shall have terminated this Agreement under Section 9, the parties shall
jointly request an extension of the effective period of the FCC Consent. No
extension of the FCC Consent shall limit the exercise by either party of its
rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of Sellers until the Closing.
6.3 Accounts Receivable.
(a) Collection. At the Closing, Sellers shall designate
Buyer as its agent solely for the purposes of collecting Sellers' Receivables.
Buyer shall make reasonable efforts to collect Sellers' Receivables during the
"Collection Period," which shall be the period beginning on the Closing Date
and ending on the last day of the sixth calendar month beginning after the
Closing Date. Buyer shall not be obligated to use any extraordinary efforts to
collect any of Sellers' Receivables or to refer any of Sellers' Receivables to
a collection agency or attorney for collection, and Buyer shall not make any
such referral or compromise, nor settle or adjust the amount of any of Sellers'
Receivables, except with the approval of Sellers. During the Collection
Period, neither Sellers nor their agents shall make any direct solicitation
with respect to Sellers' Receivables. All payments received from advertisers
on the Station shall first be applied to Sellers' Receivables, if any, due from
such advertisers.
(b) Payments to Sellers. On or before the fifteenth day
after the end of each full calendar month during the Collection Period, Buyer
shall furnish to Sellers (i) a list of the amounts collected before the end of
such month with respect to Sellers' Receivables, and (ii) the amount collected
during such month with respect to Sellers' Receivables. On or before the
fifteenth day after the end of the Collection Period, Buyer shall furnish
Sellers with a list of all of Sellers' Receivables which remain uncollected at
the end of the Collection Period.
15
<PAGE> 17
(c) Further Obligations. After the expiration of the
Collection Period, Buyer shall have no further obligation hereunder other than
to make the payment under Section 6.3(b) and to remit to Sellers any payments
with respect to any of Sellers' Receivables that Buyer subsequently receives,
and Sellers itself shall act to collect any of Sellers' Receivables that
continue to remain uncollected.
6.4 Risk of Loss. (a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Sellers at all times prior to the Closing.
(b) If any damage or destruction of the Assets or any other event
occurs which (i) causes the Station to cease broadcasting operations for a
period of three or more days or(ii) prevents in any material respect signal
transmission by the Station in the normal and usual manner and Sellers fail to
restore or replace the Assets so that normal and usual transmission is resumed
within seven days of the damage, destruction or other event, Buyer, in its sole
discretion, may (x) terminate this Agreement forthwith without any further
obligations hereunder upon written notice to Sellers, in which event all funds
held by the Escrow Agent pursuant to the Escrow Agreement, including all
interest and other proceeds from the investment of such funds, shall be
immediately returned to Buyer, or (y) proceed to consummate the transaction
contemplated by this Agreement and complete the restoration and replacement of
the Assets after the Closing Date, in which event Sellers shall deliver to
Buyer all insurance proceeds received in connection with such damage,
destruction or other event.
6.5 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.6 Environmental Audit. Buyer may, at its option and expense,
retain an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Station. If the survey discloses
any material environmental hazard or material possibility of future liability
for environmental damages or clean-up costs, Buyer shall so notify Sellers as
soon as practicable.
6.7 Engineering Study. Buyer may, at its option and expense, retain
an engineering firm to conduct a proof of performance study of the Station and
to prepare a report on the Station's compliance with customary engineering
practices and all applicable FCC rules, regulations, prescribed practices, and
technical standards. If the survey discloses any material deficiencies in the
operations or equipment of the Station, Buyer shall so notify Sellers as soon
as practicable.
6.8 Cooperation. Buyer and Sellers shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Sellers shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, Buyer shall have no obligation (i)
16
<PAGE> 18
to expend funds to obtain any of the Consents or (ii) to agree to any adverse
change in any License or Assumed Contract to obtain a Consent required with
respect thereto.
6.9 Bulk Sales Law. Buyer hereby wives compliance by Seller with the
provisions of the "Bulk Sales" or similar laws of the State of Arizona.
Sellers agree to indemnify Buyer and hold it harmless against any and all
claims, losses, damages, liabilities, costs and expenses incurred by Buyer or
any affiliate as a result of Sellers' failure to comply with any such "Bulk
Sales" or similar laws.
6.10 Real Property Leases. At Buyer's request and expense, Sellers
will cooperate with Buyer and use their best efforts to cause all lease
agreements relating to the Real Property to be recorded in the appropriate
public recording offices and to obtain from the lessors under such lease
agreements such estoppel certificates and consent agreement(s) to the collateral
assignment of the lessee's interest under each such lease as Buyer's lenders may
reasonably request.
6.11 Sales Tax Filings. Sellers shall continue to file Arizona sales
tax returns with respect to the Station in accordance with Sellers' past
practices and shall concurrently deliver copies of all such returns to Buyer.
6.12 Access to Books and Records. Sellers shall provide Buyer access
and the right to copy for a period of three years from the Closing Date any
books and records relating to the Assets. Buyer shall provide Sellers access
and the right to copy for a period of three years from the Closing Date any
books and records relating to the Assets.
6.13 Appraisal. Buyer and Sellers agree to allocate the Purchase
Price for tax and recording purposes in accordance with an appraisal to be
conducted by an appraisal firm selected and retained by Buyer with experience
in the valuation and appraisal of television station assets.
6.14 Broker. Buyer and Sellers each represents and warrants that
neither it nor any person or entity acting on its behalf has incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transactions contemplated by this Agreement, except for a commission payable
to Media Venture Partners by Sellers.
6.15 Non-competition Agreement. At Closing, Buyer and Sellers shall
enter into a Non-competition Agreement in the form of Schedule 6.16 and $28,000
of the Purchase Price shall be allocated to the covenants of Sellers set forth
therein on the Closing Date.
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS AT
CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at
the Closing are subject at Buyer's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Sellers contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Sellers shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
17
<PAGE> 19
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied
with by Buyer under Section 6.1 hereof, Sellers shall have complied with any
conditions imposed on it by the FCC Consent, and the FCC Consent shall have
become a Final Order.
(e) Governmental Authorizations. Sellers shall be the holder
of all Licenses and there shall not have been any modification of any License
that could have an adverse effect on the Station or the conduct of its business
and operations. No proceeding shall be pending the effect of which could be to
revoke, cancel, fail to renew, suspend, or modify adversely any License.
(f) Deliveries. Sellers shall have made or stand willing to
make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement and
the Closing Date, there shall have been no material adverse change in the
business, assets, or properties of the Station, including any damage,
destruction, or loss affecting any assets used or useful in the conduct of the
business of the Station.
7.2 Conditions to Obligations of Sellers. All obligations of Sellers
at the Closing are subject at Sellers' option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing to
make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Sellers of any conditions that need not be complied
with by Sellers under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
18
<PAGE> 20
SECTION 8 CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00 a.m.
on a date, to be set by Buyer on at least five days' written notice to Sellers,
that is (1) not earlier than the first business day after the FCC Consent is
granted, and (2) not later than ten business days following the date upon which
the FCC Consent has become a Final Order. If Buyer fails to specify the date
for Closing pursuant to the preceding sentence prior to the fifth business day
after the date upon which the FCC Consent becomes a Final Order, the Closing
shall take place on the tenth business day after the date upon which the FCC
Consent becomes a Final Order.
(b) Closing Place. The Closing shall be held at the offices
of Dow, Lohnes & Albertson in Washington D.C., or any other place that is
agreed upon by Buyer and Sellers.
8.2 Deliveries by Sellers. Prior to or on the Closing Date, Sellers
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty bills of
sale, deeds, motor vehicle titles, assignments, and other transfer documents
which shall be sufficient to vest good and marketable title to the Assets in
the name of Buyer, free and clear of all mortgages, liens, restrictions,
encumbrances, claims, and obligations except for liens for current taxes not
yet due and payable;
(b) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property and estoppel certificates of contracting parties to those Assumed
Contracts listed in Schedule 3.7 that are designated to indicate that estoppel
certificates are required under this paragraph;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Delroy by its President, certifying (1)
that the representations and warranties of Sellers contained in this Agreement
are true and complete in all material respects as of the Closing Date as though
made on and as of that date; and (2) that Sellers have in all material respects
performed and complied with all of their obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to
the Closing Date;
(e) Tax, Lien, and Judgment Searches. Results of a search
for tax, lien, and judgment filings in the Secretary of State's records of the
State of Arizona and in the records of those counties in Arizona in which any
of the Assets are located, such searches having been made no earlier than
fifteen days prior to the Closing Date;
(f) Licenses, Contracts, Business Records, Etc. Copies of
all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by
Sellers in connection with its operations;
(g) Accounts Receivable. A complete and accurate list of the
Station's accounts receivable as of a date no more than five business days
prior to the Closing Date, including, with
19
<PAGE> 21
respect to each of the accounts receivable, the account number, date of
issuance, name and address of account debtor, aggregate amount, and balance
due;
(h) Opinion of Counsel. An Opinion of Sellers' counsel dated
as of the Closing Date, substantially in the form of Schedule 8.2(h) hereto;
(j) Non-competition Agreement. The Non-competition Agreement
in the form as Schedule 6.15, duly executed on behalf of Sellers; and
(k) Lenders Certificates. Such certificates and
confirmations to Buyer's senior lenders as Buyer may reasonably request in
connection with obtaining financing for the performance of its payment
obligations hereunder.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Sellers the following, in form and substance reasonably
satisfactory to Sellers and their counsel:
(a) Purchase Price. The Purchase Price as provided in
Section 2.4(a);
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Sellers' obligations under the Licenses and Assumed Contracts arising on or
after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by its President, certifying (1) that
the representations and warranties of Buyer contained in this Agreement are
true and complete in all material respects as of the Closing Date as though
made on and as of that date, and (2) that Buyer has in all material respects
performed and complied with all of its obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to
the Closing Date;
(d) Opinion of Counsel. An opinion of Buyer's counsel dated
as of the Closing Date, substantially in the form of Schedule 8.3(g) hereto.
(e) Non-competition Agreement. The Non-competition Agreement
in the form of Schedule 6.15 duly executed by Buyer and the payment of $28,000
to Sellers thereunder.
SECTION 9 TERMINATION
9.1 Termination by Sellers. This Agreement may be terminated by
Sellers and the purchase and sale of the Station abandoned, if Sellers are not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Sellers set
forth in this Agreement have not been satisfied or waived in writing by
Sellers.
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
April 30, 1996.
20
<PAGE> 22
9.2 Termination by Buyer. This Agreement may be terminated by Buyer
and the purchase and sale of the Station abandoned, if Buyer is not then in
material default, upon written notice to Sellers, upon the occurrence of any of
the following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Buyer set
forth in this Agreement have not been satisfied or waived in writing by Buyer.
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
April 30, 1996.
(d) Interruption of Service. If any event shall have
occurred that prevented signal transmission of the Station in the normal and
usual manner as described in Section 6.4(b) above.
(e) Environmental Hazards. Buyer shall have notified Sellers
of material environmental hazards or the material possibility of environmental
damages or clean-up costs, as indicated in the environmental study described in
Section 6.6, within 30 days prior to the Closing Date, and the cause thereof
shall not have been remedied prior to the Closing Date.
(f) Technical Deficiencies. Buyer shall have notified
Sellers of material deficiencies in the operations or equipment of the Station,
as indicated in the engineering study described in Section 6.7, within 30 days
prior to the Closing Date, and the cause thereof shall not have been remedied
prior to the Closing Date.
9.3 Rights on Termination. If this Agreement is terminated pursuant
to Section 9.1 or Section 9.2 and neither party is in material breach of any
provision of this Agreement, the parties hereto shall not have any further
liability to each other with respect to the purchase and sale of the Assets.
If this Agreement is terminated by Sellers due to Buyer's material breach of
any provision of this Agreement, then the payment to Sellers of $100,000
pursuant to Section 9.4(c) below shall be liquidated damages and shall
constitute full payment and the exclusive remedy for any damages suffered by
Sellers by reason of Buyer's material breach of this Agreement. Sellers and
Buyer agree in advance that actual damages would be difficult to ascertain and
that the amount of $100,000 is a fair and equitable amount to reimburse Sellers
for damages sustained due to Buyer's material breach of this Agreement. If
this Agreement is terminated by Buyer due to Sellers' material breach of any
provision of this Agreement, Buyer shall have all rights and remedies available
at law or equity.
9.4 Escrow Deposit. Simultaneously with the execution and delivery
of this Agreement, Buyer has deposited with Escrow Agent the sum of $100,000 in
accordance with an Escrow Agreement among Buyer, Sellers and the Escrow Agent
(the "Escrow Agreement"). All such funds deposited with the Escrow Agent shall
be held and disbursed in accordance with the terms of the Escrow Agreement and
the following provisions:
(a) At the Closing, all amounts held by the Escrow Agent pursuant to
the Escrow Agreement, including any interest or other proceeds from the
investment of funds held by the Escrow Agent, shall be disbursed to or at the
direction of Buyer.
(b) If this Agreement is terminated pursuant to Section 9.1 or 9.2
and Buyer is not in material breach of any provision of this Agreement, all
amounts held by the Escrow Agent pursuant
21
<PAGE> 23
to the Escrow Agreement, including any interest or other proceeds from the
investment of funds held by the Escrow Agent, shall be disbursed to or at the
direction of Buyer.
(c) If this Agreement is terminated by Sellers due to Buyer's
material breach of this Agreement, then all amounts held by the Escrow Agent
pursuant to the Escrow Agreement shall be disbursed to or at the direction of
Sellers as liquidated damages under Section 9.3 above and any interest or other
proceeds from the investment of funds held by the Escrow Agent shall be
disbursed by the Escrow Agent to or at the direction of Buyer.
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
eighteen months. Any investigations by or on behalf of any party hereto shall
not constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
Sellers shall affect Buyer's right to rely on any representation or warranty
made by Sellers or relieve Sellers of any obligations under this Agreement as
the result of a breach of any of its representations and warranties.
10.2 Indemnification by Sellers. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, Sellers hereby agrees to indemnify and hold Buyer
harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Sellers contained in this Agreement or in any certificate,
document, or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Sellers not assumed by Buyer
pursuant to this Agreement, including any liabilities arising at any time under
any Contract not included in the Assumed Contracts.
(c) Any loss, liability, obligation, or cost resulting from
the failure of Sellers to comply with the provisions of any bulk sales law
applicable to the transfer of the Assets.
(d) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station prior to the Closing, including
any liabilities arising under the Licenses or the Assumed Contracts which
relate to events occurring prior the Closing Date.
(e) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees
and expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Sellers or
any information Sellers may have, Buyer hereby agrees to indemnify and hold
Sellers harmless against and with respect to, and shall reimburse Sellers for:
22
<PAGE> 24
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, document,
or instrument delivered to Sellers under this Agreement.
(b) Any and all obligations of Sellers assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station on and after the Closing.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim.
If the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within five days after
written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to which
the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
23
<PAGE> 25
(e) The indemnifications rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Specific Performance. The parties recognize that if Sellers
breach this Agreement and refuse to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other
remedies that may be available, including money damages, to obtain specific
performance of the terms of this Agreement. If any action is brought by Buyer
to enforce this Agreement, Sellers shall waive the defense that there is an
adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
10.7 Threshold. Neither Buyer nor Sellers shall be entitled to
recover under this Agreement for any indemnification claims until the aggregate
losses, liabilities or damages exceed Fifty Thousand Dollars ($50,000) (the
"Threshold"), whereupon Buyer or Sellers shall be entitled to indemnification
hereunder for indemnification claims from the other party for any losses,
liabilities or damages suffered by such party in excess of the Threshold.
10.8 Maximum Liability. Buyer's or Sellers' maximum liability for
indemnification claims under this Agreement shall be One Million Four Hundred
Fifty Thousand Dollars ($1,400,000).
SECTION 11 MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Sellers
to Buyer pursuant to this Agreement shall be paid by the party upon which such
tax is imposed by law. Except as otherwise provided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents, and representatives, and each
party shall be responsible for all fees or commissions payable to any finder,
broker, advisor, or similar person retained by or on behalf of such party.
11.2 Arbitration. Except as otherwise provided to the contrary below,
any dispute arising out of or related to this Agreement that Sellers and Buyer
are unable to resolve by themselves shall be settled by arbitration by a panel
of three (3) neutral arbitrators who shall be selected in accordance with the
procedures set forth in the commercial arbitration rules of the American
Arbitration Association. The persons selected as arbitrators shall have prior
experience in the broadcasting industry but need not be professional
arbitrators, and persons such as lawyers, accountants, brokers and bankers shall
be acceptable. Before undertaking to resolve the dispute, each arbitrator shall
be duly sworn faithfully and fairly to hear and examine the matters in
controversy and to make a just award according to the best of his or her
understanding. The arbitration hearing shall be conducted in accordance with
the commercial arbitration rules of the American Arbitration Association. The
written decision of a majority of the arbitrators shall be final and binding on
Sellers and Buyer. The costs and expenses of the arbitration proceeding shall
be assessed between Sellers and Buyer in a manner to be decided by a majority of
the arbitrators, and the assessment shall be set forth in the decision and award
of the arbitrators. Judgment on the award, if it is not paid within thirty
days,
24
<PAGE> 26
may be entered in any court having jurisdiction over the matter. No action at
law or suit in equity based upon any claim arising out of or related to this
Agreement shall be instituted in any court by Sellers or Buyer against the
other except (i) an action to compel arbitration pursuant to this Section, (ii)
an action to enforce the award of the arbitration panel rendered in accordance
with this Section, or (iii) a suit for specific performance pursuant to Section
10.5.
11.3 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed to
have been given on the date of personal delivery or the date set forth in the
records of the delivery service or on the return receipt, and (d) addressed as
follows:
If to Sellers: Michael C. Gelfand, M.D.
4915 Auburn Ave., Suite 200
Bethesda, MD 20814
With a copy to: Thomas Moran, Esq.
Wilkinson, Barker, Knauer & Quinn
1735 New York Ave., N.W.
Washington, D.C. 20006
If to Buyer: Channel 13 of Flagstaff, Inc.
14444 66th Street, North
Clearwater, FL 34624
With a copy to: John Feore, Esq.
Dow, Lohnes & Albertson
1255 23rd Street, N.W.
Washington, D.C. 20037-1194
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.3.
11.4 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto; provided,
however, that Buyer may assign its rights and obligations under this Agreement
to one or more subsidiaries or commonly controlled affiliates of Buyer without
seeking or obtaining Sellers' prior approval in which event Buyer shall have no
further obligation hereunder and Buyer may collaterally assign its rights and
interests hereunder to its senior lenders without seeking or obtaining Sellers'
prior approval. Upon any permitted assignment by Buyer or Sellers in accordance
with this Section 11.4, all references to"Buyer" herein shall be deemed to be
references to Buyer's assignee and all references to "Sellers" herein shall be
deemed to be references to Sellers's assignee, as the case may be. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
Sellers, any additional bills of sale, deeds, or other transfer documents that,
in the reasonable opinion of Buyer, may be necessary to ensure, complete, and
evidence the full and effective transfer of the Assets to Buyer pursuant to this
Agreement.
25
<PAGE> 27
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for ease
of reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Sellers with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires
or permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in its judgement be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.11 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
11.12 Guaranty of Paxson Communications Corporation.
(a) As an inducement for Seller to enter into this Agreement
and in consideration of other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Paxson Communications Corporation
("PCC") agrees as follows:
(1) PCC hereby guarantees the full, complete, and
timely performance by Buyer of each and every obligation of Buyer under this
Agreement. If any default shall be made by Buyer in the performance of any of
such obligations, then PCC will itself perform or cause to be
26
<PAGE> 28
performed such obligation upon receipt of notice from Sellers or either Company
specifying in summary form the default.
(2) PCC waives presentment, protest, demand, or
action or delinquency in respect of any of the obligations of Buyer under this
Agreement. PCC waives all notices of nonperformance, notices of protest,
notices of dishonor, and notices of acceptance of this guaranty. Upon any
default by Buyer in its obligations under this Agreement, Sellers may proceed
directly and at once against PCC without proceeding first against Buyer.
(3) This guaranty shall be deemed a continuing
guaranty, and the above consents and waivers of PCC shall remain in full force
and effect until the satisfaction in full of all obligations of Buyer under
this Agreement.
(b) PCC hereby represents and warrants to Sellers and the
Companies as follows:
(1) This Agreement has been duly and validly
executed and delivered by PCC and constitutes its legal, valid, and binding
agreement, enforceable in accordance with its terms, except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally, and by judicial discretion
in the enforcement of equitable remedies.
(2) The execution, delivery and performance by PCC
of this Agreement (A) do not require the consent of any third party; (B) will
not conflict with any provision of the Certificate of Incorporation or Bylaws
of PCC; (C) will not conflict with, result in a breach of, or constitute a
default under, any law, judgment, order, ordinance, injunction, decree, rule,
regulation or ruling of any court of governmental instrumentality; and (D) will
not conflict with, constitute grounds for termination of, result in a breach
of, constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license, or
permit to which PCC is a party of by which PCC may be bound.
27
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
Channel 13 of Flagstaff, Inc.
By: /s/ James L. West /s/ Michael C. Gelfand, M.D.
--------------------------------- ----------------------------------
Michael C. Gelfand, M.D.
Its: Chairman
--------------------------------
Del Ray Television Company, Inc. For Purposes of Section 11.12 Only
Paxson Communications Corporation
By: /s/ Michael C. Gelfand, M.D. By: /s/ Lowell W. Pasxon
--------------------------------- -----------------------------
Its: President
--------------------------------
28
<PAGE> 1
EXHIBIT 10.54
<PAGE> 2
EXHIBIT 10.54
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
WHITEHEAD MEDIA, INC.
AND
NGM TELEVISION PARTNERS, LIMITED
FOR
TELEVISION STATION WNGM-TV,
ATHENS, GEORGIA
OCTOBER 2, 1995
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Accounts Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assumed Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Consents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Consent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Final Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Intangibles" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Permitted Liens" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Manner of Determining Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Organization, Standing and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Title to and Condition of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Title to and Condition of Tangible Personal Property . . . . . . . . . . . . . . . . . . . . 8
3.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
- i -
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Employees and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 3A. REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNER . . . . . . . . . . . . . . . . . . . . . 13
3A.1 Organization, Standing and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3A.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3A.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1 Organization, Standing and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Buyer Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.4 Trade Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.5 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.6 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.7 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.8 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.9 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.10 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.11 Maintenance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.13 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.14 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.15 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.17 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.18 Personnel Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.19 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.20 Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.21 Financing Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
- ii -
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 Control of the Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.5 Environmental and Engineering Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.6 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.7 State Tax Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.9 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.10 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING . . . . . . . . . . . . . . . . . . . . 20
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(c) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(d) FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(e) Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(f) Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(g) Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Television Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------------
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(e) Transfer Application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Closing Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Transfer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(d) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(e) Licenses, Contracts, Business Records, Etc. . . . . . . . . . . . . . . . . . . . . 23
(f) Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(g) Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(a) Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(b) Assumption Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(d) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(e) Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
- iii -
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(b) Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(c) Upset Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(b) Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(c) Upset Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(d) Environmental Hazards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(e) Technical Deficiencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(f) Casualty Termination Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 Escrow Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.4 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . 26
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.6 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.12 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
- iv -
<PAGE> 7
LIST OF SCHEDULES
<TABLE>
<CAPTION>
<S> <C> <C>
Schedule 2.2 -- Excluded Property
Schedule 3.3 -- Consents
Schedule 3.4 -- Licenses
Schedule 3.5 -- Real Property
Schedule 3.6 -- Tangible Personal Property
Schedule 3.7 -- Assumed Contracts
Schedule 3.9 -- Intangibles
Schedule 3.10 -- Insurance Policies
Schedule 3.12 -- Employee Matters
Schedule 6.10 -- Noncompetition Agreement
Schedule 8.2(f) -- Form of Opinion of Seller's Counsel
Schedule 8.3(d) -- Form of Opinion of Buyer's Counsel
Schedule 9.3 -- Escrow Agreement
</TABLE>
- v -
<PAGE> 8
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of October 2, 1995, by and
between Whitehead Media, Inc., a Florida corporation ("Buyer"), and NGM
Television Partners, Limited, an Alabama partnership ("Seller").
RECITALS
A. Seller is the licensee of and owns and operates television
station WNGM-TV, Athens, Georgia (the "Station"), pursuant to licenses issued
by the Federal Communications Commission ("FCC").
B. Georgia Mountain Corporation is a Georgia corporation and is
the general partner of Seller ("General Partner") and there are four limited
partners.
C. Seller and General Partner have pending at the FCC a transfer
of control application (FCC File No. BTCCT-950508KF) and the grant and closing
of this application is essential to completing the transaction contemplated by
this Agreement.
D. Seller desires to sell, and Buyer wishes to buy, substantially
all the assets that are owned by Seller or in which Seller has a transferable
interest and which are used or useful in the business or operations of the
Station, for the price and on the terms and conditions set forth in this
Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Seller, intending to be
bound legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of advertising and/or programming time on the Station prior to the Closing
Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1 and 2.2.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7
that are to be assumed by Buyer upon its purchase of the Station, (ii) all
Contracts entered into by Seller in the ordinary course of business which
comply with the provisions of Section 5.3 hereof; and (iii) any other Contracts
entered into by Seller
<PAGE> 9
between the date of this Agreement and the Closing Date that Buyer agrees in
writing to assume.
"Closing" means the consummation of the purchase and sale of the
Assets pursuant to this Agreement in accordance with the provisions of Section
8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer
or otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including any amendments and other
modifications thereto) to which Seller is a party or which are binding upon
Seller and which relate to or affect the Assets or the business or operations
of the Station, and (i) which are in effect on the date of this Agreement or
(ii) which are entered into by Seller between the date of this Agreement and
the Closing Date.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
y Seller or under which Seller is licensed or franchised and which are used or
useful in the business and operations of the Station, together with any
- 2 -
<PAGE> 10
additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local government authorities to Seller in connection with the conduct
of the business or operations of the Station, together with any additions
thereto between the date of this Agreement and the Closing Date.
"Permitted Liens" means liens for taxes not yet due and payable.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, or any
governmental entity.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means Seller's interests in real property, leaseholds
and subleaseholds, purchase options, easements, licenses, rights to access, and
rights of way, and all buildings and other improvements thereon, which are used
or useful in the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
furniture, leasehold improvements, office equipment, plant, inventory, spare
parts, and other tangible personal property which is owned by the Seller or in
which Seller has an interest and which is used or useful in the conduct of the
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date, but excluding any
Tangible Personal Property consumed in the ordinary course of business between
the date hereof and the Closing Date.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell, transfer,
assign and deliver to Buyer on the Closing Date, and Buyer agrees to purchase
and accept, all of the Assets and property interests owned by Seller or in
which Seller has a property interest which are used or useful in connection
with the conduct of the business or operations of the Station, (but excluding
all vehicles) together with any additions thereto between the date of this
Agreement and the Closing Date, but excluding the assets described in Section
2.2, free and clear of any claims, liabilities, security interests, mortgages,
liens, pledges,
- 3 -
<PAGE> 11
conditions, charges, or encumbrances of any nature whatsoever (except for
Permitted Liens), including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles, including the goodwill of
the Station, if any;
(f) All proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station, which belong to
Seller and is within its possession and control;
(g) All choses in action of Seller relating to
the Station that are assignable to Buyer as provided herein;
(h) All records required by the FCC to be kept by
the Station and copies of all other books and records which belong to Seller
and are within its possession and control relating to the business or
operations of the Station (exclusive of corporate, financial and accounting
records), including executed copies of the Assumed Contracts; and
2.2 Excluded Assets. The Assets shall exclude the following
assets.
(a) Seller's cash on hand as of the Closing and
all other cash in any of Seller's bank or savings accounts; any insurance
policies, letters of credit, or other similar items and cash surrender value in
regard thereto; and any stocks, bonds, certificates of deposit and similar
securities or other investments;
(b) All corporate and accounting records of
Seller and copies of all other books and records relating to the business and
operations of the Station; and
(c) All property listed on Schedule 2.2 hereto;
and
(d) The Accounts Receivable.
- 4 -
<PAGE> 12
2.3 Purchase Price. The Purchase Price for the Assets shall be
NINE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($9,800,000), adjusted as provided
below:
(a) Prorations. The Purchase Price shall be
increased or decreased as required to effectuate the proration of expenses as
of 11:59 p.m. local time, on the day prior to the Closing Date. All expenses
arising from the operation of the Station, including business and license fees,
utility charges, real and personal property taxes and assessments levied
against the Assets, property and equipment rentals, applicable copyright or
other fees, sales and service charges, taxes (except for taxes arising from the
transfer of the Asset under this Agreement which shall be governed by Section
11.1 hereof), prepaid time sales agreements and similar prepaid and deferred
items, shall be prorated between Buyer and Seller in accordance with the
principle that Seller shall be responsible for all expenses, costs, and
liabilities allocable to the period prior to the Closing Date, and Buyer shall
be responsible for all expenses, costs, and obligations allocable to the period
on and after the Closing Date. Notwithstanding the preceding sentence, there
shall be no adjustment for, and Seller shall remain solely liable with respect
to, any Contracts not included in the Assumed Contracts and any other
obligation or liability not being assumed by Buyer in accordance with Section
2.5.
(b) Manner of Determining Adjustments. Any
adjustments will, insofar as feasible, be determined and paid on the Closing
Date, with final settlement and payment by the appropriate party occurring no
later than ninety (90) days after the Closing Date or such other date as the
parties shall mutually agree upon.
2.4 Payment of Purchase Price. The Purchase Price shall be paid
by Buyer to Seller as follows: At the Closing, Buyer shall pay to Seller the
sum of NINE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($9,800,000), adjusted as
provided above, by wire transfer of same-day funds pursuant to wire
instructions which shall be delivered by Seller to Buyer, at least two days
prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of the Seller under the Licenses and the Assumed
Contracts insofar as they relate to the time on and after the Closing Date, and
arise out of events related to Buyer's ownership of the Assets or its operation
of the Station on or after the Closing Date and those relating to the period
prior to the Closing which Buyer agrees to assume pursuant to the prorations
and adjustments. Buyer shall not assume any other
- 5 -
<PAGE> 13
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or
proceedings relating to the operation of the Station prior to the Closing, (iv)
any obligations or liabilities arising under agreements entered into other than
in the ordinary course of business, (v) any obligation to any employee of the
Station for severance benefits, vacation time, or sick leave accrued prior to
the Closing Date relating to any employee of Seller who is not employed or
offered employment by Buyer within the 90-day adjustment period, or (vi) any
obligations or liabilities caused by, arising out of, or resulting from any
action or omission of Seller prior to the Closing, and all such obligations and
liabilities shall remain and be the obligations and liabilities solely of
Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a partnership
organized under the laws of Alabama and is authorized to transact business in
Georgia. Seller has all requisite power and authority (i) to own, lease, and
use the Assets as now owned, leased, and used, (ii) to conduct the business
operations of the Station as now conducted, and (iii) to execute and deliver
this Agreement and the documents contemplated hereby, and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by Seller hereunder and thereunder. Seller is not a participant of any
joint venture or partnership with any person or entity with respect to any part
of the operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Seller have been duly authorized
by all necessary partnership actions on the part of Seller. This Agreement has
been duly executed and delivered by Seller and constitutes the legal, valid,
and binding obligation of Seller, enforceable against it in accordance with its
terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, the performance of
this Agreement and the documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both): (i) do not require the consent
of any third party; (ii) will not
- 6 -
<PAGE> 14
conflict with, result in a breach of, or constitute a default under, any law,
judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of
any court or governmental instrumentality in a proceeding involving Seller;
(iii) will not conflict with, constitute grounds for termination of, result in
a breach of, constitute a default under, or accelerate or permit the
acceleration of any performance required by the terms of, any agreement,
instrument, license, or permit to which Seller is a party or by which Seller
may be bound; (iv) will not create any claim, liability, mortgage, lien,
pledge, condition, charge, or encumbrance of any nature whatsoever upon any of
the Assets; and (v) will not conflict with any provision of Seller's
Partnership Agreement or Certificate of Limited Partnership.
3.4 Governmental Licenses. To the best of Seller's knowledge and
except as set forth on Schedule 3.4, (i) Schedule 3.4 includes a true and
complete list of the material Licenses and lists pending applications affecting
the Licenses; (ii) Seller has delivered to Buyer true and complete copies of
the Licenses listed on such Schedule (including any amendment and other
modifications thereto), (iii) the Licenses have been validly issued, and Seller
is the authorized legal holder thereof, (iv) the Licenses listed on Schedule
3.4 comprise all of the material licenses, permits, and other authorizations
required from any governmental or regulatory authority for the lawful conduct
of the business and operations of the Station in the manner and to the full
extent they are now conducted, (v) none of the Licenses is subject to any
restriction or condition that would limit the full operation of the Station as
now operated, (vi) the Licenses are in full force and effect, in all material
respects, and the conduct of the business and operations of the Station is in
material accordance therewith, and (vii) Seller has no reason to believe that
any of the Licenses would not be renewed by the FCC or other granting authority
in the ordinary course. Schedule 3.4 lists the cable systems to whom Seller
made a valid election of must carry and further lists those cable systems that
have disputed or are currently disputing Seller's must carry election. The
Station's city-of-license, as determined by the FCC, is located within (i) the
Atlanta, Georgia Area of Dominant Influence as defined by the 1991-1992 Area of
Dominant Influence Market Guide published by The Arbitron Co., and (ii) the
Atlanta, Georgia Designated Market Area as defined by the 1994 United States
Television Household Estimates published by Nielsen Media Research.
3.5 Title to and Condition of Real Property. Schedule 3.5
contains a complete and accurate description of all the Real Property and
Seller's interests therein (including street address, legal description, owner,
and use and the location of all improvements thereon). The Real Property
listed on Schedule 3.5 comprises all real property interests necessary to
conduct the
- 7 -
<PAGE> 15
business and operations of the Station as now conducted. With respect to each
leasehold or subleasehold interest included in the Real Property being conveyed
under this Agreement, so long as Seller fulfills its obligations under the
lease therefor, Seller has enforceable rights to nondisturbance and quiet
enjoyment, and no third party holds any interest in the leased premises with
the right to foreclose upon Seller's leasehold or subleasehold interest. All
towers, guy anchors, and buildings and other improvements included in the
Assets are located entirely on the Real Property listed in Schedule 3.5. To
the best of Seller's knowledge, all Real Property (including the improvements
thereon) is in good condition and repair consistent with its present use, and
such use complies in all material respects with (i) the terms of the FCC
Licenses, (ii) all rules and regulations of the FCC, and (iii) generally
accepted standards of good engineering practice. All Real Property (including
all improvements thereon) (i) is available for immediate use in the conduct of
the business and operations of the Station, and (ii) complies in all material
respects with all applicable building or zoning codes and the regulations of
any governmental authority having jurisdiction. Seller has full legal and
practical access to the Real Property. All easements, rights-of-way, and real
property licenses relating to the Real Property have been properly recorded in
the appropriate public recording offices. Seller will cooperate with Buyer and
provide such assistance as Buyer may reasonably request in connection with
Buyer's efforts to obtain on or before Closing, at Buyer's election and
expense, a policy of title insurance and a current survey with respect to the
Real Property, including, without limitation, using its best efforts to cause
all lease agreements relating to the Real Property to be recorded in the
appropriate public recording offices.
3.6 Title to and Condition of Tangible Personal Property.
Schedule 3.6 lists all material items of Tangible Personal Property. The
Tangible Personal Property listed on Schedule 3.6 comprises all material items
of tangible personal property used to conduct the business and operations of
the Station as now conducted exclusive of motor vehicles. Except as described
in Schedule 3.6, Seller owns and has good title to each item of Tangible
Personal Property, and none of the Tangible Personal Property owned by Seller
is subject to any security interest, mortgage, pledge, conditional sales
agreement, or other lien or encumbrance, except Permitted Liens. Each item of
Tangible Personal Property is available for immediate use in the business and
operations of the Station. To the best of Seller's knowledge, all items of
transmitting and studio equipment included in the Tangible Personal Property
will permit the Station to operate in accordance with the terms of the FCC
Licenses and the rules and regulations of the FCC, and with all other
applicable federal, state, and local statutes, ordinances, rules, and
regulations.
- 8 -
<PAGE> 16
3.7 Contracts. Schedule 3.7 is a true and complete list of all
Assumed Contracts except contracts with advertisers for the sale of advertising
time on the Station for cash at prevailing rates and which may be canceled by
the Station without penalty on not more than ninety days' notice. Seller has
delivered to Buyer true and complete copies of all written Assumed Contracts,
true and complete memoranda of all material oral Assumed Contracts (including
any amendments and other modifications to such Assumed Contracts), and a
schedule summarizing Seller's obligations under trade and barter agreements
relating to the Station. To the best of Seller's knowledge, all of the Assumed
Contracts are in full force and effect, and are valid, binding, and enforceable
in accordance with their terms and there is not under any Assumed Contract any
default by any party thereto or any event that, after notice or lapse of time
or both, could constitute a default. Except for the need to obtain the
Consents listed in Schedule 3.3, Seller has full legal power and authority to
assign its rights under the Assumed Contracts to Buyer in accordance with this
Agreement, and such assignment will not affect the validity, enforceability, or
continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided in Section 6.1
and the other Consents described in Schedule 3.3, to the best of Seller's
knowledge, no consent, approval, permit, or authorization of, or declaration to
or filing with any governmental or regulatory authority, or any other third
party is required (i) to consummate this Agreement and the transactions
contemplated hereby, (ii) to permit Seller to assign or transfer the Assets to
Buyer, or (iii) to enable Buyer to conduct the business and operations of the
Station in essentially the same manner as such business and operations are now
conducted.
3.9 Intangibles. To the best of Seller's knowledge, Schedule 3.9
is a true and complete list of all material Intangibles (exclusive of those
listed in Schedule 3.4), all of which are valid and in good standing and
uncontested. Seller has delivered to Buyer copies of all documents
establishing or evidencing all intangibles. Seller is not, to the best of its
knowledge, infringing upon or otherwise acting adversely to any trademarks,
trade names, service marks, service names, copyright, patents, patent
applications, know-how, methods, or processes owned by any other person or
persons, and, there is no claim or action pending, or threatened, with respect
thereto. To the best of Seller's knowledge, the Intangibles listed on Schedule
3.9 comprise all intangible property interests used to conduct the business and
operations of the Station as now conducted.
3.10 Insurance. Schedule 3.10 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets
- 9 -
<PAGE> 17
or the business of the Station. All policies of insurance listed in Schedule
3.10 are in full force and effect.
3.11 Reports. To the best of Seller's knowledge and except as set
forth in Schedule 3.4, all returns, reports, and statements that the Station is
currently required to file with the FCC or place in its Public File or file
with any other governmental agency have been filed, and all reporting
requirements of the FCC and other governmental authorities having jurisdiction
over Seller and the Station have been complied with in all material respects
and all of such returns, reports, and statements are substantially complete and
correct as filed. Seller has not paid to the FCC the 1994 and 1995 annual
regulatory fees payable with respect to the FCC Licenses, and has filed or is
preparing to file a waiver with the FCC with regard to both the 1994 and 1995
annual regulatory fees.
3.12 Personnel.
(a) Employees and Compensation. Schedule 3.12 contains a
true and complete list of all employees of the Station, their job description,
date of hire, salary and amount and date of last salary increase. Schedule
3.12 also contains a true and complete list as of the date of this Agreement of
all employee benefit plans or arrangements applicable to the employees of the
Station and all fixed or contingent liabilities or obligations of Seller with
respect to any person now or formerly employed by Seller at the Station,
including pension or thrift plans, individual or supplemental pension or
accrued compensation arrangements, contributions to hospitalization or other
health or life insurance programs, incentive plans, bonus arrangements, and
vacation, sick leave, disability and termination arrangements or policies,
including workers' compensation policies, and a description of all fixed or
contingent liabilities or obligations of Seller with respect to any person now
or formerly employed at the Station or any person now or formerly retained as
an independent contractor at the Station. Seller has furnished Buyer with true
and complete copies of all employee handbooks, employee rules and regulations,
and summary plan descriptions of the written plans and arrangements listed in
Schedule 3.12, and with descriptions, in writing, of the unwritten plans and
arrangements listed in Schedule 3.12. At Buyer's request, Seller will furnish
Buyer with true and complete copies of all applicable plan documents, trust
documents, and insurance contracts with respect to the plans and arrangements
listed on Schedule 3.12. All employee benefits and welfare plans or
arrangements listed in Schedule 3.12 were established and have been executed,
managed and administered in accordance with the Internal Revenue Code of 1986,
as amended, the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and all other laws. Seller is not aware of the existence of any
governmental
- 10 -
<PAGE> 18
audit or examination of any of such plans or arrangements or of any facts which
would lead it to believe that any such audit or examination is pending or
threatened. No action, suit, or claim with respect to any of such plans or
arrangements (other than routine claims for benefits) is pending or, to the
knowledge of Seller, threatened, and Seller possesses no knowledge of any facts
which could give rise to any such action, suit or claim.
(b) Labor Relations. Seller is not a party to or subject
to any collective bargaining agreements with respect to the Station. Seller
has no written or oral contracts of employment with any employee of the
Station, other than those listed in Schedule 3.7. Seller has complied in all
material respects with all laws, rules, and regulations relating to the
employment of labor, including those related to wages, hours, collective
bargaining, occupational safety, discrimination, and the payment of social
security and other payroll related taxes, and it has not received any notice
alleging that it has failed to comply in any material respect with any such
laws, rules, or regulations. No controversies, disputes, or proceedings are
pending or, to the best of its knowledge, threatened, between it and any
employee (singly or collectively) of the Station. No labor union or other
collective bargaining unit represents or claims to represent any of the
employees of the Station. To the best of Seller's knowledge, there is no union
campaign being conducted to solicit cards from employees to authorize a union
to request a National Labor Relations Board certification election with respect
to any employees at the Station.
(c) Liabilities. Seller has no liability of any kind to
or in respect of any employee benefit plan, including withdrawal liability
under Section 4201 of ERISA. Seller has not incurred any accumulated funding
deficiency within the meaning of ERISA or Section 4971 of the Internal Revenue
Code. Seller has not failed to make any required contributions to any employee
benefit plan. The Pension Benefit Guaranty Corporation has not asserted that
Seller has incurred any liability in connection with any such plan. No lien
has been attached and no person has threatened to attach a lien on any property
of Seller as a result of a failure to comply with ERISA.
3.13 Taxes. To the best of the Seller's knowledge, (i) Seller has
filed or caused to be filed all federal income tax returns and all other
federal, state, county, local, or city tax returns which are required to be
filed, and it has paid or caused to be paid all taxes shown on those returns or
on any tax assessment received by it to the extent that such taxes have become
due, and (ii) there are no governmental investigations or other legal,
administrative, or tax proceedings pursuant to which Seller is or could be made
liable for any taxes, penalties, interest, or other charges, the
- 11 -
<PAGE> 19
liability for which could extend to Buyer as transferee of the business of the
Station, and no event has occurred that could impose on Buyer any transferee
liability for any taxes, penalties, or interest due or to become due from
Seller.
3.14 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry, and except as set
forth on Schedule 3.4, to the best of Seller's knowledge, there is no claim,
legal action, counterclaim, nor any order, decree or judgment, in progress or
pending, or to the knowledge of Seller threatened, against or relating to
Seller with respect to its ownership or operation of the Station or otherwise
relating to the Assets or the business or operations of the Station, nor does
Seller know or have reason to be aware of any basis for the same. In
particular, but without limiting the generality of the foregoing, and except as
forth on Schedule 3.14, to the best of Seller's knowledge, there are no
applications, complaints or proceedings pending or, to the best of its
knowledge, threatened (i) before the FCC relating to the business or operations
of the Station other than rule making proceedings which affect the radio
industry generally, (ii) before any federal or state agency relating to the
business or operations of the Station involving charges of illegal
discrimination under any federal or state employment laws or regulations, or
(iii) before any federal, state, or local agency relating to the business or
operations of the Station involving zoning issues under any federal, state, or
local zoning law, rule, or regulation.
3.15 Environmental Matters.
(a) Seller has complied in all material respects with all
laws, rules, and regulations of all federal, state, and local governments (and
all agencies thereof) concerning the environment, public health and safety, and
employee health and safety, and no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been filed or commenced
against Seller in connection with its ownership or operation of the Station
alleging any failure to comply with any such law, rule, or regulation.
(b) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and there is no basis related to the past or present
operations, properties, or facilities of Seller for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand against Seller giving rise to any such liability) under any law, rule,
or regulation of any federal, state, or local government (or agency thereof)
concerning release or threatened release of hazardous substances, public health
and safety, or pollution or protection of the environment.
- 12 -
<PAGE> 20
(c) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and Seller has not handled or disposed of any substance,
arranged for the disposal of any substance, or owned or operated any property
or facility in any manner that could form the basis for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand (under the common law or pursuant to any statute) against Seller giving
rise to any such liability) for damage to any site, location, or body of water
(surface of subsurface) or for illness or personal injury.
(d) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and there is no basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
against Seller giving rise to any such liability) under any law, rule, or
regulation of any federal, state, or local government (or agency thereof)
concerning employee health and safety.
(e) In connection with its ownership or operation of the
Station, Seller has obtained and been in material compliance with all of the
terms and conditions of all permits, licenses, and other authorizations which
are required under, and has complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all federal,
state, and local laws, rules, and regulations (including all codes, plans,
judgments, orders, decrees, stipulations, injunctions, and charges thereunder)
relating to public health and safety, worker health and safety, and pollution
or protection of the environment, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
(f) To the best of Seller's knowledge, after due
investigation, all properties and equipment used in the business of the Station
are and have been free of asbestos and asbestos-related products, PCB's,
dioxins, and Extremely Hazardous Substances (as defined in Section 302 of the
Emergency Planning and Community Right-to-Know Act).
(g) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released
- 13 -
<PAGE> 21
by Seller in connection with its ownership and operation of the Station or, to
the best of Seller's knowledge, after due investigation, by any other party on
any Real Property.
3.16 Compliance with Laws. To the best Seller's knowledge and
except as set forth on Schedule 3.4, Seller has complied in all material
respects with the Licenses and all federal, state, and local laws, rules,
regulations, and ordinances applicable or relating to the ownership and
operation of the Station. To the best of Seller's knowledge, neither the
ownership or use of the properties of the Station nor the conduct of the
business or operations of the Station conflicts with the rights of any other
person or entity.
3.17 Full Disclosure. No representation or warranty made by Seller
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will
knowingly contain any untrue statement of a material fact.
SECTION 3A. REPRESENTATIONS AND WARRANTIES OF THE GENERAL
PARTNER
Georgia Mountain Corporation ("GMC") as Seller's General Partner
represents and warrants to Buyer as follows:
3A.1 Organization, Standing and Authority. GMC is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Georgia. GMC has all requisite corporate power and authority to
execute and deliver this Agreement and the documents contemplated hereby.
3A.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement by GMC have been duly authorized by all
necessary corporate actions on the part of GMC. This Agreement has been duly
executed by GMC and constitute the legal, valid and binding obligation of GMC,
enforceable against it in accordance with their terms except as the
enforceability hereof may be affected by bankruptcy, insolvency, or similar
laws affecting creditors' rights generally or by court-applied equitable
remedies.
3A.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance of this Agreement and the
documents contemplated hereby, by GMC (with or without giving of notice, the
lapse of time, or both): (i) does not require the consent of any third party
(ii) will not conflict with any provision of the Articles of Incorporation or
By-Laws of GMC; (iii) will not conflict with, result in a material breach of,
or constitute a material default under, any law, judgment, order,
- 14 -
<PAGE> 22
injunction, decree, rule, regulation or ruling of any court or governmental
instrumentality, which is applicable to CCI; or (iv) will not conflict with,
constitute grounds for termination of, result in a material breach of,
constitute a material default under, or accelerate or permit the acceleration
of any performance required by the terms of an material agreement, instrument,
licenses, or permit to which GMC is a party or by which GMC may be bound.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida and at Closing will be duly qualified to conduct business as a
foreign corporation in the State of Georgia. Buyer has all requisite power and
authority to execute and deliver this Agreement and the documents contemplated
hereby, and to perform and comply with all of the terms, covenants, and
conditions to be performed and complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Buyer have been duly authorized
by all necessary actions on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the documents contemplated hereby (with or without the giving of notice,
the lapse of time, or both): (i) do not require the consent of any third party;
(ii) will not conflict with the Certificate of Incorporation or Bylaws of
Buyer; (iii) will not conflict with, result in a breach of, or constitute a
default under, any law, judgment, order, injunction, decree, rule, regulation,
or ruling of any court or governmental instrumentality; (iv) will not conflict
with, constitute grounds for termination of, result in a breach of, constitute
a default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to
which Buyer is a party or by which Buyer may be bound, such that Buyer could
not acquire the Assets or operate the Station.
- 15 -
<PAGE> 23
4.4 Full Disclosure. No representation or warranty made by Buyer
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will
knowingly contain any untrue statement of a material fact.
4.5 Buyer Qualifications. Buyer is legally, financially and
otherwise qualified to be the licensee of, acquire, own and operate the Station
under the Communications Act of 1934, as amended, and the rules, regulations
and policies of the FCC. Buyer knows of no fact that would, under existing law
and the existing rules, regulations, policies and procedures of the FCC
disqualify Buyer as assignee of the FCC Licenses or as the owner and operator
of the Station.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall operate the Station in the
ordinary course of business in accordance with its past practices (except where
such conduct would conflict with the following covenants or with Seller's other
obligations under this Agreement), and in accordance with the other covenants
in this Section 5.
5.2 Compensation. Seller shall not materially increase the
compensation, bonuses, or other benefits payable or to be payable to any person
employed in connection with the conduct of the business or operations of the
Station, except in accordance with past practices.
5.3 Contracts. Seller will not enter into any contract or
commitment which is not terminable on 90-days notice relating to the Station or
the Assets, or amend or terminate any Contract (or waive any material right
thereunder), or incur any obligation (including obligations relating to the
borrowing of money or the guaranteeing of indebtedness) that will be binding on
Buyer after Closing, except for cash time sales agreements made in the ordinary
course of business and other contracts or commitments involving less than
$5,000. Prior to the Closing Date, Seller shall deliver to Buyer a list of all
Contracts entered into between the date of this Agreement and the Closing Date,
together with copies of such Contracts.
5.4 Trade Agreements. Seller shall not increase in any material
respect its obligations under trade agreements in effect on the date hereof and
shall use reasonable best efforts to satisfy Station's obligations under the
trade agreements in effect on the date hereof.
- 16 -
<PAGE> 24
5.5 Disposition of Assets. Seller shall not sell, assign, lease,
or otherwise transfer or dispose of any of the material Assets, except where no
longer used or useful in the business or operations of the Station or in
connection with the acquisition of replacement property of equivalent kind and
value.
5.6 Encumbrances. Seller shall not create, assume or permit to
exist any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets, except for (i) liens
which shall be removed prior to the Closing Date, (ii) liens for current taxes
not yet due and payable, and (iii) mechanics' liens and other similar liens,
which shall be removed prior to the Closing Date either by payment or posting
an appropriate indemnity bond.
5.7 Licenses. Seller shall not cause or permit, by any act or
failure to act, any of the Licenses issued by the FCC to expire or to be
revoked, suspended, or modified, or take any action that could cause the FCC or
any other governmental authority to institute proceedings for the suspension,
revocation, or adverse modification of any of the Licenses. Seller shall not
fail to prosecute with due diligence any applications to any governmental
authority in connection with the operation of the Station.
5.8 Rights. Seller shall not knowingly waive any material right
relating to the Station or any of the Assets.
5.9 No Inconsistent Action. Seller shall not take any action that
is inconsistent with its material obligations under this Agreement or that
could hinder or delay the consummation of the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing, Seller covenants
that neither it nor any of its partners nor their officers or agents will,
prior to the Closing Date, (a) solicit, initiate or encourage the submission of
any proposal or offer relating to any (i) liquidation, dissolution or
recapitalization, (ii) merger or consolidation, (iii) acquisition or purchase
of securities or assets, or (iv) similar transaction or business combination,
in each case involving Seller or (b) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
party to do or seek any of the foregoing. Notwithstanding the foregoing,
Seller and its General Partner may undertake to complete the restructuring
presented to the FCC in the pending transfer of control application (FCC File
No. BTCCT-950508KF). Seller shall notify Buyer as soon as practicable if any
party makes any proposal with respect to any of the foregoing. Notwithstanding
any other provision in this Agreement to the contrary, in the event that Seller
violates its obligations in this Section 5.9, Buyer shall
- 17 -
<PAGE> 25
have the right to seek specific performance of Seller's obligations hereunder.
5.10 Access to Information. Seller shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives
reasonable access during normal business hours to the Assets and to all other
properties, equipment, books, records, Contracts, and documents relating to the
Station for the purpose of audit and inspection, including inspections incident
to the environmental study and the engineering study described in Section 6.6,
and will furnish or cause to be furnished to Buyer or its authorized
representatives all material information with respect to the affairs and
business of the Station that Buyer may reasonably request (including any
operations reports produced with respect to the affairs and business of the
Station).
5.11 Maintenance of Assets. Seller shall maintain all of the
Assets in good condition (ordinary wear and tear and casualty loss excepted),
and use, operate, and maintain all of the Assets in a reasonable manner.
Seller shall maintain inventories of spare parts and expendable supplies at
levels consistent with past practices.
5.12 Insurance. Seller shall maintain substantially the same
insurance coverage provided by the existing insurance policies on the Station
and the Assets.
5.13 Consents. Seller shall use its best efforts to obtain the
Consents described in Section 8.2(c), without any material change in the terms
or conditions of any Contract or License as in effect on the date of this
Agreement. Seller shall advise Buyer of any communications it receives
concerning the Consents and of any conditions proposed, considered, or
requested for any of the Consents. Upon Buyer's request, Seller shall
cooperate with Buyer and use its best efforts to obtain from the lessors under
each Real Property lease such estoppel certificates and consents to the
collateral assignment of the lessee's interest under each such lease as Buyer's
lenders may request.
5.14 Books and Records. Seller shall maintain its books and
records relating to the Station in accordance with past practices.
5.15 Notification. Seller shall promptly notify Buyer in writing
of any material change in any of the information contained in Seller's
representations and warranties contained in Section 3 of this Agreement.
5.16 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Station.
- 18 -
<PAGE> 26
5.17 Preservation of Business. Seller shall operate the Station in
the ordinary course of business consistent with its past practices.
5.18 Personnel Recommendations. Seller shall promptly notify Buyer
as personnel vacancies occur at the Station and consider for employment all
personnel recommended by Buyer for such vacant positions.
5.19 Indebtedness. Seller shall not incur, create, assume or
permit to exist any Indebtedness, except (i) unsecured trade accounts payable
and other unsecured current Indebtedness incurred in the ordinary course of
business between the date hereof and the Closing Date (but excluding any
Indebtedness for borrowed money) ("Trade Indebtedness") and (ii) Indebtedness
for taxes arising between the date hereof and the Closing Date.
5.20 Financial Information. Seller shall furnish to Buyer within
twenty days after the end of each month ending between the date of this
Agreement and the Closing Date a statement of income and expense and a
statement of operating cash flow for the month just ended and such other
financial information (including information on payables and receivables) as
Buyer may reasonably request. All financial information delivered by Seller to
Buyer pursuant to this Section shall be prepared from the books and records of
Seller in accordance with generally accepted accounting principles consistently
applied, shall accurately reflect the books, records, and accounts of the
Station, shall be complete and correct in all material respects, and shall
present fairly the financial condition of the Station as at their respective
dates and the results of operations for the periods then ended.
5.21 Financing Leases. Seller will satisfy at or prior to Closing
all outstanding obligations under capital and financing leases with respect to
any of the Assets and obtain good title to the Assets leased by Seller pursuant
to those leases so that those Assets shall be transferred to Buyer at Closing
free of any interest of the lessors.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with
the purchase and sale of the Assets pursuant to this Agreement shall be subject
to the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an
appropriate application for the FCC Consent and shall file the application with
the FCC within five (5) business days of the
- 19 -
<PAGE> 27
execution of this Agreement. The parties shall prosecute the application with
all reasonable diligence and otherwise use their reasonable commercial efforts
to obtain a grant of the application as expeditiously as practicable. Each
party agrees to comply with any condition imposed on it by the FCC Consent,
except that no party shall be required to comply with a condition if (1) the
condition was imposed on it as the result of a circumstance the existence of
which does not constitute a breach by the party of any of its representations,
warranties, or covenants under this Agreement, and (2) compliance with the
condition would have a material adverse effect upon it, provided, however, that
Buyer agrees that the imposition by the FCC of a standard EEO reporting
condition on the Station's license renewal shall not be considered to have a
material adverse effect. Buyer and Seller shall oppose any requests for
reconsideration or judicial review of the FCC Consent, provided, however, that
the parties shall continue to have all rights available to them pursuant to
Section 9 hereof. If the Closing shall not have occurred for any reason within
the original effective period of the FCC Consent, and neither party shall have
terminated this Agreement under Section 9, the parties shall jointly request an
extension of the effective period of the FCC Consent. No extension of the FCC
Consent shall limit the exercise by either party of its rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of the Seller until the Closing.
6.3 Risk of Loss. The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing. If any damage or
destruction of the Assets or any other event occurs which prevents in any
material respect signal transmission by the Station in the normal and usual
manner and Seller is unable to restore or replace the Assets so that such
conditions are cured and normal and usual transmission is resumed in all
material respects before the Closing Date, Seller shall send Buyer written
notice of such event (a "Casualty Notice"), which notice shall contain an
estimate, in Seller's reasonable judgment, of the costs to repair or replace
the damaged or destroyed Assets, as well as the amount of any credit or refund
Seller will offer Buyer due to the inadequacy of Seller's insurance proceeds to
restore or place the Assets in all material respects. Within five (5) days
after its receipt of a Casualty Notice, Buyer may, by written notice to Seller
(a "Casualty Termination Notice"), elect to terminate the Agreement and receive
a refund of the Escrow Deposit and interest earned thereon, and neither party
shall
- 20 -
<PAGE> 28
thereafter have any liability to the other hereunder. In the event that Buyer
does not give Seller a timely and unconditional Casualty Termination Notice,
then Buyer shall, proceed to close this Agreement and complete the restoration
and replacement of such damaged Assets and Seller shall deliver to Buyer all
insurance proceeds received in connection with such damage or destruction of
the Assets; provided, however, that Buyer will receive a credit or refund at
Closing for any funds it provides up to the amount of credit or refund as
offered by Seller's Casualty Notice.
6.4 Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. Except as
provided in this Paragraph each party will refrain from disclosing any such
information to any third party. If this Agreement is terminated, each party
will return to the other party all copies of all documents and other all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Environmental and Engineering Audit. Buyer shall have the
right during the period ending thirty (30) days from the date hereof at its
expense (i) to retain an environmental consultant to conduct a Phase I or other
environmental study with respect to the Real Property, and (ii) an engineering
firm to conduct a proof of performance study of the Station and to prepare a
report on the Station's compliance with customary engineering practices and
applicable FCC rules, regulations, prescribed practice and technical standards.
In the event that such investigations or reports disclose matters which are not
acceptable to Buyer then Buyer may by written notice to Seller within such
thirty (30) day period elect to terminate this Agreement and receive a refund
of the Escrow Deposit unless Seller within five (5) business days from its
receipt of such notice gives Buyer notice of Seller's election to undertake and
perform remedial action to cure such matters. In no event shall Seller have
any liability to Buyer following the Closing for any environmental matters.
6.6 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their reasonable commercial efforts to consummate
- 21 -
<PAGE> 29
the transaction contemplated hereby and to fulfill their obligations under this
Agreement. Notwithstanding the foregoing, neither Buyer nor Seller shall have
any obligation (i) to expend funds to obtain any of the Consents or (ii) to
agree to any material adverse change in any License or Assumed Contract to
obtain a Consent required with respect thereto; provided, however, that Seller
shall be required to expend funds, if necessary, to cure any defaults in order
to obtain Consents and either party shall be required to expend funds in
respect of normal and usual filing fees and the fees of professional advisors.
6.7 State Tax Filings. Seller shall continue to file Georgia
sales tax returns with respect to the Station in accordance with Seller's past
practices.
6.8 Access to Books and Records. Seller shall provide Buyer
access and the right to copy for a period of four (4) years from the Closing
Date any books and records relating to the Assets but not included in the
Assets. Buyer shall provide Seller access and the right to copy for a period
of four (4) years from the Closing Date any books and records relating to the
Assets that are included in the Assets.
6.9 Broker. Each of Buyer and Seller represents and warrants that
neither it nor any person or entity acting on its behalf has incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transactions contemplated by this Agreement, except that Seller shall be
solely responsible for any commissions payable to Media Venture Partners and
Tomlin and Company.
6.10 Noncompetition Agreement. At Closing, Buyer and Seller shall
enter into a Noncompetition Agreement in the form of Schedule 6.10 and Seller
shall receive Two Hundred Thousand Dollars ($200,000).
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing are subject at Buyer's option to the fulfillment or waiver by
Buyer prior to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All material
representations and warranties of Seller and General Partner contained in this
Agreement shall be true and complete in all material respects at and as of the
Closing Date as though made at and as of that time.
- 22 -
<PAGE> 30
(b) Covenants and Conditions. Seller shall have
performed and complied in all material respects with all material covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any material adverse change in the terms or
conditions of any agreement or any governmental license, permit, or other
authorization, provided that with respect to Consents to assignment of
agreements, only Consent to assignment of the Lease described in Paragraph 1 of
Schedule 3.7 hereof shall be a condition precedent to Buyer's obligation to
close, and; provided, further, that as set forth at Section 6.1(b) hereof, the
imposition of a standard EEO reporting condition by the FCC will not be
considered a material adverse change.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any material conditions that need not be
complied with by Buyer under Section 6.1 hereof, Seller shall have complied
with any material conditions imposed on it by the FCC Consent, and the FCC
Consent shall have become a Final Order.
(e) Governmental Authorizations. Seller shall be the
holder of all material Licenses and there shall not have been any modification
of any material License that could have a material adverse effect on the
Station or the conduct of its business and operations. No proceeding shall be
pending the effect of which could be to revoke, cancel, fail to renew, suspend,
or modify adversely any material License. All FCC Licenses are material
Licenses.
(f) Deliveries. Seller and General Partner shall have
made or stand willing to make all the deliveries to Buyer set forth in Section
8.2.
(g) Adverse Change. Subject to the provisions of Section
6.3 hereof, between the date of this Agreement and the Closing, there shall
have been no material adverse change in the Real Property or Tangible Personal
Property of the Station, including any damage, destruction, or loss to the Real
Property or Tangible Personal Property used or useful by the Station.
(h) Television Market. Between the date of this
Agreement and the Closing, there shall have been no action deleting the City of
Athens, Georgia or Clarke County, Georgia or the Station from the Atlanta,
Georgia DMA as defined by Nielsen Media Research.
- 23 -
<PAGE> 31
7.2 Conditions to Obligations of Seller. All obligations of
Seller at the Closing are subject at Seller's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All material
representations and warranties of Buyer contained in this Agreement shall be
true and complete in all material respects at and as of the Closing Date as
though made at and as of that time.
(b) Covenants and Conditions. Buyer shall have performed
and complied in all material respects with all material covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
it prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing
to make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any material conditions that need not be
complied with by Seller under Section 6.1 hereof and Buyer shall have complied
with any conditions imposed on it by the FCC Consent.
(e) Transfer Application. The FCC shall have approved
Seller's transfer of control application (FCC File No. BTCCT-950508KF).
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00
a.m. on a date to be set by Buyer on at least five days' written notice to
Seller, that is (1) not earlier than the first business day after the FCC
Consent is granted, and (2) not later than ten business days following the date
upon which the FCC Consent has become a Final Order. If Buyer fails to specify
the date for Closing pursuant to the preceding sentence prior to the fifth
business day after the date upon which the FCC Consent becomes a Final Order,
the Closing shall take place on the tenth business day after the date upon
which the FCC Consent becomes a Final Order.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson, 1255 23rd Street, N.W, Suite 500,
Washington, D.C. 20037, or such other place that is agreed upon by Buyer and
Seller.
- 24 -
<PAGE> 32
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Subject to the provisions of
this Agreement, duly executed bills of sale, assignments, and other transfer
documents which shall be sufficient to vest good and marketable title to the
Assets in the name of Buyer, free and clear of all mortgages, liens,
restrictions, encumbrances, claims, and obligations except for Permitted Liens.
(b) Estoppel Certificate. An Estoppel Certificate of the
Lessor of the leasehold interests listed in Schedule 3.5.
(c) Consents. An executed copy of any instrument
evidencing receipt of any Consent;
(d) Certificates. Certificates, dated as of the Closing
Date, executed by Seller and General Partner certifying (1) that the material
representations and warranties of Seller and General Partner contained in this
Agreement are true and complete in all material respects as of the Closing Date
as though made on and as of that date; and (2) that Seller and General Partner
have in all material respects performed and complied with all of its material
obligations, covenants, and agreements set forth in this Agreement to be
performed and complied with on or prior to the Closing Date and such additional
Certificates and confirmations to Buyer's lenders as Buyer may reasonably
request in connection with obtaining financing for the performance of its
payment obligations hereunder.
(e) Licenses, Contracts, Business Records, Etc. Copies
of all Licenses and Assumed Contracts;
(f) Opinions of Counsel. Opinions of Seller's corporate
and communications counsel dated as of the Closing Date, substantially in the
form of Schedule 8.2(f) hereto.
(g) Noncompetition Agreement. The Noncompetition
Agreement in the form of Schedule 6.10 duly executed by Seller.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel;
(a) Purchase Price. The Purchase price as provided in
Section 2.4(a);
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to
- 25 -
<PAGE> 33
perform Seller's obligations under the Licenses and Assumed Contracts arising
on or after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Buyer by its President, certifying (1)
that the representations and warranties of Buyer contained in this Agreement
are true and complete in all material respects as of the Closing Date as though
made on and as of that date, and (2) that Buyer has in all material respects
performed and complied with all of its obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to
the Closing Date;
(d) Opinion of Counsel. An opinion of Buyer's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3(d)
hereto.
(e) Noncompetition Agreement. The Noncompetition
Agreement in the form of Schedule 6.10, duly executed by Buyer and the payment
called for by that Agreement.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Assets abandoned, if Seller is not then
in material default, upon written notice to Buyer, upon the occurrence of any
of the following:
(a) Conditions. If, on the date that would otherwise be
the Closing Date, any of the conditions precedent to the obligations of Seller
set forth in this Agreement have not been satisfied or waived in writing by
Seller.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order, not
caused by Seller, that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
by October 1, 1996.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Station abandoned, if Buyer is not then
in material default, upon written notice to Seller, upon the occurrence of any
of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer
set forth in this Agreement have not been satisfied or waived in writing by
Buyer.
- 26 -
<PAGE> 34
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order, not
caused by Buyer, that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
by October 1, 1996.
(d) Environmental Hazards. Buyer shall have notified
Seller of material environmental hazards or the material possibility of
environmental damages or clean-up costs, as indicated in the environmental
study described in Section 6.5, within 30 days after the execution of this
Agreement, and the cause thereof shall not have been remedied prior to the
Closing Date.
(e) Technical Deficiencies. Buyer shall have notified
Seller of material deficiencies in the technical operations or equipment of the
Station, as indicated in the engineering study described in Section 6.5, within
30 days after the date of this Agreement, and the cause thereof shall not have
been remedied prior to the Closing Date.
(f) Casualty Termination Notice. Buyer shall have given
a timely and unconditional Casualty Termination Notice to Seller pursuant to
Section 6.3 hereof.
9.3 Escrow Deposit. Simultaneously with the execution and
delivery of this Agreement, Buyer has deposited with First Union National Bank
of Florida, as escrow agent (the "Escrow Agent"), the sum of Five Hundred
Thousand Dollars ($500,000) in accordance with an Escrow Agreement among Buyer,
Seller and the Escrow Agent in the form of Schedule 9.3. All funds deposited
with the Escrow Agent shall be held and disbursed in accordance with the terms
of the Escrow Agreement and the following provisions:
(a) At the Closing, all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, [including any interest or other proceeds
from the investment of funds held by the Escrow Agent], shall be disbursed to
or at the direction of Buyer.
(b) If this Agreement is terminated pursuant to Section
9.1 or Section 9.2 and Buyer is not in material breach of any provision of this
Agreement, all amounts held by the Escrow Agent pursuant to the Escrow
Agreement, including any interest or other proceeds from the investment of
funds held by the Escrow Agent, shall be disbursed to or at the direction of
Buyer.
(c) If this Agreement is terminated by Seller due to
Buyer's breach of this Agreement, then the amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any
- 27 -
<PAGE> 35
interest or other proceeds from the investment of funds held by the Escrow
Agent shall be disbursed by the Escrow Agent to or at the direction of Seller.
9.4 Rights on Termination. If this Agreement is terminated
pursuant to Section 9.1 or Section 9.2 and neither party is in material breach
of any provision of this Agreement, the parties hereto shall not have any
further liability to each other with respect to the purchase and sale of the
Assets. If this Agreement is terminated by Seller due to Buyer's material
breach of any provision of this Agreement, then the payment to Seller pursuant
to Section 9.3(c) shall be liquidated damages and shall constitute full payment
and the exclusive remedy for any damages suffered by Seller by reason of
Buyer's material beach of this Agreement. Seller and Buyer agree in advance
that actual damages would be difficult to ascertain and that the amount of Five
Hundred Thousand ($500,000) is a fair and equitable amount to reimburse Seller
for damages sustained due to Buyer's material breach of this Agreement. If
prior to Closing, Seller is in material breach of its obligations under this
Agreement, Buyer's sole remedy shall be an action for specific performance of
this Agreement and Buyer expressly waives any right to pursue a claim for
monetary damages.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the closing for a period of
eighteen (18) months provided, however, that as to any representation or
warranty made by either the Buyer or Seller which the other party knows, or has
reason to believe, is not true as of the Closing Date, such representation or
warranty shall not survive the Closing. Until the Closing, Buyer and Seller
will immediately advise each other, in a detailed written notice, of any fact
or occurrence or any pending or threatened occurrence of which any of them
obtains knowledge and which (a) (if existing and known at the date of the
execution of this Agreement) would have been required to be set forth or
disclosed in or pursuant to this Agreement or a Schedule hereto, (b) (if
existing and known at any time prior to or at the Closing) would make the
performance by any party of a covenant contained in this Agreement impossible
or make that performance materially more difficult than in the absence of that
fact or occurrence, or (c) (if existing and known at the time of the Closing)
would cause a condition to any party's obligations under this Agreement not to
be fully satisfied.
10.2 Indemnification by Seller. Seller hereby agrees to indemnify
and hold Buyer harmless against and with respect to, and shall reimburse Buyer
for:
- 28 -
<PAGE> 36
(a) Subject to the proviso contained in the first
sentence of Section 10.1, any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or material omission or
nonfulfillment of any covenant by Seller contained in this Agreement or in any
certificate, document, or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by
Buyer pursuant to this Agreement, including any liabilities arising at any time
under any Contract not included in the Assumed Contracts.
(c) Any and all losses, liabilities, or damages
contingent or otherwise resulting from the operation or ownership of the
Station prior to the Closing Date, including any liabilities arising under the
Licenses or the Assumed Contracts which relate to events occurring prior to the
Closing Date.
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.3 Indemnification by Buyer. Buyer hereby agrees to indemnify
and hold Seller harmless against and with respect to, and shall reimburse
Seller for:
(a) Subject to the proviso contained in the first
sentence of Section 10.1, any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or material omission or
nonfulfillment of any covenant by Buyer contained in this Agreement or in any
certificate, Schedule, document, or instrument delivered to Seller under this
Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages
contingent or otherwise, resulting from the operation or ownership of the
Station on and after the Closing.
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
- 29 -
<PAGE> 37
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim. If the claim relates to an action, suit, or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant within as soon
as practicable after written notice of such action, suit, or proceeding was
given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty- day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party subject to reimbursement for
reasonable actual out-of-pocket expenses incurred by the Claimant as the result
of a request by the Indemnifying Party. If the Indemnifying Party elects to
assume control of the defense of any third-party claim, the Claimant shall have
the right to participate in the defense of such claim at its own expense. If
the Indemnifying Party does not elect to assume control or otherwise
participate int he defense of any third party claim, it shall be bound by the
results obtained by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
- 30 -
<PAGE> 38
(e) The indemnification rights provided in Sections 10.2
and 10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
(f) Notwithstanding anything in this Agreement to the
contrary, neither party shall indemnify or otherwise be liable to the other
party for any breach of a representation or warranty, or for breach of any
covenant in this Agreement except to the extent the losses, obligations,
liabilities, costs and expenses of such party arising therefrom exceed in the
aggregate Ten Thousand Dollars ($10,000). The provisions of the foregoing
sentence shall not apply to liabilities assumed by either party pursuant to the
adjustments and prorations.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, as its sole and exclusive
remedy, to obtain specific performance of the terms of this Agreement. If any
action is brought by Buyer to enforce this Agreement, Seller shall waive the
defense that there is an adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either party
which results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing party shall be entitled to reimbursement from
the other party of its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Seller
to Buyer pursuant to this Agreement shall be paid by Seller. Buyer and Seller
shall each pay one-half of the fee payable to the FCC in connection with the
filing of the application for FCC Consent. Except as otherwise provided in
this Agreement, each party shall pay its own expenses incurred in connection
with the authorization, preparation, execution, and performance of this
Agreement, including all fees and expenses of counsel, accountants, agents, and
representatives, and each party shall be responsible for all fees or
commissions payable to any finder, broker, advisor, or similar person retained
by or on behalf of such party.
11.2 Arbitration. Except as otherwise provided to the contrary
below, any dispute arising out of or related to this Agreement that Seller and
Buyer are unable to resolve by themselves
- 31 -
<PAGE> 39
shall be settled by arbitration in the District of Columbia by a panel of three
arbitrators. Seller and Buyer shall each designate one disinterested
arbitrator, and the two arbitrators so designated shall select the third
arbitrator. Before undertaking to resolve the dispute, each arbitrator shall
be duly sworn faithfully and fairly to hear and examine the matters in
controversy and to make a just award according to the best of his or her
understanding. The arbitration hearing shall be conducted in accordance with
the commercial arbitration rules of the American Arbitration Association. The
written decision of a majority of the arbitrators shall be final and binding on
Seller and Buyer. The costs and expenses of the arbitration proceeding shall
be assessed between Seller and Buyer in a manner to be decided by a majority of
the arbitrators, and the assessment shall be set forth in the decision and
award of the arbitrators. Judgment on the award, if it is not paid within
thirty days, may be entered in any court having jurisdiction over the matter.
No action at law or suit in equity based upon any claim arising out of or
related to this Agreement shall be instituted in any court by Seller or Buyer
against the other except (i) an action to compel arbitration pursuant to this
Section, (ii) an action to enforce the award of the arbitration panel rendered
in accordance with this Section, or (iii) a suit for specific performance
pursuant to Section 10.5.
11.3 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) sent by telecopy (with receipt personally confirmed by telephone),
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, (c) deemed to have been
given on the date of personal delivery or the date set forth in the records of
the delivery service or on the return receipt, and (d) addressed as follows:
If to Seller: NGM Television Partners, Limited
c/o J. McDavid Flowers
2431 West Main Street
Suite 202
Dothan, Alabama 36301
Telephone: (334) 793-4002
Facsimile: (334) 712-1270
- 32 -
<PAGE> 40
With a copy John E. Fiorini, III
(which shall not Gardner Carton & Douglas
constitute notice) to: 1301 K Street, N.W., East Tower
Suite 900
Washington, DC 20005
Telephone: (202) 408-7159
Facsimile: (202) 289-1504
William W. Hinesley, Esq.
Johnston, Hinesley, Flowers & Clenney, P.C.
291 North Oates Street
Dothan, Alabama 36303
' Telephone: (334) 793-1115
Facsimile: (334) 793-6603
If to Buyer: Mr. Eddie L. Whitehead
Whitehead Media, Inc.
12144 Classic Drive
Coral Springs, FL 33071
Telephone: (305) 753-8712
Facsimile: (305) 752-2280
With a copy John R. Feore, Jr., Esq.
(which shall not Dow, Lohnes & Albertson
constitute notice) to: 1255 23rd Street, N.W.
Washington, D.C. 20037
Telephone: (202) 857-2500
Facsimile: (202) 857-2900
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.3.
11.4 Benefit and Binding Effect. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement to a wholly-owned subsidiary or commonly controlled affiliate without
seeking or obtaining Seller's prior approval, provided that such assignment
does not relieve Buyer of its responsibilities hereunder. Upon any permitted
assignment by Buyer or Seller in accordance with this Section 11.4, all
references to "Buyer" herein shall be deemed to be references to Buyer's
assignee and all references to "Seller" herein shall be deemed to be references
to Seller's assignee. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable
- 33 -
<PAGE> 41
to the implementation and consummation of this Agreement, including, in the
case of Seller, any additional bills of sale, deeds, or other transfer
documents that, including, in the case of Seller, any additional bills of sale,
deeds, or other transfer documents that, in the reasonable opinion of Buyer,
may be necessary to ensure, complete, and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT
REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for
ease of reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless
of the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
- 34 -
<PAGE> 42
11.12 Press Releases. Neither party shall publish any press
release, make any other public announcement or otherwise communicate with any
news media concerning this Agreement or the transactions contemplated hereby
without the prior written consent of the other party; provided, however, that
nothing contained herein shall prevent either party from promptly making all
filings with governmental authorities as may, in its judgment, be required or
advisable in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, in which case the
other party shall be first notified in writing.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 35 -
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have duly executed this
Asset Purchase Agreement as of the day and year first above written.
NGM TELEVISION PARTNERS, LTD.
By: /s/ Richard A. Birgel
---------------------------------
Name:
GEORGIA MOUNTAIN CORPORATION
By: /s/ Richard A. Birgel
---------------------------------
Name: Richard A. Birgel
-------------------------------
Title: President
------------------------------
WHITEHEAD MEDIA, INC.
By: /s/ Eddie L. Whitehead
--------------------------------
Name: Eddie L. Whitehead
------------------------------
Title: President
-----------------------------
- 36 -
<PAGE> 1
EXHIBIT 10.55
<PAGE> 2
EXHIBIT 10.55
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
CHANNEL 26 OF DAYTON, INC.
AND
PAXSON COMMUNICATIONS OF DAYTON-26, INC.
FOR
TELEVISION STATION WTJC(TV), SPRINGFIELD, OHIO
OCTOBER 6, 1995
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. LEASE OF STATION AIR TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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
</TABLE>
- i -
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.10 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.11 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
- ii -
<PAGE> 5
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this 6th day of October, 1995, by and
between Channel 26 of Dayton, Inc., a Florida corporation (the "Licensee"), and
Paxson Communications of Dayton-26, Inc., a Florida corporation (the
"Programmer").
WHEREAS, Licensee owns and operates Television Station WTJC(TV).
Springfield, Ohio (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:
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 ten 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 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
<PAGE> 6
- 2 -
matter, news, public service announcements and other suitable programming to
the Licensee up to ninety-eight 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> 7
- 3 -
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., 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 1.10. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE
1.11 Licensee Authority. Notwithstanding any other provision of
this Agreement, Programmer recognizes that Licensee has certain obligations to
broadcast programming to meet
<PAGE> 8
- 4 -
the needs and interests of viewers in Springfield, Ohio, 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.
1.12 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.
1.13 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.
SECTION 1.14. STATION PROGRAMMING POLICIES
1.15 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
<PAGE> 9
- 5 -
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 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.
1.16 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.
1.17 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.
1.18 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 Section 1.3 hereof.
<PAGE> 10
- 6 -
1.19 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.
1.20 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.
1.21 Cooperation on Programming. Programmer and Licensee mutually
acknowledge their interest in ensuring that the Station serves the needs and
interests of viewers in Springfield 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 Springfield 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 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.
1.22 Staffing Requirements. Licensee will be in full compliance
with the main studio staff requirements as specified by the FCC.
<PAGE> 11
- 7 -
SECTION 1.23. INDEMNIFICATION
1.24 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.
1.25 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.
1.26 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.
1.27 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 1.28 ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE
1.29 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
<PAGE> 12
- 8 -
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.
1.30 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 1.31 TERMINATION AND REMEDIES UPON DEFAULT
1.32 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> 13
- 9 -
(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 and not the subject of an appeal or
further administrative review and this Agreement cannot be reformed, in a
manner acceptable to Programmer and Licensee, to remove and/or eliminate the
violation; or
(e) by either party upon six months written notice to the other party.
1.33 Termination Requirements and Procedures.
(a) Programmer may terminate this Agreement pursuant to
Section 6.1(e) hereof only if it pays Licensee an amount equal to six times the
monthly compensation due for the month preceding the notice of termination by
Programmer pursuant to Attachment I.
(b) Licensee may terminate this Agreement pursuant to
Section 6.1(e) hereof only if it pays Programmer an amount equal to six times
the monthly compensation due for the month preceding the notice of termination
by Licensee pursuant to Attachment I.
(c) 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.
1.34 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.
1.35 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.
<PAGE> 14
- 10 -
SECTION 1.36. MISCELLANEOUS
1.37 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.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
1.38 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.
1.39 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.
1.40 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.
1.41 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.
1.42 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
1.43 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.
<PAGE> 15
- 11 -
1.44 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 Dayton-26, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Telecopy: (407) 659-4252
Telephone: (407) 659-4122
To Licensee: Channel 26 of Dayton, Inc.
14444 66th Street North
Clearwater, FL 34624
Telecopy: (813) 530-0671
Telephone: (813) 536-0036
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.
1.45 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.
1.46 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
<PAGE> 16
- 12 -
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.
1.47 No Joint Venture. Nothing in this Agreement shall be deemed
to create a joint venture between the Licensee and the Programmer.
<PAGE> 17
- 13 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
LICENSEE: CHANNEL 26 OF DAYTON, INC.
By: /s/ James L. West
-------------------------------------
James L. West
Chairman
PROGRAMMER: PAXSON COMMUNICATIONS OF
DAYTON-26, INC.
By: /s/ William L. Watson
------------------------------------
William L. Watson
Secretary
<PAGE> 18
ATTACHMENT I
Compensation Schedule
Upon execution of this Agreement, Programmer shall have paid Licensee
a fee equal to Seven Thousand Dollars ($7,000). 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.
Payments shall be made by delivery of a check to Licensee at an
address to be designated.
<PAGE> 19
ATTACHMENT II
Categories of Anticipated Station Expenses
(1) Lease and Utility Payments
(2) Employee Salaries and Benefits
(3) Property Insurance and Taxes
(4) Fees, Licenses and Professional Fees
(5) Miscellaneous Station Expenses
(6) Equipment Repair and Replacement
(7) Programming Expenses
<PAGE> 20
ATTACHMENT III
Broadcast Station Programming Policy Statement
<PAGE> 21
BROADCAST STATION PROGRAMMING POLICY STATEMENT
The following sets forth the policies generally applicable to the
presentation of programming and advertising over Television Station WTJC(TV),
Springfield, Ohio. All programming and advertising broadcast by the station
must conform to these policies and to the provisions of the Communications Act
of 1934, 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, WTJC);
followed immediately by (2) the station's city of license (Springfield, Ohio).
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> 22
- 2 -
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> 23
- 3 -
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> 24
- 4 -
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 Ohio 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> 25
ATTACHMENT IV
Payola Statement
<PAGE> 26
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> 27
- 3 -
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> 28
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,
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
<PAGE> 29
- 2 -
consideration received by Programmer as a consequence of its
good faith efforts to sell or assign such agreements;
(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.
<PAGE> 30
- 3 -
(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 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 10.56
<PAGE> 2
EXHIBIT 10.56
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 6th day of October, 1995, is by
and among PAXSON COMMUNICATIONS OF DAYTON-26, INC., a Florida corporation
having its principal offices at 601 Clearwater Park Road, West Palm Beach, FL
33401 (the "Lender"), and CHANNEL 26 OF ORLANDO, INC., a Florida corporation
having its principal offices at 14444 66th Street North, Clearwater, Florida
34624 (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower is purchasing substantially all of the assets
and properties, including all broadcast licenses issued by the Federal
Communications Commission ("FCC Licenses") and other governmental authorities,
of Television Station WTJC-TV, Springfield, Ohio;
WHEREAS, the Lender is willing to lend the Borrower sufficient funds
to acquire the station on which Lender will provide programming pursuant to a
Time Brokerage Agreement;
WHEREAS, the Borrower and Lender have entered into an Option Agreement
dated as of the date hereof pursuant to which the Borrower has granted to the
Lender an exclusive and irrevocable option to acquire the assets of the Station
upon the terms and conditions specified therein (the "Option Agreement"); 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 I
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 or loans to the Borrower in an
aggregate principal amount not to exceed at any one time outstanding Three
Million Five Hundred Thousand Dollars ($3,500,000.00) 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 1.2 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 (as amended, renewed, restated, increased, consolidated or substituted
from time to time, the "Note") payable to the order of the Lender and
representing the
<PAGE> 3
- 2 -
obligation of the Borrower to pay the Lender the amount of the Loan, with
interest thereon, as prescribed in Section 1.04. All references to the "Note"
in this Loan Agreement, the Security Agreement, the Pledge Agreement, and the
Leasehold Mortgage or Mortgage (each as defined in this Loan Agreement), the
mortgages or deeds of trust referred to in Section 3.04 of the Loan Agreement
and in such other agreements and documents executed and delivered in connection
with this Loan Agreement shall be deemed to be references to the Note referred
to in this Section.
Section 1.3 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 highest interest rate per annum paid by Lender or its
affiliates on outstanding debt, public or private, as such rate may be adjusted
from time to time. Interest shall be calculated on the basis of a year of
three-hundred and sixty (360) days and the 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 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 thirty (30) 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 or before the first day of each month until all principal and
interest hereunder is paid in full and at the repayment or maturity of the
Loan. 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 date due
thereof until paid in full.
Section 1.4 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. In the event that the Borrower does not acquire the Station,
Borrower shall repay to Lender the outstanding principal amount of the Loan no
later than one-hundred eighty (180) days after such other party acquires the
Station. The principal amount of the Loan plus any accrued and unpaid interest
shall be due and payable on the first day of the 84th month following the
acquisition of the Station by the Borrower (the "Term Date"). In the event of
a termination of the Time Brokerage Agreement dated as of October 6, 1995,
between Borrower and Lender, Borrower shall, in addition to payments of
interest required under Section 1.03
<PAGE> 4
- 3 -
hereof, repay the outstanding principal balance of the Loan in consecutive,
equal monthly installments commencing on the first day of the month following
such termination (the "Amortization Commencement Date") and ending on the Term
Date, with each such monthly principal installment payment equal to (x) the
principal amount of the Loans outstanding hereunder as of the first day of the
month following such termination divided by (y) the total number of consecutive
months included in the period commencing on the Amortization Commencement Date,
through and including the Term Date.
Section 1.5 Use of Proceeds and Advancement of Funds.
(a) The proceeds of the Loan are to be used by the
Borrower exclusively for financing the 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"), at
the closing of the acquisition of the Station, following final and
nonappealable FCC approval of the assignment of the FCC licenses of the Station
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 that 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,
provided, however, that if any such prepayment is made within three years of
the Borrower's acquisition of the Station, Borrower shall reimburse Lender for
any prepayment penalty imposed on Lender or its affiliates under their debt
agreements or instruments as a result of Borrower's prepayment. 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.
Section 1.09 Preferred Contingent Facility Fee. In consideration for
Lender's agreement to make the Loan, Borrower
<PAGE> 5
- 4 -
agrees to pay Lender a preferred contingent facility fee (the "Contingent
Facility Fee") in an amount equal to twenty-five percent (25%) of the Loan
payable to the extent available out of the Net Sale Price received by Borrower
or any Affiliate of Borrower in connection with any Sale that is consummated at
any time prior to October 6, 2003, whether or not any portion of the Loan is
outstanding as of such date. The Contingent Facility Fee shall be due and
payable by Borrower to Lender by confirmed wire transfer of immediately
available funds on the date of closing of a Sale and prior to the payment by
Borrower of any other obligations or distributions. For the purpose of this
Section 1.09, the following terms shall have the following meanings:
"Affiliate", as applied to any entity or individual, means any other
entity or individual directly or indirectly controlling, controlled
by, or under common control with, that entity or individual. For the
purposes of this definition, "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any entity or individual, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that entity or
individual, whether through the ownership of voting securities,
partnership interests or by contract or otherwise.
"Net Sale Price" means (a) the aggregate value of all
consideration of whatsoever nature (whether in cash, other
property, services or otherwise) directly or indirectly paid or payable
to the Borrower and any Affiliate of Borrower (or either of them) in
connection with a Sale and whether such amounts are payable as purchase
price (whether in cash at closing or on a deferred basis), non-compete
payments, payments for the provision of future services or the rental
of property or otherwise, or any combination thereof, plus (b) an
amount equal to the sum of all accounts receivable of the Station if
such accounts receivable are retained by Borrower or any Affiliate of
Borrower in connection with a Sale, minus (c) an amount equal to the
sum of all reasonable and necessary fees and expenses incurred by the
Borrower or any Affiliate of Borrower (other than any fee payable to an
Affiliate of the Borrower) in connection with the consummation of a
Sale, minus (d) an amount equal to all liabilities of the Station (as
determined in accordance with generally accepted principles
consistently applied) that are retained by Borrower or any Affiliate of
Borrower in connection with a Sale, and minus (e) an amount equal to
the sum of the principal balance of, and all accrued but unpaid
interest on, the Loans as of the date the Contingent Facility Fee is
due.
<PAGE> 6
- 5 -
"Sale" means any (a) sale, exchange, transfer or other disposition to
any third party unaffiliated with Borrower or any Affiliate of
Borrower of all or substantially all of the Station's assets or of the
equity of (i) Borrower or (ii) any Affiliate of Borrower that acquires
the Station's assets in accordance with the requirements of this Loan
Agreement and any collateral document executed and delivered in
connection with this Loan Agreement (a "WTJC Affiliate") or (b)
merger, consolidation or similar transaction between a third party
unaffiliated with Borrower and Borrower or any WTJC Affiliate, whether
or not Borrower or such WTJC Affiliate is the surviving corporation.
ARTICLE II
CLOSING
Section 2.1 Closing Date. Closing of this transaction shall occur on
a date agreed upon by the parties hereto (the "Closing Date").
ARTICLE III
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 2 hereto (the "Security
Agreement").
Section 3.2 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 hereto, duly executed by The Christian
Network, Inc. (the "Shareholder"), the sole shareholder of the Borrower (the
"Pledge Agreement").
Section 3.3 Leasehold Mortgages. At such time as the Borrower enters
into or assumes the Lessee's interest under any lease, it shall execute with
respect to such lease a leasehold mortgage substantially in the form of Exhibit
4 hereto (a "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. The Borrower shall also deliver to the Lender with respect to any
lease to which the Borrower becomes a party the following documents, each of
which shall be in form and substance satisfactory to the Lender: (i) evidence
of the filing of the lease or a memorandum of lease, (ii) an estoppel
certificate executed by the landlord under such lease or any sublessee, (iii)
an executed landlord's consent and waiver, (iv) fixture filing UCC-1 financing
statements, (v) copies of such
<PAGE> 7
- 6 -
lease and any sublease, (vi) executed tenant subordination agreements, (vii) a
title encumbrance report with respect to the real property subject to such
lease, and (viii) any other document required by applicable law to create or
perfect a mortgage lien with respect to such lease or reasonably required by
the Lender.
Section 3.4 Mortgages. At 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, substantially in the form of
Exhibit 4 hereto (a "Mortgage"). The Borrower shall also deliver to the Lender
with respect to such property the following documents, each of which shall be
in form and substance satisfactory to the Lender: (i) fixture filing UCC-1
financing statements, (ii) copies of any lease relating to such property, if
any, (iii) executed tenant subordination agreements and estoppel certificates,
if applicable, (iv) a survey of such real property, (v) a mortgagee title
insurance policy, with such coverage and with such endorsements, including,
without limitation, usury, first loss, last dollar, revolving credit, variable
rate, doing business, zoning comprehensive, contiguity (as applicable) and
survey, to the extent available in the state where the property is located, as
the Lender may require, and (vi) any other document required by applicable law
to create or perfect a mortgage lien with respect to such property or
reasonably required by the Lender.
ARTICLE IV
CONDITIONS OF LENDING
Section 4.1 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:
(a) The Note, duly executed and delivered by the Borrower;
(b) The Security Agreement, together with appropriate
UCC-1 forms and, if applicable, landlord lien waivers, 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) Certified copies of the resolutions of (i) 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, and (ii) the Board of Stewards of Shareholder
evidencing approval of the
<PAGE> 8
- 7 -
execution, delivery and performance of this Loan Agreement and the Pledge
Agreement;
(e) A Certificate of Good Standing for the Borrower and
Shareholder;
(f) A copy of the Asset Purchase Agreement dated as of
June 1, 1995, between Borrower and Video Mall Communications, Inc. (the
"Purchase Agreement"), pursuant to which Borrower is purchasing the Station;
(g) Copies of UCC, judgment and tax lien searches in each
jurisdiction in which collateral covered by the Security Agreement is located,
naming the Borrower and the Seller of the Station as debtor;
(h) Such other agreements, certificates, opinions of
counsel and documents that the Lender may reasonably require; and
(i) The Option Agreement, duly executed and delivered
by the Borrower.
Section 4.2 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) With respect to each leased real property, the
documents required by Section 3.03, and with respect to each owned real
property, the documents required by Section 3.04;
(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) Evidence, in form and substance acceptable to Lender,
that Borrower has received the approval of the Federal Communications
Commission to be the licensee of the Station and that approval has become a
final, non- appealable order no longer subject to administrative or judicial
review, reconsideration or appeal;
(e) A copy of the Purchase Agreement and each other
contract, certificate and other document executed by the Borrower
<PAGE> 9
- 8 -
or the seller of the Station in connection with the Borrower's acquisition of
the Station; and
(f) Such other agreements, certificates, opinions of
counsel and documents that the Lender may reasonably require.
Section 4.3 Compliance. All of the representations and warranties of
the Borrower and Shareholder in this Loan 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 and Shareholder shall deliver to the Lender a
certificate, dated as of such date and signed by an executive officer of the
Borrower and Shareholder, 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 and Shareholder as of the date of such Loan, is in compliance with
this Section and if the Borrower or Shareholder is not in compliance with this
Section, the Lender shall not be required to disburse such Loan to the
Borrower.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 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 Florida and is qualified to do business and in good standing under the
laws of 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 Mortgage or Leasehold Mortgage,
the Security Agreement, the Option Agreement, and all other documents that have
been or will be executed and delivered by the Borrower pursuant to this
Agreement.
<PAGE> 10
- 9 -
(b) Authorizations, Compliance with Laws. The execution,
delivery and performance by the Borrower of this Agreement, the Note, any
Mortgage or Leasehold Mortgage, the Security Agreement, the Option 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 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 Mortgage or Leasehold Mortgage, the Security
Agreement, the Option 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, any Mortgage, the Security Agreement, the Pledge Agreement
and all other documents required to be executed and delivered by the Borrower
(or, in the case of the Pledge Agreement, of the Shareholder) pursuant to this
Agreement have been or, on or prior to the Closing Date, will be executed and
delivered by duly authorized officers of the Borrower (or, in the case of the
Pledge Agreement, of the Shareholder) and constitute or, on or prior to the
Closing Date, will constitute, legal, valid and binding obligations of the
Borrower (or, in the case of the Pledge Agreement, of the Shareholder)
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, prospects, operation or condition (financial or
otherwise) of the Borrower.
(f) No Default. The Borrower is not in default in the
performance, observance or fulfillment of any of the obligations or
<PAGE> 11
- 10 -
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. 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 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, 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 VI
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
<PAGE> 12
- 11 -
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 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, any 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, any Mortgage or Leasehold Mortgage or any other
document delivered to the Lender in
<PAGE> 13
- 12 -
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) Purchase Agreement. Comply with its obligations
under the Purchase Agreement.
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; (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; (iii)
obligations or liabilities arising under the indemnification provisions of the
Purchase Agreement.
(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 with respect to property or assets other
than the Stock (as defined in the Pledge Agreement):
(i) any security interest or lien created
pursuant to or in connection with this Agreement or securing the Loan, the
Security Agreement, the Pledge Agreement, any Leasehold Mortgage or any
Mortgage;
(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;
<PAGE> 14
- 13 -
(iv) deposits or pledges to secure payment of
workers' compensation, unemployment insurance or other social security benefits
or obligations; or
(v) any judgment lien, singly or aggregated with
other judgment liens, in an amount less than $100,000, 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 any of its assets or properties other than sales of assets
in the ordinary course of business (which shall expressly not include any
transfer or assignment of any FCC License).
(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. Issue or permit the
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 issuances or transfers to the
Lender.
(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 capital stock of the Borrower) in respect of the Borrower's capital
stock.
(i) Transactions with Affiliates. Enter into any
transaction or agreement with any affiliate of the Borrower.
<PAGE> 15
- 14 -
(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 to 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 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 (as defined in Section 7.01(d) below), if any,
to which the Station is a party.
(q) Purchase Agreement. Terminate, amend, commit any
material breach or default under or waive any term of the Purchase Agreement or
Option Agreement.
<PAGE> 16
- 15 -
(r) Subsidiaries. Create or acquire any subsidiary of
Borrower, unless Lender shall have approved such action in advance and Borrower
shall have taken all actions required by Lender to grant Lender a first
priority security interest in all of the issued and outstanding stock of such
subsidiary. Borrower acknowledges and agrees that until such time as such
security interest is granted and perfected, Lender shall have an equitable lien
in the stock of any subsidiary created or acquired by Borrower.
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 and
to the Agents:
(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 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 5.01(e).
(d) Budget. An annual budget 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 or the Administrative Agents may from time to
time reasonably request.
<PAGE> 17
- 16 -
ARTICLE VII
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
including, without limitation, the obligation to pay the Contingent Facility
Fee as set forth in Section 1.09 hereof, when due whether at the due date
thereof or by acceleration or otherwise, and, in the case of any installment of
interest, such default shall remain unremedied for a period of five (5) days;
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 or 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 Shareholder (or any of its officers) herein, in the Security Agreement, any
Leasehold Mortgage or Mortgage or the Option Agreement, or by the Shareholder
in the Pledge 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 Mortgage, the Security
Agreement or the Option 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 Mortgage, the Option Agreement 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 or the Shareholder shall fail to pay any
indebtedness for borrowed money owing by the Borrower or the Shareholder 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 the Shareholder 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
<PAGE> 18
- 17 -
Borrower or the Shareholder 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) Either (i) Borrower or the Shareholder shall fail to
pay its debts as they mature in the ordinary course of business; or (ii)
Borrower or the Shareholder shall file a petition commencing a voluntary case
concerning it under any Chapter of Title 11 of the United States Code entitled
"Bankruptcy"; or (iii) Borrower or the Shareholder 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 or the Shareholder and such appointment
shall continue undischarged for a period of thirty (30) days; or (v) an
involuntary case is commenced against the Borrower or the Shareholder 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 or the Shareholder 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 or the Shareholder and
shall remain undismissed for a period of thirty (30) days; or (viii) the
Borrower or the Shareholder 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 money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an amount in excess of One
Hundred Thousand Dollars ($100,000.00), or (ii) in the aggregate at any time an
amount in excess of One Hundred
<PAGE> 19
- 18 -
Thousand Dollars ($100,000.00), and in either case not adequately covered by
insurance as to which the insurance company has acknowledged coverage, shall be
entered or filed against Borrower or its assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of 30 days or in any event later
than five days prior to the date of any proposed sale thereunder; or
(k) The Shareholder shall default in the due performance
or observance of any term, covenant or agreement on its part to be performed or
observed pursuant to Article IX hereof or any obligation of the Shareholder
under Article IX hereof shall, for any reason other than the full satisfaction
thereof, not be or shall cease to be in full force and effect or is, or is
declared to be, null and void, or the Shareholder shall, or shall purport to,
terminate, revoke, repudiate, declare voidable or void, deny, disaffirm or
otherwise contest Article IX hereof or any term or provision thereof or any of
its obligations or liabilities under Article IX hereof.
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 Mortgage or Leasehold Mortgage, which provisions are
hereby incorporated by reference.
ARTICLE VIII
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
<PAGE> 20
- 19 -
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 Mortgage or 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 8.03 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 Mortgage or 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: James L. West
The Christian Network, Inc.
14444 66th Street North
Clearwater, Florida 34624
If to the Lender: Lowell W. Paxson
Paxson Communications of Dayton-26, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 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 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 Mortgage or 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 out of court, in trial,
on appeal or in proceedings under any bankruptcy or insolvency law or
otherwise. In addition, the Borrower shall pay any and all taxes and fees
payable or determined to be payable in
<PAGE> 21
- 20 -
connection with the execution, delivery or recordation of any instruments and
documents to be delivered hereunder. In addition, Borrower agrees to pay (i)
all the actual and reasonable costs and expenses of Lender in connection with
the negotiation, preparation and execution of this Loan Agreement, the Note,
the Security Agreement, the Pledge Agreement, any Mortgage or Leasehold
Mortgage and all other documents and instruments to be delivered hereunder
(collectively, the "Loan Documents") and all the costs of furnishing all
opinions by counsel for Borrower, and of Borrower's performance of and
compliance with all agreements and conditions contained herein and in the other
Loan Documents on its part to be performed or complied with including, without
limitation, confirming compliance with environmental and insurance
requirements; (ii) the reasonable fees, expenses and disbursements of counsel
to Lender (including allocated costs of internal 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 actual and reasonable costs
and expenses of creating and perfecting liens in favor of Lender pursuant to
any Loan Document.
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 and
the Agents. Lender shall be permitted to assign, without Borrower's consent,
all or any portion of Lender's rights and interests hereunder and under each
other document executed in connection with this Loan Agreement (x) to one or
more other Affiliates (as defined in Section 1.09) of Lender, and, upon any
such assignment, each reference herein or in such other document to "Lender"
shall be deemed to be and include a reference to such other Affiliate and (y)
to creditors of Lender or its Affiliates as security for indebtedness of Lender
or such Affiliates.
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.
Section 8.08 Severability of Provisions. Any provision of this
Agreement, the Note, the Security Agreement, or any Mortgage or 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
<PAGE> 22
- 21 -
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.
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 [INTENTIONALLY OMITTED]
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.
<PAGE> 23
- 22 -
Section 8.15 Waiver. EACH OF LENDER, BORROWER AND SHAREHOLDER 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 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 8.16 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
<PAGE> 24
- 23 -
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 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.
ARTICLE IX
GUARANTY
Section 9.1. Guaranty. In consideration for Lender's execution and
delivery of this Loan Agreement and Lender's agreement to make the Loan,
Shareholder agrees as follows:
(a) Shareholder hereby guarantees the full, complete and timely
payment and performance by Borrower of each and every obligation of Borrower
under this Loan Agreement, the Note, the Security Agreement, each Mortgage and
Leasehold Mortgage executed and delivered pursuant to this Loan Agreement and
each other agreement or instrument executed and delivered by Borrower in
connection with this Loan Agreement (individually, a "Loan Document" and
collectively, the "Loan Documents"). If any default shall be made by Borrower
in the payment or performance of any of such obligations, then Shareholder will
itself pay or perform or cause to be paid or performed such obligation upon
receipt of notice from Lender specifying in summary form the default. Lender
may proceed to enforce its rights against Shareholder from time to time prior
to, contemporaneously with, or after any enforcement against Borrower, or
without any enforcement against Borrower. The obligations of Shareholder under
this Guaranty shall be absolute and unconditional and shall remain in full
force and effect without regard to and shall not be released, discharged, or in
any way affected by (and Shareholder expressly waives any and all defenses
arising out of, or based on): (i) any amendment or modification of or
supplement to any Loan Document; (ii) any exercise or non-exercise of, or delay
in exercising any, right, remedy, power, or privilege under or in respect of
any Loan Document; (iii) any
<PAGE> 25
- 24 -
bankruptcy, insolvency, arrangement, composition, assignment for the benefit of
creditors, or similar proceeding commenced by or against Borrower or
Shareholder; (iv) the dissolution (voluntarily or involuntarily) of Lender; (v)
the genuineness, validity, or enforceability of any Loan Document; or (vi) any
other circumstance which might otherwise constitute a legal or equitable
discharge of a guarantor or surety. If payment of any sum by Borrower pursuant
to any Loan Document is recovered as a preference or fraudulent transfer under
any applicable bankruptcy or insolvency law, the liability of Shareholder under
such Loan Document shall continue and remain in full force and effect
notwithstanding such recovery.
(b) Shareholder waives presentment, protest, demand, or action or
delinquency in respect of any of the obligations of Borrower under the Loan
Documents. Shareholder waives all set-offs and counterclaims and all notices
of nonperformance, notices of protest, notices of dishonor, and notices of
acceptance of this guaranty.
(c) This guaranty shall be deemed a continuing guaranty, and the
above consents and waivers of Shareholder shall remain in full force and effect
until the satisfaction in full of all obligations of Borrower under the Loan
Documents.
(d) Shareholder agrees that any and all claims in its favor
against Borrower, any endorser or any other guarantor of all or any part of the
obligations of Borrower under the Loan Documents, or against any of their
respective properties, arising by reason of any payment by Shareholder to
Lender pursuant to the provisions hereof or otherwise, shall be subordinate and
subject in right of payment to the prior payment, in full in cash, of all
obligations of Borrower under the Loan Documents. Shareholder agrees that any
right of subrogation arising as a result of its performance hereunder shall not
exist unless and until all obligations of the Borrower under the Loan Documents
are paid in full in cash.
Section 9.2 Representations and Warranties. Shareholder hereby
represents and warrants to Lender as follows:
(a) This Loan Agreement has been duly and validly executed and
delivered by Shareholder and constitutes its legal, valid, and binding
agreement with respect to the provisions contained in Article IX, enforceable
in accordance with its terms, except as the enforceability of this Loan
Agreement may be affected by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally, and by judicial discretion in the enforcement of
equitable remedies.
(b) The execution, delivery, and performance by Shareholder of
this Loan Agreement: (i) do not require the consent of any
<PAGE> 26
- 25 -
third party; (ii) will not conflict with any provision of the Articles of
Incorporation or Bylaws of Shareholder; (iii) will not conflict with, result in
a breach of, or constitute a default under, any law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality; and (iv) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
or accelerate or permit the acceleration of any performance required by the
terms of, any agreement, instrument, license, or permit to which Shareholder is
a party or by which Shareholder may be bound.
Section 9.3 Limited Recourse. Notwithstanding anything to the
contrary contained in this Article IX, in any action or proceeding commenced
with reference to any Loan Document, no judgment obtained against Shareholder
shall be enforced against any of its separate assets, other than Shareholder's
interest in all of the issued and outstanding capital stock of Borrower
(whether outstanding on the date hereof or hereafter), and Shareholder's
liability under any Loan Document shall be limited to such interest. In any
legal action or suit in equity which the Lender may undertake against
Shareholder to enforce its rights and remedies under any Loan Document, any
judgment obtained by Lender may be satisfied by recourse only to Shareholder's
interest in all of the issued and outstanding capital stock of Borrower
(whether outstanding on the date hereof or hereafter) and not by recourse to
any other assets of Shareholder.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 27
- 26 -
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.
PAXSON COMMUNICATIONS OF DAYTON-26, INC.
By:
--------------------------------------
William L. Watson
Secretary
CHANNEL 26 OF DAYTON, INC.
By:
-------------------------------------
James L. West
Chairman
THE CHRISTIAN NETWORK, INC.
HEREBY JOINS IN THE EXECUTION
OF THE FOREGOING AGREEMENT TO
AGREE TO THE PROVISIONS OF
ARTICLE IX ONLY, AS OF THE DATE
FIRST ABOVE WRITTEN.
THE CHRISTIAN NETWORK, INC.
By:
-------------------------------------
James L. West
Chairman
<PAGE> 1
EXHIBIT 10.57
<PAGE> 2
EXHIBIT 10.57
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement") is entered into as of
October 6, 1995 by and between PAXSON COMMUNICATIONS OF DAYTON-26, INC., a
Florida corporation ("Paxson"), and CHANNEL 26 OF DAYTON, INC., a Florida
corporation ("CNI-26").
R E C I T A L S
A. CNI-26 has entered into an Asset Purchase Agreement dated as
of June 1, 1995, with Video Mall Communications, Inc., pursuant to which CNI-26
has agreed to acquire substantially all of the assets (the "Assets") that are
used or useful in the business and operations of Television Station WTJC-TV,
Channel 43, Springfield, Ohio (the "Station"), including, without limitation,
the licenses issued by the Federal Communications Commission ("FCC") for the
Station (the "FCC Licenses").
B. Paxson and CNI-26 have entered into a Loan Agreement of even
date herewith, pursuant to which Paxson has agreed to make a loan or loans to
CNI-26 to enable CNI-26 to purchase the Station and for working capital and
operating expenses relating to the Station (the "Loans").
C. Paxson and CNI-26 have entered into a Time Brokerage Agreement
of even date herewith, pursuant to which Paxson shall provide programming for
broadcast on the Station.
D. CNI-26 desires to grant to Paxson an exclusive and irrevocable
option to purchase the Assets, including the FCC Licenses, on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Grant of Option. In consideration for the making of the
Loans, the receipt and sufficiency of which are hereby acknowledged, CNI-26
hereby grants to Paxson an exclusive and irrevocable option to acquire the
Assets, including the FCC Licenses (the "Option") for a purchase price of One
Hundred Thousand Dollars ($100,000) payable upon the closing of the Option
Purchase Agreement (as defined in Section 3 below) and the forgiveness of the
Loans upon the closing of the Option Purchase Agreement.
2. Notice of Exercise. Paxson may deliver to CNI-26 written
notice of Paxson's intention to exercise the Option (the "Option Notice") at
any time following the date hereof and prior to the termination of the Option
as set forth in Section 4.
<PAGE> 3
3. Option Purchase Agreement. Within three (3) business days
following CNI-26's receipt of the Option Notice, CNI-26 and Paxson shall enter
into an Asset Purchase Agreement that contains such terms and conditions as are
customarily included in such agreements and is in form and substance reasonably
acceptable to Paxson and CNI-26 (the "Option Purchase Agreement"), and
thereafter CNI-26 and Paxson shall perform their respective obligations under
the Option Purchase Agreement, including, without limitation, filing and
prosecuting an appropriate application for FCC consent to the assignment of the
FCC Licenses from CNI-26 to Paxson (the "FCC Consent").
4. Termination of Option. The Option shall remain in full force
and effect until the tenth anniversary of the date hereof.
5. Representations and Warranties of CNI-26. CNI-26 represents
and warrants to Paxson as follows:
(a) CNI-26 is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida and is
duly qualified to conduct business as a foreign corporation in the State of
Ohio. CNI-26 has full corporate power and authority to execute and deliver
this Option Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Option Agreement and the consummation of the
transactions contemplated hereby by CNI-26 has been duly and validly authorized
by all necessary corporate action on the part of CNI-26. This Option
Agreement has been duly and validly executed and delivered by CNI-26 and
constitutes a legal, valid and binding agreement of CNI-26 enforceable against
CNI-26 in accordance with its terms, except as such enforceability may be
affected by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.
(b) Except for the FCC Consent, there is no requirement
applicable to CNI-26 to make any filing with, or to obtain any permit,
authorization, consent or approval of, any governmental or regulatory authority
or any other third party as a condition to the consummation by CNI-26 of the
transactions contemplated by this Option Agreement and the Option Purchase
Agreement.
(c) Subject to obtaining the FCC Consent, the execution,
delivery and performance of this Option Agreement and the Option Purchase
Agreement by CNI-26 will not (i) conflict with CNI-26's organizational
documents, (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage,
- 2 -
<PAGE> 4
agreement, or lease to which CNI-26 is a party or by which any of the FCC
Licenses or the other Assets are bound, or (iii) violate any statute, law,
rule, regulation, order, writ, injunction or decree applicable to CNI-26, the
FCC Licenses or the other Assets.
6. Representations and Warranties of Paxson. Paxson represents
and warrants to CNI-26 as follows:
(a) Paxson has full corporate power and authority to
execute and deliver this Option Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Option Agreement and
the consummation of the transactions contemplated hereby by Paxson have been
duly and validly authorized by all necessary corporate action on the part of
Paxson. This Option Agreement has been duly and validly executed and delivered
by Paxson and constitutes a legal, valid and binding agreement of Paxson
enforceable against Paxson in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by judicial discretion in the
enforcement of equitable remedies.
(b) Except for the FCC Consent, there is no requirement
applicable to Paxson to make any filing with, or to obtain any permit,
authorization, consent or approval of, any governmental or regulatory authority
or any other third party as a condition to the consummation by Paxson of the
transactions contemplated by this Option Agreement and the Option Purchase
Agreement.
(c) Subject to obtaining the FCC Consent, the execution,
delivery and performance of this Option Agreement and the Option Purchase
Agreement by Paxson will not (i) conflict with Paxson's organizational
documents, (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, agreement, or lease to which Paxson is a party or
by which any of its assets are bound, or (iii) violate any statute, law, rule,
regulation, order, writ, injunction or decree applicable to Paxson.
7. Covenants of CNI-26. CNI-26 will not commit any act that is
inconsistent with the grant of the Option to Paxson or the transactions
contemplated by this Option Agreement and the Option Purchase Agreement.
8. Cooperation. CNI-26 and Paxson shall cooperate fully with
each other and their respective counsel and accountants in connection with any
steps required to be taken as part of their respective obligations under this
Option Agreement and the Option
- 3 -
<PAGE> 5
Purchase Agreement and will each use their respective best efforts to perform
or fulfill all conditions and obligations to be performed or fulfilled by them
under this Option Agreement and the Option Purchase Agreement so that the
transactions contemplated hereby shall be consummated.
9. Specific Performance. The parties recognize that if CNI-26
breaches this Option Agreement and refuses to perform under the provisions of
this Option Agreement, monetary damages alone would not be adequate to
compensate Paxson for its injury. Paxson 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 Option Agreement. If any
action is brought by Paxson to enforce this Option Agreement, CNI-26 shall
waive the defense that there is an adequate remedy at law.
10. Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Option Agreement shall be
(a) in writing, (b) delivered by personal delivery, or sent by commercial
delivery service or registered or certified mail, return receipt requested, (c)
deemed to have been given on the date of personal delivery or the date set
forth in the records of the delivery service or on the return receipt, and (d)
addressed as follows:
If to CNI-26: James L. West
The Christian Network, Inc.
14444 66th Street North
Clearwater, Florida 34624
If to Paxson: Lowell W. Paxson
Paxson Communications Corporation 601
Clearwater Park Road West
Palm Beach, Florida 33401
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
10.
11. Entire Agreement; Amendment. This Option Agreement and the
Option Purchase Agreement supersede all prior agreements and understandings of
the parties, oral and written, with respect to its subject matter. This Option
Agreement and the Option Purchase Agreement may be modified only by an
agreement in writing executed by all of the parties hereto. No waiver of
compliance with any provision of this Option Agreement or the Option Purchase
Agreement
- 4 -
<PAGE> 6
will be effective unless evidenced by an instrument evidenced in writing and
signed by the parties hereto.
12. Further Assurances. From time to time after the date of
execution hereof, the parties shall take such further action and execute such
further documents, assurances and certificates as either party reasonably may
request of the other to effectuate the purposes of this Option Agreement.
13. Counterparts. This Option Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and shall become
effective when each of the parties hereto shall have delivered to it this
Option Agreement duly executed by the other parties hereto.
14. Headings. The headings in this Option Agreement are for the
sole purpose of convenience of reference and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Option Agreement.
15. Governing Law. This Option Agreement shall be construed under
and in accordance with the laws of the State of Florida, without giving effect
to the principles of conflicts of law.
16. Benefit and Binding Effect; Assignability. This Option
Agreement shall inure to the benefit of and be binding upon CNI-26, Paxson and
their respective successors and permitted assigns. No party hereto may assign
this Option Agreement without the prior written consent of the other parties
hereto, except that Paxson at any time prior to the consummation of the
transactions contemplated by this Option Agreement may assign its rights and
obligations under this Option Agreement without CNI-26's consent to any entity
controlled by or under common control with Paxson. Upon any permitted
assignment by a party in accordance with this Section 16, all references to
"Paxson" herein shall be deemed to be references to Paxson's assignee and all
references to "CNI-26" herein shall be deemed to be references to CNI-26's
assignee, as the case may be. Notwithstanding the foregoing, CNI-26 and Paxson
may collaterally assign their respective rights, benefits, duties or
obligations hereunder to their respective lenders.
17. Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Option Agreement, and except as and to the
extent required by law, each party will keep confidential any information
obtained from the other party in connection with the transactions contemplated
by this Option Agreement. If this Option Agreement is terminated,
- 5 -
<PAGE> 7
each party will return to the other party all information obtained by the such
party from the other party in connection with the transactions contemplated by
this Option Agreement.
18. Press Release. No party shall publish any press release, make
any other public announcement or otherwise communicate with any news media
concerning this Option Agreement or the transactions contemplated hereby
without the prior written consent of the other party.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 6 -
<PAGE> 8
IN WITNESS WHEREOF the parties hereto have executed this Option
Agreement as of the date first above written.
PAXSON COMMUNICATIONS OF
DAYTON-26, INC.
By: /s/ William L. Watson
--------------------------------
William L. Watson
Secretary
CHANNEL 26 OF DAYTON, INC.
By: /s/ James L. West
--------------------------------
James L. West
Chairman
- 7 -
<PAGE> 1
EXHIBIT 10.58
<PAGE> 2
EXHIBIT 10.58
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CHANNEL 13 OF ST. LOUIS, INC.
AND
MCENTEE BROADCASTING, INC.,
FOR
TELEVISION STATION WCEE-TV,
MT. VERNON, ILLINOIS
AUGUST 25, 1995
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Accounts Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assumed Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Consents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Consent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Final Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Intangibles" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Trade Balance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Title to and Condition of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Title to and Condition of Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Assumed Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.13 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.15 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.18 Conduct of Business in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
- i -
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
3.19 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.20 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.21 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Buyer Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.6 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.8 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.9 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.10 Maintenance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.12 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.13 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.14 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.15 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.17 Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.18 Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.19 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.20 Personnel Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
- ii -
<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Control of the Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.6 Engineering Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.9 Title Insurance and Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.10 Sales Tax Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.12 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.13 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.14 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.15 Collection of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.16 St. Louis DMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER
AND SELLER AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.3 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.4 Escrow Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.2 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.6 Consent to Jurisdiction and Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
- iii -
<PAGE> 6
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.11 Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.13 Guaranty of Paxson Communications Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
- iv -
<PAGE> 7
LIST OF SCHEDULES
Schedule 2.2 -- Excluded Property
Schedule 3.3 -- Consents
Schedule 3.4 -- Licenses
Schedule 3.5 -- Real Property
Schedule 3.6 -- Tangible Personal Property
Schedule 3.7 -- Contracts
Schedule 3.9 -- Intangibles
Schedule 3.10 -- Financial Matters
Schedule 3.11 -- Insurance Policies
Schedule 3.13 -- Employee Matters
Schedule 6.14 -- Form of Noncompetition Agreement
Schedule 8.2(i) -- Form of Opinions of Seller's
Counsel
Schedule 8.3(d) -- Form of Opinion of Buyer's
Counsel
- v -
<PAGE> 8
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 25th day of August,
1995, by and between Channel 13 of St. Louis, Inc., a Florida corporation
("Buyer"), and McEntee Broadcasting, Inc., an Illinois corporation ("Seller").
RECITALS
A. Seller is the licensee of and owns and operates television
station WCEE-TV, Mt. Vernon, Illinois (the "Station") pursuant to licenses
issued by the Federal Communications Commission ("FCC").
B. Seller desires to sell, and Buyer desires to buy,
substantially all the assets that are used or useful in the business or
operations of the Station, for the price and on the terms and conditions set
forth in this Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Seller, intending to be
bound legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of advertising time run on the Station by Seller prior to the Closing
Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) Contracts for the sale of advertising
time on the Station in exchange for merchandise or services entered into in the
ordinary course of business ("Trade Agreements") and that, as of the Closing
Date, do not involve a negative Trade Balance in excess of Twenty-Five Thousand
Dollars ($25,000) in the aggregate, (ii) all Contracts listed in Schedule 3.7
that are specifically designated as Contracts to be assumed by Buyer upon its
purchase of the Station, (iii) any Contracts entered into by Seller between the
date of this Agreement and the Closing Date that Buyer agrees in writing to
assume, and (iv) time sales contracts entered into by Seller in compliance with
Section 5.3.
<PAGE> 9
"Closing" means the consummation of the purchase and sale of the
Assets pursuant to this Agreement in accordance with the provisions of Section
8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer
or otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including any amendments and other
modifications thereto) to which Seller is a party or which are binding upon
Seller and which relate to or affect the Assets or the business or operations
of the Station, and (i) which are in effect on the date of this Agreement or
(ii) which are entered into by Seller between the date of this Agreement and
the Closing Date.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by Seller or under which Seller is licensed or franchised and which are used or
useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local governmental authorities to Seller in connection with the
conduct of the
- 2 -
<PAGE> 10
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real
property, including fee estates, leaseholds and subleaseholds, purchase
options, easements, licenses, rights to access, and rights of way, and all
buildings and other improvements thereon, and other real property interests
which are used or useful in the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property which is used or
useful in the conduct of the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
"Trade Balance" means the difference between the aggregate value of
time owed pursuant to the Trade Agreements and the aggregate value of goods and
services to be received pursuant to the Trade Agreements, determined in
accordance with generally accepted accounting principles. The Trade Balance is
"negative" if the value of time owed exceeds the value of goods and services to
be received.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell, transfer,
and deliver to Buyer on the Closing Date, and Buyer agrees to purchase, all of
the tangible and intangible assets used or useful in connection with the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date, but
excluding the assets described in Section 2.2, free and clear of any claims,
liabilities, security interests, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for liens for current
taxes not yet due and payable), including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
- 3 -
<PAGE> 11
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of Seller
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
(f) All of Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station;
(g) All choses in action of Seller relating to the
Station; and
(h) All books and records relating to the business or
operations of the Station, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept by the Station.
2.2 Excluded Assets. The Assets shall exclude the following
assets:
(a) Seller's cash on hand as of the Closing and all other
cash in any of Seller's bank or savings accounts; any insurance policies,
letters of credit, or other similar items and cash surrender value in regard
thereto; and any stocks, bonds, certificates of deposit and similar
investments;
(b) All books and records that Seller is required by law
to retain and that pertain to Seller's corporate organization;
(c) Any pension, profit-sharing, or employee benefit
plans, and any collective bargaining agreements;
(d) All property listed on Schedule 2.2 hereto; and
(e) The Accounts Receivable as of 12:01 a.m., local time,
on the Closing Date ("Seller's Receivables").
2.3 Purchase Price. The Purchase Price for the Assets and the
covenants of Seller set forth in the Noncompetition Agreement referred to in
Section 6.14 shall be THREE MILLION TWO HUNDRED THOUSAND DOLLARS ($3,200,000)
adjusted as provided below:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses. All expenses
arising from the operation of the Station, including business and license fees,
utility charges, real and personal property taxes and assessments levied
against the Assets, property
- 4 -
<PAGE> 12
and equipment rentals, applicable copyright or other fees, sales and service
charges, taxes (except for taxes arising from the transfer of the Assets under
this Agreement), and similar prepaid and deferred items, shall be prorated
between Buyer and Seller in accordance with the principle that Seller shall be
responsible for all expenses, costs, and liabilities allocable to the period
prior to the Closing Date, and Buyer shall be responsible for all expenses,
costs, and obligations allocable to the period on and after the Closing Date.
Notwithstanding the preceding sentence, there shall be no adjustment for, and
Seller shall remain solely liable with respect to, any Contracts not included
in the Assumed Contracts and any other obligation or liability not being
assumed by Buyer in accordance with Section 2.5.
(b) Manner of Determining Adjustments. Any adjustments
will, insofar as feasible, be determined and paid on the Closing Date, with
final settlement and payment by the appropriate party occurring no later than
ninety (90) days after the Closing Date or such other date as the parties shall
mutually agree upon.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer, at
least two days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of Seller under the Licenses and the Assumed
Contracts insofar as they relate to the time on and after the Closing Date, and
arise out of events related to Buyer's ownership of the Assets or its operation
of the Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or
proceedings relating to the operation of the Station prior to the Closing, (iv)
any obligations or liabilities arising under capitalized leases or other
financing agreements, (v) any obligations or liabilities arising under
agreements entered into other than in the ordinary course of business, (vi) any
obligations or liabilities of Seller under any employee pension, retirement, or
other benefit plans or collective bargaining agreements, (vii) any obligation
to any employee of the Station for severance benefits, vacation time, or sick
leave accrued prior to the Closing Date, (viii) any obligations or liabilities
caused by, arising out of, or resulting from any action or omission of Seller
prior to the Closing, (ix) any cash program contracts, or (x) any obligation
for a negative Trade Balance above
- 5 -
<PAGE> 13
$25,000, and all such obligations and liabilities shall remain and be the
obligations and liabilities solely of Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Illinois. Seller has all requisite power and authority
(i) to own, lease, and use the Assets as now owned, leased, and used, (ii) to
conduct the business and operations of the Station as now conducted, and (iii)
to execute and deliver this Agreement, the Escrow Agreement and the documents
contemplated hereby and thereby, and to perform and comply with all of the
terms, covenants, and conditions to be performed and complied with by Seller
hereunder and thereunder. Seller is not a participant in any joint venture or
partnership with any other person or entity with respect to any part of the
operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement and the Escrow Agreement by Seller
have been duly authorized by all necessary actions on the part of Seller and
its shareholders. This Agreement and the Escrow Agreement have been duly
executed and delivered by Seller and constitute the legal, valid, and binding
obligations of Seller, enforceable against it in accordance with their
respective terms except as the enforceability of this Agreement and the Escrow
Agreement may be affected by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally, and by judicial discretion in the enforcement of
equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the Escrow Agreement and the documents contemplated hereby
and thereby (with or without the giving of notice, the lapse of time, or both):
(i) do not require the consent of any third party; (ii) will not conflict with
any provision of the Articles of Incorporation or Bylaws of Seller; (iii) will
not conflict with, result in a breach of, or constitute a default under, any
law, judgment, order, ordinance, injunction, decree, rule, regulation, or
ruling of any court or governmental instrumentality; (iv) will not conflict
with, constitute grounds for termination of, result in a breach of, constitute
a default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to
which Seller is a party or by which Seller may be bound; and (v) will not
create any claim, liability, mortgage, lien,
- 6 -
<PAGE> 14
pledge, condition, charge, or encumbrance of any nature whatsoever upon any of
the Assets.
3.4 Governmental Licenses. Schedule 3.4 includes a true and
complete list of the Licenses. Seller has delivered to Buyer true and complete
copies of the Licenses (including any amendments and other modifications
thereto). The Licenses have been validly issued, and Seller is the authorized
legal holder thereof. The Licenses listed on Schedule 3.4 comprise all of the
licenses, permits, and other authorizations required from any governmental or
regulatory authority for the lawful conduct of the business and operations of
the Station in the manner and to the full extent they are now conducted, and
none of the Licenses is subject to any restriction or condition that would
limit the full operation of the Station as now operated. The Licenses are in
full force and effect, and the conduct of the business and operations of the
Station is in accordance therewith. Seller has no reason to believe that any
of the Licenses would not be renewed by the FCC or other granting authority in
the ordinary course. The Station's city of license, as determined by the FCC,
is located within the St. Louis, Missouri, Area of Dominant Influence as
defined by the 1991-1992 Area of Dominant Influence Market Guide published by
The Arbitron Co. On or before June 17, 1993, the Station made a valid election
of must carry with respect to each cable system identified on Schedule 3.4,
and, except as described on Schedule 3.4, no cable system identified on
Schedule 3.4 has advised Seller of any signal quality or copyright indemnity or
other prerequisite to cable carriage of the Station's signal, and, except as
described on Schedule 3.4, no cable system identified on Schedule 3.4 has
declined or threatened to decline such carriage or failed to respond to a
request for carriage or sought any form of relief from carriage from the FCC.
3.5 Title to and Condition of Real Property. Schedule 3.5
contains a complete and accurate description of all the Real Property and
Seller's interests therein (including street address, legal description, owner,
and use and the location of all improvements thereon). The Real Property
listed on Schedule 3.5 comprises all real property interests necessary to
conduct the business and operations of the Station as now conducted. Seller
has good and marketable fee simple title, insurable at standard rates, to all
fee estates (including the improvements thereon) included in the Real Property,
free and clear of all liens, mortgages, pledges, covenants, easements,
restrictions, encroachments, leases, charges, and other claims and encumbrances
of any nature whatsoever, and without reservation or exclusion of any mineral,
timber, or other rights or interests, except for liens for real estate taxes
not yet due and payable and liens disclosed on Schedule 3.5. With respect to
each leasehold or subleasehold interest included in the Real Property being
conveyed under this
- 7 -
<PAGE> 15
Agreement so long as Seller fulfills its obligations under the lease therefor,
Seller has enforceable rights to nondisturbance and quiet enjoyment, and no
third party holds any interest in the leased premises with the right to
foreclose upon Seller's leasehold or subleasehold interest. All towers, guy
anchors, and buildings and other improvements included in the Assets are
located entirely on the Real Property listed in Schedule 3.5. Seller has
delivered to Buyer true and complete copies of all deeds pertaining to the Real
Property. All Real Property (including the improvements thereon) (i) is in
good condition and repair consistent with its present use, (ii) is available
for immediate use in the conduct of the business and operations of the Station,
and (iii) complies with all applicable building or zoning codes and the
regulations of any governmental authority having jurisdiction. Seller has full
legal and practical access to the Real Property. All easements, rights-of-way,
and real property licenses have been properly recorded in the appropriate
public recording offices.
3.6 Title to and Condition of Tangible Personal Property.
Schedule 3.6 lists all material items of Tangible Personal Property. The
Tangible Personal Property listed on Schedule 3.6 comprises all material items
of tangible personal property necessary to conduct the business and operations
of the Station as now conducted. Except as described in Schedule 3.6, Seller
owns and has good title to each item of Tangible Personal Property, and none of
the Tangible Personal Property owned by Seller is subject to any security
interest, mortgage, pledge, conditional sales agreement, or other lien or
encumbrance, except for liens for current taxes not yet due and payable.
Except as identified on Schedule 3.6, each item of Tangible Personal Property
is available for immediate use in the business and operations of the Station.
All items of transmitting and studio equipment included in the Tangible
Personal Property (i) have been maintained in a manner consistent with
generally accepted standards of good engineering practice, and (ii) will permit
the Station and any unit auxiliaries thereto to operate in accordance with the
terms of the FCC Licenses and the rules and regulations of the FCC, and with
all other applicable federal, state, and local statutes, ordinances, rules, and
regulations.
3.7 Assumed Contracts. Schedule 3.7 is a true and complete list
of all Assumed Contracts except contracts with advertisers for the sale of
advertising time on the Station for cash at prevailing rates and which have not
been prepaid and which may be canceled by the Station without penalty on not
more than thirty days' notice. Seller has delivered to Buyer true and complete
copies of all written Assumed Contracts, true and complete memoranda of all
oral Assumed Contracts (including any amendments and other modifications to
such Assumed Contracts), and a schedule summarizing Seller's obligations under
trade and barter agreements relating to the
- 8 -
<PAGE> 16
Station. Other than the Assumed Contracts listed on Schedule 3.7 and cash and
barter programming contracts, Seller requires no contract, lease, or other
agreement to enable it to carry on its business as now conducted. All of the
Assumed Contracts are in full force and effect, and are valid, binding, and
enforceable in accordance with their terms. There is not under any Assumed
Contract any default by any party thereto or any event that, after notice or
lapse of time or both, could constitute a default. Seller is not aware of any
intention by any party to any Assumed Contract (i) to terminate such contract
or amend the terms thereof, (ii) to refuse to renew the Assumed Contract upon
expiration of its term, or (iii) to renew the Assumed Contract upon expiration
only on terms and conditions which are more onerous than those now existing.
Except for the need to obtain the Consents listed in Schedule 3.3, Seller has
full legal power and authority to assign its rights under the Assumed Contracts
to Buyer in accordance with this Agreement, and such assignment will not affect
the validity, enforceability, or continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section
6.1 and the other Consents described in Schedule 3.3, no consent, approval,
permit, or authorization of, or declaration to or filing with any governmental
or regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Station in essentially the same manner as
such business and operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Seller has delivered to Buyer copies of
all documents establishing or evidencing all Intangibles. Seller is not
infringing upon or otherwise acting adversely to any trademarks, trade names,
service marks, service names, copyrights, patents, patent applications,
know-how, methods, or processes owned by any other person or persons, and there
is no claim or action pending, or to the knowledge of Seller threatened, with
respect thereto. The Intangibles listed on Schedule 3.9 comprise all
intangible property interests necessary to conduct the business and operations
of the Station as now conducted.
3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of an unaudited (i) balance sheet of Seller as of December 31,
1994, (ii) income statement of Seller for the period from December 28, 1994
through December 31, 1994, and (iii) statement of operations and cash flow for
the Station for the calendar year ended 1994 (collectively, the "Financial
- 9 -
<PAGE> 17
Statements"). The Financial Statements have been prepared from the books and
records of Seller or the Station, have been prepared in accordance with
generally accepted accounting principles consistently applied and maintained
throughout the periods indicated, accurately reflect the books, records, and
accounts of the Seller or the Station (which books, records, and accounts are
complete and correct), are complete and correct in all material respects, and
present fairly the financial condition of the Station as at their respective
dates and the results of operations for the periods then ended. None of the
Financial Statements understates the true costs and expenses of conducting the
business or operations of the Station, fails to disclose any material
contingent liabilities, or inflates the revenues of the Station.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the business
of the Station. All policies of insurance listed in Schedule 3.11 are in full
force and effect. The insurance policies listed in Schedule 3.11 are adequate
in amount with respect to, and for the full value (subject to customary
deductibles) of, the Assets, and insure the Assets and the business of the
Station against all customary and foreseeable risks. During the past three
years, no insurance policy of Seller on the Assets or the Station has been
canceled by the insurer and no application of Seller for insurance has been
rejected by any insurer.
3.12 Reports. All returns, reports, and statements that the
Station is currently required to file with the FCC or with any other
governmental agency have been filed, and all reporting requirements of the FCC
and other governmental authorities having jurisdiction over Seller and the
Station have been complied with. All of such returns, reports, and statements
are substantially complete and correct as filed. Seller has timely paid to the
FCC all annual regulatory fees payable with respect to the FCC Licenses.
3.13 Personnel.
(a) Employees and Compensation. Schedule 3.13 contains a
true and complete list of all employees of the Station, their job titles, date
of hire, current salary and date and amount of last salary increase. Schedule
3.13 also contains a true and complete list as of the date of this Agreement of
all employee benefit plans or arrangements applicable to the employees of the
Station and all fixed or contingent liabilities or obligations of Seller with
respect to any person now or formerly employed by Seller at the Station,
including pension or thrift plans, individual or supplemental pension or
accrued compensation arrangements, contributions to hospitalization or other
health or life insurance programs, incentive plans, bonus arrangements, and
vacation, sick
- 10 -
<PAGE> 18
leave, disability and termination arrangements or policies, including workers'
compensation policies, and a description of all fixed or contingent liabilities
or obligations of Seller with respect to any person now or formerly employed at
the Station or any person now or formerly retained as an independent contractor
at the Station. Seller has furnished Buyer with true and complete copies of
all employee handbooks, employee rules and regulations, and summary plan
descriptions of the written plans and arrangements listed in Schedule 3.13, and
with descriptions, in writing, of the unwritten plans and arrangements listed
in Schedule 3.13. At Buyer's request, Seller will furnish Buyer with true and
complete copies of all applicable plan documents, trust documents, and
insurance contracts with respect to the plans and arrangements listed on
Schedule 3.13. All employee benefits and welfare plans or arrangements listed
in Schedule 3.13 were established and have been executed, managed and
administered in accordance with the Internal Revenue Code of 1986, as amended,
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
all other laws. Seller is not aware of the existence of any governmental audit
or examination of any of such plans or arrangements or of any facts which would
lead it to believe that any such audit or examination is pending or threatened.
No action, suit, or claim with respect to any of such plans or arrangements
(other than routine claims for benefits) is pending or, to the knowledge of
Seller, threatened, and Seller possesses no knowledge of any facts which could
give rise to any such action, suit or claim.
(b) Labor Relations. Seller is not a party to or subject
to any collective bargaining agreements with respect to the Station. Seller
has no written or oral contracts of employment with any employee of the
Station, other than those listed in Schedule 3.7. Seller has complied with all
laws, rules, and regulations relating to the employment of labor, including
those related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payroll related
taxes, and it has not received any notice alleging that it has failed to comply
in any material respect with any such laws, rules, or regulations. No
controversies, disputes, or proceedings are pending or, to the best of its
knowledge, threatened, between it and any employee (singly or collectively) of
the Station. No labor union or other collective bargaining unit represents or
claims to represent any of the employees of the Station. To Seller's
knowledge, there is no union campaign being conducted to solicit cards from
employees to authorize a union to request a National Labor Relations Board
certification election with respect to any employees at the Station.
(c) Liabilities. Seller has no liability of any kind to
or in respect of any employee benefit plan, including withdrawal liability
under Section 4201 of ERISA. Seller has not incurred any
- 11 -
<PAGE> 19
accumulated funding deficiency within the meaning of ERISA or Section 4971 of
the Internal Revenue Code. Seller has not failed to make any required
contributions to any employee benefit plan. The Pension Benefit Guaranty
Corporation has not asserted that Seller has incurred any liability in
connection with any such plan. No lien has been attached and no person has
threatened to attach a lien on any property of Seller as a result of a failure
to comply with ERISA.
3.14 Taxes. Seller has filed or caused to be filed all federal
income tax returns and all other federal, state, county, local, or city tax
returns which are required to be filed, and it has paid or caused to be paid
all taxes shown on those returns or on any tax assessment received by it to the
extent that such taxes have become due, or has set aside on its books adequate
reserves (segregated to the extent required by generally accepted accounting
principles) with respect thereto. There are no governmental investigations or
other legal, administrative, or tax proceedings pursuant to which Seller is or
could be made liable for any taxes, penalties, interest, or other charges, the
liability for which could extend to Buyer as transferee of the business of the
Station, and no event has occurred that could impose on Buyer any transferee
liability for any taxes, penalties, or interest due or to become due from
Seller.
3.15 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry, there is no claim,
legal action, counterclaim, suit, arbitration, governmental investigation or
other legal, administrative, or tax proceeding, nor any order, decree or
judgment, in progress or pending, or to the knowledge of Seller threatened,
against or relating to Seller with respect to its ownership or operation of the
Station or otherwise relating to the Assets or the business or operations of
the Station, nor does Seller know or have reason to be aware of any basis for
the same. In particular, but without limiting the generality of the foregoing,
there are no applications, complaints or proceedings pending or, to the best of
its knowledge, threatened (i) before the FCC relating to the business or
operations of the Station other than rule making proceedings which affect the
television industry generally, (ii) before any federal or state agency relating
to the business or operations of the Station involving charges of illegal
discrimination under any federal or state employment laws or regulations, or
(iii) before any federal, state, or local agency relating to the business or
operations of the Station involving zoning issues under any federal, state, or
local zoning law, rule, or regulation.
- 12 -
<PAGE> 20
3.16 Environmental Matters.
(a) Seller has complied in all material respects with all
laws, rules, and regulations of all federal, state, and local governments (and
all agencies thereof) concerning the environment, public health and safety, and
employee health and safety, and no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been filed or commenced
against Seller in connection with its ownership or operation of the Station
alleging any failure to comply with any such law, rule, or regulation.
(b) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and there is no basis related to the past or present
operations, properties, or facilities of Seller for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand against Seller giving rise to any such liability) under any law, rule,
or regulation of any federal, state, or local government (or agency thereof)
concerning release or threatened release of hazardous substances, public health
and safety, or pollution or protection of the environment.
(c) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and Seller has not handled or disposed of any substance,
arranged for the disposal of any substance, or owned or operated any property
or facility in any manner that could form the basis for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand (under the common law or pursuant to any statute) against Seller giving
rise to any such liability) for damage to any site, location, or body of water
(surface of subsurface) or for illness or personal injury.
(d) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and there is no basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
against Seller giving rise to any such liability) under any law, rule, or
regulation of any federal, state, or local government (or agency thereof)
concerning employee health and safety.
(e) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and Seller has not exposed any employee to any substance or
condition that could form the basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
(under the
- 13 -
<PAGE> 21
common law or pursuant to statute) against Seller giving rise to any such
liability) for any illness or personal injury to any employee.
(f) In connection with its ownership or operation of the
Station, Seller has obtained and been in compliance in all material respects
with all of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all federal,
state, and local laws, rules, and regulations (including all codes, plans,
judgments, orders, decrees, stipulations, injunctions, and charges thereunder)
relating to public health and safety, worker health and safety, and pollution
or protection of the environment, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
(g) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by Seller in
connection with its ownership and operation of the Station or, to the best of
Seller's knowledge, after due investigation, by any other party on any Real
Property.
3.17 Compliance with Laws. Seller has complied in all material
respects with the Licenses and all federal, state, and local laws, rules,
regulations, and ordinances applicable or relating to the ownership and
operation of the Station. Neither the ownership or use of the properties of
the Station nor the conduct of the business or operations of the Station
conflicts with the rights of any other person or entity.
3.18 Conduct of Business in Ordinary Course. Seller has conducted
the business and operations of the Station only in the ordinary course and has
not:
(a) Suffered any material adverse change in the business,
assets, or properties of the Station, including any damage, destruction, or
loss affecting any assets used or useful in the conduct of the business of the
Station;
(b) Made any material increase in compensation payable or
to become payable to any of the employees of the Station, or any bonus payment
made or promised to any employee of the Station, or
- 14 -
<PAGE> 22
any material change in personnel policies, employee benefits, or other
compensation arrangements affecting the employees of the Station;
(c) Made any sale, assignment, lease, or other transfer
of any of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(d) Canceled any debts owed to or claims held by Seller
with respect to the Station, except in the normal and usual course of business;
(e) Suffered any material write-down of the value of any
Assets or any material write-off as uncollectible of any accounts receivable of
the Station; or
(f) Transferred or granted any right under, or entered
into any settlement regarding the breach or infringement of, any license,
patent, copyright, trademark, trade name, franchise, or similar right, or
modified any existing right relating to the Station.
3.19 Transactions with Affiliates. Seller has not been involved in
any business arrangement or relationship relating to the Station with any
affiliate of Seller, and no affiliate of Seller owns any property or right,
tangible or intangible, which is used in the business of the Station. As used
in this paragraph, "affiliate" has the meaning set forth in Rule 12b-2
promulgated under the Securities and Exchange Act of 1934.
3.20 Broker. Neither Seller nor any person acting on Seller's
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement,
except for a commission payable by Seller to Force Communications, Inc.
3.21 Full Disclosure. No representation or warranty made by Seller
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing
- 15 -
<PAGE> 23
under the laws of the State of Florida and at Closing will be duly qualified to
conduct business as a foreign corporation in the State of Illinois. Buyer has
all requisite power and authority to execute and deliver this Agreement and the
Escrow Agreement and the documents contemplated hereby and thereby, and to
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement and the Escrow Agreement by Buyer
have been duly authorized by all necessary actions on the part of Buyer. This
Agreement and the Escrow Agreement have been duly executed and delivered by
Buyer and constitute the legal, valid, and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms except as
the enforceability of this Agreement and the Escrow Agreement may be affected
by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the Escrow Agreement and the documents contemplated hereby and thereby
(with or without the giving of notice, the lapse of time, or both): (i) do not
require the consent of any third party; (ii) will not conflict with the
Articles of Incorporation or Bylaws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Full Disclosure. No representation or warranty made by Buyer
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
4.5 Buyer Qualifications. Buyer is legally, financially and
otherwise qualified to be the licensee of, acquire, own and operate the Station
under the Communications Act of 1934, as now in effect, and the rules,
regulations and policies of the FCC as now in effect and to perform its
obligations hereunder. Buyer knows of no fact that would, under existing law
and the existing rules, regulations,
- 16 -
<PAGE> 24
policies and procedures of the FCC disqualify Buyer as an assignee of the FCC
Licenses or as the owner and operator of the Station.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall operate the Station diligently in
the ordinary course of business in accordance with its past practices (except
where such conduct would conflict with the following covenants or with Seller's
other obligations under this Agreement), and in accordance with the other
covenants in this Section 5.
5.2 Compensation. Seller shall not increase the compensation,
bonuses, or other benefits payable or to be payable to any person employed in
connection with the conduct of the business or operations of the Station,
except in accordance with past practices.
5.3 Contracts. Seller will not enter into any contract or
commitment relating to the Station or the Assets, or amend or terminate any
Contract (or waive any material right thereunder), or incur any obligation
(including obligations relating to the borrowing of money or the guaranteeing
of indebtedness) that will be binding on Buyer after Closing, except for (i)
cash time sales agreements made in the ordinary course of business, and (ii)
barter programming agreements entered into by Seller following the date hereof
with the prior written consent of Buyer, which consent shall not be
unreasonably withheld. Prior to the Closing Date, Seller shall deliver to
Buyer a list of all Contracts entered into between the date of this Agreement
and the Closing Date, together with copies of such Contracts.
5.4 Disposition of Assets. Seller shall not sell, assign, lease,
or otherwise transfer or dispose of any of the Assets, except where no longer
used or useful in the business or operations of the Station or in connection
with the acquisition of replacement property of equivalent kind and value.
5.5 Encumbrances. Seller shall not create, assume or permit to
exist any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets, except for (i) liens
disclosed on Schedule 3.5 and Schedule 3.6, which shall be removed prior to the
Closing Date, (ii) liens for current taxes not yet due and payable, and (iii)
mechanics' liens and other similar liens, which shall be removed prior to the
Closing Date.
5.6 Licenses. Seller shall not cause or permit, by any act or
failure to act, any of the Licenses to expire or to be revoked,
- 17 -
<PAGE> 25
suspended, or modified, or take any action that could cause the FCC or any
other governmental authority to institute proceedings for the suspension,
revocation, or adverse modification of any of the Licenses. Seller shall not
fail to prosecute with due diligence any applications to any governmental
authority in connection with the operation of the Station.
5.7 Rights. Seller shall not waive any right relating to the
Station or any of the Assets. Seller shall not cause, by any act, any cable
system located within the Station's Area of Dominant Influence to refuse to
carry the Station's signal. At Buyer's request and expense, Seller shall
cooperate with Buyer and use its best efforts to cause the Station to be
carried on the cable systems located within the St. Louis, Missouri Area of
Dominant Influence that do not currently carry the Station.
5.8 No Inconsistent Action. Seller shall not take any action that
is inconsistent with its obligations under this Agreement or that could hinder
or delay the consummation of the transactions contemplated by this Agreement.
5.9 Access to Information. Seller shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives
reasonable access to the Assets and to all other properties, equipment, books,
records, Contracts, and documents relating to the Station for the purpose of
audit and inspection, including inspections incident to the environmental study
described in Section 6.5 and the engineering study described in Section 6.6,
and will furnish or cause to be furnished to Buyer or its authorized
representatives all information with respect to the affairs and business of the
Station that Buyer may reasonably request (including any financial reports and
operations reports produced with respect to the affairs and business of the
Station). Without limiting the generality of the foregoing, Seller shall give
Buyer and its counsel, accountants and other authorized representatives
reasonable access to Seller's financial records and Seller's employees,
counsel, accountants and other representatives for the purpose of preparing and
auditing such financial statements as Buyer determines, in its sole judgment,
are required or advisable to comply with federal or state securities laws and
the rules and regulations of securities markets as a result of the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
5.10 Maintenance of Assets. Seller shall use its best efforts and
take all reasonable actions to maintain all of the Assets in good condition
(ordinary wear and tear excepted), and use, operate, and maintain all of the
Assets in a reasonable manner and in accordance with the terms of the FCC
Licenses, all rules and regulations of the FCC and generally accepted standards
of good
- 18 -
<PAGE> 26
engineering practice. Seller shall maintain inventories of spare parts and
expendable supplies at levels consistent with past practices. If any loss,
damage, impairment, confiscation, or condemnation of or to any of the Assets
occurs, Seller shall repair, replace, or restore the Assets to their prior
condition as represented in this Agreement as soon thereafter as possible, and
Seller shall use the proceeds of any claim under any insurance policy solely to
repair, replace, or restore any of the Assets that are lost, damaged, impaired,
or destroyed.
5.11 Insurance. Seller shall maintain the existing insurance
policies on the Station and the Assets.
5.12 Consents. Seller shall obtain the Consents and the estoppel
certificates described in Section 8.2(b), without any change in the terms or
conditions of any Contract or License that could be less advantageous to the
Station than those pertaining under the Contract or License as in effect on the
date of this Agreement. Seller shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon Buyer's request, Seller
shall cooperate with Buyer and use it best efforts to obtain from the lessors
under each Real Property lease such estoppel certificates and consents to the
collateral assignment of the lessee's interest under each such lease as Buyer's
senior lenders may request.
5.13 Books and Records. Seller shall maintain its books and
records relating to the Station in accordance with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing
of any unusual or material developments with respect to the business or
operations of the Station, and of any material change in any of the information
contained in Seller's representations and warranties contained in Section 3 of
this Agreement.
5.15 Financial Information. Seller shall furnish to Buyer within
thirty days after the end of each month ending between the date of this
Agreement and the Closing Date a statement of income and expense and a
statement of operating cash flow for the month just ended and such other
financial information (including information on payables and receivables) as
Buyer may reasonably request. All financial information delivered by Seller to
Buyer pursuant to this Section shall be prepared from the books and records of
Seller in accordance with generally accepted accounting principles consistently
applied, shall accurately reflect the books, records, and accounts of the
Station, shall be complete and correct in all material respects, and shall
present fairly the financial condition of the Station as at their respective
dates and the results of operations for the periods then ended.
- 19 -
<PAGE> 27
5.16 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Station.
5.17 Financing Leases. Seller will satisfy at or prior to Closing
all outstanding obligations under capital and financing leases with respect to
any of the Assets and obtain good title to the Assets leased by Seller pursuant
to those leases so that those Assets shall be transferred to Buyer at Closing
free of any interest of the lessors.
5.18 Programming. Seller shall not make any material changes in
the broadcast hours or in the percentages of types of programming broadcast by
the Station, or make any other material change in the Station's programming
policies, except such changes as in the good faith judgment of the Seller are
required by the public interest.
5.19 Preservation of Business. Seller shall use its best efforts
to preserve the business and organization of the Station and use its best
efforts to keep available to the Station its present employees and to preserve
the audience of the Station and the Station's present relationships with
suppliers, advertisers, and others having business relations with it, to the
end that the business, operations, and prospects of the Station shall be
unimpaired at the Closing Date. The ordinary and customary operating,
marketing, promotional, sales, and advertising practices of the Station shall
be maintained.
5.20 Personnel Recommendations. Seller shall promptly notify Buyer
as personnel vacancies occur at the Station and consider for employment all
personnel recommended by Buyer for such vacant positions.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with
the purchase and sale of the Assets pursuant to this Agreement shall be subject
to the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an
appropriate application for the FCC Consent and shall file the application with
the FCC within five (5) business days of the date of this Agreement. The
parties shall prosecute the application with all reasonable diligence and
otherwise use their best efforts to obtain a grant of the application as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on it by the FCC Consent, except that no party shall be
- 20 -
<PAGE> 28
required to comply with a condition if (1) the condition was imposed on it as
the result of a circumstance the existence of which does not constitute a
breach by the party of any of its representations, warranties, or covenants
under this Agreement, and (2) compliance with the condition would have a
material adverse effect upon it. Buyer and Seller shall oppose any requests
for reconsideration or judicial review of the FCC Consent. If the Closing
shall not have occurred for any reason within the original effective period of
the FCC Consent, and neither party shall have terminated this Agreement under
Section 9, the parties shall jointly request an extension of the effective
period of the FCC Consent. No extension of the FCC Consent shall limit the
exercise by either party of its rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of Seller until the Closing.
6.3 Risk of Loss.
(a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing.
(b) If any damage or destruction of the Assets or any
other event occurs which (i) causes the Station to cease broadcasting
operations for a period of three or more days or (ii) prevents in any material
respect signal transmission by the Station in the normal and usual manner and
Seller fails to restore or replace the Assets so that normal and usual
transmission is resumed within seven days of the damage, destruction or other
event, Buyer,
- 21 -
<PAGE> 29
in its sole discretion, may (x) terminate this Agreement forthwith without any
further obligations hereunder upon written notice to Seller, in which event all
funds held by the Escrow Agent pursuant to the Escrow Agreement, including all
interest and other proceeds from the investment of such funds, shall be
immediately returned to Buyer, or (y) proceed to consummate the transaction
contemplated by this Agreement and complete the restoration and replacement of
the Assets after the Closing Date, in which event Seller shall deliver to Buyer
all insurance proceeds received in connection with such damage, destruction or
other event.
6.4 Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Environmental Audit. Buyer may, at its option and expense,
retain an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Station. If the survey discloses
any material environmental hazard or material possibility of future liability
for environmental damages or clean-up costs, Buyer shall so notify Seller as
soon as practicable.
6.6 Engineering Study. Buyer may, at its option and expense,
retain an engineering firm to conduct a proof of performance study of the
Station and to prepare a report on the Station's compliance with customary
engineering practices and all applicable FCC rules, regulations, prescribed
practices, and technical standards. If the survey discloses any material
deficiencies in the operations or equipment of the Station, Buyer shall so
notify Seller as soon as practicable.
6.7 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, Buyer shall have no
- 22 -
<PAGE> 30
obligation (i) to expend funds to obtain any of the Consents or (ii) to agree
to any adverse change in any License or Assumed Contract to obtain a Consent
required with respect thereto.
6.8 Bulk Sales Law. If applicable, the Bulk Sales law of the
State of Illinois shall be complied with by Seller. Any loss, liability,
obligation, or cost suffered by Seller or Buyer as the result of the failure of
Seller or Buyer to comply with the provisions of any bulk sales law applicable
to the transfer of the Assets as contemplated by this Agreement shall be borne
by Seller.
6.9 Title Insurance and Surveys.
(a) Title Insurance on Fee Property. With respect to
each parcel of Real Property that Seller owns, Seller will obtain and deliver
to Buyer, at Seller's expense, at or prior to Closing, an ALTA Owner's Policy
of Title Insurance Form B-1987 (or equivalent policy acceptable to Buyer),
issued by a title insurer satisfactory to Buyer, in an amount equal to the fair
market value of the property and any improvements thereon (as reasonably
determined by Buyer), insuring title to such parcel to be in the name of Buyer
as of the Closing, subject only to liens or encumbrances expressly permitted by
this Agreement.
(b) General Requirements as to Title Insurance Policies.
Each title insurance policy obtained and delivered to Buyer pursuant to this
Agreement shall (1) insure title to the Real Property described in the policy
and all recorded easements benefitting such Real Property, (2) contain an
"extended coverage endorsement" insuring over the general exceptions
customarily contained in title policies, (3) contain an ALTA Zoning Endorsement
3.1 (or equivalent), (4) contain an endorsement insuring that the Real Property
described in the policy is the same real estate shown in the survey delivered
with respect to such property, (5) contain an inflation endorsement, (6)
contain a "contiguity" endorsement with respect to any Real Property consisting
of more than one record parcel, and (7) not be subject to any survey exception
or any defect or encroachment disclosed by a survey delivered with respect to
the property.
(c) Surveys. With respect to each parcel of Real
Property, as to which a title insurance policy is to be procured pursuant to
this Agreement, Seller will procure a current survey of the parcel, prepared by
a licensed surveyor and conforming to current ALTA Minimum Detail Requirements
for Land Title Surveys, disclosing the location of all improvements, easements,
party walls, sidewalks, roadways, utility lines, and other matters customarily
shown on such surveys, and showing access affirmatively to public streets and
roads.
- 23 -
<PAGE> 31
(d) Other Matters. At Buyer's request and expense,
Seller will cooperate with Buyer and use its best efforts to cause all lease
agreements relating to the Real Property to be recorded in the appropriate
public recording offices and to obtain from the lessors under such lease
agreements such estoppel certificates and consents to the collateral assignment
of the lessee's interest under each such lease as Buyer's lenders may
reasonably request.
6.10 Sales Tax Filings. Seller shall continue to file Illinois
sales tax returns with respect to the Station in accordance with Seller's past
practices and shall concurrently deliver copies of all such returns to Buyer.
6.11 Access to Books and Records. Seller shall provide Buyer
access and the right to copy for a period of three years from the Closing Date
any books and records relating to the Assets. Buyer shall provide Seller
access and the right to copy for a period of three years from the Closing Date
any books and records relating to assets not included in the Assets.
6.12 Appraisal. Buyer and Seller agree to allocate the Purchase
Price for tax and recording purposes in accordance with an appraisal to be
conducted by an appraisal firm selected and paid for by Buyer with experience
in the valuation and appraisal of television station assets.
6.13 Broker. Buyer and Seller each represents and warrants that
neither it nor any person or entity acting on its behalf has incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transactions contemplated by this Agreement, except for a commission
payable to Force Communications, Inc. by Seller. Seller shall pay on or before
the Closing Date all fees or commissions payable to Force Communications, Inc.
in connection with the transactions contemplated by this Agreement.
6.14 Noncompetition Agreement. At Closing, Buyer and Seller shall
enter into a Noncompetition Agreement in the form of Schedule 6.14 and $64,000
of the Purchase Price shall be allocated to the covenants of Seller set forth
therein on the Closing Date.
6.15 Collection of Accounts Receivable.
(a) Collection. At the Closing, Seller shall designate
Buyer as its agent solely for the purposes of collecting Seller's Receivables.
Buyer shall make reasonable efforts to collect Seller's Receivables during the
"Collection Period," which shall be the period beginning on the Closing Date
and ending on the last day of the sixth calendar month beginning after the
Closing Date. Buyer shall not be obligated to use any extraordinary efforts to
- 24 -
<PAGE> 32
collect any of Seller's Receivables or to refer any of Seller's Receivables to
a collection agency or attorney for collection, and Buyer shall not make any
such referral or compromise, nor settle or adjust the amount of any of Seller's
Receivables, except with the approval of Seller. During the Collection Period,
neither Seller nor its agents shall make any direct solicitation with respect
to Seller's Receivables.
(b) Payments. All collections of Seller's Receivables by
Buyer shall be applied first to any account specifically identified by the
account debtor or, if none is designated, to the oldest invoice of the account
debtor, unless such invoice is in dispute. On or before the tenth day after
the end of each full calendar month during the Collection Period, Buyer shall
furnish to Seller (i) a list of the amounts collected before the end of such
month with respect to Seller's Receivables, and (ii) the amount collected
during such month with respect to Seller's Receivables. On or before the
twentieth day after the end of the Collection Period, Buyer shall furnish
Seller with a list of all of Seller's Receivables which remain uncollected at
the end of the Collection Period.
(c) Further Obligations. After the expiration of the
Collection Period, Buyer shall have no further obligation hereunder other than
to make the payment under Section 6.15(b) and to remit to Seller any payments
with respect to any of Seller's Receivables that Buyer subsequently receives,
and Seller itself shall act to collect any of Seller's Receivables that
continue to remain uncollected.
6.16 St. Louis DMA. Seller shall use its best efforts to cause
Nielsen Media Research ("Nielsen") to redesignate the location of the Station
from the Paducah-Cape Girardeau-Harrisburg-Mt. Vernon Designated Market Area
(the "Paducah DMA"), as defined by the 1994 United States Television Household
Estimates published by Nielsen, to the St. Louis Designated Market Area (the
"St. Louis DMA"), as defined by Nielsen, as soon as practicable following the
date hereof and shall promptly deliver to Buyer copies of all correspondence
among Seller, its counsel and Nielsen relating to such efforts.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER
AND SELLER AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing are subject at Buyer's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
- 25 -
<PAGE> 33
(a) Representations and Warranties. All representations
and warranties of Seller contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Seller shall have
performed and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
it prior to or on the Closing Date.
(c) Consents. All Consents designated as "material" on
Schedule 3.3 shall have been obtained and delivered to Buyer without any
materially adverse change in the terms or conditions of any agreement or any
governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied
with by Buyer under Section 6.1 hereof, Seller shall have complied with any
conditions imposed on it by the FCC Consent, and the FCC Consent shall have
become a Final Order.
(e) Governmental Authorizations. Seller shall be the
holder of all Licenses and there shall not have been any modification of any
License that could have a material adverse effect on the Station or the conduct
of its business and operations. No proceeding shall be pending the effect of
which could be to revoke, cancel, fail to renew, suspend, or modify adversely
any License.
(f) Deliveries. Seller shall have made or stand willing
to make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change in the
assets, or properties of the Station, including any damage, destruction, or
loss affecting any assets used or useful in the conduct of the business of the
Station.
(h) St. Louis DMA. Nielsen shall have officially
redesignated the location of the Station from the Paducah DMA to the St. Louis
DMA.
7.2 Conditions to Obligations of Seller. All obligations of
Seller at the Closing are subject at Seller's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true
- 26 -
<PAGE> 34
and complete in all material respects at and as of the Closing Date as though
made at and as of that time.
(b) Covenants and Conditions. Buyer shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing
to make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00
a.m. on a date, to be set by Buyer on at least five days' written notice to
Seller, that is (1) not earlier than the first business day after the FCC
Consent is granted, and (2) not later than (x) January 31, 1996, if the FCC
Consent has become a Final Order on or before January 31, 1996, or (y) ten
business days following the date upon which the FCC Consent has become a Final
Order, if the FCC Consent becomes a Final Order after January 31, 1996;
provided, however, that in no event shall the Closing take place prior to
January 2, 1996.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson, 1255 Twenty-third Street, N.W., Suite 500,
Washington, D.C. 20037, or any other place that is agreed upon by Buyer and
Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty bills of
sale, deeds, motor vehicle titles, assignments, and other transfer documents
which shall be sufficient to vest good and marketable title to the Assets in
the name of Buyer, free and clear of all mortgages, liens, restrictions,
encumbrances, claims, and obligations except for liens for current taxes not
yet due and payable;
- 27 -
<PAGE> 35
(b) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property and estoppel certificates of contracting parties to those Assumed
Contracts listed in Schedule 3.7 that are designated to indicate that estoppel
certificates are required under this paragraph;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Seller by its President, certifying (1)
that the representations and warranties of Seller contained in this Agreement
are true and complete in all material respects as of the Closing Date as though
made on and as of that date; and (2) that Seller has in all material respects
performed and complied with all of its obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to
the Closing Date;
(e) Title Insurance and Surveys. The title insurance and
surveys described in Section 6.9;
(f) Tax, Lien, and Judgment Searches. Results of a
search for tax, lien, and judgment filings in the Secretary of State's records
of the State of Illinois as well as the records of those counties in Illinois
in which any of the Assets are located, such searches having been made no
earlier than fifteen days prior to the Closing Date;
(g) Licenses, Contracts, Business Records, Etc. Copies
of all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by
Seller in connection with its operations;
(h) Accounts Receivable. A complete and accurate list of
the Station's accounts receivable as of a date no more than five business days
prior to the Closing Date, including, with respect to each of the accounts
receivable, the account number, date of issuance, name and address of account
debtor, aggregate amount, and balance due;
(i) Opinion of Counsel. An Opinion of Seller's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.2(i)
hereto;
(j) Noncompetition Agreement. The Noncompetition
Agreement in the form as Schedule 6.14, duly executed on behalf of Seller;
- 28 -
<PAGE> 36
(k) Lenders Certificates. Such certificates and
confirmations to Buyer's senior lenders as Buyer may reasonably request in
connection with obtaining financing for the performance of its payment
obligations hereunder; and
(l) St. Louis DMA. A copy of an official report or other
document published or issued by Nielsen that formally redesignates the location
of the Station from the Paducah DMA to the St. Louis DMA.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in
Section 2.4;
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Seller's obligations under the Licenses and Assumed Contracts arising on or
after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Buyer by its Chairman or President,
certifying (1) that the representations and warranties of Buyer contained in
this Agreement are true and complete in all material respects as of the Closing
Date as though made on and as of that date, and (2) that Buyer has in all
material respects performed and complied with all of its obligations,
covenants, and agreements set forth in this Agreement to be performed and
complied with on or prior to the Closing Date;
(d) Opinion of Counsel. An opinion of Buyer's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3(d)
hereto.
(e) Noncompetition Agreement. The Noncompetition
Agreement in the form of Schedule 6.14 duly executed by Buyer and the payment
of $64,000 to Seller thereunder.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations
- 29 -
<PAGE> 37
of Seller set forth in this Agreement have not been reasonably satisfied or
waived in writing by Seller.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
by March 31, 1996.
(d) Nielsen. If Nielsen shall have determined that the
location of the Station shall not be redesignated from the Paducah DMA to the
St. Louis DMA; provided, however, that Seller's right to terminate this
Agreement pursuant to this Section 9.1(d) shall not be effective unless Seller
provides written notice to Buyer of such termination within ten (10) business
days following such determination by Nielsen.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Station abandoned, if Buyer is not then
in material default, upon written notice to Seller, upon the occurrence of any
of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer
set forth in this Agreement have not been reasonably satisfied or waived in
writing by Buyer.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
by March 31, 1996.
(d) Interruption of Service. If any event shall have
occurred that prevented signal transmission of the Station as described in
Section 6.3(b).
(e) Environmental Hazards. Buyer shall have notified
Seller of material environmental hazards or the material possibility of
environmental damages or clean-up costs, as indicated in the environmental
study described in Section 6.5, within 30 days prior to the Closing Date, and
the cause thereof shall not have been remedied prior to the Closing Date.
(f) Technical Deficiencies. Buyer shall have notified
Seller of material deficiencies in the operations or equipment of the Station,
as indicated in the engineering study described in Section 6.6, within 30 days
prior to the Closing Date, and the
- 30 -
<PAGE> 38
cause thereof shall not have been remedied prior to the Closing Date.
(g) Nielsen. If Nielsen shall have determined that the
location of the Station shall not be redesignated from the Paducah DMA to the
St. Louis DMA; provided, however, that Buyer's right to terminate this
Agreement pursuant to this Section 9.2(g) shall not be effective unless Buyer
provides written notice to Seller of such termination within ten (10) business
days following such determination by Nielsen.
9.3 Rights on Termination. If this Agreement is terminated
pursuant to Section 9.1 or Section 9.2 and neither party is in material breach
of any provision of this Agreement, the parties hereto shall not have any
further liability to each other with respect to the purchase and sale of the
Assets. If this Agreement is terminated by Seller due to Buyer's material
breach of any provision of this Agreement, then the payment to Seller of
$300,000 pursuant to Section 9.4 below shall be liquidated damages and shall
constitute full payment and the exclusive remedy for any damages suffered by
Seller by reason of Buyer's material breach of this Agreement. Seller and
Buyer agree in advance that actual damages would be difficult to ascertain and
that the amount of $300,000 is a fair and equitable amount to reimburse Seller
for damages sustained due to Buyer's material breach of this Agreement. If
- 31 -
<PAGE> 39
this Agreement is terminated by Buyer due to Seller's material breach of any
provision of this Agreement, Buyer shall have all rights and remedies available
at law or equity.
9.4 Escrow Deposit. Simultaneous with the execution and delivery
of this Agreement, Buyer has deposited with First Union National Bank of
Florida (the "Escrow Agent") the sum of $300,000 in accordance with an Escrow
Agreement among Buyer, Seller and the Escrow Agent (the "Escrow Agreement").
All such funds deposited with the Escrow Agent shall be held and disbursed in
accordance with the terms of the Escrow Agreement and the following provisions:
(a) At the Closing, all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, shall be disbursed to or at
the direction of Buyer.
(b) If this Agreement is terminated pursuant to Section
9.1 or 9.2 and Buyer is not in material breach of any provision of this
Agreement, all amounts held by the Escrow Agent pursuant to the Escrow
Agreement, including any interest or other proceeds from the investment of
funds held by the Escrow Agent, shall be disbursed to or at the direction of
Buyer.
(c) If this Agreement is terminated by Seller due to
Buyer's material breach of this Agreement, then all amounts held by the Escrow
Agent pursuant to the Escrow Agreement shall be disbursed to or at the
direction of Seller as liquidated damages under Section 9.3 above and any
interest or other proceeds from the investment of funds held by the Escrow
Agent shall be disbursed by the Escrow Agent to or at the direction of Buyer.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
twelve months. Any investigations by or on behalf of any party hereto shall
not constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
Seller shall affect Buyer's right to rely on any representation or warranty
made by Seller or relieve Seller of any obligations under this Agreement as the
result of a breach of any of its representations and warranties.
10.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or
any information Buyer may have, Seller hereby
- 32 -
<PAGE> 40
agrees to indemnify and hold Buyer harmless against and with respect to, and
shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Seller contained in this Agreement or in any certificate, document,
or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by
Buyer pursuant to this Agreement, including any liabilities arising at any time
under any Contract not included in the Assumed Contracts.
(c) Any loss, liability, obligation, or cost resulting
from the failure of the parties to comply with the provisions of any bulk sales
law applicable to the transfer of the Assets.
(d) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station prior to the Closing, including
any liabilities arising under the Licenses or the Assumed Contracts which
relate to events occurring prior the Closing Date.
(e) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer hereby agrees to indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, document,
or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station on and after the Closing.
- 33 -
<PAGE> 41
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim. If the claim relates to an action, suit, or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant within five days
after written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate
in the defense of any third party
- 34 -
<PAGE> 42
claim, it shall be bound by the results obtained by the Claimant with respect
to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnifications rights provided in Sections 10.2
and 10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other
remedies that may be available, including money damages, to obtain specific
performance of the terms of this Agreement. If any action is brought by Buyer
to enforce this Agreement, Seller shall waive the defense that there is an
adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either party
which results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing party shall be entitled to reimbursement from
the other party of its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Seller
to Buyer pursuant to this Agreement shall be paid by Seller. All fees payable
to the Escrow Agent pursuant to the terms of the Escrow Agreement shall be paid
by Buyer. Buyer and Seller shall each pay one- half of all filing fees
required by the FCC in connection with the application for FCC Consent. Except
as otherwise provided in this Agreement, each party shall pay its own expenses
incurred in connection with the authorization, preparation, execution, and
performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and representatives, and each party shall be responsible
for all fees or commissions payable to any finder, broker, advisor, or similar
person retained by or on behalf of such party.
- 35 -
<PAGE> 43
11.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT
REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
11.3 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed
to have been given on the date of personal delivery or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
If to Seller: William J. McEntee, Jr., President
McEntee Broadcasting, Inc.
2001 Palm Beach Lakes Blvd.
West Palm Beach, FL 33409
With a copy to: Michael H. Bader, Esq.
Haley Bader & Potts
4350 N. Fairfax Drive
Suite 900
Arlington, VA 22203
If to Buyer: James L. West, Chairman
The Christian Network, Inc.
14444 66th Street North
Clearwater, FL 34624
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson
1255 23rd St., N.W.
Washington, D.C. 20037
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.3.
11.4 Benefit and Binding Effect. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement to one or more subsidiaries or commonly controlled affiliates of
Buyer without seeking or obtaining Seller's prior approval in which event Buyer
shall have no further obligation hereunder and Buyer may collaterally assign
its rights and interests hereunder to its senior lenders without seeking or
obtaining Seller's prior approval. Upon any permitted assignment by Buyer or
Seller in accordance with this Section 11.4, all references to"Buyer" herein
shall be deemed to be references to Buyer's assignee and all
- 36 -
<PAGE> 44
references to "Seller" herein shall be deemed to be references to Seller's
assignee, as the case may be. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
Seller, any additional bills of sale, deeds, or other transfer documents that,
in the reasonable opinion of Buyer, may be necessary to ensure, complete, and
evidence the full and effective transfer of the Assets to Buyer pursuant to
this Agreement.
11.6 Consent to Jurisdiction and Service of Process. All judicial
proceedings brought against Buyer or Seller arising out of or relating to this
Agreement may be brought in any state or federal court of competent
jurisdiction in the State of Florida and, by execution and delivery of this
Agreement, Buyer and Seller each accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of
the aforesaid courts and waives any defense of forum non conveniens and
irrevocably agrees to be bound by any judgment rendered thereby in connection
with this Agreement. Seller designates and appoints William J. McEntee, Jr.,
and Buyer designates and appoints James L. West, and such other persons as may
hereafter be selected by Buyer or Seller, as its respective agent to receive on
its behalf service of all process in any such proceedings in any such court,
such service being hereby acknowledged by Buyer and Seller to be effective and
binding service in every respect. A copy of any such process so served shall
be mailed by registered mail to Buyer or Seller at its address provided in
Section 11.3, except that, unless otherwise provided by applicable law, any
failure to mail such copy shall not affect the validity of service of process.
If any agent appointed by Buyer or Seller refuses to accept service, Buyer and
Seller hereby agree that service upon it by mail shall constitute sufficient
notice. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of either party to bring
proceedings against the other in the courts of any other jurisdiction.
11.7 Headings. The headings in this Agreement are included for
ease of reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless
of the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
- 37 -
<PAGE> 45
11.9 Entire Agreement. This Agreement, the schedules hereto, all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, and the Escrow Agreement collectively represent the entire
understanding and agreement between Buyer and Seller with respect to the
subject matter hereof. This Agreement supersedes all prior negotiations
between the parties and cannot be amended, supplemented, or changed except by
an agreement in writing that makes specific reference to this Agreement and
which is signed by the party against which enforcement of any such amendment,
supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in its judgement be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
11.13 Guaranty of Paxson Communications Corp.
(a) In consideration of the execution and delivery of
this Agreement by Seller, Paxson Communications Corp. ("PCC") agrees as
follows:
(1) PCC hereby guarantees the full, complete and
timely performance by Buyer of its obligations hereunder, including Buyer's
obligation to pay the Purchase Price, as provided in Section 2.3. If any
default shall be made by Buyer in the
- 38 -
<PAGE> 46
performance of such obligations, then PCC will itself perform or cause to be
performed such obligations upon receipt of notice from Seller.
(2) PCC waives presentment, protest, demand, or
action or delinquency in respect of Buyer's obligations under this Agreement.
PCC waives all notices of protest, notices of dishonor, and notices of
acceptance of this guaranty.
(3) This guaranty shall be deemed a continuing
guaranty, and the above consent and waivers of PCC shall remain in full force
and effect until the satisfaction in full of Buyer's obligations under this
Agreement.
(b) PCC hereby represents and warrants to seller that
this Agreement has been duly and validly executed and delivered by PCC and
constitutes its legal, valid and binding agreement, enforceable in accordance
with its terms, except as the enforceability of this Agreement may be affected
by bankruptcy, insolvency or similar laws affecting creditors' rights
generally, and by judicial discretion in the enforcement of equitable remedies.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 39 -
<PAGE> 47
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
CHANNEL 13 OF ST. LOUIS, INC.
By: /s/ James L. West
---------------------------------------
Name: James L. West
Title: Chairman
MCENTEE BROADCASTING, INC.
By: /s/ William J. McEntee, Jr.
---------------------------------------
Name: William J. McEntee, Jr.
Title: President
AS TO SECTION 11.13 ONLY:
PAXSON COMMUNICATIONS CORP.
By: /s/ Lowell W. Paxson
---------------------------------------
Name: Lowell W. Pasxon
Title: Chairman
<PAGE> 1
EXHIBIT 12
<PAGE> 2
EXHIBIT 12
PAXSON COMMUNICATIONS CORPORATION
RATIO OF EARNINGS TO FIXED CHARGES
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months Ended Proforma Proforma
Year Ended December 31, June 30, June 30,
-----------------------------------------------------------------------------
1991 1992 1993 1994 1994 1995 1994 1995
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net loss (1,428) (7,855) (11,409) (4,762) (2,117) (14,430) (45,733) (30,075)
Benefit (provision) for income taxes 0 0 (2,960) 1,680 1,396 840 1,680 640
Extraordinary item 0 0 (457) 0 0 0 0 0
Cumulative effect of a change in accounting principle 0 110 0 0 0 0 0 0
Deficiency in earnings to cover fixed charges (1,428) (7,965) (7,992) (6,442) (3,513) (15,070) (47,413) (30,715)
</TABLE>
<PAGE> 1
EXHIBIT 21
<PAGE> 2
EXHIBIT 21
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
State or
Other
Jurisdiction of
Incorporation/
Name Organization D/B/A
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paxson Communications of Florida, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications LP, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Management Company Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Marketing, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Networks, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Excel Marketing Enterprises, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Outdoor, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Networks, Inc. Florida Tennessee Radio Network
Virginia Sports Networks
Georgia Sports Network
South Carolina Radio Network
Florida's Radio Networks
Pennsylvania Sports Network
Florida Sports Network
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications Television, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Broadcasting of Jacksonville, Limited Partnership Florida WROO - FM
WNZS - AM
WZNZ - AM
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Broadcasting of Miami, Limited Partnership Florida WZTA - FM
WLVE - FM
WINZ - AM
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Broadcasting of Orlando, Limited Partnership Florida WJRR - FM
WMGF - FM
WWZN - AM
WWNZ - AM
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Broadcasting of Tampa, Limited Partnership Florida WHPT - FM
WHNZ - AM
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Tampa License Limited Partnership Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Jacksonville License Limited Partnership Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Miami License Limited Partnership Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Orlando License Limited Partnership Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Atlanta-14, Inc. Florida WTLK - TV
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Atlanta License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Boston-60, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Boston License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Dallas-68, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Dallas License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of New London-26, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson New London License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Philadelphia-61, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Philadelphia License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Miami-35, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of San Jose-65, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson San Jose License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Tampa-66, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of West Palm Beach-25, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson West Palm Beach License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Los Angeles-30, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Los Angeles License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Minneapolis-41, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of St. Louis, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Minneapolis License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Cookeville, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Cookeville License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Ft. Pierce-34, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
State or
Other
Jurisdiction of
Incorporation/
Name Organization D/B/A
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Paxson Communications of Orlando-56, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Houston-49, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Houston License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Infomall TV Network, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson St. Louis License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Infomall Cable Network, Inc. Delaware
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Cleveland-67, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Washington-60, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Washington License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Phoenix-13, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Phoenix License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Infomall Los Angeles, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Milwaukee-55, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Denver-59, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of New York-43, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson New York License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Akron-23, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Akron License, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Dayton-26, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Battle Creek-43, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
Paxson Communications of Albany-55, Inc. Florida
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 1
EXHIBIT 23.1
<PAGE> 2
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Paxson Communications Corporation of our
report dated March 15, 1995 relating to the consolidated financial statements of
Paxson Communications Corp.; our report dated July 17, 1995 relating to the
financial statements of KZKI-TV (a division of Sandino Telecasters); our report
dated August 21, 1995 relating to the financial statements of Paugus
Television, Inc. (WGOT-TV); our report dated August 21, 1995 relating to the
financial statements of Delaware Valley Broadcasters Limited Partnership
(WTGI-TV); and our report dated August 21, 1995 relating to the combined
financial statements of San Jacinto Television Corporation and DuPont
Investment Group, 85 Ltd., which appears in such Prospectus. We also consent
to the references to us under the heading "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
- ------------------------
PRICE WATERHOUSE LLP
Tampa, Florida
October 26, 1995
<PAGE> 1
EXHIBIT 23.2
<PAGE> 2
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Paxson
Communications Corporation of our report dated June 20, 1994, relating to the
consolidated financial statements of Paxson Communications Corporation which
appears on page F-4 of Paxson Communications Corporation's Registration
Statement on Form S-4 (Registration No. 33-84416) dated September 30, 1994. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ RYALS, BRIMMER, BUREK & KEELAN
- ----------------------------------
RYALS, BRIMMER, BUREK & KEELAN
Tampa, Florida
October 26, 1995
<PAGE> 1
EXHIBIT 25
<PAGE> 2
EXHIBIT 25
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
--------------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
--------------------------------------
PAXSON COMMUNICATIONS CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 59-3212788
(State or other jurisdiction of (ID.R.S. employer
incorporation or organization) identification no.)
SEE TABLE OF ADDITIONAL REGISTRANTS
601 Clearwater Park Road
West Palm Beach, Florida 33401
(Address of principal executive offices) (Zip code)
--------------------------------------
11 5/8% Senior Subordinated Notes due 2002
(Title of the indenture securities)
================================================================================
<PAGE> 3
--------------------------
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
State or Other I.R.S. Employer
-------------- ---------------
Name Jurisdiction of Identification Number
- ---- --------------- ---------------------
Incorporation/
--------------
Organization
------------
<S> <C> <C>
PAXSON COMMUNICATIONS OF Florida 59-3212231
FLORIDA, INC.
- ------------------------
PAXSON COMMUNICATIONS LP, Florida 59-3212236
INC.
- ------------------------
PAXSON COMMUNICATIONS Florida 59-3212233
MANAGEMENT COMPANY
- ------------------------
PAXSON COMMUNICATIONS Florida 59-3212234
MARKETING, INC.
- ------------------------
PAXSON COMMUNICATIONS Florida 59-3212235
NETWORKS, INC.
- ------------------------
EXCEL MARKETING ENTERPRISES, Florida 59-290713
INC.
- ------------------------
PAXSON OUTDOOR, INC. Florida 59-3202387
- --------------------
PAXSON NETWORKS, INC. Florida 59-3212238
- ---------------------
PAXSON COMMUNICATIONS Florida 59-3283729
TELEVISION, INC.
- ------------------------
PAXSON BROADCASTING OF Florida 59-3075827
JACKSONVILLE, LIMITED
PARTNERSHIP
- ------------------------
PAXSON BROADCASTING OF MIAMI, Florida 59-3095656
LIMITED PARTNERSHIP
- ------------------------
PAXSON BROADCASTING OF Florida 59-3095659
ORLANDO, LIMITED PARTNERSHIP Florida
- ----------------------------
PAXSON BROADCASTING OF Florida 59-3075825
TAMPA, LIMITED PARTNERSHIP
- --------------------------
PAXSON TAMPA LICENSE LIMITED Florida 59-3291861
PARTNERSHIP
- ------------------------
PAXSON JACKSONVILLE LICENSE Florida 59-3291869
LIMITED PARTNERSHIP
- --------------------------
PAXSON MIAMI LICENSE LIMITED Florida 59-3291871
PARTNERSHIP
- --------------------------
PAXSON ORLANDO LICENSE Florida 59-3291865
LIMITED PARTNERSHIP
- --------------------------
PAXSON COMMUNICATIONS OF Florida 59-3235962
ATLANTA-14, INC.
- --------------------------
PAXSON ATLANTA LICENSE, INC. Florida 59-3291854
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 59-3283737
BOSTON-60, INC.
- ---------------------------
PAXSON BOSTON LICENSE, INC. Florida 59-3283741
- ---------------------------
PAXSON COMMUNICATIONS OF Florida 59-3283742
DALLAS-68, INC.
- ---------------------------
PAXSON DALLAS LICENSE, INC. Florida 59-3283743
- ---------------------------
PAXSON COMMUNICATIONS OF NEW Florida 59-3283739
LONDON-26, INC.
- ----------------------------
PAXSON NEW LONDON LICENSE, Florida 59-3283736
INC.
- ----------------------------
</TABLE>
-2-
<PAGE> 4
<TABLE>
<S> <C> <C>
PAXSON COMMUNICATIONS OF Florida 59-3283731
PHILADELPHIA-61, INC.
- ----------------------------
PAXSON PHILADELPHIA LICENSE, Florida 59-3283730
INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 65-0471066
MIAMI-35, INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 59-3233735
SAN JOSE-65, INC.
- ----------------------------
PAXSON SAN JOSE LICENSE, Florida 59-3233733
INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 59-3227558
TAMPA-66, INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 59-3236008
WEST PALM BEACH-25, INC.
- ----------------------------
PAXSON WEST PALM BEACH Florida 59-3291836
LICENSE, INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 59-3295991
LOS ANGELES-30, INC.
- ----------------------------
PAXSON LOS ANGELES LICENSE, Florida 59-3295992
INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 59-3295983
MINNEAPOLIS-41, INC.
- ----------------------------
PAXSON COMMUNICATIONS OF ST. Florida Applied for
LOUIS, INC.
- ----------------------------
PAXSON MINNEAPOLIS LICENSE, Florida 59-3295983
INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 62-1593701
COOKEVILLE, INC.
- ----------------------------
PAXSON COOKEVILLE LICENSE, Florida Applied for
INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 65-0587768
FT. PIERCE-34, INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 59-3297996
ORLANDO-56, INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 76-0461679
HOUSTON,-49, INC.
- ----------------------------
PAXSON HOUSTON LICENSE, INC. Florida 76-0461475
- ----------------------------
INFOMALL TV NETWORK, INC. Delaware 59-3298735
- -------------------------
PAXSON ST. LOUIS LICENSE, INC. Florida Applied for
- ------------------------------
INFOMALL CABLE NETWORK, INC. Delaware 59-3319718
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 59-3319725
CLEVELAND-67, INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 59-3319720
WASHINGTON-60, INC.
- ----------------------------
PAXSON WASHINGTON LICENSE, Florida 59-3319719
INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida Applied for
PHOENIX-13, INC.
- ----------------------------
PAXSON PHOENIX LICENSE, INC. Florida Applied for
- ----------------------------
INFOMALL LOS ANGELES, INC. Florida Applied for
- --------------------------
PAXSON COMMUNICATIONS OF Florida Applied for
MILWAUKEE-55, INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida 59-650603895
DENVER-59, INC.
- ----------------------------
PAXSON COMMUNICATIONS OF Florida Applied for
NEW YORK-43, INC.
- ----------------------------
PAXSON NEW YORK LICENSE, Florida Applied for
</TABLE>
-3-
<PAGE> 5
<TABLE>
<S> <C> <C>
INC.
- -----------------------------
PAXSON COMMUNICATIONS OF Florida Applied for
AKRON-23, INC.
- ----------------------------
PAXSON AKRON LICENSE, INC. Florida Applied for
- --------------------------
PAXSON COMMUNICATIONS OF Florida 59-311446001
DAYTON-26, INC.
- ----------------------------
</TABLE>
__________________________
-4-
<PAGE> 6
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE
TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO
WHICH IT IS SUBJECT.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Name Address
- -------------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
</TABLE>
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None. (See Note on page 3.)
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE
24 OF THE COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1
filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the
Act. (Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
-5-
<PAGE> 7
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-6-
<PAGE> 8
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 24th day of October, 1995.
THE BANK OF NEW YORK
By: /S/WALTER N. GITLIN
---------------------------
Name: WALTER N. GITLIN
Title: VICE PRESIDENT
<PAGE> 9
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30,
1995, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 3,025,419
Interest-bearing balances .......... 881,413
Securities:
Held-to-maturity securities ........ 1,242,368
Available-for-sale securities ...... 1,774,079
Federal funds sold in domestic
offices of the bank ................ 5,503,445
Securities purchased under agree-
ments to resell .................... 200,634
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................26,599,533
LESS: Allowance for loan and
lease losses ..............516,283
Loans and leases, net of unearned
income and allowance............ 26,083,250
Assets held in trading accounts ...... 1,455,639
Premises and fixed assets (including
capitalized leases) ................ 612,547
Other real estate owned .............. 79,667
Investments in unconsolidated
subsidiaries and associated
companies .......................... 198,737
Customers' liability to this bank on
acceptances outstanding ............ 1,111,464
Intangible assets .................... 105,263
Other assets ......................... 1,237,264
-----------
Total assets ......................... $43,511,189
===========
LIABILITIES
Deposits:
In domestic offices ................ $19,233,885
Noninterest-bearing .......7,677,954
Interest-bearing .........11,555,931
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 12,641,676
Noninterest-bearing ..........72,479
Interest-bearing .........12,569,197
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,747,659
Securities sold under agreements
to repurchase .................... 73,553
Demand notes issued to the U.S.
Treasury ........................... 300,000
Trading liabilities .................. 738,317
Other borrowed money:
With original maturity of one year
or less .......................... 1,586,443
With original maturity of more than
one year ......................... 220,877
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,113,102
Subordinated notes and debentures .... 1,053,860
Other liabilities .................... 1,489,252
-----------
Total liabilities .................... 40,198,624
===========
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 1,849,221
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ ( 662)
Cumulative foreign currency transla-
tion adjustments .................. ( 3,944)
-----------
Total equity capital ................ 3,312,565
-----------
Total liabilities and equity
capital ........................... $43,511,189
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Samuel F. Chevalier )
<PAGE> 1
EXHIBIT 99.1
<PAGE> 2
LETTER OF TRANSMITTAL EXHIBIT 99.1
To Tender for Exchange
11 5/8% Senior Subordinated Notes due 2002
(CUSIP NO. 704231-AA-7)
of
PAXSON COMMUNICATIONS CORPORATION
(a Delaware corporation)
Pursuant to the Prospectus dated , 1995
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1995, UNLESS EXTENDED.
To: The Bank of New York, as Exchange Agent
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Arwen Gibbons, Corporate Dept. Operations,
Floor 7E
By Overnight Courier or By Hand:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Arwen Gibbons, Corporate Dept. Operations,
Floor 7E
By Facsimile: (212) 571-3083
Confirm by Telephone: (212) 815-6333
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS
ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned acknowledges that he or she has received the
Prospectus dated , 1995 (the "Prospectus") of Paxson Communications
Corporation (the "Company") and this Letter of Transmittal (the "Letter of
Transmittal"), which together constitute the Company's offer (the "Exchange
Offer") to exchange up to $230,000,000 in aggregate principal amount of the
Company's 11 5/8% Senior Subordinated Notes due 2002 (CUSIP No. _________),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which the Prospectus
is a part (the "New Notes"), for a like principal amount of the Company's
outstanding 11 5/8% Senior Subordinated Notes due 2002 (CUSIP No. 704231-AA-7)
(the "Original Notes"), of which $230,000,000 aggregate principal amount is
outstanding. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on ___________, 1995, unless the Company, in its sole discretion, extends
the Exchange Offer, in which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended. Capitalized
terms used but not defined herein have the meaning given to them in the
Prospectus.
1
<PAGE> 3
The Letter of Transmittal is to be used by holders of Original Notes
whether (i) certificates representing the Original Notes are to be physically
delivered herewith, (ii) the guaranteed delivery procedures described in the
Prospectus are to be utilized, or (iii) tenders are to be made by book-entry
transfer to the account maintained by the Exchange Agent at The Depository
Trust Company, New York, New York ("DTC" or the "Book-Entry Transfer
Facility"), pursuant to the procedures set forth in the Prospectus. Delivery
of documents to DTC does not constitute delivery to the Exchange Agent.
Unless the context requires otherwise, the term "Holder" with respect
to the Exchange Offer means any person in whose name Original Notes are
registered on the books of the Company or the Registrar or any other person who
has obtained a properly completed bond power from the registered holder or any
person whose Original Notes are held of record by the Book-Entry Transfer
Facility who desires to deliver such Original Notes by book-entry transfer at
the Book-Entry Transfer Facility. The undersigned has completed, executed and
delivered this Letter of Transmittal to indicate the action the undersigned
desires to take with respect to the Exchange Offer. Holders who wish to tender
their Original Notes must complete this Letter of Transmittal in its entirety.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY
BEFORE COMPLETING ANY BOX BELOW
<TABLE>
<CAPTION>
================================================================================================================================
DESCRIPTION OF 11 5/8% SENIOR SUBORDINATED NOTES DUE 2002 BEING TENDERED
- --------------------------------------------------------------------------------------------------------------------------------
Names and Addresses of Aggregate Principal Amount Principal Amount Tendered
Registered Holder(s) Certificate Represented by (must be in Integral
(Please fill in, if blank) Number(s) Certificate(s) (1) Multiples of $1,000) (2)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total
- --------------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Holders tendering by book-entry transfer.
(2) Unless otherwise indicated in the column labeled "Principal Amount Tendered," any tendering Holder will be deemed to
have tendered the full aggregate amount represented by such Original Notes.
================================================================================================================================
</TABLE>
Holders of Original Notes who wish to tender and whose Original Notes
are not immediately available or who cannot deliver their Original Notes and
all other documents required hereby to the Exchange Agent prior to the
Expiration Date or whose Original Note(s) cannot be delivered on a timely basis
pursuant to the rules for book-entry transfer may tender Original Notes
according to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer -- Procedures for Tendering." See
Instruction 1 below.
2
<PAGE> 4
<TABLE>
<S> <C>
/ / CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED
BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
----------------------------------------------------------------------------------
Account Number:
-------------------------------------------------------------------------------------------------
Transaction Code Number:
-----------------------------------------------------------------------------------------
/ / CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND
COMPLETE THE FOLLOWING:
Name of Registered Holder(s):
------------------------------------------------------------------------------------
Name of Eligible Institution that guaranteed delivery:
----------------------------------------------------------
Account Number (if delivered by book-entry transfer):
-----------------------------------------------------------
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES
OF ANY AMENDMENT OR SUPPLEMENT TO THE PROSPECTUS.
Name:
-----------------------------------------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------------------------------------
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3, 4 and 5) (See Instructions 4, 5 and 6)
To be completed ONLY if certificates for To be completed ONLY if certificates for
Original Notes in a principal amount not Original Notes in a principal amount not
tendered, or New Notes issued in exchange for tendered, or New Notes issued in exchange for
Original Notes accepted for exchange, are to be Original Notes accepted for exchange, are to be
issued in the name of someone other than the sent to someone other than the undersigned, or
undersigned or if Original Notes tendered by to the undersigned at an address other than
book-entry transfer which are not exchanged that shown above.
and/or any New Notes are to be returned by
credit to an account maintained by DTC other
than the account designated above.
Deliver certificate(s) to:
Issue certificate(s) to:
DTC Account Number: Name:
----------------------------- -------------------------------------------
(Please Print)
Name:
-------------------------------------------
(Please Print) Address:
---------------------------------------
---------------------------------------
Address:
--------------------------------------- ---------------------------------------
(Including Zip Code)
---------------------------------------
---------------------------------------
(Including Zip Code)
------------------------------------------------
(Identification or Social Security Number)
------------------------------------------------
(Identification or Social Security No.)
</TABLE>
3
<PAGE> 5
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Original
Notes indicated above. Subject to and effective upon the acceptance for
exchange of the principal amount of Original Notes tendered in accordance with
this Letter of Transmittal, the undersigned exchanges, assigns and transfers
to, or upon the order of, the Company, all right, title and interest in and to
the Original Notes tendered hereby and accepted for exchange pursuant to the
Exchange Offer. The undersigned hereby irrevocably constitutes and appoints
the Exchange Agent its, his or her agent and attorney-in-fact (with full
knowledge that the Exchange Agent also acts as the agent of the Company) with
respect to the tendered Original Notes with full power of substitution to (i)
deliver certificates for such Original Notes to the Company or its agent or
transfer ownership of such Original Notes on the account books maintained by
DTC, together in either such case with all accompanying evidences of transfer
and authenticity to, or upon the order of, the Company upon receipt by the
Exchange Agent, as the undersigned's agent, of the New Notes and (ii) present
such Original Notes for cancellation and transfer on the books of the Company
and receive all benefits and otherwise exercise all rights of beneficial
ownership of such Original Notes, all in accordance with the terms of the
Exchange Offer. The power of attorney granted in this paragraph shall be
deemed to be irrevocable and coupled with an interest.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT IT, HE OR SHE HAS
FULL POWER AND AUTHORITY TO TENDER, SELL, ASSIGN AND TRANSFER THE ORIGINAL
NOTES TENDERED HEREBY AND THAT THE COMPANY WILL ACQUIRE GOOD AND UNENCUMBERED
TITLE THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND
ENCUMBRANCES AND NOT SUBJECT TO ANY ADVERSE CLAIM, WHEN THE SAME ARE ACQUIRED
BY THE COMPANY. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY
ADDITIONAL DOCUMENTS DEEMED BY THE EXCHANGE AGENT OR THE COMPANY TO BE
NECESSARY OR DESIRABLE TO COMPLETE THE ASSIGNMENT, TRANSFER AND EXCHANGE OF THE
ORIGINAL NOTES TENDERED HEREBY.
The undersigned also acknowledges that the Exchange Offer is being
made in reliance on interpretations by the staff of the Securities and Exchange
Commission (the "Commission") that the New Notes issued in exchange for the
Original Notes pursuant to the Exchange Offer may be offered for resale, resold
or otherwise transferred by Holders thereof (other than any Holder that is an
affiliate of the Company within the meaning of Rule 405 of the Securities Act)
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that such New Notes are acquired in the ordinary
course of such Holders' business and such Holders have no arrangements with any
person to participate in the distribution of the New Notes. If the undersigned
is not a broker-dealer or is a broker-dealer but will not receive New Notes
for its own account in exchange for Original Notes, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
New Notes. If the undersigned is a broker-dealer that will receive New Notes
for its own account in exchange for Original Notes that were acquired as a
result of market-making activities or other trading activities, it acknowledges
that it will deliver a Prospectus in connection with any resale of such New
Notes, however, by so acknowledging and by delivering a Prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
By acceptance of the Exchange Offer, such broker-dealer that receives
New Notes pursuant to the Exchange Offer hereby acknowledges and agrees that,
upon receipt of notice by the Company of the happening of any event which makes
any statement in the Prospectus untrue in any material respect or which
requires the making of any changes in the Prospectus in order to make the
Statements therein not misleading (which notice the Company agrees to deliver
promptly to such broker-dealer), such broker-dealer will suspend use of the
Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission and has furnished copies of the amended
or supplemented Prospectus to such broker-dealer.
The undersigned represents that (i) the New Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of such Holder's
business, (ii) such Holder has no arrangement with any other person to
participate in the distribution of such New Notes and (iii) such Holder is not
an "affiliate" of the Company as defined under Rule 405 of the Securities Act,
or if such Holder is an affiliate, that such Holder will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.
4
<PAGE> 6
The undersigned understands that, upon acceptance by the Company of
the Original Notes tendered under the Exchange Offer, the undersigned will be
deemed to have accepted the New Notes and will be deemed to have relinquished
all rights with respect to the Original Notes so accepted.
The undersigned understands that the Company may accept the
undersigned's tender at any time on or after the Expiration Date by delivering
oral or written notice of acceptance to the Exchange Agent. Tenders of
Original Notes may be withdrawn at any time prior to the Expiration Date,
unless theretofore accepted for exchange as provided in the Exchange Offer.
The undersigned understands that the Company reserves the right, at
any time and from time to time, in its sole discretion, (such to its
obligations under the Registration Rights Agreement) (i) to delay accepting any
Original Notes or to delay the issuance and exchange of New Notes for Original
Notes, to extend the Exchange Offer, or if any of the conditions set forth in
the Prospectus under the caption "The Exchange Offer -- Conditions to the
Exchange Offer" shall not have been satisfied to terminate the Exchange Offer,
by giving oral (promptly confirmed in writing) or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of
the Exchange Offer in any manner.
If any tendered Original Notes are not accepted for exchange pursuant
to the Exchange Offer for any reason, certificates for any such unaccepted
Original Notes will be returned, without expense to the tendering Holder
thereof, to the undersigned at the address shown below or at a different
address as may be indicated herein under "Special Delivery Instructions" (or,
in the case of Original Notes tendered by book-entry transfer, such Original
Notes will be credited to the account of such Holder maintained at the
Book-Entry Transfer Facility) as promptly as practicable after the expiration
or termination of the Exchange Offer.
All authority conferred or aimed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns.
The undersigned understands that tenders of Original Notes pursuant to
the procedures described under the caption "The Exchange Offer -- Procedures
for Tendering" in the Prospectus and in the instructions hereto will constitute
a binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer. Any tender of Original Notes
pursuant to this Letter of Transmittal may be withdrawn only in accordance with
the applicable procedures set forth in the Prospectus.
The New Notes exchanged for the tendered Original Notes will be issued
to the undersigned and mailed to the address (or credited to the account
maintained at the Book-Entry Transfer Facility above) unless otherwise
indicated under the "Special Registration Instructions" or the "Special
Delivery Instructions" above.
The undersigned understands that the Company has no obligation
pursuant to the "Special Registration Instructions" and "Special Delivery
Instructions" to transfer any Original Notes from the name of the registered
Holder(s) thereof if the Company does not accept for exchange any of the
Original Notes so tendered.
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available or (ii) who cannot deliver their Original
Notes (or complete the procedures for book-entry transfer), this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date may tender their Original Notes according to the
guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 1
printed below regarding the completion of this Letter of Transmittal.
5
<PAGE> 7
<TABLE>
<S> <C>
PLEASE SIGN HERE WHETHER OR NOT
ORIGINAL NOTES ARE BEING PHYSICALLY TENDERED HEREBY
X
--------------------------------------------------- ------------------------------------------------
Date
X
--------------------------------------------------- ------------------------------------------------
Signature(s) of Registered Date
Holder(s) or Authorized
Signatory
Area Code and Telephone Number:
----------------------------------------------------------------------------
The above lines must be signed by the registered Holder(s) as their name(s) appear(s) on the
Original Notes or on a security position listing at the Book-Entry Transfer Facility as the owner of the
Original Notes or by person(s) authorized to become registered Holder(s), a copy of which must be
transmitted with this Letter of Transmittal. If Original Notes to which this Letter of Transmittal relate
are held of record by two or more joint Holders, then all such Holders must sign this Letter of
Transmittal. If required by Instruction 4 hereto, the signatures on the above lines must be guaranteed by
an Eligible Institution.
If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity, then such person must
(i) set forth his or her full title below and (ii) unless waived by the Company, submit evidence
satisfactory to the Company of such person's authority so to act with this Letter. See Instruction 4
regarding the completion of this Letter of Transmittal printed below.
Name(s)
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
(Please Print)
Capacity (full title)
--------------------------------------------------------------------------------------
Address:
---------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.
-------------------------------------------------------------------------------
Tax Identification or
Social Security No(s).
------------------------------------------------------------------------------------
Please Complete Substitute Form W-9
GUARANTEE OF SIGNATURE(S)
(SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 4)
Authorized Signature:
-------------------------------------------------------------------------------------
Dated , 1995
-------------------
Name and Title:
-------------------------------------------------------------------------------------------
(Please Print)
Name of Firm:
---------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND ORIGINAL NOTES OR
BOOK-ENTRY CONFIRMATIONS. Certificates for all physically tendered Original
Notes, or confirmation of a book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility of Original Notes tendered
electronically, together in each case with a properly completed and duly
executed copy of this Letter of Transmittal and any other documents required by
this Letter of Transmittal or the Prospectus, must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date unless the tendering Holder complies with the guaranteed
delivery procedures described in the following paragraph. The method of
delivery of Original Notes, this Letter of Transmittal and all other required
documents to the Exchange Agent is at the election and risk of the Holder and,
except as otherwise provided below, the delivery will be deemed made only when
actually received by the Exchange Agent. Instead of delivery by mail, it is
recommended that the Holder use an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. No Letter
of Transmittal, certificates representing Original Notes or any other required
documents should be sent to the Company.
Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available, or (ii) who cannot deliver their Original
Notes (or complete the procedure for book-entry transfer), this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date, must tender their Original Notes according to the
guaranteed delivery procedure set forth in the Prospectus. Pursuant to such
procedures: (i) such tender must be made by or through a firm that is a member
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States or an eligible guarantor institution
within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended (each an "Eligible Institution"); (ii) prior to the Expiration Date,
the Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, mail, hand delivery or overnight courier, setting forth the name
and address of the Holder, any certificate numbers and the principal amount of
such Original Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within five (5) New York Stock Exchange trading days after
the Expiration Date, this Letter of Transmittal (or facsimile hereof) together
with certificate(s) representing the Original Notes (or, with respect to a
book-entry transfer, confirmation of a book-entry transfer of the Original
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility)
and any other required documents will be deposited by the Eligible Institution
with the Exchange Agent; and (iii) such properly completed and executed Letter
of Transmittal (or facsimile hereof), as well as all other documents required
by this Letter of Transmittal and the certificate(s) representing all tendered
Original Notes in proper form for transfer (or, with respect to a book-entry
transfer, confirmation of a book-entry transfer of the Original Notes into the
Exchange Agent's Account at the Book-Entry Transfer Facility), must be received
by the Exchange Agent within five (5) New York Stock Exchange trading days
after the Expiration Date, all as provided in the Prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures." Any Holder who wishes
to tender his, her or its Original Notes pursuant to the guaranteed delivery
procedures described above must ensure that the Exchange Agent receives the
Notice of Guaranteed Delivery from the Eligible Institution prior to 5:00 p.m.,
New York City time, on the Expiration Date. Upon request to the Exchange
Agent, a duplicate Notice of Guaranteed Delivery will be sent to Holders. A
Notice of Guaranteed Delivery has been included with the Prospectus and the
Letter of Transmittal for use by Holders who wish to tender their Original
Notes according to the guaranteed delivery procedures set forth above.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Original Notes, and withdrawal of tendered
Original Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute
right to reject any and all Original Notes determined by the Company not to be
validly tendered or any Original Notes the acceptance of which would, in the
opinion of counsel for the Company, be unlawful. The Company also reserves the
absolute right to waive any defects, irregularities or conditions of tender to
particular Original Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in this Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Original Notes will
render such tenders invalid unless such defects or irregularities are cured
within such time as the Company shall determine. Any Original Notes received
by the Exchange Agent that are not properly tendered and as to which the
defects or irregularities have not been cured or waived will be returned by the
Exchange Agent to the tendering Holders, unless otherwise provided in this
Letter of Transmittal, as soon as practicable following the Expiration Date.
7
<PAGE> 9
No alternative, conditional or contingent tender will be accepted.
All tendering Holders, by execution of this Letter of Transmittal, waive any
rights to receive any notice of the acceptance of their tender.
2. TENDER OF HOLDER. Only a Holder of Original Notes may tender
such Original Notes in the Exchange Offer. Any beneficial owner of Original
Notes who is not the registered Holder and who wishes to tender should arrange
with such registered Holder to execute and deliver this Letter of Transmittal
on such owner's behalf or must, prior to completing and executing this Letter
of Transmittal and delivering his Original Notes, either make appropriate
arrangements to register ownership of the Original Notes in such owner's name
or obtain a properly completed bond power from the registered Holder.
3. PARTIAL TENDERS; WITHDRAWALS. (Not applicable to Holders who
tender by book-entry transfer.) Tenders of Original Notes will be accepted
only in integral multiples of $1,000. If less than the entire principal amount
of any Original Notes evidenced by a certificate is tendered, the tendering
Holder should fill in the principal amount tendered in the fourth column of the
box entitled "Description of 11 5/8% Senior Subordinated Notes Due 2002 Being
Tendered" above. The entire principal amount of any Original Notes delivered
to the Exchange Agent will be deemed to have been tendered unless otherwise
indicated. If the entire principal amount of all Original Notes evidenced by a
certificate is not tendered, then Original Notes for the principal amount of
Original Notes not tendered and a certificate or certificates representing New
Notes (subject to the denomination requirements discussed in the Prospectus)
issued in exchange for any Original Notes accepted will be sent to the Holder
at its, his or her registered address, unless a different address is provided
in the appropriate box on this Letter of Transmittal promptly after the
Original Notes are accepted for exchange.
A tender pursuant to the Exchange Offer may be withdrawn subject to
the procedures set forth in this Letter of Transmittal and the Prospectus at
any time prior to the acceptance thereof on the Expiration Date. To withdraw a
tender of Original Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Original Notes to be withdrawn (the
"Depositor"), (ii) specify the serial numbers on the particular certificates
evidencing the Original Notes to be withdrawn and the name of the registered
Holder thereof (if certificates have been delivered or otherwise identified to
the Exchange Agent) or the name and number of the account at DTC to be credited
with withdrawn Original Notes (if the Original Notes have been tendered
pursuant to the procedures for book-entry transfer), (iii) be signed by the
Holder in the same manner as the original signature on the Letter of
Transmittal by which such Original Notes were tendered (including any required
signature guarantees) or be accompanied by documents of transfer sufficient to
have the Registrar with respect to the Original Notes register the transfer of
such Original Notes into the name of the person withdrawing the tender and (iv)
specify the name in which any such Original Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by the Company in its sole discretion, which determination shall be final, and
binding on all parties. Any Original Notes so withdrawn will be deemed not to
have been validly tendered for purposes of the Exchange Offer and no New Notes
will be issued with respect thereto unless the Original Notes so withdrawn are
validly retendered. Properly withdrawn Original Notes may be retendered by
following one of the procedures described in the Prospectus under the caption
"The Exchange Offer -- Procedures for Tendering" at any time prior to the
Expiration Date.
4. SIGNATURES ON THE LETTER OF TRANSMITTAL, BOND POWERS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal (or
facsimile hereof) is signed by the registered Holder(s) of the Original Notes
tendered hereby, the signature must correspond (i) with the name(s) as written
on the face of the certificate without alteration, enlargement or any change
whatsoever, or (ii) in the case of Original Notes held by book-entry, with the
name as contained on the security position listing at the Book-Entry Transfer
Facility.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder of Original Notes tendered and the New Notes issued in
exchange therefor are to be issued (or any untendered principal amount of
Original Notes is to be reissued) to the registered Holder, then such Holder
need not and should not endorse any tendered Original Notes, nor provide a
separate bond power. In any other case such Holder must either properly
endorse the certificates tendered or transmit a properly completed separate
bond power with this Letter of Transmittal with the signatures on the
endorsement or bond power guaranteed by an Eligible Institution.
8
<PAGE> 10
If this Letter of Transmittal is signed by a person other than the
registered Holder of any Original Notes or if delivery of the Original Notes is
to be made to a person other than the registered Holder, such Original Notes
must be endorsed or accompanied by appropriate bond powers, in either case
signed as the name of the registered Holder appears on the Original Notes.
If this Letter of Transmittal (or facsimile hereof) or any Original
Notes or bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, or officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and, unless waived by the Company, evidence satisfactory to the
Company of their authority so to act must be submitted with this Letter of
Transmittal.
Except as otherwise provided below, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. Signatures on this
Letter of Transmittal need not be guaranteed if (a) this Letter of Transmittal
is signed by the registered Holder(s) of the Original Notes tendered herewith
in connection with the Exchange Offer and such Holder(s) have not completed the
box set forth herein entitled "Special Registration Instructions" or "Special
Delivery Instructions," (b) such Original Notes are tendered for the account of
an Eligible Institution, or (c) such Original Notes are tendered for the
account of DTC.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering
Holders should indicate, in the applicable box or boxes, the name and address
to which New Notes or substitute Original Notes for principal amounts not
tendered or not accepted for exchange are to be issued or sent,or the account
number at the Book-Entry Transfer Facility to which the New Notes are to be
credited, if different from the name and address, or account number of the
person signing this Letter of Transmittal. In the case of issuance in a
different name or to a different account number, the taxpayer identification or
social security number of the person named (or to whose account the New Notes
are credited) must also be indicated. Holders tendering Original Notes by
book-entry transfer may request that Original Notes not exchanged be credited
to such Holders' accounts maintained at the Book-Entry Transfer Facility.
6. TRANSFER TAXES. The Company will pay all transfer taxes, if
any, applicable to the exchange of Original Notes pursuant to the Exchange
Offer. If, however, certificates representing New Notes or Original Notes for
principal amounts not tendered or accepted for exchange are to be delivered to,
or are to be issued in the name or credited to the account of, any person other
than the registered Holder of the Original Notes tendered hereby, or if
tendered Original Notes are registered in the name of any person other than the
person signing this Letter of Transmittal, or if a transfer tax is imposed for
any reason other than the exchange of Original Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered Holder or on any other persons) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with this Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Original Notes listed in this Letter
of Transmittal.
7. WAIVER OF CONDITIONS. The Company reserves the right, in its
sole discretion, to amend, waive or modify specified conditions in the Exchange
Offer in the case of any Original Notes tendered.
8. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL NOTES. Any
tendering Holder whose Original Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated herein for
further instructions. This Letter of Transmittal and any related documents
cannot be processed until the procedures for replacing mutilated, lost, stolen
or destroyed certificates have been followed.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for additional copies of the Prospectus or this Letter of Transmittal
may be directed to the Exchange Agent at the address specified in the
Prospectus. Holders may also contact their broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Exchange Offer.
9
<PAGE> 11
IMPORTANT TAX INFORMATION
Under current federal income tax law, a Holder whose tendered Original
Notes are accepted for exchange is required to provide the Company (as payor),
through the Exchange Agent, with such Holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 or otherwise establish a basis for
exemption from backup withholding. If such Holder is an individual, the TIN is
such Holder's social security number. If the Exchange Agent is not provided
with the correct TIN or an adequate basis for exemption, the Holder may be
subject to a $50 penalty imposed by the Internal Revenue Service (the "IRS").
In addition, delivery of such Holder's New Notes may be subject to backup
withholding.
Certain Holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on the
Substitute Form W-9 enclosed herewith. A foreign individual may qualify as an
exempt recipient by submitting to the Exchange Agent a properly completed IRS
Form W-8 (which the Exchange Agent will provide upon request) signed under
penalty of perjury, attesting to the Holder's exempt status.
If backup withholding applies, the Company is required to withhold 31%
of any payment made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made with respect
to Original Notes exchanged in the Exchange Offer, each Holder is required to
provide the Exchange Agent with either: (i) the Holder's correct TIN by
completing the form below, certifying that the TIN provided on Substitute Form
W-9 is correct (or that such Holder is awaiting a TIN) and that (A) the Holder
has not been notified by the IRS that he or she is subject to backup
withholding as a result of a failure to report all interest or dividends or (B)
the IRS has notified the Holder that he or she is no longer subject to backup
withholding, or (ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the record owner
of the Original Notes. If the Original Notes are held in more than one name or
are not held in the name of the actual owner, consult the Substitute Form W-9
for additional guidance regarding which number to be reported.
10
<PAGE> 12
<TABLE>
<S> <C> <C>
PAYER'S NAME: THE BANK OF NEW YORK
Name (if joint names, list first
and circle the name of the person
or entity whose number you enter in
SUBSTITUTE Part 1 below.)
FORM W-9 Social Security Number
DEPARTMENT OF THE TREASURY OR
Employer Identification Number
------------------------------------
INTERNAL REVENUE SERVICE ------------------------------------ ----------------------------------
Address
------------------------------------
City, State and Zip Code
Payer's Request for
Taxpayer ------------------------------------ PART 3--AWAITING TIN [ ]
Identification Number (TIN) PART 1--PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW.
-------------------------------------------------------------------------------------------------------
PART 2--CERTIFICATION--Under Penalties of Perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting
for a number to be issued to me), and
(2) I am not subject to backup withholding either because I have not been notified by the
Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or the IRS has notified me that I am no longer
subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) in Part 2 above if you have been notified by
the IRS that you are subject to backup withholding because of underreporting interest or dividends on
your tax return. However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS stating that you are no longer subject to
backup withholding, do not cross out item (2).
-------------------------------------------------------------------------------------------------------
SIGNATURE DATE
--------------------------------------------------- -------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
11
<PAGE> 13
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer
identification number has not been issued to me, and either (a) I have
mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office or (b) I intend to
mail or deliver such an application in the near future. I understand
that if I do not provide a taxpayer identification number within
sixty (60) days, 31% of all reportable payments made to me
thereafter will be withheld until I provide such a number.
___________________________ ___________________________
Signature Date
<TABLE>
(DO NOT WRITE IN SPACE BELOW)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Principal Amount of Principal Amount of
Certificate Surrendered Original Notes Tendered Original Notes Accepted
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Delivery Prepared by Checked by Date
------------- ----------------------- -------------------------------
</TABLE>
12
<PAGE> 1
EXHIBIT 99.2
<PAGE> 2
EXHIBIT 99.2
PAXSON COMMUNICATIONS CORPORATION
NOTICE OF GUARANTEED DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
As set forth in the Prospectus dated , 1995 (the
"Prospectus") in the section entitled "The Exchange Offer -- Procedures for
Tendering" and in the accompanying Letter of Transmittal (the "Letter of
Transmittal") and Instruction 1 thereto, this form or one substantially
equivalent thereto must be used to accept the Exchange Offer if certificates
representing 11 5/8% Senior Subordinated Notes due 2002 (the "Original Notes")
of Paxson Communications Corporation (the "Company") are not immediately
available or time will not permit the holder's Original Notes or other required
documents to reach the Exchange Agent, or complete the procedures of book-entry
transfer, prior to the Expiration Date (as defined in the Prospectus) of the
Exchange Offer. This form may be delivered by hand or sent by overnight
courier, facsimile transmission or registered or certified mail to the Exchange
Agent and must be received by the Exchange Agent prior to 5:00 p.m., New York
City time on , 1995.
To: The Bank of New York, as Exchange Agent
By Registered or Certified Mail:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Arwen Gibbons,
Corporate Dept. Operations
Floor 7E
By Overnight Courier or By Hand:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Arwen Gibbons, Corporate Dept.
Operations, Floor 7E
By Facsimile: (212) 571-3083
Confirm by Telephone: (212) 815-6333
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE NUMBER OTHER THAN
THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
1
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tender(s) to Paxson Communications Corporation
the principal amount of the Original Notes listed below, upon the terms of and
subject to the conditions set forth in the Prospectus and the related Letter of
Transmittal and the instructions thereto (which together constitute the
"Exchange Offer"), receipt of which is hereby acknowledged, pursuant to the
guaranteed delivery procedures set forth in the Prospectus, as follows:
<TABLE>
<CAPTION>
Certificate Nos. Aggregate Principal Amount Principal Amount Tendered (must be
---------------- Represented by Certificate(s) in integral multiples of $1,000)
----------------------------- ----------------------------------
<S> <C> <C>
- ---------------------------- ----------------------------- ----------------------------------
- ---------------------------- ----------------------------- ----------------------------------
- ---------------------------- ----------------------------- ----------------------------------
</TABLE>
The Book-Entry Transfer Facility Account Number
(if the Original Notes will be tendered by book-
entry transfer)
________________________________ __________________________________
Account Number Principal Amount Tendered
(must be in integral multiples of
$1,000)
Name of Record Holder(s)
________________________________
________________________________
(Please Print or Type)
Address:________________________
________________________________
Area Code & Tel. No. ___________
Signature(s)____________________
________________________________
Dated:____________________, 1995
This Notice of Guaranteed Delivery must be signed by the registered
Holder(s) of Original Notes exactly as its (their) name(s) appear(s) on the
Original Notes or by person(s) authorized to become registered Holder(s) by
endorsements and documents transmitted with the Notice of Guaranteed Delivery.
If Original Notes to which this Notice of Guaranteed Delivery relates are held
of record by two or more joint holders, then all such holders must sign this
Notice of Guaranteed Delivery. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person must
provide evidence satisfactory to the Company of such person's authority to so
act, together with the following information:
Please print name(s) and address(es)
Name(s):________________________________________________________________________
_______________________________________________________________________
Capacity:_______________________________________________________________________
Address(es):____________________________________________________________________
____________________________________________________________________
2
<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office in the United States,
guarantees (a) that the above-named person(s) "own(s)" the principal amount of
$ 11 5/8% Senior Subordinated Notes due 2002 of Paxson
Communications Corporation (the "Original Notes") tendered hereby within the
meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended,
(b) that such tender of such Original Notes complies with Rule 14e-4, and (c)
to deliver to the Exchange Agent the certificates representing the Original
Notes tendered hereby or confirmation of book-entry transfer of such Original
Notes into the Exchange Agent's account at
, in proper form for transfer, together with the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, with
any required signature guarantees and any other required documents, within five
(5) New York Stock Exchange trading days after the Expiration Date.
<TABLE>
<S> <C>
- ------------------------------------------- --------------------------------------------------
Name of Firm Authorized Signature
- ------------------------------------------- --------------------------------------------------
Address Title
Name:
- ------------------------------------------- ---------------------------------------------
Zip Code Please Type or Print
Name:
- ------------------------------------------- ---------------------------------------------
Area Code and Tel. No. Dated: , 1995
-------------------- -------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES REPRESENTING ORIGINAL NOTES WITH THIS
FORM. CERTIFICATES REPRESENTING ORIGINAL NOTES SHOULD BE SENT
ONLY WITH A LETTER OF TRANSMITTAL.
1
<PAGE> 1
EXHIBIT 99.3
<PAGE> 2
EXHIBIT 99.3
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Re: Paxson Communications Corporation (the "Issuer")
Pursuant to The Exchange Offer section of the Prospectus dated ,
1995 (the "Prospectus"), which prospectus is attached hereto as Exhibit I, we
appoint you as Exchange Agent subject to the terms hereof.
As Exchange Agent, you are hereby instructed to perform the specific
exchange agency duties set forth in The Exchange Offer section of the
Prospectus.
You will be acting solely as agent for the Issuer hereunder and will
owe no fiduciary duties to any person by reason of this appointment.
You will perform such duties and only such duties as are specifically
set forth herein, and no implied covenants or obligations shall be read into
this appointment against you. Without limiting and in furtherance of the
foregoing, you shall not be liable or responsible for any of the provisions of
the Prospectus except for those expressly referred to hereinabove.
In the absence of willful misconduct or gross negligence on your part,
you shall not be liable for any action taken, suffered, or omitted or for any
error of judgment made by you in the performance of your duties hereunder. You
shall not be liable for any error of judgment made in good faith unless you
shall have been grossly negligent in ascertaining the pertinent facts.
You may rely and shall be protected in acting or refraining from
acting upon any communication authorized hereby and upon any oral or written
instruction, notice, request, direction, consent, report, certificate, form of
note certificate or other instrument, paper or document in good faith believed
by you to be genuine.
The Issuer's and your rights and obligations will be governed by the
law of the State of New York.
You may consult with counsel of your choice and the advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by you hereunder in good faith and in
reliance thereon.
You shall not be required to advance, expend or risk you own funds or
otherwise incur or become exposed to financial liability in the performance of
your duties hereunder.
You may perform your duties and exercise your rights hereunder
directly or by or through agents or attorneys and shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed by
you with due care hereunder.
You make no representations as to (i) the validity or adequacy of the
Issuer's power to make this appointment, or (ii) the Exchange Offer.
In consideration of your acceptance of the foregoing appointment by
the Issuer, the Issuer hereby agrees:
(1) to pay to you from time to time reasonable compensation for
all services rendered by you under the foregoing appointment;
(2) to reimburse you upon your request for all reasonable
expenses, disbursements and advances incurred or made by you in accordance with
any of your agency duties (including the reasonable compensation and the
expenses and disbursements of your agents and counsel) except that any such
expense, disbursement or advance as may be attributable to your gross
negligence or willful misconduct; and
<PAGE> 3
(3) to indemnify you for, and to hold you harmless against, any
loss, liability or expense, incurred without gross negligence or willful
misconduct on your part, arising out of or in connection with the acceptance or
administration of the agency created under the foregoing appointment, including
the costs and expenses (including the reasonable fees and expenses of your
counsel) of defending yourself against any claim or liability in connection
with the exercise or performance of any of your duties thereunder and/or
enforcing this indemnification provision.
PAXSON COMMUNICATIONS CORPORATION
By:_________________________________________
Name:____________________________________
Title:___________________________________
Accepted:
THE BANK OF NEW YORK
By:__________________________________________
Name:_____________________________________
Title:____________________________________
