<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
-------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- -----------
Commission File Number 1-13452
-------
PAXSON COMMUNICATIONS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 59-3212788
---------------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401
---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (407) 659-4122
---------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934
during the proceeding 12 months (or for shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common and preferred stock, as of May 8, 1996:
<TABLE>
<CAPTION>
CLASS OF STOCK NUMBER OF SHARES
- ---------------------------- ----------------------
<S> <C>
COMMON STOCK-CLASS A, $0.001
PAR VALUE PER SHARE ----------------------- 38,522,454
COMMON STOCK-CLASS B, $0.001
PAR VALUE PER SHARE ----------------------- 8,311,639
REDEEMABLE CUMULATIVE SENIOR
PREFERRED STOCK, $0.001 PAR VALUE --------- 2,000
REDEEMABLE CUMULATIVE SERIES B
PREFERRED STOCK, $0.001 PAR VALUE --------- 714.286
REDEEMABLE CUMULATIVE JUNIOR
PREFERRED STOCK, $0.001 PAR VALUE --------- 33,000
</TABLE>
<PAGE> 2
PAXSON COMMUNICATIONS CORPORATION
<TABLE>
INDEX
- ---------------------------------------------------------------------------
<CAPTION>
Page
----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1996 and December 31, 1995 3
Consolidated Statements of Operations
Three Months Ended March 31, 1996
and March 31, 1995 4
Consolidated Statements of Changes in
Common Stockholders' Equity 5
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996
and March 31, 1995 6-7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9-16
Part II - Other Information
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults upon Senior Securities 17
Item 4. Submission of Matters to a Vote of
Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17-18
Signatures 19
</TABLE>
2
<PAGE> 3
PAXSON COMMUNICATIONS CORPORATION
Consolidated Balance Sheets
- -------------------------------------------------------------------------
<TABLE>
March 31, December 31,
1996 1995
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 42,224,690 $ 68,070,990
Accounts receivable, less allowance for
doubtful accounts of $986,719 and
$909,713 respectively 16,195,018 17,726,415
Prepaid expenses and other current assets 1,754,768 971,363
Current program rights 1,134,909 1,412,544
----------- -----------
Total current assets 61,309,385 88,181,312
Property and equipment, net 87,464,874 79,859,080
Intangible assets, net 116,896,627 84,318,147
Other assets, net 18,527,637 19,896,694
Investments in broadcast properties 29,568,406 21,192,030
Program rights, net 209,153 384,814
------------ ------------
Total assets $313,976,082 $293,832,077
============ ============
LIABILITIES, REDEEMABLE SECURITIES AND
COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 5,689,328 $ 5,030,692
Accrued interest 13,803,684 6,932,342
Current portion of program rights payable 1,161,967 1,449,602
Current portion of long-term debt 452,901 430,590
------------ ------------
Total current liabilities 21,107,880 13,843,226
Program rights payable 269,856 432,750
Long-term debt 30,053,652 12,484,024
Senior subordinated notes, net 227,435,282 227,374,911
Redeemable Cumulative Compounding Senior
preferred stock, $0.001 par value; 15%
dividend rate per annum, 2,000 shares
authorized, issued and outstanding 17,608,609 16,824,082
Redeemable Class A & B common stock warrants 9,031,790 6,465,317
Redeemable Cumulative Compounding Series B
preferred stock, $0.001 par value;
15% dividend rate per annum, 714.286 shares
authorized, issued and outstanding 2,671,427 2,352,654
Redeemable Cumulative Compounding Junior
preferred stock, $0.001 par value;
12% dividend rate per annum, 33,000 shares
authorized, issued and outstanding 32,812,086 31,533,910
Class A common stock, $0.001 par value; one
vote per share; 150,000,000 shares
authorized, 26,262,854 shares issued and
outstanding 26,263 26,227
Class B common stock, $0.001 par value; ten
votes per share, 35,000,000 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 (61,967) (115,714)
Additional paid-in capital 37,043,267 34,342,086
Deferred option plan compensation (2,108,325) (1,384,267)
Accumulated deficit (67,261,002) (55,694,393)
Commitments and contingencies
------------ ------------
Total liabilities, redeemable
securities and common
stockholders' equity
$313,976,082 $293,832,077
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
3
<PAGE> 4
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Operations
- ----------------------------------------------------------------------
For the Three Months
Ended March 31,
1996 1995
(Unaudited)
<TABLE>
<S> <C> <C>
Revenue:
Local and national advertising $ 30,113,814 $18,483,224
Retail and other 1,179,491 1,490,966
Trade and barter 835,462 645,513
------------ -----------
Total revenue 32,128,767 20,619,703
Operating expenses:
Direct 7,057,728 5,634,155
Programming 3,906,329 3,126,804
Sales and promotion 2,581,666 2,179,513
Technical 1,525,612 979,206
General and administrative 6,613,148 4,657,850
Trade and barter 644,979 471,541
Time brokerage agreement fees 991,703 239,048
Sports rights fees 758,961 1,041,582
Option plan compensation 1,758,368 -
Program rights amortization 386,671 351,835
Depreciation and amortization 5,671,742 3,784,629
------------ -----------
Total operating expenses 31,896,907 22,466,163
------------ -----------
Income (loss) from operations 231,860 (1,846,460)
Other income (expense):
Interest expense (7,724,778) (2,092,359)
Interest income 831,072 298,200
Other income, net 43,186 67,635
------------- ------------
Loss before income tax benefit (6,618,660) (3,572,984)
Income tax benefit - 320,000
------------- ------------
Net loss (6,618,660) (3,252,984)
Dividends and accretion on
preferred stock and common
stock warrants (4,947,949) (2,190,952)
------------ -----------
Net loss attributable to common
stock and common stock
equivalents $(11,566,609) $(5,443,936)
============ ===========
Net loss per share $ (.19) $ (.09)
Dividends and accretion on
preferred stock and common
stock warrants per share (.14) (.07)
------------ -----------
Net loss attributable to common
stock and common stock
equivalents per share $ (.33) $ (.16)
============ ===========
Weighted average shares
outstanding primary and fully
diluted 34,556,861 34,354,201
============ ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
4
<PAGE> 5
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Changes in Common Stockholders' Equity
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock
-------------------------
Class Class Class Common Class C
A B C Stock Common Sock
Warrants
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $26,042 $8,312 $ 0 $ 0 $5,338,952
Stock issued for Cookeville
acquisition 95
Deferred option plan
compensation
Option plan compensation
Stock options exercised 90
Increase in stock subscription
receivable
Note repayments
Dividends on redeemable
preferred stock
Accretion on Senior redeemable
preferred stock
Accretion on Series B
preferred stock
Accretion on Junior preferred
stock
Accretion on Class A & B
common stock warrants
Net loss
-------- ------- ------ ------- ----------
Balance at December 31, 1995 26,227 8,312 - - 5,338,952
Deferred option plan
compensation (unaudited)
Option plan compensation
(unaudited)
Stock options exercised 36
(unaudited)
Note repayments (unaudited)
Dividends on redeemable
preferred stock (unaudited)
Accretion on Senior redeemable
preferred stock (unaudited)
Accretion on Series B
preferred stock (unaudited)
Accretion on Junior preferred
stock (unaudited)
Accretion on Class A & B
common stock warrants (unaudited)
Net loss (unaudited)
-------- ------- ------ ------ ----------
Balance at March 31, 1996
(unaudited) $26,263 $8,312 $0 $0 $5,338,952
======== ======= ======= ====== ==========
<CAPTION>
Stock Additional Deferred Option Accumulated
Subscription Paid-in Plan Deficit
Notes Capital Compensation
Receivable
<S> <C> <C> <C> <C>
Balance at December 31, 1994 $(77,666) $20,647,647 $ 0 $(8,923,897)
Stock issued for Cookeville
acquisition 1,199,905
Deferred option plan
compensation 12,187,508 (12,187,508)
Option plan compensation 10,803,241
Stock options exercised 307,026
Increase in stock subscription
receivable (48,029)
Note repayments 9,981
Dividends on redeemable
preferred stock (7,275,516)
Accretion on Senior redeemable
preferred stock (332,156)
Accretion on Series B
preferred stock (325,208)
Accretion on Junior preferred
stock (634,988)
Accretion on Class A & B
common stock warrants (4,729,338)
Net loss (33,473,290)
-------- ----------- ------------ -----------
Balance at December 31, 1995 (115,714) 34,342,086 (1,384,267) (55,694,393)
Deferred option plan
compensation (unaudited) 2,482,426 (2,482,426)
Option plan compensation
(unaudited) 1,758,368
Stock options exercised 218,755
(unaudited)
Note repayments (unaudited) 53,747
Dividends on redeemable
preferred stock (unaudited) (2,031,241)
Accretion on Senior redeemable
preferred stock (unaudited) (85,364)
Accretion on Series B
preferred stock (unaudited) (102,350)
Accretion on Junior preferred
stock (unaudited) (162,521)
Accretion on Class A & B
common stock warrants (unaudited) (2,566,473)
Net loss (unaudited) (6,618,660)
-------- ----------- ----------- ----------
Balance at March 31, 1996
(unaudited) $(61,967) $37,043,267 $(2,108,325) $(67,261,002)
======== =========== =========== ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
5
<PAGE> 6
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1996 1995
(Unaudited)
<S> <C> <C>
Cash flow from operating activities:
Net loss $(6,618,660) $(3,252,984)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 5,671,742 3,784,629
Option plan compensation 1,758,368 -
Program rights amortization 386,671 351,835
Provision for doubtful accounts 174,223 143,257
Deferred income taxes - (320,000)
Gain on sale of assets (133,883) -
Minority interest in net loss - (61,370)
Decrease in accounts receivable 1,357,174 450,891
Increase in prepaid expenses and other current assets (783,405) (313,477)
Increase in intangible assets (166,250) (316,027)
Decrease (increase) in other assets 5,587 (300,213)
(Decrease)increase in accounts payable and
accrued liabilities 658,636 (1,958,376)
Increase in accrued interest 6,871,342 1,679,103
----------- -----------
Net cash provided by (used in) operating
activities 9,181,545 (112,732)
----------- -----------
Cash flows from investing activities:
Acquisitions of broadcast properties (42,960,785) (18,211,875)
Decrease (increase) in deposits on broadcast properties 1,890,000 (900,000)
Proceeds from sale of fixed assets 220,622 -
Increase in investments in broadcast properties (8,376,376) -
Purchase of property and equipment (2,639,383) (5,079,492)
----------- -----------
Net cash used for investing activities (51,865,922) (24,191,367)
----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt 17,700,000 6,300,000
Payments of long-term debt (108,061) (17,147)
Payments of loan origination costs (516,232) -
Proceeds from exercise of common stock options 92,527 -
Repayments of stock subscription notes receivable 53,747 -
Payments for program rights (383,904) (108,174)
----------- -----------
Net cash provided by financing activities 16,838,077 6,174,679
----------- -----------
Decrease in cash and cash equivalents (25,846,300) (18,129,420)
----------- -----------
Cash and cash equivalents at beginning of period 68,070,990 21,571,658
----------- -----------
Cash and cash equivalents at end of period $42,224,690 $ 3,442,238
=========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
6
<PAGE> 7
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1996 1995
(Unaudited)
<S> <C> <C>
Supplemental disclosures of cash flow
information:
Cash paid for interest $ 429,399 $2,049,734
========== ==========
Cash paid for income taxes $ - $ 18,500
========== ==========
Non-cash operating and financing activities:
Accretion of discount on senior subordinated notes $ 60,371 $ -
========== ==========
Dividends accreted on redeemable preferred stock $2,031,241 $1,729,917
========== ==========
Accretion on redeemable securities $2,916,708 $ 461,033
========== ==========
Trade and barter revenue $ 835,462 $ 645,513
========== ==========
Trade and barter expense $ 644,979 $ 471,541
========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
7
<PAGE> 8
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 March 31, 1996
and for the three month periods ended March 31, 1996 and 1995, are unaudited.
In the opinion of management, all adjustments necessary for the fair
presentation of such financial information have been included. These
adjustments are of a normal recurring nature. There have been no changes in
accounting policies, nor has the composition of accounts substantially changed
since the period ended December 31, 1995.
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, 1995 financial
statements and related footnotes and discussions contained in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995, filed
with the United States Securities and Exchange Commission. In conjunction with
the sale of 13.5 million shares of Class A common stock by the Company and
others, the Company filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission on January 26, 1996 which, as amended, was
declared effective March 28, 1996. The sale of the related shares was
consummated on April 3, 1996. The pro forma effect of the stock sale has been
presented in Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
On September 28, 1995, the Company issued $230,000,000 of senior subordinated
notes (the "Original Notes") and all of its then-existing subsidiaries
(collectively, the "Guarantors"), all of which are directly or indirectly
wholly-owned by the Company, fully and unconditionally guaranteed the Original
Notes. The Company and the Guarantors filed a Registration Statement on Form
S-4 with the Securities and Exchange Commission on October 27, 1995 relating to
the Original Notes and, beginning January 24, 1996, commenced an offer to
exchange the notes registered under such registration statement (the "Notes")
for the Original Notes. All of the Original Notes were subsequently tendered
in exchange for the Notes pursuant to such exchange offer. The Notes were also
fully and unconditionally guaranteed by the Guarantors. Separate financial
statements for each of the Guarantors have not been presented because
management has determined that such financial statements would not be material
to investors.
8
<PAGE> 9
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Since its inception in 1991, the Company has grown primarily through the
acquisition or management of radio and television broadcast stations and radio
networks, as well as the subsequent improvement of these properties operations.
Certain of the Company's radio and television stations were and continue to be
operated under time brokerage agreements for various periods. Under time
brokerage agreements, the stations' operating revenues and expenses are
controlled by the Company and are consolidated in the financial statements.
The Company operates three business segments: (1) the Infomall TV Network
("inTV"), a nationwide network of owned, operated or affiliated television
stations dedicated to the airing of long form paid programming, consisting
primarily of infomercials; (2) Paxson Radio, consisting of radio broadcasting
stations, radio news and sports networks and billboard operations; and (3)
Paxson Network-Affiliated Television, consisting of network-affiliated
television broadcasting stations in West Palm Beach, Florida. The broadcast
properties owned, operated or affiliated with the Company as of March 31, 1996,
are listed below:
<TABLE>
INFOMALL TV NETWORK COMMENCEMENT
TV MARKET SERVED (1) STATION OF OPERATIONS OWNERSHIP
- ---------------------------- ------------------------------------ ------------------------------
<S> <C> <C> <C>
New York, NY WHAI-TV 1996 Owned
Los Angeles, CA KZKI-TV 1995 Owned
Philadelphia, PA WTGI-TV 1995 Owned
San Francisco, CA KLXV-TV 1995 Owned
Boston, MA WGOT-TV 1995 Owned
Washington, D.C. (2) WYVN-TV 1996 Owned
Dallas,TX (2) Channel 68 1996 Time Brokerage
Atlanta, GA WTLK-TV 1994 Owned
Houston, TX KTFH-TV 1995 Owned
Cleveland, OH WOAC-TV 1995 Time Brokerage
Cleveland, OH WAKC-TV 1996 Owned
Tampa, FL WFCT-TV 1994 Time Brokerage
Miami, FL WCTD-TV 1994 Time Brokerage
Denver, CO KUBD-TV 1995 Time Brokerage
Phoenix,AZ KWBF-TV 1996 Time Brokerage
St. Louis, MO WCEE-TV 1996 Time Brokerage
Orlando, FL WIRB-TV 1994 Time Brokerage
Hartford, CT (3) WTWS-TV 1995 Owned
Raleigh, NC (2) WRMY-TV 1996 Time Brokerage
Grand Rapids, MI (2) WJUE-TV 1996 Owned
Dayton, OH WTJC-TV 1995 Time Brokerage
Puerto Rico WSJN-TV 1996 Time Brokerage
Puerto Rico WKPV-TV 1996 Time Brokerage
Puerto Rico WJWN-TV 1996 Time Brokerage
Sacramento, CA KCMY-TV 1995 Affiliate
Indianapolis, IN WIIB-TV 1996 Affiliate
Norfolk, VA WJCB-TV 1995 Affiliate
Fresno, CA KGMC-TV 1996 Affiliate
</TABLE>
9
<PAGE> 10
<TABLE>
PAXSON RADIO COMMENCEMENT
RADIO MARKET SERVED (1) STATION FORMAT OF OPERATIONS OWNERSHIP
- ---------------------------- ------------------ ------------------------------------------------
<C> <C> <C> <C> <C>
Miami, FL WLVE-FM Smooth Jazz 1993 Owned
WZTA-FM Mainstream AOR 1992 Owned
WINZ-AM News/Sports 1992 Owned
WFTL-AM Talk/Sports 1995 Owned
Tampa, FL WHPT-FM Rock AC 1991 Owned
WSJT-FM Smooth Jazz 1995 Owned
WHNZ-AM News/Sports 1991 Owned
WZTM-AM Sports 1994 Owned
Orlando, FL WMGF-FM Soft AC 1992 Owned
WJRR-FM Modern Rock 1992 Owned
WWNZ-AM News 1992 Owned
WRTM-AM Sports 1994 Owned
Jacksonville, FL WROO-FM Young Country 1991 Owned
WPLA-FM Alternative Rock 1992 Owned
WNZS-AM Sports 1993 Owned
WZNZ-AM News 1992 Owned
Cookeville, TN WGSQ-FM Country 1994 Owned
WPTN-AM Talk 1994 Owned
RADIO NETWORK
-------------
Alabama Radio Network News 1995 Owned
Florida Radio Network News 1993 Owned
Tennessee Radio Network News 1994 Owned
University of Florida Sports Network Sports 1994 Owned
Universtiy of Miami Sports Network Sports 1995 Owned
Penn State Sports Network Sports 1994 Owned
PAXSON NETWORK-AFFILIATED TELEVISION COMMENCEMENT
TV MARKET SERVED (1) STATION AFFILIATION OF OPERATIONS OWNERSHIP
- ---------------------------- ------------------ ------------------------------------------------
West Palm Beach, FL WPBF-TV ABC 1994 Owned
WTVX-TV Warner/UPN 1995 Time Brokerage
</TABLE>
(1) Each station is licensed by the Federal Communications Commission
("FCC") to serve a specific community, which is included in the listed
market.
(2) Presently not on the air.
(3) To be operated pursuant to a time brokerage agreement upon completion
of an FCC-required restructuring of the Company's investment in
such station in connection with the Company's acquisition of WHAI-TV.
In January 1996, the Company financed the acquisition by The Christian Network,
Inc. ("CNI") of television stations KWBF-TV and WCEE-TV and entered into time
brokerage agreements with CNI with respect to these stations. During the three
months ended March 31, 1996, the Company exercised options to purchase these
stations and stations KUBD-TV and WTJC-TV, all of which have been operated by
the Company pursuant to time brokerage agreements with CNI. Completion of the
acquisition of these stations by the Company is subject to receipt of the
approval of the FCC, which is currently pending. The aggregate exercise price
of these options is approximately $400,000.
In January 1996, the Company purchased an option to acquire a 40% limited
partnership interest in WRMY-TV from Roberts Broadcasting Company ("Roberts")
for $1.5 million. The Company has committed to loan Roberts up to $4 million to
finance the construction of WRMY-TV, of which approximately $1.5 million was
outstanding at March 31, 1996.
In February 1996, the Company purchased, in a single transaction, the assets of
WHAI-TV and WAKC-TV for approximately $22 million and $18 million,
respectively.
In February 1996, the Company began operating WSJN-TV, WKPV-TV and WJWN-TV
pursuant to a time brokerage agreement pending completion of the acquisition of
a 50% ownership interest in each station.
10
<PAGE> 11
The Company did not renew the rights to the Virginia Tech Sports Network which
expired in March 1996 and sold its interest in the South Carolina Radio Network
in January 1996.
In February 1996, the Company purchased a 70% ownership interest in WJUE-TV
serving the Grand Rapids, Michigan market.
The Company's operations as a public company commenced in November 1994 as a
result of the Company's merger with The American Network Group, Inc. ("ANG"), a
company primarily involved in the operation of radio networks. The former
operations of ANG are no longer material to the Company.
The Company's operating data throughout the periods discussed have been
impacted significantly by the timing and mix of radio, television and inTV
acquisitions throughout such periods. Operating revenues are derived from the
sale of advertising to local and national advertisers. The Company's primary
operating expenses involved in owning and operating Paxson Radio and Paxson
Network-Affiliated Television are syndicated program rights fees, commissions
on revenues, employee salaries, news gathering, promotion and administrative
expenses. Comparatively, operation of an inTV station involves low operating
expenses relative to traditional network or independent television station
operation. As a result, the Company's inTV stations usually contribute to
operating profit within a short time frame. The costs of operating an inTV
station do not vary significantly with revenue, with the exception of costs
associated with sales commissions and agency fees. As such, upon obtaining a
certain level of revenue sufficient to cover fixed costs, additional revenue
levels have a significant impact on the operating results of an individual inTV
station.
The Company currently expects to continue acquiring additional stations which
may have similar effects on the comparability of revenues, operating expenses,
interest expense and operating cash flow as those described above.
The Company's past results are not necessarily indicative of future performance
due to various risks and uncertainties which may significantly reduce revenues
and increase operating expenses. For example, a reduction in expenditures by
radio and television advertisers in the Company's markets may result in lower
revenues. The Company may be unable to reduce expenses, including certain
variable expenses, in an amount sufficient in the short term to offset lost
revenues caused by poor market conditions. The Company's television stations
are dependent upon "must carry" regulations for carriage on cable systems in
each market. The constitutionality of "must carry" regulations is currently
being litigated in the U.S. Supreme Court and if such regulations were
invalidated, the Company could suffer decreased revenues or increased carriage
expenses if the Company's stations lose cable carriage or are forced to pay
cable systems for carriage. The broadcasting industry continues to undergo
rapid technological change which may increase competition within the Company's
markets as new delivery systems, such as direct broadcast satellite and
computer networks, attract customers. The changing nature of audience tastes
and viewing and listening habits may affect the continued attractiveness of the
Company's broadcasting stations to advertisers, upon whom the Company is
dependent for its revenue.
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amount (contingent or otherwise) of assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. The fair value of the
Company's investments in broadcast properties and programming rights payable
were based upon the net present value of applicable estimated future cash flows
using a discounted rate approximating market rates. The fair values of the
Company's long-term debt and the senior subordinated notes were estimated based
on market rates and instruments with similar risks and maturities. The fair
value estimates presented are based on pertinent information available to
management as of March 31, 1996. As a result of the foregoing, the estimates
presented in the Company's financial statements are not necessarily indicative
of the amounts that the Company could realize in a current market exchange.
Although management is not aware of any factors that would significantly affect
the estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of the Company's financial statements.
11
<PAGE> 12
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Consolidated revenues for the three months ended March 31, 1996 increased 56%
(or $11.5 million) to $32.1 million from $20.6 million for the three months
ended March 31, 1995. This increase was primarily due to the new television
station acquisitions and time brokerage operations ($5.5 million), new radio
stations ($1.0 million) and increased revenues from existing television
stations ($3.3 million) and radio stations ($1.6 million).
Operating expenses for the three months ended March 31, 1996 increased 42% (or
$9.4 million) to $31.9 million from $22.5 million for the three months ended
March 31, 1995. The increase was due to higher direct expenses such as
commissions which rise in proportion to revenues ($1.4 million), other
non-direct costs of operating new television stations ($1.6 million) and radio
stations ($.6 million), increased non-direct costs of network-affiliated
television operations of ($.6 million) which is primarily due to the addition
of WTVX, option plan compensation ($1.7 million), higher depreciation and
amortization related to assets acquired ($1.9 million), and increased time
brokerage agreement fees ($.8 million).
Operating cash flow for the three months ended March 31, 1996 increased 207%
(or $5.8 million) to $8.6 million, from $2.8 million for the three months ended
March 31, 1995. The increase in operating cash flow was a direct result of
television station acquisitions and improved performance of the radio
properties.
Net interest expense for the three months ended March 31, 1996 increased to
$7.7 million from $2.1 million for the three months ended March 31, 1995, an
increase of 267% primarily due to a greater level of debt throughout the period
and higher borrowing rates. As a result of acquisitions, at March 31, 1996,
total long-term debt and senior subordinated notes were $257.9 million, or 191%
higher than the $88.7 million outstanding a year prior.
The following table sets forth, for the periods indicated, selected financial
information as a percentage of revenues.
STATEMENTS OF OPERATIONS
<TABLE>
FOR THE THREE MONTHS ENDED
MARCH 31,
1996 1995
---- ----
<S> <C> <C>
Revenues 100.0% 100.0%
Operating Expenses:
Direct 22.0% 27.3%
Programming 12.2 15.2
Sales and promotion 8.0 10.6
Technical 4.7 4.7
General and administrative 20.6 22.6
Trade and barter 2.0 2.3
Time brokerage agreement fees 3.1 1.2
Sport rights fees 2.4 5.1
Option plan compensation 5.5 -
Program rights amortization 1.2 1.7
Depreciation and amortization 17.6 18.4
----- ------
Total operating expenses 99.3 -109.1
----- ------
Income (loss) from operations 0.7 -9.1
----- ------
Other income (expense):
Interest expense -24.0 -10.1
Interest income 2.6 1.4
Other income, net 0.1 0.3
----- -----
Loss before income tax benefit -20.6 -17.5
----- -----
Income tax benefit - 1.6
----- -----
Net loss -20.6% -15.9%
===== =====
</TABLE>
12
<PAGE> 13
The following sets forth, for the periods indicated, selected information for
the Company's business segments:
<TABLE>
As of and for the three
months ended March 31,
1996 1995
---- ----
<S> <C> <C>
INFOMALL TV NETWORK
Total revenue $ 12,715,920 $ 3,903,094
Operating expenses, less depreciation,
amortization and option plan compensation 6,633,622 2,450,345
Depreciation and amortization 2,070,930 837,306
Option plan compensation 3,563 -
------------ ------------
Income (loss) from operations $ 4,007,805 $ 615,443
============ ============
Operating cash flow $ 6,525,000 $ 1,651,000
============ ============
Total identifiable assets $156,675,990 $ 33,265,349
============ ============
Capital expenditures $ 1,520,666 $ 348,665
============ ============
PAXSON RADIO
Total revenue $ 14,535,690 $ 12,305,718
Operating expenses, less depreciation,
amortization and option plan compensation 12,115,096 11,177,059
Depreciation and amortization 2,589,026 2,039,950
Option plan compensation 33,404 -
------------ ------------
Income (loss) from operations $ (201,836) $ (911,291)
============ ============
Operating cash flow $ 2,346,000 $ 1,455,000
============ ============
Total identifiable assets $ 68,510,770 $ 72,156,313
============ ============
Capital expenditures $ 743,357 $ 1,715,718
============ ============
PAXSON NETWORK-AFFILIATED TELEVISION
Total revenue $ 4,540,668 $ 3,584,997
Operating expenses, less depreciation,
amortization and option plan compensation 3,865,079 2,551,788
Depreciation and amortization 746,991 786,662
Option plan compensation - -
------------ ------------
Income (loss) from operations $ (71,402) $ 246,547
============ ============
Operating cash flow $ 1,228,000 $ 1,160,000
============ ============
Total identifiable assets $ 37,351,207 $ 39,279,569
============ ============
Capital expenditures $ 119,941 $ 484,299
============ ============
CORPORATE AND OTHER
Total revenue $ 336,489 $ 825,894
Operating expenses, less depreciation,
amortization and option plan compensation 1,853,000 2,502,342
Depreciation and amortization 264,795 120,711
Option plan compensation 1,721,401 -
------------ ------------
Income (loss) from operations $ (3,502,707) $ (1,797,159)
============ ============
Operating cash flow $ (1,517,000) $ (1,427,000)
============ ============
Total identifiable assets $ 51,438,115 $ 10,227,767
============ ============
Capital expenditures $ 255,419 $ 2,530,810
============ ============
CONSOLIDATED
Total revenue $ 32,128,767 $ 20,619,703
Operating expenses, less depreciation,
amortization and option plan compensation 24,466,797 18,681,534
Depreciation and amortization 5,671,742 3,784,629
Option plan compensation 1,758,368 -
------------ ------------
Income (loss) from operations $ 231,860 $ (1,846,460)
============ ============
Operating cash flow $ 8,582,000 $ 2,839,000
============ ============
Total identifiable assets $313,976,082 $154,928,998
============ ============
Capital expenditures $ 2,639,383 $ 5,079,492
============ ============
</TABLE>
"Operating cash flow" is defined as net income excluding non-cash items,
non-recurring items including terminated operations, interest, other income,
income taxes and time brokerage fees, less scheduled program rights payments.
The Company has included operating cash flow data because the financial
performance of broadcast companies is frequently evaluated based
on some measure of cash flow from operations and such data may assist investors
in measuring the Company's ability to service debt. Operating 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.
13
<PAGE> 14
LIQUIDITY AND CAPITAL RESOURCES
On April 3, 1996, the Company completed an offering ("the Offering") of
13,500,000 shares of Class A Common Stock, 10,300,000 of which were sold by the
Company, resulting in gross proceeds of $164.8 million before transaction
costs. Total issuance costs (including those prepaid) are estimated to be
approximately $10.4 million, resulting in net proceeds of approximately $154.4
million. A portion of the Offering proceeds was used by the Company to repay
the outstanding balances under its $100 million senior credit facility
aggregating approximately $27.7 million. The remaining proceeds from the
Offering will be utilized to fund the acquisitions discussed below along with
related capital requirements. The Company may also borrow under its senior
credit facility should additional funds for acquisitions or capital
expenditures be required. The completion of each of the acquisitions discussed
below is subject to a variety of factors and to the satisfaction of various
conditions, and there can be no assurance that any of such acquisitions will be
completed.
The following table sets forth the actual and pro forma capitalization of the
Company as of March 31, 1996. Pro forma capitalization gives effect to (i) the
consummation of the Offering at a price of $16.00 per share; and (ii) the
termination of the holders' put rights on the Class A and Class B common stock
warrants.
<TABLE>
<CAPTION>
As of March 31,
1996
--------------------
Actual Proforma
------- --------
(in thousands)
<S> <C> <C>
Cash and cash equivalents (1) $ 42,225 $169,277
======== ========
Other assets (2) $ 18,528 $ 17,859
======== ========
Long-term debt (including current maturities) $ 30,507 $ 2,807
Senior subordinated notes, net (3) 227,435 227,435
-------- --------
257,942 230,242
-------- --------
Redeemable Senior Preferred Stock 17,609 17,609
Redeemable Class A and B Common Stock Warrants (4) 9,032 -
Redeemable Series B Preferred Stock 2,671 2,671
Redeemable Junior Preferred Stock 32,812 32,812
Class A Common Stock 26 39
Class B Common Stock 8 8
Class C Common Stock - -
Class A and B Common Stock Warrants (4) - 6,778
Class C Common Stock Warrants 5,339 4,282
Stock subscription notes receivable (62) (62)
Additional paid-in capital 37,043 195,094
Deferred option plan compensation (2,108) (2,108)
Accumulated deficit (67,261) (67,261)
-------- --------
Total capitalization $293,051 $420,104
======== ========
</TABLE>
(1) Estimated additional unbilled offering costs of $1.5 million deducted from
proceeds.
(2) Decrease represents deferred transaction costs netted against the
proceeds.
(3) Net of issue discount.
(4) Reflects termination of the holders' put rights on the Class A Common
Stock and Class B Common Stock warrants concurrent with the completion of
the Offering.
The Company's working capital at March 31, 1996 and December 31, 1995 was $40.2
million and $74.3 million, respectively, and the ratio of current assets to
current liabilities was 2.90:1 and 6.37:1, on such dates respectively. Working
capital decreased primarily due to the acquisitions previously discussed.
Cash provided by (used in) operations of $9.2 million and ($.1) million for the
three months ended March 31, 1996 and 1995, respectively, 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
and investments discussed above, and purchases of equipment for these and
existing properties. Cash provided by financing activities primarily reflects
the proceeds from long term debt borrowings. In addition, the Company has
advanced $450,000 to CNI during the three months ended March 31, 1996 under a
demand note bearing interest at 6% which has been included in Investments in
broadcast properties. Non-cash activity relates to option plan compensation,
reciprocal trade and barter advertising revenue and expense and accretion of
discount on senior subordinated notes, as well as dividends and accretion on the
redeemable preferred stock and common stock warrants.
14
<PAGE> 15
ACQUISITION COMMITMENTS
The Company has agreements to purchase significant assets of, or to enter into
time brokerage arrangements with respect to, the following properties, which
are subject to various conditions, including the receipt of regulatory
approvals:
<TABLE>
Property Market Served (1) Purchase Price
<S> <C> <C>
WOST (TV-69) Providence, RI (2) $ 1,000,000
KZAR (TV-16) Salt Lake City, UT (3) $ 850,000
WHUB-FM,WHUB-AM Cookeville, TN $ 3,800,000
WFSJ-FM Jacksonville, FL (4) $ 5,000,000
W23BA-LP New York, NY (5) $ 2,000,000
WNYA-LP New York, NY (5) $ 1,500,000
Channel 68 Dallas, TX (6) $ 2,000,000
WHKE(TV-55) Milwaukee, WI(7) $ 2,500,000
WSJN-TV,WKPV-TV,WJWN-TV Puerto Rico (8) $ 4,000,000
WSHE-FM,WSRF-AM Ft. Lauderdale, FL (9) $57,500,000
WAAP (TV-16) Greensboro-Winston Salem, NC $ 5,000,000
WOCD (TV-55) Albany, NY $ 2,500,000
WDIZ-FM Orlando, FL (10) $22,500,000
Billboards Orlando, FL (11) $12,000,000
WSNI-FM,WTNT-FM,WTPS-FM
WXSR-FM and WNLS-AM Tallahassee, FL
WOWW-FM,WTKX-FM Pensacola, FL
WPAP-FM,WPBH-FM Panama City, FL $21,300,000
</TABLE>
(1) Each station is licensed by the FCC to serve a specific community, which
is included in the listed market.
(2) The Company will acquire 50% ownership interest and has committed to
loan up to $3 million for capital improvements and relocation of the station's
tower.
(3) The Company will acquire 50% ownership interest and has committed to
loan up to $3.2 million for construction of the station.
(4) The Company will issue stock valued at approximately $1.70 million,
cancel a $1.75 million note receivable from Todd Communications and assume a
Todd Communications note payable to Mr. Paxson of approximately $1.55 million
to acquire the station.
(5) These "low power" stations will be utilized to simulcast the signal of
the Company's WHAI-TV station.
(6) Station is not currently on the air. The Company estimates spending
$2 million in build-out costs before broadcasting can begin.
(7) Station license will be acquired by CNI, with the Company financing the
acquisition price through a loan to CNI. The Company has entered into a time
brokerage agreement to operate the station.
(8) The Company intends to purchase a 50% ownership interest in these
stations which are currently operated under a time brokerage agreement.
(9) Purchase price includes a cash payment of $47.5 million and
approximately $10 million of Company common stock. The Company began operating
the stations pursuant to a time brokerage agreement on May 1, 1996 and
anticipates completing the purchase in January 1997.
(10) The Company intends to begin operating the station pursuant to a time
brokerage agreement on June 1, 1996.
(11) Purchase includes billboards with 169 faces. The Company completed the
purchase on May 8, 1996.
In addition, the Company recently entered into an agreement to acquire an
additional AM station in a major Florida market for $13 million.
WNGM (TV-34) in Atlanta, GA was acquired by Whitehead Media Inc. on April 19,
1996 and the Company has entered into a 10 year time brokerage agreement to
operate the station.
The Company has committed to loan Roberts up to $4 million to finance the
relocation and construction of television station WRMY (TV-47) serving the
Raleigh/Durham, North Carolina market. The Company has also entered into a
seven year time brokerage agreement commencing
15
<PAGE> 16
upon the consummation of Roberts' acquisition of the license. In January
1996, the Company purchased an option to acquire a 40% limited partnership
interest in WRMY (TV-47) from Roberts. At March 31, 1996 advances of
approximately $1.5 million had been made under the loan commitment.
The Company has committed to loan Cocola Media Corporation of Florida
("Cocola") up to $7 million to finance the construction of television station
WHBI (TV-67) serving the West Palm Beach, Florida market. The Company has also
entered into a seven year time brokerage agreement commencing upon the
consummation of the Cocola acquisition of the license. At March 31, 1996 the
Company had total advances under the loan commitment of approximately $1.2
million. Such amounts are included in Investments in broadcast properties.
16
<PAGE> 17
PAXSON COMMUNICATIONS CORPORATION
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No material legal proceedings are pending to which the Company, or any of its
property, is subject. To the knowledge of the Company, no such legal
proceedings are contemplated by any governmental authority.
Items 2-3. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders. Not Applicable
Item 5. Other Matters. Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ---------------------------------------------
<S> <C>
1.1 Final form of Underwriting Agreement, dated March 28, 1996, between
the Company, Smith Barney, Inc. and others (U.S.)
1.2 Final form of Underwriting Agreement dated, March 28, 1996, between
the Company, Smith Barney, Inc. and others (International)
3.1.1 Certificate of Incorporation of the Company(**)
3.1.2 The Company's Certificate of Designations of the Company's 15%
Cumulative Compounding Redeemable Preferred Stock(*)
3.1.3 The Company's Certificate of Designations of the Company's Series B
15% Cumulative Compounding Redeemable Preferred Stock(**)
3.1.4 The Company's Certificate of Designations of the Company's Junior
Cumulative Compounding Redeemable Preferred Stock(**)
3.1.5 Bylaws of the Company(+)
4.1 Form of Stock Certificate of Class A Common Stock(*)
10.4.1 Agreement, dated March 26, 1996 amending the Amended and Restated
Stockholders Agreement, by and among the Company and certain
stockholders therof and certain related agreements(+)
10.53.1 Option Agreement, dated January 24, 1996, by and between Channel 13
of Flagstaff, Inc. and Paxson Communications of Flagstaff-13, Inc.
for television station KWBF-TV(+)
10.65.1 Time Brokerage Agreement, dated January 26, 1996, between Channel
13 of St. Louis, Inc. and Paxson Communications of St. Louis-13,
Inc. for television station WCEE-TV, Mt. Vernon, Illinois(+)
10.65.2 Option Agreement, dated January 26, 1996 by and between Channel 13
of St. Louis, Inc. and Paxson Communications of St. Louis, Inc(+)
10.65.3 Letter Exercising Option, dated February 21, 1996, by and between
Channel 13 of St. Louis, Inc. and Paxson Communications of St.
Louis-13, Inc. for television station WCEE-TV(+)
10.67 Letter of Intent, dated February 24, 1996, among the Company, New Age
Broadcasting, Inc. and The Seventies Broadcasting Corporation(+)
10.71 Letter Exercising Option, dated February 22, 1996, by Paxson
Broadcasting of Tampa-66, Inc. to exercise option on WFCT-TV(+)
10.74 Time Brokerage Agreement, dated January 31, 1996, by and between
S&E Network, Inc. and Paxson Communications of San Juan, Inc. for
television station WSJN-TV(+)
</TABLE>
17
<PAGE> 18
10.74.1 Stock Purchase Agreement by and between S&E Network, Inc. and
Paxson Communications of San Jaun, Inc. for television station
WSJN-TV(+)
10.79 Letter of Intent, dated February 22, 1996, with Roberts
Broadcasting Company of Salt Lake City LLC regarding television
station KZAR-TV(+)
10.81 Asset Purchase Agreement, dated January 31, 1996 between TeleSouth
Communications, Inc., Paxson Networks, Inc and Lowell W. Paxson in
connection with the sale of South Carolina Radio Network(+)
10.82 Asset Purchase Agreement, dated January 1, 1996, between the
Company and Lowell W. Paxson in connection with the sale of World
Travelors Network(+)
10.87 First Amendment dated February 29, 1996 between Channel 55 of
Albany, Inc. and Cornerstone Television Inc.
10.88 Asset Purchase Agreement dated as of March 29, 1996 by and between
Paxson Communications of Cookeville, Inc. and WHUB, Inc.
27 Financial Data Schedule (for SEC use only)
99.1 Tax Exemption Savings Agreement between the Company and The
Christian Network, Inc., dated May 15, 1994(+)
- ----------------
(*) Filed with the Company's Registration Statement on Form S-4, filed
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 Registration Statement on Form S-1, as
amended, filed January 26, 1996, Registration No. 333-473 and
incorporated herein by reference.
(b) Reports on Form 8-K. None.
18
<PAGE> 19
PAXSON COMMUNICATIONS CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAXSON COMMUNICATIONS CORPORATION
Date: May 14, 1996 By: /s/ Lowell W. Paxson
----------------------------------
Lowell W. Paxson
Chairman of the Board of Directors
and Chief Executive Officer
Date: May 14, 1996 By: /s/ Arthur D. Tek
-----------------------------------
Arthur D. Tek
Vice President, Chief
Financial Officer, Director
19
<PAGE> 1
EXHIBIT 1.1
10,800,000 Shares
PAXSON COMMUNICATIONS CORPORATION
Class A Common Stock
U.S. UNDERWRITING AGREEMENT
March 28, 1996
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
CIBC WOOD GUNDY SECURITIES CORP.
BT SECURITIES CORPORATION
As Representatives of the Several U.S. Underwriters
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Paxson Communications Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell an aggregate of 8,240,000 shares of its
Class A Common Stock, $0.001 par value per share, to the several Underwriters
named in Schedule II hereto (the "U.S. Underwriters"), and the persons named in
Part A of Schedule I hereto (the "Selling Stockholders"), severally and not
jointly, propose to sell to the several U.S. Underwriters an aggregate of
1,076,800 shares of Class A Common Stock and the persons named in Part B of
Schedule I hereto (the "Selling Warrantholders" and, together with the Selling
Stockholders, the "Selling Securityholders"), severally and not jointly,
propose to sell to the several U.S. Underwriters warrants (the "Firm Warrants")
to purchase 1,483,200 shares of common stock (the "Common Stock") of the
Company (the "Firm Warrant Shares"). The Company and the Selling
Securityholders are hereinafter sometimes referred to as the "Sellers." The
Company's Class A Common Stock, $0.001 par value per share, is hereinafter
referred to as the "Class A Common Stock" and the 8,240,000 shares of Class A
Common Stock to be issued and sold to the U.S. Underwriters by the Company and
the 1,076,800 shares of Class A Common Stock to be sold to the U.S.
Underwriters by the Selling Stockholders are hereinafter referred to as the
"Firm Shares." The Firm Shares and the Firm Warrants are hereinafter referred
to as the "Firm Securities." The Company and the Selling Securityholders
listed in Part C of Schedule I hereto, severally and not jointly, also propose
to sell to the U.S. Underwriters, upon the terms and
<PAGE> 2
-2-
conditions set forth in Section 2 hereof, up to an additional 1,131,200 shares
(the "Additional Shares" and, together with the Firm Shares, the "U.S. Shares")
of Class A Common Stock and warrants (the "Additional Warrants" and, together
with the Firm Warrants, the "U.S. Warrants") to purchase 488,800 shares of
Common Stock (the "Additional Warrant Shares" and, together with the Firm
Warrant Shares, the "U.S. Warrant Shares"). The Additional Shares and the
Additional Warrants are hereinafter referred to as the "Additional Securities."
The U.S. Shares and the U.S. Warrants are hereinafter referred to as the "U.S.
Securities."
It is understood that the Company and the Selling
Securityholders are concurrently entering into an International Underwriting
Agreement, dated the date hereof (the "International Underwriting Agreement"
and, together with the U.S. Underwriting Agreement, the "Underwriting
Agreements"), providing for (i) the sale of 2,329,200 shares of Class A Common
Stock (the "Firm International Shares"), of which 2,060,000 shares will be sold
by the Company and 269,200 shares will be sold by the Selling Securityholders,
and warrants (the "Firm International Warrants") to purchase 370,800 shares of
Common Stock (the "Firm International Warrant Shares") and (ii) the grant of an
option to purchase up to an additional 282,800 shares of Class A Common Stock
(the "Additional International Shares" and, together with the Firm
International Shares, the "International Shares") and warrants (the "Additional
International Warrants" and, together with the Firm International Warrants, the
"International Warrants") to purchase 122,200 shares of Common Stock (the
"Additional International Warrant Shares" and, together with the Firm
International Warrant Shares, the "International Warrant Shares"), through
arrangements with certain underwriters outside the United States and Canada
(the "Managers"), for whom Smith Barney Inc., PaineWebber International (U.K.)
Ltd., CIBC Wood Gundy Securities Corp. and Bankers Trust International PLC are
acting as lead managers (the "Lead Managers"). The International Shares and
the International Warrants are hereinafter referred to as the "International
Securities." The International Shares and the U.S. Shares are hereinafter
referred to as the "Shares." The International Warrants and the U.S. Warrants
are hereinafter referred to as the "Warrants." The International Warrant
Shares and the U.S. Warrant Shares are hereinafter referred to as the "Warrant
Shares." The International Securities and the U.S. Securities are hereinafter
referred to as the "Securities."
The Company and the Selling Securityholders understand that
the U.S. Underwriters and the Managers intend to exercise the Warrants
immediately upon their receipt and will offer the
<PAGE> 3
-3-
Warrant Shares (which, for purposes of this Agreement, shall mean the shares of
Class A Common Stock issuable upon exercise of the Warrants or into which the
shares of Class B Common Stock, par value $.001 per share (the "Class B Common
Stock") of the Company are convertible) publicly as described in the
Registration Statement (as hereinafter defined). The Shares and the Warrant
Shares are hereinafter referred to as the "Offered Shares."
The Company and the Selling Securityholders also understand
that the U.S. Underwriters and the Managers have entered into an agreement (the
"Agreement Between U.S. Underwriters and Managers") contemplating the
coordination of certain transactions between the U.S. Underwriters and the
Managers and that, pursuant thereto and subject to the conditions set forth
therein, the U.S. Underwriters may purchase from the Managers a portion of the
International Securities or sell to the Managers a portion of the U.S.
Securities. The Company understands that any such purchases and sales between
the U.S. Underwriters and the Managers shall be governed by the Agreement
Between U.S. Underwriters and Managers and shall not be governed by the terms
of this Agreement or the International Underwriting Agreement.
The Company and the Selling Securityholders wish to confirm as
follows their respective agreements with you (the "Representatives") and the
other several U.S. Underwriters on whose behalf you are acting, in connection
with the several purchases of the U.S. Securities by the U.S. Underwriters.
1. Registration Statement and Prospectus. The Company
has prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act") a registration statement on Form S- 1 under the Act
(the "Registration Statement"), including prospectuses subject to completion
relating to the Offered Shares. The term "Registration Statement" as used in
this Agreement means the Registration Statement (including all financial
schedules and exhibits) and any registration statement filed pursuant to Rule
462(b) under the Act, each as amended at the time it becomes effective, or, if
the Registration Statement became effective prior to the execution of this
Agreement, as supplemented or amended prior to the execution of this Agreement.
If it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the Registration Statement will be filed and must
be declared effective before the offering of the Offered Shares may commence,
the term "Registration Statement" as used in this Agreement means the
Registration Statement as amended by said post-effective
<PAGE> 4
-4-
amendment. The term "Prospectuses" as used in this Agreement means the
prospectuses in the forms included in the Registration Statement (including any
prospectus subject to completion meeting the requirements of Rule 434(b) under
the Act), or, if the prospectuses included in the Registration Statement omit
information in reliance on Rule 430A under the Act and such information is
included in the prospectuses or term sheets (within the meaning of Rule 434
under the Act) filed with the Commission pursuant to Rule 424(b) under the Act,
the term "Prospectuses" as used in this Agreement means the prospectuses in the
form included in the Registration Statement as supplemented by the addition of
the Rule 430A information contained in the prospectuses or term sheets (within
the meaning of Rule 434 under the Act) filed with the Commission pursuant to
Rule 424(b). The term "Prepricing Prospectuses" as used in this Agreement
means the prospectuses subject to completion in the forms included in the
Registration Statement at the time of the initial filing of the Registration
Statement with the Commission or in any amendment to the Registration Statement
filed with the Commission, and as such prospectuses shall have been amended
from time to time prior to the date of the Prospectuses.
It is understood that two forms of Prepricing Prospectus and
two forms of Prospectus are to be used in connection with the offering and sale
of the Offered Shares: a Prepricing Prospectus and a Prospectus relating to
the U.S. Shares and the U.S. Warrant Shares that are to be offered and sold in
the United States (as defined herein) or Canada (as defined herein) to U.S. or
Canadian Persons (as defined herein) (the "U.S. Prepricing Prospectus" and the
"U.S. Prospectus," respectively), and a Prepricing Prospectus and a Prospectus
relating to the International Shares and the International Warrant Shares which
are to be offered and sold outside the United States and Canada to persons
other than U.S. or Canadian Persons (the "International Prepricing Prospectus"
and the "International Prospectus," respectively). The U.S. Prospectus and the
International Prospectus are herein collectively called the "Prospectuses," and
the U.S. Prepricing Prospectus and the International Prepricing Prospectus are
herein called the "Prepricing Prospectuses." For purposes of this Agreement:
"Rules and Regulations" means the rules and regulations adopted by the
Commission under the Act; "U.S. or Canadian Person" means any resident or
national of the United States or Canada, any corporation, partnership or other
entity created or organized in or under the laws of the United States or Canada
or any estate or trust the income of which is subject to United States or
Canadian income taxation regardless of the source of its income (other than the
foreign branch of any U.S. or Canadian Person), and includes any United States
or
<PAGE> 5
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Canadian branch of a person other than a U.S. or Canadian Person; "United
States" means the United States of America (including the states thereof and
the District of Columbia) and its territories, its possessions and other areas
subject to its jurisdiction; and "Canada" means Canada and its territories, its
possessions and other areas subject to its jurisdiction.
2. Agreements to Sell and Purchase. Subject to such
adjustments as you may determine in order to avoid fractional shares, the
Company hereby agrees, subject to all the terms and conditions set forth
herein, to issue and sell to each U.S. Underwriter and, upon the basis of the
representations, warranties and agreements of the Company and the Selling
Securityholders herein contained and subject to all the terms and conditions
set forth herein, each U.S. Underwriter, severally and not jointly, agrees to
purchase from the Company, at a purchase price of $15.20 per share (the
"purchase price per share"), the number of Firm Shares which bears the same
proportion to the aggregate number of Firm Shares to be issued and sold by the
Company as the number of Shares set forth opposite the name of such U.S.
Underwriter in Schedule II hereto (or such number of Shares increased as set
forth in Section 12 hereof) bears to the total number of Shares set forth on
Schedule II hereto (with respect to each U.S. Underwriter, such U.S.
Underwriter's "Pro Rata Share"). The Company agrees, upon receipt of the
exercise price of the Firm Warrants and surrender of the certificates, if any,
representing such Firm Warrants, to issue to the U.S. Underwriters the Firm
Warrant Shares (including any conversion of Class B Common Stock into Class A
Common Stock).
Subject to such adjustments as you may determine in order to
avoid fractional shares or, indirectly, warrant shares, each Selling
Securityholder hereby agrees, severally and not jointly, and subject to all the
terms and conditions set forth herein, to sell to each U.S. Underwriter and,
upon the basis of the representations, warranties and agreements of the Company
and the Selling Securityholders herein contained and subject to all the terms
and conditions set forth herein, each U.S. Underwriter, severally and not
jointly, agrees to purchase from each Selling Securityholder (i) that number of
Firm Shares, if any, set forth opposite such Selling Securityholder's name on
Part A of Schedule I hereto multiplied by each such U.S. Underwriter's Pro Rata
Share at the purchase price per share and (ii) that number of Firm Warrants, if
any, set forth opposite such Selling Securityholder's name on Part B of
Schedule I hereto multiplied by each such U.S. Underwriter's Pro Rata Share at
the warrant purchase price. "Warrant purchase price" for any Warrant means the
excess of (i) the purchase price per share multiplied by the
<PAGE> 6
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number of Warrant Shares issuable upon the exercise of the Warrant over (ii)
the exercise price payable upon the issuance of such Warrant Shares pursuant to
the exercise of such Warrant.
The Company and the Selling Securityholders listed in Part C
of Schedule I hereto also agree, severally and not jointly, and subject to all
the terms and conditions set forth herein, to sell to the U.S. Underwriters
and, upon the basis of the representations, warranties and agreements of the
Company and the Selling Securityholders herein contained and subject to all the
terms and conditions set forth herein, the U.S. Underwriters shall have the
right to purchase from the Company and the Selling Securityholders listed in
Part C of Schedule I hereto, at the purchase price per share in the case of any
Additional Shares and at the warrant purchase price in the case of any
Additional Warrants, pursuant to an option (the "over-allotment option") which
may be exercised at any time and from time to time prior to 9:00 P.M., New York
City time, on the 30th day after the date of the U.S. Prospectus (or, if such
30th day shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the American Stock Exchange is open for trading), that number
of Additional Shares and Additional Warrants, if any, set forth opposite their
respective names in Part C of Schedule I. Additional Shares and Additional
Warrants may be purchased only for the purpose of covering over- allotments
made in connection with the offering of the Firm Shares and the Firm Warrant
Shares. The Additional Shares and Additional Warrants which the U.S.
Underwriters elect to purchase upon any exercise of the over-allotment option
shall be provided (i) by the Company in the form of Additional Shares equal to
the number of Additional Shares set forth opposite its name on Part C of
Schedule I hereto multiplied by a fraction, the numerator of which is the
aggregate number of shares of Class A Common Stock which the U.S. Underwriters
elect to purchase (either directly through the purchase of Additional Shares or
indirectly through the purchase and subsequent exercise of Additional Warrants)
upon such exercise of the over-allotment option and the denominator of which is
the aggregate number of Additional Shares and Additional Warrant Shares (such
fraction, the "Purchased Percentage") and (ii) by each Selling Securityholder
in the form of Additional Shares and/or Additional Warrants determined by
multiplying the number of Additional Shares and/or Additional Warrant Shares
that would be issued upon the exercise of such Selling Securityholder's
Additional Warrants, each as set forth opposite such Selling Securityholder's
name on Part C of Schedule I hereto by the Purchased Percentage. Upon any
exercise of the over-allotment option, subject to such adjustments as you may
determine in order to avoid fractional shares or, indirectly, warrant shares,
each
<PAGE> 7
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U.S. Underwriter, severally and not jointly, agrees to (i) purchase from the
Company and each Selling Securityholder who has agreed to sell Additional
Shares that number of Additional Shares to be sold by the Company or such
Selling Securityholder determined pursuant to the preceding sentence multiplied
by each such U.S. Underwriter's Pro Rata Share and (ii) purchase from each
Selling Securityholder who has agreed to sell Additional Warrants that number
of Additional Warrants to be sold by such Selling Securityholder determined
pursuant to the preceding sentence multiplied by each such U.S. Underwriter's
Pro Rata Share. The Company agrees, upon receipt of the exercise price of the
Additional Warrants and surrender of the certificates, if any, representing
such Additional Warrants, to issue to the U.S. Underwriters the Additional
Warrant Shares (including any conversion of Class B Common Stock into Class A
Common Stock).
Certificates in transferable form for the U.S. Shares and the
U.S. Warrants which each of the Selling Securityholders agrees to sell pursuant
to this Agreement (other than Shares issuable upon the exercise of options)
have been placed in custody with First Union National Bank of North Carolina
(the "Custodian") for delivery under this Agreement pursuant to a Custody
Agreement and Power of Attorney (collectively, the "Custody Agreement")
executed by each of the Selling Securityholders appointing Arthur D. Tek and
Anthony L. Morrison as agents and attorneys-in-fact (the "Attorneys-in-Fact").
With respect to Shares issuable upon the exercise of stock options held by
certain of the Selling Securityholders, the Selling Securityholders holding
such options have deposited with the Custodian irrevocable option exercise and
payment direction letters in form and substance satisfactory to the
Representatives. Each Selling Securityholder agrees, severally and not
jointly, that (i) the U.S. Shares and the U.S. Warrants represented by the
certificates deposited by such Selling Securityholder in custody pursuant to
the Custody Agreement are subject to the interests of the U.S. Underwriters,
the Company and each other Selling Securityholder, (ii) the arrangements made
by such Selling Securityholder for such custody are, except as specifically
provided in the Custody Agreement, irrevocable, and (iii) to the extent that
such Selling Securityholder can, by reliance on this clause (iii), vary the
provisions of any applicable law, the obligations of such Selling
Securityholder hereunder and under the Custody Agreement shall not be
terminated by any act of such Selling Securityholder or by operation of law,
whether upon the death or incapacity of any Selling Securityholder or the
occurrence of any other event, except as specifically provided in the Custody
Agreement. Subject to the terms and conditions of the Custody Agreement, if
any Selling Security-
<PAGE> 8
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holder shall die or be incapacitated or if any other event referred to in
clause (iii) of the immediately preceding sentence shall occur before the
delivery of the U.S. Shares and the U.S. Warrants hereunder, certificates for
the U.S. Shares and the U.S. Warrants of such Selling Securityholder shall be
delivered to the U.S. Underwriters by the Attorneys-in-Fact in accordance with
the terms and conditions of this Agreement and the Custody Agreement as if such
death or incapacity or other event had not occurred, regardless of whether or
not the Attorneys-in-Fact or any U.S. Underwriter shall have received notice
of such death, incapacity or other event. To the extent specifically provided
in the Custody Agreement, each Attorney-in-Fact is authorized, on behalf of
such Selling Securityholder, to execute this Agreement and certain other
documents in connection with the sale of the U.S. Shares and the U.S. Warrants
to be sold hereunder by such Selling Securityholder including acknowledging, on
behalf of such Selling Securityholder, receipt of the proceeds from the sale of
the U.S. Shares and the U.S. Warrants. Each Attorney-in-Fact agrees to perform
his duties under the Custody Agreement.
Each U.S. Underwriter represents, warrants, covenants and
agrees that, except as contemplated under Section 2 of the Agreement Between
U.S. Underwriters and Managers dated the date hereof, (i) it is not purchasing
any Shares or Warrants for the account of anyone other than a U.S. or Canadian
Person, (ii) it has not offered or sold, and will not offer, sell, resell or
deliver, directly or indirectly, any Shares or Warrants or distribute any U.S.
Prospectus outside the United States or Canada or to anyone other than a U.S.
or Canadian Person and (iii) any offer of Shares or Warrants in Canada will be
made only pursuant to an exemption from the requirement to file a prospectus in
the relevant province of Canada in which such offer is made.
3. Terms of Public Offering. The Sellers have been
advised by you that the U.S. Underwriters propose to make a public offering of
their respective portions of the Offered Shares as soon after the Registration
Statement and this Agreement have become effective as in your judgment is
advisable and initially to offer such Offered Shares upon the terms set forth
in the U.S. Prospectus.
4. Delivery of the Securities and Payment Therefor.
Delivery to the U.S. Underwriters of and payment for the Firm Securities shall
be made at the office of Smith Barney Inc., 388 Greenwich Street, New York, NY
10013, at 10:00 A.M., New York City time, on April 3, 1996 (the "Closing
Date"). The place of closing for the Firm Securities and the Closing Date may
be
<PAGE> 9
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varied by agreement among you, the Company and the Attorneys-in-Fact.
Delivery to the U.S. Underwriters of and payment for any
Additional Securities to be purchased by the U.S. Underwriters shall be made at
the aforementioned office of Smith Barney Inc. at such times on such dates
(each, an "Option Closing Date"), which may be the same as the Closing Date but
shall in no event be earlier than the Closing Date nor earlier than three nor
later than ten business days after the giving of the notice hereinafter
referred to, as shall be specified in a written notice from you on behalf of
the U.S. Underwriters to the Company and the Attorneys-in-Fact of the U.S.
Underwriters' determination to purchase a number, specified in such notice, of
Additional Securities. The place of closing for any Additional Securities and
the Option Closing Date for such Additional Securities may be varied by
agreement among you, the Company and the Attorneys-in-Fact.
Certificates for the Firm Shares and the Firm Warrant Shares
and for any Additional Shares and any Additional Warrant Shares to be purchased
hereunder (or acquired upon the exercise of Warrants purchased hereunder) shall
be registered in such names and in such denominations as you shall request
prior to 1:00 P.M., New York City time, on the second business day preceding
the Closing Date or any Option Closing Date, as the case may be. Such
certificates shall be made available to you in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date or the Option Closing Date, as the case may be.
The certificates evidencing the Firm Shares and the Firm Warrant Shares and any
Additional Shares and any Additional Warrant Shares to be purchased hereunder
(or acquired upon the exercise of Warrants purchased hereunder) shall be
delivered to you on the Closing Date or the Option Closing Date, as the case
may be, against payment of the purchase price therefor by certified or official
bank check or checks payable in New York Clearing House (next day) funds to the
order of the Company or the Attorneys-in-Fact, as the case may be.
5. Agreements of the Company. The Company agrees with
the several U.S. Underwriters as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a
post-effective amendment thereto to be declared effective before the
offering of the Offered Shares may commence, the Company will endeavor
to cause the Registration Statement or
<PAGE> 10
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such post-effective amendment to become effective as soon as possible
and will advise you promptly and, if requested by you, will confirm
such advice in writing, when the Registration Statement or such
post-effective amendment has become effective.
(b) The Company will advise you promptly and, if
requested by you, will confirm such advice in writing: (i) of any
request by the Commission for amendment of or a supplement to the
Registration Statement, any of the Prepricing Prospectuses or the
Prospectuses or for additional information; (ii) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the
Offered Shares for offering or sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (iii) within the
period of time referred to in the first sentence of paragraph (f) of
this Section 5, of any change in the Company's or any of its
subsidiaries' condition (financial or other), business, prospects,
properties, net worth or results of operations, or of the happening of
any event, which makes any statement of a material fact made in the
Registration Statement or the Prospectuses (as then amended or
supplemented) untrue or which requires the making of any additions to
or changes in the Registration Statement or the Prospectuses (as then
amended or supplemented) in order to state a material fact required by
the Act or the regulations thereunder to be stated therein or
necessary in order to make the statements therein not misleading, or
of the necessity to amend or supplement the Prospectuses (as then
amended or supplemented) to comply with the Act or any other law. If
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company will use its
best efforts to obtain the withdrawal of such order at the earliest
possible time.
(c) The Company will furnish to you, without charge, five
signed copies of the registration statement as originally filed with
the Commission and of each amendment thereto, including financial
statements and all exhibits thereto, and will also furnish to you,
without charge, such number of conformed copies of the registration
statement as originally filed and of each amendment thereto, but
without exhibits, as you may reasonably request.
(d) The Company will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the
Prospectuses (including by way of issuance and filing
<PAGE> 11
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under the Act of any term sheet within the meaning of Rule 434 under
the Act) of which you shall not previously have been advised or to
which you shall reasonably object within a reasonable period of time
after being so advised or (ii) during such period as, in the
reasonable opinion of counsel for the U.S. Underwriters, a prospectus
is required to be delivered in connection with sales by any U.S.
Underwriter or dealer, file any information, documents or reports
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), without delivering a copy of such information,
documents or reports to you, as Representatives of the U.S.
Underwriters, prior to or concurrently with such filing.
(e) Prior to the execution and delivery of this
Agreement, the Company has delivered to you, without charge, in such
quantities as you have reasonably requested, copies of each form of
the U.S. Prepricing Prospectus. The Company consents to the use, in
accordance with the provisions of the Act and with the securities or
Blue Sky laws of the jurisdictions in which the Offered Shares are
offered by the several U.S. Underwriters and by dealers, prior to the
date of the U.S. Prospectus, of each U.S. Prepricing Prospectus so
furnished by the Company.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period
as in the reasonable opinion of counsel for the U.S. Underwriters a
prospectus is required by the Act to be delivered in connection with
sales of Offered Shares by any U.S. Underwriter or dealer, the Company
will expeditiously deliver to each U.S. Underwriter, without charge,
as many copies of the U.S. Prospectus (and of any amendment or
supplement thereto) as you may reasonably request. The Company
consents to the use of the U.S. Prospectus (and of any amendment or
supplement thereto) in accordance with the provisions of the Act and
with the securities or Blue Sky laws of the jurisdictions in which the
Offered Shares are offered by the several U.S. Underwriters and by all
dealers to whom Offered Shares may be sold, both in connection with
the offering and sale of the Offered Shares and for such period of
time thereafter as the U.S. Prospectus is required by the Act to be
delivered in connection with sales by any U.S. Underwriter or dealer.
If during such period of time any event shall occur that in the
judgment of the Company or in the opinion of counsel for the U.S.
Underwriters is required to be set forth in the U.S. Prospectus (as
then amended or supplemented) or should be set forth therein in
<PAGE> 12
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order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary to supplement or amend the U.S. Prospectus in order to
comply with the Act or any other law, the Company will forthwith
prepare and, subject to the provisions of paragraph (d) above, file
with the Commission an appropriate supplement or amendment thereto,
and will expeditiously furnish to the U.S. Underwriters as many
copies thereof as they may reasonably request. In the event that the
Company and you, as Representatives of the several U.S. Underwriters,
agree that the U.S. Prospectus should be amended or supplemented, the
Company, if requested by you, will promptly issue a press release
announcing or disclosing the matters to be covered by the proposed
amendment or supplement.
(g) The Company will cooperate with you and with counsel
for the U.S. Underwriters in connection with the registration or
qualification of the Offered Shares for offering and sale by the
several U.S. Underwriters and by dealers under the securities or Blue
Sky laws of such jurisdictions as you may designate and will file such
consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification;
provided that in no event shall the Company be obligated to qualify to
do business in any jurisdiction where it is not now so qualified or to
take any action which would subject it to service of process in suits,
other than those arising out of the offering or sale of the Offered
Shares, in any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its
security holders a consolidated earning statement, which need not be
audited, covering a twelve-month period commencing after the effective
date of the Registration Statement and ending not later than 15 months
thereafter, as soon as practicable after the end of such period, which
consolidated earning statement shall satisfy the provisions of Section
11(a) of the Act and Rule 158 promulgated thereunder.
(i) During the period of five years hereafter, the
Company will furnish to you promptly after available, a copy of each
report of the Company mailed to common stockholders or filed with the
Commission or the American Stock Exchange (unless the Company has, in
good faith, requested confidential treatment with respect to such
filing).
<PAGE> 13
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(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof
(otherwise than pursuant to the second paragraph of Section 12 hereof
or by notice given by you terminating this Agreement pursuant to
Section 12 or Section 13 hereof) or if this Agreement shall be
terminated by the U.S. Underwriters because of any failure or refusal
on the part of the Company or the Selling Securityholders to comply
with the terms or fulfill any of the conditions of this Agreement, the
Company agrees to reimburse the Representatives for all reasonable
out-of-pocket expenses (including reasonable fees and expenses of
counsel for the U.S. Underwriters) incurred by you in connection
herewith.
(k) The Company will apply the net proceeds from the sale
of the Offered Shares to be sold by it hereunder substantially in
accordance with the description set forth in the Prospectuses.
(l) If Rule 430A of the Act is employed, the Company will
timely file the Prospectuses pursuant to Rule 424(b) under the Act and
will advise you of the time and manner of such filing.
(m) Except as provided in this Agreement and the
International Underwriting Agreement, the Company will not sell, offer
to sell, solicit an offer to buy, contract to sell, grant any option
to purchase or otherwise transfer or dispose of any common stock of
the Company (the "Common Stock") or any securities convertible into or
exercisable or exchangeable for Common Stock, for a period of 180 days
after the date of the Prospectuses, without the prior written consent
of Smith Barney Inc; provided, however, that the Company may (i)
repurchase from Selling Securityholders Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock, (ii)
issue Common Stock upon the exercise of currently outstanding warrants
or upon the exercise of options granted under the Company's existing
stock option grants or plans or the proposed stock option plan to be
adopted by the Company as described in the Prospectuses, (iii) issue
Class A Common Stock upon conversion or exchange of existing shares of
another class of Common Stock, (iv) grant an option, and permit the
exercise thereof, with respect to 75,000 shares of Class A Common
Stock to John Casey or his designee and (v) issue shares of Common
Stock as consideration for the acquisition of additional broadcast
assets.
<PAGE> 14
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(n) Except as stated in this Agreement and in the
International Underwriting Agreement and in the Prepricing
Prospectuses and Prospectuses, the Company has not taken, nor will it
take, directly or indirectly, any action designed to cause or result
in stabilization or manipulation of the price of any of the Company's
capital stock (the "Capital Stock") to facilitate the sale or resale
of the Offered Shares.
(o) The Company will use its best efforts to have the
Offered Shares listed, subject to issuance, on the American Stock
Exchange on or before the Closing Date.
6. Agreements of the Selling Securityholders. Each of
the Selling Securityholders, severally and not jointly, agrees with
the several U.S. Underwriters as follows:
(a) Such Selling Securityholder will use reasonable
efforts to cooperate to the extent reasonably necessary to cause the
Registration Statement or any post-effective amendment thereto to
become effective at the earliest possible time, to the extent that
such effectiveness is contingent upon an action to be taken by such
Selling Securityholder.
(b) On the Closing Date or the Option Closing Date, as
the case may be, all stock transfer or other taxes (other than income
taxes) which are required to be paid in connection with the sale and
transfer hereunder to the several U.S. Underwriters by such Selling
Securityholder of the Shares or Warrants to be sold by such Selling
Securityholder to the several Underwriters hereunder on such date will
have been paid or provided for by such Selling Securityholder.
(c) Except as provided in this Agreement and in the
International Underwriting Agreement, such Selling Securityholder will
not sell, offer to sell, solicit an offer to buy, contract to sell,
grant any option to purchase or otherwise transfer or dispose of any
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, for a period of 180 days after the date
of the Prospectuses, without the prior written consent of Smith Barney
Inc; provided, however, that such Selling Securityholder may
(i) transfer shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock to (x) the Company, (y)
any other Selling Securityholder who is bound by the terms of this
paragraph (c) or (z) to any Affiliate (as such term is defined for
purposes
<PAGE> 15
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of the Securities Exchange Act of 1934, as amended) of any Selling
Securityholder if such Affiliate agrees in writing to be bound by the
terms of this paragraph (c) or (ii) exercise, exchange or convert
stock options, warrants, convertible securities or other rights
entitling such Selling Securityholder to receive shares of Common
Stock or convert or exchange shares of one class of Common Stock into
shares of a different class of Common Stock, with all the shares of
Common Stock received upon any such exercise, exchange or conversion
being subject to the terms of this paragraph (c).
(d) Except as stated in this Agreement and the
International Underwriting Agreement and in the Prepricing
Prospectuses and the Prospectuses, such Selling Securityholder has not
taken, nor will it take, directly or indirectly, any action designed
to cause or result in stabilization or manipulation of the price of
any Capital Stock to facilitate the sale or resale of the Offered
Shares (it being understood that this paragraph (d) shall not apply to
any stabilization efforts of any affiliate of such Selling
Securityholder who is a U.S. Underwriter or Manager).
(e) Such Selling Securityholder will (promptly after the
same becomes known to such Selling Securityholder) advise you, and if
requested by you, will confirm such advice in writing, within the
period of time referred to in the first sentence of paragraph (f) of
Section 5 hereof (but not in excess of nine months from the date of
this Agreement), of any change in information relating to such Selling
Securityholder previously furnished to you or the Company in writing
by such Selling Securityholder specifically for use in the
Registration Statement.
(f) Such Selling Securityholder agrees to deliver to you
prior to or at the Closing Date a properly completed and executed
United States Treasury Department Form W-9 (or other applicable form
or statement specified by Treasury Department regulations in lieu
thereof).
7. Representations and Warranties of the Company.
The Company represents and warrants to each U.S. Underwriter that:
(a) Each Prospectus complied when filed in all material
respects with the provisions of the Act. The Commission has not
issued any order preventing or suspending the use of any Prepricing
Prospectus.
<PAGE> 16
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(b) The Registration Statement in the form in which it
became or becomes effective and also in such form as it may be when
any post-effective amendment thereto shall become effective and the
Prospectuses and any supplement or amendment thereto when filed with
the Commission under Rule 424(b) under the Act complied or will comply
in all material respects with the provisions of the Act and did not
and will not at any such times 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 not misleading,
except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the
Prospectuses made in reliance upon and in conformity with information
relating to any U.S. Underwriter or Manager furnished to the Company
in writing by or on behalf of any U.S. Underwriter or Manager through
you expressly for use therein.
(c) All the outstanding shares of Capital Stock of the
Company have been duly authorized and validly issued, are fully paid
and nonassessable and are free of any preemptive or similar rights;
the Shares to be issued and sold by the Company have been duly
authorized and, when issued and delivered to the U.S. Underwriters
and the Managers against payment therefor in accordance with the terms
hereof and in the International Underwriting Agreement, will be
validly issued, fully paid and nonassessable and free of any
preemptive or similar rights; and the Capital Stock of the Company
conforms in all material respects to the descriptions thereof in the
Registration Statement and the Prospectuses.
(d) The warrant agreements governing the Warrants (the
"Warrant Agreements") have been duly and validly authorized by the
Company, and the Warrant Agreements have been duly executed and
delivered by the Company and constitute valid and legally binding
agreements of the Company, enforceable against the Company 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.
(e) The Warrants have been duly and validly authorized by the
Company and have been duly executed and delivered by the Company and
constitute valid and legally binding obligations of the Company
enforceable against the Company in
<PAGE> 17
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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. The exercise price for the
Warrants is (i) $.01 per Warrant for those Warrants exerciseable for
Class A Common Stock or Class B Common Stock and (ii) otherwise $.001
per Warrant.
(f) The Warrant Shares have been validly reserved for
issuance; when issued, the Warrant Shares will be duly authorized,
validly issued, fully paid and nonassessable and free of any
preemptive or similar rights.
(g) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of
Delaware with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectuses, and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification,
except where the failure so to register or qualify could not have a
material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the
Company and its subsidiaries taken as a whole (a "Material Adverse
Effect").
(h) All the Company's subsidiaries (collectively, the
"Subsidiaries") are listed in an exhibit to the Registration
Statement. Each Subsidiary is either (i) a corporation duly
incorporated or organized, validly existing and in good standing in
the jurisdiction of its incorporation or organization or (ii) a
partnership duly organized and validly existing under the applicable
laws of the State of Florida and, in each case, with full corporate or
partnership power and authority, as the case may be, to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectuses, and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification,
except where the failure so to register or qualify does not have a
Material Adverse Effect; all the outstanding shares of capital stock
of each
<PAGE> 18
-18-
Subsidiary which is a corporation have been duly authorized and
validly issued and are fully paid and nonassessable; all of the
outstanding shares of capital stock or outstanding partnership
interests of the Subsidiaries are owned by the Company directly, or
indirectly through one of the other Subsidiaries, and, other than as
set forth in the Prospectuses, are owned free and clear of any lien,
adverse claim, security interest, equity or other encumbrance.
(i) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the
Company or any of the Subsidiaries or any of their respective officers
or directors, or to which the Company or any of the Subsidiaries, or
to which any of their respective properties is subject, that are
required to be described in the Registration Statement or the
Prospectuses but are not described as required, and there are no
agreements, contracts, indentures, leases or other instruments that
are required to be described in the Registration Statement or the
Prospectuses or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the Act.
(j) Neither the Company nor any of the Subsidiaries is in
violation of its certificate or articles of incorporation or by-laws,
or other organizational documents, or of any law, ordinance,
administrative or governmental rule or regulation applicable to the
Company or any of the Subsidiaries or of any decree of any court or
governmental agency or body having jurisdiction over the Company or
any of the Subsidiaries, or in default in any material respect in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
material agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties may be bound, except as would
not (individually or in the aggregate) have a Material Adverse Effect.
(k) Except as disclosed in the Registration Statement and
the Prospectuses, neither the issuance and sale of the Offered Shares,
the execution, delivery or performance of this Agreement or the other
Transaction Documents (as hereinafter defined) by the Company or the
Subsidiaries (to the extent a party thereto) nor the consummation by
the Company or the Subsidiaries (to the extent a party thereto) of the
transactions contemplated hereby or thereby (i) requires any
<PAGE> 19
-19-
consent, approval, authorization or other order of or registration or
filing with, any court, regulatory body, administrative agency or
other governmental body, agency or official (except (A) such as may
be required for the registration of the Offered Shares under the Act
and compliance with the securities or Blue Sky and other laws of
various jurisdictions and countries, all of which have been or will be
effected in accordance with this Agreement and (B) as would not
(individually or in the aggregate) have a Material Adverse Effect) or
conflicts or will conflict with or constitutes or will constitute a
breach of, or a default under, the certificate or articles of
incorporation or by-laws, or other organizational documents, of the
Company or any of the Subsidiaries or (ii) conflicts or will conflict
with or constitutes or will constitute a breach of, or a default
under, any agreement, indenture, lease or other instrument to which
the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound, or violates
or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of the
Subsidiaries or any of their respective properties, or will result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Subsidiaries pursuant
to the terms of any agreement or instrument to which any of them is a
party or by which any of them may be bound or to which any of the
property or assets of any of them is subject, except as would not
(individually or in the aggregate) have a Material Adverse Effect.
(l) Each of Price Waterhouse LLP and Voynow, Bayard and
Company, who have certified or shall certify the financial statements
included in the Registration Statement and the Prospectuses (or any
amendment or supplement thereto), are independent public accountants
as required by the Act.
(m) The financial statements of the Company and the
Subsidiaries, together with related schedules and notes, included in
the Registration Statement and the Prospectuses (and any amendment or
supplement thereto) present fairly the consolidated financial
position, results of operations and changes in financial position of
the Company and the Subsidiaries on the basis stated in the
Registration Statement and the Prospectuses at the respective dates or
for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently ap-
<PAGE> 20
-20-
plied throughout the periods involved, except as disclosed therein;
and the other financial and statistical information and data included
in the Registration Statement and the Prospectuses (and any amendment
or supplement thereto) are accurately presented and prepared on a
basis consistent with such financial statements and the books and
records of the Company and the Subsidiaries.
(n) The unaudited pro forma consolidated financial
statements and other pro forma financial information (including the
notes thereto) included in the Registration Statement and the
Prospectuses (A) present fairly in all material respects the
information shown therein; (B) have been prepared in accordance with
applicable requirements of Regulation S-X promulgated under the
Exchange Act; (C) have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements; and (D) have been properly computed on the bases described
therein. The assumptions used in the preparation of the pro forma
financial statements and other pro forma condensed consolidated
financial information included in the Registration Statement and the
Prospectuses are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances
referred to therein.
(o) The execution and delivery of, and the performance by
the Company of its obligations under, this Agreement have been duly
and validly authorized by the Company, and this Agreement has been
duly executed and delivered by the Company and constitutes the valid
and legally binding agreement of the Company, enforceable against the
Company 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 applicable
securities laws and public policy considerations.
(p) The execution and delivery of, and the performance by
the Company and the Subsidiaries (to the extent a party thereto) of
each of its obligations under, each agreement or instrument executed
or delivered in connection with the Proposed Acquisitions (as defined
in the Prospectuses), the exercise of the Station Options (as defined
in the Prospectuses) and the termination of the put option on the Com-
<PAGE> 21
-21-
pany's Class A and Class B Common Stock warrants (collectively, the
"Transaction Documents"), other than this Agreement, have been duly
and validly authorized by the Company and the Subsidiaries (to the
extent a party thereto), and such Transaction Documents have been duly
executed and delivered by the Company and the Subsidiaries (to the
extent a party thereto) and constitute the valid and legally binding
agreement of the Company and the Subsidiaries (to the extent a party
thereto), enforceable against them 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) to general principles of equity and the discretion
of the court before which any proceeding therefor may be brought.
(q) Except as disclosed in the Registration Statement and
the Prospectuses (or any amendment or supplement thereto), subsequent
to the respective dates as of which such information is given in the
Registration Statement and the Prospectuses (or any amendment or
supplement thereto), neither the Company nor any of the Subsidiaries
has incurred any liability or obligation, contingent or otherwise, or
entered into any transaction, not in the ordinary course of business,
that is material to the Company and the Subsidiaries taken as a whole,
and there has not been any change in the capital stock (other than as
contemplated by the Underwriting Agreements or the exercise of stock
options pursuant to grants or plans described in the Prospectuses), or
material increase in the short-term debt or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change, or
any development involving or which may reasonably be expected to
involve, a prospective material adverse change, in the condition
(financial or other), business, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole.
(r) Each of the Company and the Subsidiaries has good and
marketable title to all property (real and personal) described in the
Prospectuses as being owned by it which is material to the business of
the Company and the Subsidiaries, taken as a whole, free and clear of
all liens, claims, security interests or other encumbrances except
such as are described in the Registration Statement and the
Prospectuses or would not (individually or in the aggregate) have a
Material Adverse Effect and all property described in the Registration
Statement (including exhibits thereto) and the
<PAGE> 22
-22-
Prospectuses as being held under lease by each of the Company and the
Subsidiaries which is material to the business of the Company and the
Subsidiaries, taken as a whole, is held by it under binding leases
that are in force and effect.
(s) The Company has not distributed and, prior to the
later to occur of (i) the Closing Date and (ii) completion of the
distribution of the Shares, will not distribute any offering material
in connection with the offering and sale of the Offered Shares other
than the Registration Statement, the Prepricing Prospectuses, the
Prospectuses or other materials, if any, permitted by the Act.
(t) The Company and each of the Subsidiaries have such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities, including, without limitation, permits,
licenses, franchises and authorizations from the United States Federal
Communications Commission (the "FCC") ("Permits"), as are necessary to
own their respective properties and to conduct their business in the
manner described in the Prospectuses, subject to such qualifications
as may be set forth in the Prospectuses and, except as, individually
or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; the Company and each of the Subsidiaries have
fulfilled and performed all of their respective obligations with
respect to such Permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of
the holder of any such Permit, subject in each case to such
qualifications as may be set forth in the Prospectuses and, except as,
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect; and, except as described in the
Prospectuses, none of such Permits contains any restriction that is
materially burdensome to the Company or any of the Subsidiaries, taken
as a whole. Other than as disclosed in the Prospectuses, there are no
license renewal or rate or tariff proceedings existing, pending or, to
the best knowledge of the Company, threatened that could reasonably be
expected to have a Material Adverse Effect.
(u) To the extent required by the Exchange Act, each of
the Company and the Subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general
or specific authorization;
<PAGE> 23
-23-
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(v) To the Company's knowledge, neither the Company nor
any of the Subsidiaries nor any officer, director, employee or agent
of the Company or any Subsidiary has made any payment of funds of the
Company or any Subsidiary or received or retained any funds in
violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the
Prospectuses.
(w) The Company and each of the Subsidiaries have filed
all tax returns required to be filed, which returns are complete and
correct, and neither the Company nor any Subsidiary is in default in
the payment of any taxes which were payable pursuant to said returns
or any assessments with respect thereto, other than those taxes or
assessments being contested in good faith and those taxes or
assessments for which adequate reserves or accruals have been
established in accordance with generally accepted accounting
principles, except where the failure to file such tax returns or to
pay such taxes or assessments is not reasonably likely to have,
individually 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
would, individually or in the aggregate, be reasonably likely to have
a Material Adverse Effect.
(x) Except as disclosed in the Registration Statement or
the Prospectuses, no holder of any security of the Company has any
right to require registration of any security of the Company because
of the filing of the Registration Statement or consummation of the
transactions contemplated by this Agreement.
(y) The Company and the Subsidiaries own or possess all
patents, trademarks, trademark registrations, service marks, service
mark registrations, trade names, copyrights, licenses, inventions,
trade secrets and rights described in the Prospectuses as being owned
by them or any of them or
<PAGE> 24
-24-
necessary for the conduct of their respective businesses, the absence
of which would have or could reasonably be expected to have a Material
Adverse Effect, and the Company is not aware of any claim to the
contrary or any challenge by any other person to the rights of the
Company and the Subsidiaries with respect to the foregoing which
claims or challenges, if the subject of an unfavorable decision, would
individually or in the aggregate, have a Material Adverse Effect.
(z) The Company has complied with all provisions of
Florida Statutes, Section 517.075, relating to issuers doing business
with Cuba.
(aa) The Company is not now, and after sale of the Shares
to be sold by it hereunder and application of the net proceeds from
such sale as described in the Prospectuses under the caption "Use of
Proceeds" will not be, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(ab) There are no business relationships or related-party
transactions of the nature described in Item 404 of Regulation S-K
involving the Company or any of its Subsidiaries and any persons
described in such Item that are required to be disclosed in the
Prospectuses and which have not been so disclosed.
(ac) Except as stated in this Agreement and in the
International Underwriting Agreement and in the Prepricing
Prospectuses and the Prospectuses, neither the Company nor any of the
Subsidiaries, or any of such entities' directors, officers or
controlling persons, has taken, or will take, directly or indirectly,
any action designed to cause or result in stabilization or
manipulation of the price of any Capital Stock of the Company to
facilitate the sale or resale of the Offered Shares.
8. Representations and Warranties of the Selling
Securityholders. Each Selling Securityholder, severally and not
jointly, represents and warrants to each U.S. Underwriter that:
(a) Such Selling Securityholder now has, and on the
Closing Date and the Option Closing Date will have, valid and
marketable title to the Shares or the Warrants to be sold by such
Selling Securityholder hereunder, free and clear of any lien, claim,
security interest or other encumbrance, including, without limitation,
any restriction on
<PAGE> 25
-25-
transfer other than those arising under this Agreement, the Custody
Agreement, the Communications Act of 1934, as amended and the
policies, rules and regulations promulgated thereunder (collectively,
the "Communications Act") and any federal or state securities laws.
(b) Such Selling Securityholder now has, and on the
Closing Date and the Option Closing Date will have, full legal right,
power and authorization to sell, assign, transfer and deliver such
Shares or Warrants in the manner and on the terms provided in and
contemplated by this Agreement. Assuming that the U.S. Underwriters
have purchased such Shares or Warrants for value and without notice of
any adverse claim, upon delivery of and payment for such Shares or
Warrants hereunder, the several U.S. Underwriters will acquire valid
and marketable title to such Shares or Warrants, as the case may be,
free and clear of any lien, claim, security interest or other
encumbrance, it being understood that no representation or warranty is
being made herein with respect to the securities or Blue Sky laws of
any jurisdiction or the Communications Act.
(c) Each of this Agreement and the Custody Agreement has
been duly authorized, executed and delivered by or on behalf or such
Selling Securityholder and assuming that each has been duly
authorized, executed and delivered by or on behalf of and constitutes
a valid and binding agreement of each other party thereto, constitutes
a valid and binding agreement of such Selling Securityholder
enforceable against such Selling Securityholder 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 applicable laws and public policy
considerations.
(d) Assuming that the agreement among the Company and
certain of the Selling Securityholders setting forth certain
amendments to the Stockholders Agreement (as defined in the
Prospectuses) and certain other instruments and agreements are in full
force and effect, that the waivers and consents given by the other
parties thereto are valid and binding and that the Company's
representations and warranties contained herein are true and complete
in all material respects,
<PAGE> 26
-26-
neither the execution and delivery of this Agreement or the Custody
Agreement by or on behalf of such Selling Securityholder nor the
performance by such Selling Securityholder of its obligations
hereunder or thereunder requires any consent, approval, authorization
or order of, or filing or registration with, any court, regulatory
body, administrative agency or other governmental body, agency or
official or conflicts with or constitutes a breach of, or default
under, any agreement, indenture or other instrument to which such
Selling Securityholder is a party or by which such Selling
Securityholder is bound, or any statute, law, rule, regulation,
ruling, judgment, injunction, order or decree applicable to such
Selling Securityholder except, in each case, such as may have been
obtained or as may be required under the Act or the Communications Act
or such as may be required under state securities or Blue Sky laws or
as would not (individually or in the aggregate) have a material
adverse effect on such Selling Securityholder or its ability to
perform its obligations hereunder.
(e) The Registration Statement and the Prospectuses do
not contain an 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 (in the case of the
Prospectuses, in the light of the circumstances under which such
statements were made), provided that the representations and
warranties set forth in this paragraph (e) shall apply only to
statements in or omissions from the Registration Statement or any
Prospectus made in reliance upon and in conformity with the most
recent information relating to such Selling Securityholder provided by
or on behalf of such Selling Securityholder in writing expressly for
use therein.
(f) The representations and warranties of such Selling
Securityholder in the Custody Agreement are true and correct.
9. Indemnification and Contribution. (a) The Company
and Second Crystal Diamond, L.P. (the "Indemnifying Selling Securityholder"),
jointly and severally, agree to indemnify and hold harmless each of you and
each other U.S. Underwriter and each person, if any, who controls any U.S.
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Prepricing
<PAGE> 27
-27-
Prospectus or in the Registration Statement or the Prospectuses or in any
amendment or supplement thereto, or 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 not misleading, except
insofar as such losses, claims, damages, liabilities or expenses arise out of
or are based upon any untrue statement or omission or alleged untrue statement
or omission which has been made therein or omitted therefrom in reliance upon
and in conformity with the information relating to such U.S. Underwriter
furnished in writing to the Company by or on behalf of any U.S. Underwriter
through you expressly for use in connection therewith; provided, however, that
the indemnification contained in this paragraph (a) with respect to any
Prepricing Prospectus and any other preliminary prospectus, the Prospectuses or
any other amendment or supplement thereto shall not inure to the benefit of any
U.S. Underwriter (or to the benefit of any person controlling such U.S.
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Offered Shares by such U.S. Underwriter to any
person if a copy of the U.S. Prospectus, as amended or supplemented, shall not
have been delivered or sent to such person within the time required by the Act
and the regulations thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
U.S. Prepricing Prospectus was corrected in the U.S. Prospectus; provided that
the Company has delivered the U.S. Prospectus, as amended or supplemented, to
the several U.S. Underwriters in requisite quantity on a timely basis to permit
such delivery or sending. The foregoing indemnity agreement shall be in
addition to any liability which the Company or any Indemnifying Selling
Securityholder may otherwise have. Notwithstanding the foregoing, to the
extent any such loss, claim, damage, liability or expense arises out of matters
other than those which are referred to in paragraph 9(c) hereof and which
relate to the Indemnifying Selling Securityholder, each U.S. Underwriter agrees
that it shall seek indemnification or contribution for any claim hereunder
first against the Company and if, and only if, the Company is unable to fulfill
its indemnification or contribution obligations hereunder, the U.S.
Underwriters shall then be entitled to seek any remaining indemnification or
contribution of any claim hereunder from the Indemnifying Selling
Securityholder. The obligations and liability of the Indemnifying Selling
Securityholder, whether with respect to indemnification pursuant to this
Section 9(a) or Section 9(c), contribution pursuant to Section 9(e) or
otherwise, shall not in any event exceed the aggregate amount of the net
proceeds received by the Indemnifying Selling Securityholder from the sale of
Shares sold
<PAGE> 28
-28-
by the Indemnifying Selling Securityholder to the U.S. Underwriters pursuant to
this Agreement.
(b) If any action, suit or proceeding shall be brought
against any U.S. Underwriter or any person controlling any U.S. Underwriter in
respect of which indemnity may be sought against the Company or the
Indemnifying Selling Securityholder, such U.S. Underwriter or such controlling
person shall promptly notify the parties against whom indemnification is being
sought (the "indemnifying parties"), and such indemnifying parties shall assume
the defense thereof, including the employment of counsel and payment of all
fees and expenses. Such U.S. Underwriter or any such controlling person shall
have the right to employ separate counsel in any such action, suit or
proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such U.S. Underwriter or such
controlling person unless (i) the indemnifying parties have agreed in writing
to pay such fees and expenses, (ii) the indemnifying parties have failed to
assume the defense and employ counsel or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both such
U.S. Underwriter or such controlling person and the indemnifying parties and
such U.S. Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and any indemnifying
party by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel
has been proposed) due to actual or potential differing interests between them
(in which case the indemnifying party shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such U.S. Underwriter
or such controlling person). It is understood, however, that the indemnifying
parties shall, in connection with any one such action, suit or proceeding or
separate but substantially similar or related actions, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such U.S. Underwriters and controlling persons not having actual or
potential differing interests with you or among themselves, which firm shall be
designated in writing by Smith Barney Inc. and shall be reasonably acceptable
to the indemnified parties, and that all such fees and expenses shall be
reimbursed as they are incurred. The indemnifying parties shall not be liable
for any settlement of any such action, suit or proceeding effected without
their written consent, but if settled with such written consent, or if there be
a final judgment for the plaintiff in any such action, suit or proceeding, the
indemnifying parties agree
<PAGE> 29
-29-
to indemnify and hold harmless any U.S. Underwriter, to the extent provided in
the preceding paragraph, and any such controlling person from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment.
(c) Each Selling Securityholder agrees, severally and not
jointly, to indemnify and hold harmless each of you and each other U.S.
Underwriter and each person, if any, who controls any U.S. Underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, the
Company, its directors, its officers who sign the Registration Statement, and
any person who controls the Company within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act from and against any and all losses,
claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectuses or in any amendment or supplement thereto, or 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 not
misleading, but only with respect to the information relating to such Selling
Securityholder furnished in writing by or on behalf of such Selling
Securityholder other than the Indemnifying Selling Securityholder expressly for
use in the Registration Statement or any Prospectus, or any amendment or
supplement thereto; provided, however, that (i) such Selling Securityholder
shall not be liable in any such case, whether for indemnification pursuant to
this Section 9(c), contribution pursuant to Section 9(e), or otherwise, if any
such untrue statement or alleged untrue statement or omission or alleged
omission was contained in or omitted from the Registration Statement or any
Prospectus used after such time as the Company shall have been advised by or on
behalf of such Selling Securityholder of such untrue statement or alleged
untrue statement or omission or alleged omission, and (ii) the obligations and
liability of such Selling Securityholder, whether with respect to
indemnification pursuant to this Section 9(c), contribution pursuant to Section
9(e) or otherwise, shall not in any event exceed in the aggregate the amount of
net proceeds received by such Selling Securityholder from the sale of the
Shares or Warrants sold by such Selling Securityholder to the U.S. Underwriters
pursuant to this Agreement. If any action, suit or proceeding shall be brought
against any U.S. Underwriter, any such controlling person of any U.S.
Underwriter, the Company, any of its directors, any such officer, or any such
controlling person of the Company, based on the Registration Statement or any
Prospectus or any amendment or supplement thereto, and in respect of which
indemnity may be sought against any Selling Security
<PAGE> 30
-30-
holder pursuant to this paragraph (c), such Selling Securityholder shall have
the rights and duties given to the Company by paragraph (b) above (except that
if the Company shall have assumed the defense thereof such Selling
Securityholder shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
such counsel shall be at such Selling Securityholder's expense), and each U.S.
Underwriter, each such controlling person of any U.S. Underwriter, the Company,
its directors, any such officer, and any such controlling person of the Company
shall have the rights and duties given to the U.S. Underwriters by paragraph
(b) above. The foregoing indemnity agreement shall be in addition to any
liability which any Selling Securityholder may otherwise have.
(d) Each U.S. Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors, its
officers who sign the Registration Statement, each Selling Securityholder, and
any person who controls the Company or any Selling Securityholder within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, to the
same extent as the foregoing indemnity from the Company and the Selling
Securityholders to each U.S. Underwriter, but only with respect to information
relating to such U.S. Underwriter furnished in writing by or on behalf of such
U.S. Underwriter through you expressly for use in the Registration Statement,
the Prospectus or any Prepricing Prospectus, or any amendment or supplement
thereto. If any action, suit or proceeding shall be brought against the
Company, any of its directors, any such officer, any Selling Securityholder, or
any such controlling person based on the Registration Statement, the Prospectus
or any Prepricing Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against any U.S. Underwriter pursuant
to this paragraph (d), such U.S. Underwriter shall have the rights and duties
given to the Company by paragraph (b) above (except that if the Company shall
have assumed the defense thereof such U.S. Underwriter shall not be required to
do so, but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such U.S.
Underwriter's expense), and the Company, its directors, any such officer, the
Selling Securityholders, and any such controlling person shall have the rights
and duties given to the U.S. Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which any
U.S. Underwriter may otherwise have.
(e) If the indemnification provided for in this Section 9
is unavailable to an indemnified party under paragraphs
<PAGE> 31
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(a), (c) or (d) hereof or is insufficient to hold an indemnified party harmless
in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an 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, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company, the Selling Securityholders (severally) and the U.S. Underwriters
from the sale of the Shares and the Warrants and the offering of the Offered
Shares, or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company, the Selling Securityholders (severally) and the U.S.
Underwriters in connection with the statements or omissions that resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Selling Securityholders (severally) and the U.S. Underwriters
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company or such Selling
Securityholders (severally) bear to the total underwriting discounts and
commissions received by the U.S. Underwriters, in each case determined as set
forth in the table on the cover page of the U.S. Prospectus; provided that, in
the event that the U.S. Underwriters shall have purchased any Additional
Shares and/or Additional Warrants hereunder, any determination of the relative
benefits received by the Company, the Selling Securityholders (severally) or
the U.S. Underwriters from the offering of the Offered Shares shall include the
net proceeds (before deducting expenses) received by the Company and the
Selling Securityholders (severally), and the underwriting discounts and
commissions received by the U.S. Underwriters, from the sale of such
Additional Shares and Additional Warrants, in each case computed on the basis
of the respective amounts set forth in the notes to the table on the cover page
of the U.S. Prospectus. The relative fault of the Company, the Selling
Securityholders and the U.S. Underwriters 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 Company, the Selling Securityholders or
the U.S. Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
In determining the benefits to, or the fault of, any particular Selling
Securityholder, the benefits to and fault of each other Selling Securityholder
and the Company shall not be taken into account.
<PAGE> 32
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(f) The Company, the Selling Securityholders and the U.S.
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by a pro rata allocation (even if
the U.S. Underwriters 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 paragraph (e) above. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
and expenses referred to in paragraph (e) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
any claim or defending any such action, suit or proceeding. Notwithstanding
the provisions of this Section 9, no U.S. Underwriter shall be required to
contribute any amount in excess of the amount by which the total price of the
Offered Shares underwritten by it and distributed to the public exceeds the
amount of any damages which such U.S. Underwriter 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 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The U.S.
Underwriters' obligations to contribute pursuant to this Section 9 are several
in proportion to the respective numbers of Firm Shares set forth opposite their
names in Schedule II hereto (or such numbers of Firm Shares increased as set
forth in Section 12 hereof) and not joint. The obligations of the Selling
Securityholders to contribute pursuant to this Section 9 are several and not
joint and no Selling Securityholder shall in any event be required to
contribute any amount which is in excess of the amount by which the total net
proceeds received by such Selling Securityholder from the sale of the Shares or
Warrants sold by such Selling Securityholder to the U.S. Underwriters pursuant
to this Agreement exceeds the amounts that such Selling Securityholder has
otherwise been required to pay by reason of the statements or omissions which
result in such obligation to contribute.
(g) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been 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 on claims that are the
subject matter of such action, suit or proceeding.
<PAGE> 33
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(h) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 9 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of the Company and the Selling Securityholders
set forth in this Agreement shall remain operative and in full force and
effect, regardless of (i) any investigation made by or on behalf of any U.S.
Underwriter or any person controlling any U.S. Underwriter, the Company, its
directors or officers or the Selling Securityholders or any person controlling
the Company or any Selling Securityholder, (ii) acceptance of any Shares or
Warrants and payment therefor hereunder and (iii) any termination of this
Agreement. A successor to any U.S. Underwriter or any person controlling any
U.S. Underwriter, to the Company, its directors or officers, or any person
controlling the Company, or to any Selling Securityholder, its directors,
officers or partners, or any person controlling a Selling Securityholder shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 9.
10. Conditions of U.S. Underwriters' Obligations. The
several obligations of the U.S. Underwriters to purchase the Firm Shares and
the Firm Warrants hereunder are subject to the following conditions:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a
post-effective amendment thereto to be declared effective before the
offering of the Offered Shares may commence, the Registration
Statement or such post-effective amendment shall have become effective
not later than 5:30 P.M. (or, in the case of a Registration Statement
filed pursuant to Rule 462(b) under the Act, not later than 10:00
P.M.), New York City time, on the date hereof, or at such later date
and time as shall be consented to in writing by you, and all filings,
if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the
Registration Statement shall have been issued and be in effect and no
proceeding for that purpose shall have been instituted or, to the
knowledge of the Company, any Selling Securityholder or any
Underwriter, threatened by the Commission, and any request of the
Commission for additional information (to be included in the
Registration Statement or the Prospectuses or otherwise)
<PAGE> 34
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shall have been complied with to your reasonable satisfaction.
(b) Subsequent to the effective date of this Agreement,
there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting the condition
(financial or other), business, prospects, properties, net worth, or
results of operations of the Company or the Subsidiaries not
contemplated by the Prospectuses, which in your opinion, as
Representatives of the several U.S. Underwriters, would materially,
adversely affect the market for the Offered Shares or (ii) any event
or development relating to or involving the Company or any officer or
director of the Company or any Selling Securityholder which makes any
statement made in the Prospectuses untrue or which, in the opinion of
the Company and its counsel or the U.S. Underwriters and their
counsel, requires the making of any addition to or change in the
Prospectuses in order to state a material fact required by the Act or
any other law to be stated therein or necessary in order to make the
statements therein not misleading if amending or supplementing the
Prospectuses to reflect such event or development would, in your
opinion, as Representatives of the several U.S. Underwriters,
materially adversely affect the market for the Offered Shares.
(c) You shall have received on the Closing Date, an
opinion of Holland & Knight, counsel for the Company and Second
Crystal Diamond, L.P., James B. Bocock, Dean M. Goodman, Jon Jay
Hoker, Arthur D. Tek, Anthony L. Morrison and S. William Scott
(collectively, the "Management Stockholders"), dated the Closing Date
and addressed to you, as Representatives of the several U.S.
Underwriters, to the effect that:
(i) The Company is a corporation
duly incorporated and validly existing in good standing
under the laws of the State of Delaware. To our knowledge,
the Company has the requisite corporate power to own and
operate its properties and to transact its business as
described in the Registration Statement and the Prospectuses
(and any amendment or supplement thereto), and is duly
qualified to transact its business and is in good standing as
a foreign entity in each jurisdiction in which the character
of its business requires such qualification, except where the
failure so to qualify does not have a Material Adverse Effect;
<PAGE> 35
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(ii) Each Subsidiary which is a Florida corporation
or partnership is either (i) a corporation duly
incorporated or organized and currently existing under the
laws of the State of Florida and the status of each thereunder
is active or (ii) a partnership duly organized and currently
existing under the applicable laws of the State of Florida and
the status of each such Subsidiary is active; to the knowledge
of such counsel, each Subsidiary has the requisite corporate
or partnership power to own and operate its properties and to
transact the business in which it is engaged except where the
failure to own or operate such properties or transact such
business would not have a Material Adverse Effect; each
Subsidiary which is a Delaware corporation is duly
incorporated and validly existing in good standing under the
laws of the State of Delaware; and each Subsidiary is duly
qualified to transact its business and is in good standing as
a foreign entity in each jurisdiction in which the character
of its business requires such qualification, except where the
failure so to qualify does not have a Material Adverse Effect;
(iii) To the knowledge of such counsel after
reasonable inquiry, the actual authorized and
outstanding Capital Stock of the Company as of December 31,
1995 is as set forth under the caption "Capitalization" in the
Prospectuses; and the authorized Capital Stock of the Company
conforms in all material respects as to legal matters to the
descriptions thereof contained in the Prospectuses under the
caption "Description of Capital Stock"; to the knowledge of
such counsel after reasonable inquiry, all of the outstanding
shares of capital stock of or ownership interests in each of
the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights;
(iv) All the shares of Capital Stock of the Company
outstanding prior to the issuance of the Shares to be
issued and sold by the Company hereunder and the Warrant
Shares have been duly authorized and validly issued and are
fully paid and nonassessable and, to our knowledge, were not
issued in violation of any preemptive or similar rights; the
Warrant Shares have been validly reserved for issuance; when
issued upon exercise of the Warrants in accordance with the
terms
<PAGE> 36
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thereof, the Warrant Shares will be duly authorized and
validly issued and will be fully paid and non-assessable and
will not, to our knowledge, be issued in violation of any
preemptive or similar rights;
(v) The Offered Shares to be issued and sold to the
U.S. Underwriters by the Company hereunder (including
the Warrant Shares) have been duly authorized and, when issued
and delivered to the U.S. Underwriters against payment
therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and, to our knowledge,
free of any preemptive or similar rights that entitle or will
entitle any person to acquire any securities of the Company
upon the issuance thereof by the Company;
(vi) The form of certificates for the Offered
Shares conforms to the requirements of the Delaware General
Corporation Law;
(vii) The Registration Statement and all
post-effective amendments, if any, have become
effective under the Act and, to the knowledge of such counsel
after reasonable inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose are pending before or
contemplated by the Commission; and any required filing of the
Prospectuses pursuant to Rule 424(b) has been made in
accordance with Rule 424(b);
(viii) The Company has the requisite corporate
power and authority to enter into this Agreement and to
issue, sell and deliver the Offered Shares, and this Agreement
has been duly authorized, executed and delivered by the
Company;
(ix) Neither the offer, sale or delivery of the
Offered Shares, the execution, delivery or performance of
this Agreement, compliance by the Company with the
provisions hereof nor consummation by the Company of the
transactions contemplated hereby conflicts or will conflict
with or constitutes or will constitute a breach of, or a
default under, the certificate or articles of incorporation or
by-laws, or other organizational documents, of the Company or
any of the Subsidiaries or to the knowledge of such counsel
after reasonable inquiry any agreement or document relating to
the Capital Stock of the Company, nor will any such
<PAGE> 37
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action result in any violation of any law, regulation,
rule (assuming compliance with all applicable state securities
and Blue Sky laws) or to the knowledge of such counsel after
reasonable inquiry judgment, ruling or court decree applicable
to the Company, the Subsidiaries or any of their respective
properties;
(x) No consent, approval, authorization or other
order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental
body, agency, or official is required on the part of the
Company (except as have been obtained under the Act or
such as may be required under state securities or Blue Sky
laws governing the purchase and distribution of the Offered
Shares) for the valid issuance and sale of the Offered Shares
to the U.S. Underwriters as contemplated by this Agreement;
(xi) The Registration Statement and the
Prospectuses and any supplements or amendments thereto
(except for the financial statements and the notes
thereto and the schedules and other financial and statistical
data included therein, as to which such counsel need not
express any opinion) comply as to form in all material
respects with the requirements of the Act;
(xii) To the knowledge of such counsel after
reasonable inquiry, (A) other than as described or
contemplated in the Prospectuses (or any supplement thereto),
there are no legal or governmental proceedings pending or
threatened against the Company or any of the Subsidiaries, or
to which the Company or any of the Subsidiaries, or any of
their property, is subject, which are required to be described
in the Registration Statement or Prospectuses (or any
amendment or supplement thereto) and (B) there are no
agreements, contracts, indentures, leases or other instruments
that are required to be described in the Registration
Statement or the Prospectuses (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required, as the
case may be;
(xiii) Other than with respect to federal, state
or local broadcasting, licensing or communications law
or regulatory matters, the statements in the Registration
Statement and Prospectuses, insofar as they are descriptions
of contracts, agreements or other legal
<PAGE> 38
-38-
documents, or refer to statements of law or legal
conclusions, are accurate and present fairly the information
required to be shown;
(xiv) This Agreement and the Custody Agreement have
each been duly executed and delivered by or on behalf
of each of the Management Stockholders and are valid and
binding agreements of each Management Stockholder enforceable
against each Management Stockholder in accordance with their
respective terms;
(xv) To the knowledge of such counsel after
reasonable inquiry, the Management Stockholder that is
not a natural person has the requisite partnership power and
authorization by law to sell, assign, transfer and deliver
good and marketable title to the Shares which such Management
Stockholder has agreed to sell pursuant to this Agreement;
(xvi) To the knowledge of such counsel after
reasonable inquiry the execution and delivery of this
Agreement and the Custody Agreement by the Management
Stockholder that is not a natural person and the consummation
of the transactions contemplated hereby and thereby will not,
to our knowledge, conflict with, violate, result in a breach
of or constitute a default under the terms or provisions of
any agreement, indenture, mortgage or other instrument known
to such counsel to which such Management Stockholder is a
party or by which it or any of its assets or property is
bound, or any court order or decree or any law, rule, or
regulation applicable to such Management Stockholder or to any
of the property or assets of such Management Stockholder;
(xvii) Upon delivery of the Offered Shares and the
Warrants pursuant to this Agreement and payment therefor
as contemplated herein, and assuming that each purchasing
U.S. Underwriter shall have purchased the Offered
Shares and the Warrants in good faith without notice of any
adverse claim, such U.S. Underwriter will acquire good and
marketable title to the Offered Shares and Warrants free and
clear of any lien, claim, security interest, or other
encumbrance, restriction on transfer or other defect in title;
and
(xviii) The Company is not an "investment company"
or a company "controlled by an investment company" within
<PAGE> 39
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the meaning of the Investment Company Act of 1940, as amended.
Such counsel will confirm that they have participated in
conferences with officers and other representatives of the Company,
the Underwriters and the independent certified public accountants of
the Company, at which such conferences the contents of the
Registration Statement and the Prospectuses and related matters were
discussed, and although they have not verified the accuracy or
completeness of the statements contained in the Registration Statement
or the Prospectuses, nothing has come to their attention which leads
them to believe that, at the time the Registration Statement became
effective and at all times subsequent thereto up to and on the Closing
Date or the Option Closing Date as the case may be, the Registration
Statement or the Prospectuses and any amendment or supplement thereto
(other than the financial statements including the notes thereto and
supporting schedules and other financial and statistical information,
as to which they will make no comment) contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(d) You shall have received on the Closing Date an
opinion of Anthony L. Morrison, Esq., General Counsel to the Company,
dated the Closing Date and addressed to you, as Representatives of the
several U.S. Underwriters, to the effect that under the laws of the
State of New York, as applicable:
(i) The Company and each of the Subsidiaries has
corporate or partnership power and authority, and all
necessary governmental authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all
governmental regulatory officials and bodies (except where the
failure so to have full corporate or partnership power or any
such authorizations, approvals, orders, licenses,
certificates, franchises or permits, individually or in the
aggregate, would not have a Material Adverse Effect), to own
their respective properties and to conduct their respective
businesses as now being conducted, as described in the
Prospectuses;
(ii) Except as disclosed in the Prospectuses, all
the outstanding shares of capital stock of each of the
Subsidiaries are owned by the Company directly, or
<PAGE> 40
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indirectly through one of the other Subsidiaries, free
and clear of any lien, adverse claim, security interest,
equity, or other encumbrance;
(iii) This Agreement is a valid, legal and binding
agreement of the Company, enforceable against the Company in
accordance with its terms (it being noted, without expressing
any opinion with regard to the federal securities laws and
regulations, that the Commission has expressed the view that
indemnification against securities law liabilities is against
public policy) and subject to the qualification that the
enforceability of the Company's obligations hereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and by general equitable
principles;
(iv) Each of the Company and the Subsidiaries has
all corporate or partnership power and authority, as the case
may be, to execute, deliver and perform each of the Transaction
Documents to which it is a party, to perform all of its
obligations thereunder and to consummate the transactions
contemplated thereby, except where the failure to have any
such corporate or partnership power and authority would not
have a Material Adverse Effect;
(v) Neither the Company nor any of the Subsidiaries
is in violation of its certificate or articles of
incorporation or by-laws, or other organizational documents,
or to the knowledge of such counsel after reasonable
inquiry, is in default (and no event has occurred which with
notice or lapse of time, or both, would constitute a default)
in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or other evidence of
indebtedness, except in the case of any violation or default
which would not reasonably be expected to result in a Material
Adverse Effect;
(vi) Except as disclosed in the Registration
Statement and the Prospectuses, to the knowledge of such
counsel after reasonable inquiry, neither the offer, sale or
delivery of the Offered Shares, the execution, delivery or
performance of this Agreement and the other Transaction
Documents, compliance by the Company or the Subsidiaries (to
the extent a party
<PAGE> 41
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thereto) with the provisions hereof or thereof nor
consummation by the Company or the Subsidiaries (to the extent
a party thereto) of the transactions contemplated hereby or
thereby, conflict or will conflict with or constitute or will
constitute a breach of, or a default under the certificate or
articles of incorporation or by-laws, or other organizational
documents, of the Company or any of the Subsidiaries or any
agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any
of them or any of their respective properties is bound or will
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any
of the Subsidiaries which conflict, breach, default or lien
could reasonably be expected to have a Material Adverse
Effect;
(vii) To the knowledge of such counsel after
reasonable inquiry, other than as described in the
Prospectuses (or any supplement thereto), there are no legal
or governmental proceedings pending or threatened against
the Company or any of the Subsidiaries, or to which the
Company or any of the Subsidiaries, or any of their
property, is subject, which are required to be described in
the Registration Statement or Prospectuses (or any amendment
or supplement thereto);
(viii) There are no agreements, contracts,
indentures, leases or other instruments that are
required to be described in the Registration Statement or the
Prospectuses (or any amendment or supplement thereto) that are
not described or filed as required, as the case may be;
(ix) To the knowledge of such counsel after
reasonable inquiry, neither the Company nor any of the
Subsidiaries is in violation of any law, ordinance,
administrative or governmental rule or regulation applicable
to the Company or any of the Subsidiaries or of any decree of
any court or governmental agency or body having jurisdiction
over the Company or any of the Subsidiaries where such
violation could reasonably be expected to have a Material
Adverse Effect;
(x) Except as described in the Prospectuses,
there are no outstanding options, warrants or other rights
calling for the issuance of, and such counsel does not know of
any commitment, plan or arrangement to
<PAGE> 42
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issue, any shares of Capital Stock of the Company or any
security convertible into or exchangeable or exercisable for
Capital Stock of the Company; and
(xi) Except as described in the Prospectuses,
there is no holder of any security of the Company or any other
person who has the right, contractual or otherwise, to cause
the Company to sell or otherwise issue to them, or to permit
them to underwrite the sale of, the Offered Shares or the
right to have any Capital Stock or other securities of the
Company included in the Registration Statement or the right,
as a result of the filing of the Registration Statement, to
require registration under the Act of any shares of
Capital Stock or other securities of the Company.
(e) You shall have received on the Closing Date an
opinion of Dow, Lohnes & Albertson, special communications counsel for
the Company, dated the Closing Date and addressed to you, as
Representatives of the several U.S. Underwriters, to the effect that:
(i) Based upon a review of the FCC files,
(a) Whitehead Media, Inc., Bradenton Broadcast Television
Company, Ltd., Todd Communications, Inc., Roberts Broadcasting
Company of Raleigh Durham, L.P. and each subsidiary of the
Company and each subsidiary of The Christian Network, Inc.
holds those broadcast licenses issued by the FCC ("FCC
Licenses") identified as held by such entity and (b) each of
the FCC Licenses authorizes radio or television broadcast
operations by the holder thereof using the channel or
frequency assignment and serving the community of license that
is identified for each of the FCC Licenses;
(ii) To the knowledge of such counsel,
based upon the review of the publicly available records of
the FCC and inquiry to officers of the Company, except as may
be disclosed in the Prospectuses, there is no order, judgment,
decree, notice of apparent liability, or order of forfeiture
outstanding, and no petition, objection, notice of apparent
liability, order of forfeiture, investigation, complaint, or
other proceeding pending before the FCC or threatened by the
FCC against the stations listed (the "Stations") or the FCC
Licenses that reasonably could be expected to result in the
termination, revocation, suspension, or denial of renewal of
any of the FCC Licenses, except for rule
<PAGE> 43
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making and other similar proceedings generally applicable to
the radio or television broadcasting industry or substantial
segments thereof;
(iii) To the knowledge of such counsel based upon
the review of the publicly available files of the FCC and
inquiry to officers of the Company, other than as disclosed in
the Prospectuses, (a) there are no license renewal proceedings
pending for any of the FCC Licenses; and (b) except as set
forth on the FCC authorization certificates for the FCC
Licenses or imposed by the generally applicable rules of the
FCC, none of the FCC Licenses is subject to any condition
imposed by the FCC that reasonably could be expected to have a
material adverse effect on the Company's ability to conduct
its broadcast operations, taken as a whole;
(iv) The issuance, sale and delivery of the
Offered Shares and the Warrants pursuant to this Agreement (A)
does not require any consent or authorization from the FCC,
and (B) does not constitute a violation of the Communications
Act or the published rules and regulations of the FCC
promulgated thereunder;
(v) The identified applications for consent
to assignment or transfer of control of licenses issued by
the FCC in connection with the Proposed Acquisitions and the
exercise of the Station Options (each as defined in the
Prospectuses) have been filed with the FCC; and, to the
knowledge of such counsel based upon the review of the
publicly available files of the FCC and inquiry to officers of
the Company, except as identified, no petition to deny
such applications has been filed with the FCC;
(vi) The statements in the Prospectuses under the
captions "Risk Factors -- Must Carry Regulations," "--
Government Regulation," "-- Multiple Ownership Rules; Time
Brokerage Agreements" and "Business -- Federal Regulation of
Broadcasting," insofar as they constitute summaries of the
Communications Act and the published rules and regulations of
the FCC promulgated thereunder, have been reviewed by such
counsel and are accurate in all material respects;
(vii) The execution, delivery and performance of
(x) this Agreement by the Company and (y) this Agreement and
the Custody Agreement by the Selling Secur-
<PAGE> 44
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ityholders (A) do not require any consent or authorization
from the FCC, and (B) do not and will not violate the
Communications Act and the rules and regulations promulgated
thereunder;
(viii) There are no restrictions or
limitations imposed by the FCC on the ability of the Company
to pay cash dividends on its shares of Class A Common Stock
or, except as set forth in the Prospectuses, otherwise make
distributions in cash on its shares of Capital Stock.
(f) You shall have received on the Closing Date an
opinion, to be governed by and interpreted in accordance with the Legal
Opinion Accord of the ABA Section of Business Law (1991) (the "ABA
Accord"), of (i) Baker & Botts L.L.P., special counsel to Sandler
Mezzanine Partners, L.P., a Delaware limited partnership, Sandler
Mezzanine Foreign Partners, L.P., a Delaware limited partnership, and
Sandler Mezzanine T-E Partners, L.P., a Delaware limited partnership,
(ii) Mr. Richard D'Alessandri, counsel to National Union Fire Insurance
Company of Pittsburgh, PA, (iii) Mr. Salvatore Palazzolo, counsel to BT
Investment Partners, Inc., (iv) Mr. Hal Clarke, counsel to First Union
Corporation of Virginia, (v) Edwards & Angell, counsel to J. Patrick
Michaels, Jr. Family Trust, Kim Enterprises, L.P. and PXN Investment
Partnership, (vi) Mr. Lynn Smith, counsel for Smith PXN Company and
(vii) Mr. Michael Nakama, counsel to Union Venture Corporation (in each
case, the Selling Securityholder(s) so represented, the
"Stockholders"), dated the Closing Date and addressed to you, as
Representatives of the several U.S. Underwriters, to the effect
that:
(i) Each of the Stockholders has the
necessary corporate or partnership (as applicable) power and
authority to execute and deliver this Agreement and the
Custody Agreement and to sell to the U.S. Underwriters, in
accordance with this Agreement, the Shares or Warrants to be
sold by such Stockholder to the several U.S. Underwriters
pursuant to this Agreement;
(ii) This Agreement and the Custody
Agreement have been duly executed and delivered by or on
behalf of each Stockholder;
(iii) Assuming this Agreement constitutes
the legal, valid and binding obligation of each of the U.S.
Underwriters, the Company and each of the other Selling
<PAGE> 45
-45-
Securityholders, this Agreement is a valid and binding
obligation of each of the Stockholders, except that no opinion
is expressed with respect to rights to indemnity or
contribution or with respect to the validity of this Agreement
under, or the effect on the validity or binding nature of this
Agreement of, the Communications Act; and
(iv) Upon the purchase by, and delivery to, the
several U.S. Underwriters in accordance with the terms of this
Agreement of the Shares or Warrants to be sold by a
Stockholder to the several U.S. Underwriters pursuant to this
Agreement (including, without limitation, payment for such
Shares or Warrants by the several U.S. Underwriters as
provided in this Agreement) and the registration of such
Shares or Warrants in the respective names of the several
purchasing U.S. Underwriters, and assuming that each
purchasing U.S. Underwriter shall have purchased such Shares
or Warrants in good faith and without notice of any adverse
claim (within the meaning of Section 8-302 of the Uniform
Commercial Code), such purchasing U.S. Underwriter will have
acquired all of the rights of such Stockholder in such Shares
or Warrants so purchased by such U.S. Underwriter that such
Stockholder had or had authority to convey, free of any
adverse claims.
Such counsel may limit such opinion in all respects to the
laws of the State of New York and federal law (excluding the
Communications Act (and also excluding the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended)) normally applicable to similar
transactions in the experience of such counsel, to the limited
partnership or corporation statute of the jurisdiction of formation of
any Stockholder which is an entity and insofar as such opinions are
based on any such limited partnership or corporation statute, may base
such opinions solely on such counsel's reading of such statute,
without consultation of any judicial or administrative interpretations
thereof. If this Agreement shall have been executed and delivered on
behalf of any Stockholder by any Attorney-in-Fact pursuant to the
Custody Agreement, then such counsel may assume that such execution
and delivery was duly and validly made. Such opinion may be made to
any other assumptions, qualifications, exceptions and limitations as
are customary for similar opinions rendered in similar circumstances
or as are contemplated by the ABA Accord.
<PAGE> 46
-46-
(g) You shall have received on the Closing Date
an opinion of Cahill Gordon & Reindel, counsel for the U.S.
Underwriters, dated the Closing Date and addressed to you, as
Representatives of the several U.S. Underwriters, with respect to the
matters referred to in clauses (v), (vii), (viii) and (xi) and the
final clause of the foregoing paragraph (c) and such other related
matters as you may request.
(h) You shall have received "cold comfort" letters
addressed to you, as Representatives of the several U.S.
Underwriters, and dated the date hereof and the Closing Date from
Price Waterhouse LLP, independent certified public accountants,
substantially in the forms heretofore approved by you.
(i) (i) No stop order suspending the effectiveness
of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been taken or, to the
knowledge of the Company, the Selling Securityholders or the
Underwriters, shall be contemplated by the Commission at or prior to
the Closing Date; (ii) there shall not have been any change in the
Capital Stock of the Company nor any material increase in the
consolidated short-term or long-term debt of the Company (other than
in the ordinary course of business) from that set forth or
contemplated in the Registration Statement or the Prospectuses (or any
amendment or supplement thereto); (iii) there shall not have been,
since the respective dates as of which information is given in the
Registration Statement and the Prospectuses (or any amendment or
supplement thereto), except as may otherwise be stated in the
Registration Statement and Prospectuses (or any amendment or
supplement thereto), any material adverse change in the condition
(financial or other), business, prospects, properties, net worth or
results of operations of the Company and the Subsidiaries taken as a
whole; (iv) the Company and the Subsidiaries shall not have any
liabilities or obligations, contingent or otherwise (whether or not in
the ordinary course of business), that are material to the Company and
the Subsidiaries, taken as a whole, other than those reflected in the
Registration Statement or the Prospectuses (or any amendment or
supplement thereto); and (v) all the representations and warranties of
the Company contained in this Agreement shall be true and correct on
and as of the date hereof and on and as of the Closing Date as if made
on and as of the Closing Date, and you shall have received a
certificate, dated the Closing Date and signed by the chief executive
officer and the chief financial officer of the Company (or such other
officers as are acceptable to
<PAGE> 47
-47-
you), to the effect set forth in this Section 10(i) and in Section
10(j) hereof.
(j) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements
herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(k) All the representations and warranties of the Selling
Securityholders contained in this Agreement shall be true and correct
on and as of the date hereof and on and as of the Closing Date as if
made on and as of the Closing Date, and you shall have received one or
more certificates, dated the Closing Date and signed by or on behalf
of the several Selling Securityholders to the effect set forth in this
Section 10(k) and in Section 10(l) hereof.
(l) The Selling Securityholders shall not have failed at
or prior to the Closing Date to have performed or complied with any of
their agreements herein contained and required to be performed or
complied with by them hereunder at or prior to the Closing Date.
(m) Prior to the Closing Date the Offered Shares shall
have been listed, subject to issuance, on the American Stock Exchange.
(n) The Sellers shall have furnished or caused to be
furnished to you such further certificates and documents as you shall
have requested.
(o) The closing under the International Underwriting
Agreement shall have occurred concurrently with the closing hereunder
on the Closing Date.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to you and your counsel.
Any certificate or document signed by any officer of the
Company or any Attorney-in-Fact or any Selling Securityholder and delivered to
you, as Representatives of the U.S. Underwriters, or to counsel for the U.S.
Underwriters, shall be deemed a representation and warranty by the Company, the
Selling Securityholders or the particular Selling Securityholder, as the case
<PAGE> 48
-48-
may be, to each U.S. Underwriter as to the statements made therein.
The several obligations of the U.S. Underwriters to purchase
Additional Securities hereunder are subject to the satisfaction on and as of
any Option Closing Date of the conditions set forth in this Section 10, except
that, if any Option Closing Date is other than the Closing Date, the
certificates, opinions and letters referred to in paragraphs (c) through (l)
shall be dated the Option Closing Date in question and the opinions called for
by paragraphs (c), (d), (e), (f) and (g) shall be revised to reflect the sale
of Additional Securities.
11. Expenses. Notwithstanding any termination of this
Agreement (pursuant to Section 12, Section 13 or otherwise), the Company agrees
to pay the following costs and expenses and all other costs and expenses
incident to the performance by the Sellers of their obligations hereunder: (i)
the preparation, printing or reproduction, and filing with the Commission of
the registration statement (including financial statements and exhibits
thereto), each of the Prepricing Prospectuses, the Prospectuses, and each
amendment or supplement to any of them; (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and
packaging) of such copies of the registration statement, each Prepricing
Prospectus, the Prospectuses, and all amendments or supplements to any of them
as may be reasonably requested for use in connection with the offering and sale
of the Offered Shares; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Offered Shares, including any
stamp taxes in connection with the original issuance and sale of the Offered
Shares; (iv) the printing (or reproduction) and delivery of this Agreement, the
preliminary and supplemental Blue Sky Memoranda and all other agreements or
documents printed (or reproduced) and delivered in connection with the offering
of the Offered Shares; (v) the listing of the Offered Shares on the American
Stock Exchange; (vi) the registration or qualification of the Offered Shares
for offer and sale under the securities or Blue Sky laws of the several states
as provided in Section 5(g) hereof (including the reasonable fees, expenses and
disbursements of counsel for the U.S. Underwriters relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental Blue
Sky Memoranda and such registration and qualification); (vii) the filing fees
and the reasonable fees and expenses of counsel for the U.S. Underwriters in
connection with any filings required to be made with the National Association
of Securities Dealers, Inc.; (viii) the transportation and other expenses
incurred by or on behalf of Company representatives in
<PAGE> 49
-49-
connection with presentations to prospective purchasers of the Offered Shares;
and (ix) the fees and expenses of the Company's accountants and the fees and
expenses of counsel (including local and special counsel) for the Company.
12. Effective Date of Agreement. This Agreement shall
become effective: (i) upon the execution and delivery hereof by the parties
hereto; or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Offered Shares may
commence, when notification of the effectiveness of the registration statement
or such post-effective amendment has been released by the Commission. Until
such time as this Agreement shall have become effective, it may be terminated
by the Company, by notifying you and the Selling Securityholders, or by you, as
Representatives of the several U.S. Underwriters, by notifying the Company and
the Selling Securityholders.
If any one or more of the U.S. Underwriters shall fail or
refuse to purchase Shares or Warrants which it or they are obligated to
purchase hereunder on the Closing Date, and the aggregate number of Shares or
Warrants which such defaulting U.S. Underwriter or U.S. Underwriters are
obligated but fail or refuse to purchase is not more than one- tenth of the
aggregate number of Shares or Warrants, respectively, which the U.S.
Underwriters are obligated to purchase on the Closing Date, each non-defaulting
U.S. Underwriter shall be obligated, severally, in the proportion which the
number of Shares set forth opposite its name in Schedule II hereto bears to the
aggregate number of Shares set forth opposite the names of all non-defaulting
U.S. Underwriters or in such other proportion as you may specify in accordance
with Section 20 of the Master Agreement Among Underwriters of Smith Barney
Inc., to purchase the Firm Shares and Firm Warrants which such defaulting U.S.
Underwriter or U.S. Underwriters are obligated, but fail or refuse, to
purchase. If any one or more of the U.S. Underwriters shall fail or refuse to
purchase Shares or Warrants which it or they are obligated to purchase on the
Closing Date and the aggregate number of Shares or Warrants with respect to
which such default occurs is more than one-tenth of the aggregate number of
Shares or Warrants, respectively, which the U.S. Underwriters are obligated to
purchase on the Closing Date and arrangements satisfactory to you and the
Company for the purchase of such Shares or Warrants by one or more
non-defaulting U.S. Underwriters or other party or parties approved by you and
the Company are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting U.S.
Underwriter, the Company or the Selling
<PAGE> 50
-50-
Securityholders. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectuses or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting U.S. Underwriter from liability
in respect of any such default of any such U.S. Underwriter under this
Agreement. The term "U.S. Underwriter" as used in this Agreement includes, for
all purposes of this Agreement, any party not listed in Schedule II hereto who,
with your approval and the approval of the Company, purchases Shares or
Warrants which a defaulting U.S. Underwriter is obligated, but fails or
refuses, to purchase.
Any notice under this Section 12 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
13. Termination of Agreement. This Agreement shall be
subject to termination in your absolute discretion, without liability on the
part of any U.S. Underwriter to the Company or any Selling Securityholder, by
notice to the Company and the Selling Securityholders, if prior to the Closing
Date or any Option Closing Date (if different from the Closing Date and then
only as to the Additional Securities), as the case may be, (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or the Nasdaq National Market shall have been suspended or materially
limited, (ii) a general moratorium on commercial banking activities in New York
or Florida shall have been declared by either federal or state authorities, or
(iii) there shall have occurred any outbreak or escalation of hostilities or
other international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial markets
of the United States is such as to make it, in your judgment, impracticable or
inadvisable to commence or continue the offering of the Offered Shares at the
offering price to the public set forth on the cover page of the Prospectuses or
to enforce contracts for the resale of the Offered Shares by the U.S.
Underwriters. Notice of such termination may be given to the Company and the
Selling Securityholders by telegram, telecopy or telephone and shall be
subsequently confirmed by letter.
14. Information Furnished by the Underwriters. The
statements set forth in the last paragraph on the cover page, the stabilization
legend on the inside cover page, and the statements in the first, fourth,
ninth, tenth, eleventh and fifteenth
<PAGE> 51
-51-
paragraphs under the caption "Underwriting" in any U.S. Prepricing Prospectus
and in the U.S. Prospectus constitute the only information furnished by or on
behalf of the U.S. Underwriters through you as such information is referred to
in Sections 7(b) and 9 hereof.
15. Miscellaneous. Except as otherwise provided in
Sections 5, 12 and 13 hereof, notice given pursuant to any provision of this
Agreement shall be in writing and shall be delivered (i) if to the Company or
the Management Stockholders, at the office of the Company at 601 Clearwater
Park Road, West Palm Beach, Florida 33401, Attention: Anthony L. Morrison,
Esq., Vice President and General Counsel; or (ii) if to the Selling
Securityholders, at Paxson Communications Corporation, 601 Clearwater Park
Road, West Palm Beach, Florida 33401, Attention: Anthony L. Morrison and
Arthur D. Tek, Attorneys-in-Fact, with copies to be delivered as follows: (A)
Sandler Mezzanine Partners, L.P., General Motors Building, 767 Fifth Avenue,
New York, New York 10153, Attn: Michael J. Marocco, (B) Joseph E. Young,
Baker & Botts, 885 Third Avenue, New York, New York 10022, (C) BT Investment
Partners, Inc., One Bankers Trust Plaza, New York, New York 10006, Attn:
Joseph T. Wood and (D) First Union Corporation of Virginia, 301 South College
Street, 18th Floor, Charlotte, North Carolina 28288-0732, Attn: Watts Hamrick;
or (iii) if to you, as Representatives of the several U.S. Underwriters, care
of Smith Barney Inc., 388 Greenwich Street, New York, New York 10013,
Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of
the several U.S. Underwriters, the Company, its directors and officers, the
other controlling persons referred to in Section 9 hereof and the Selling
Securityholders, their controlling persons and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any U.S. Underwriter of any of the Shares in his
status as such purchaser.
16. Applicable Law; Counterparts. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed within the State of New
York.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed
<PAGE> 52
-52-
in counterparts, this Agreement shall not become effective unless at least one
counterpart hereof shall have been executed and delivered on behalf of each
party hereto.
<PAGE> 53
-53-
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Securityholders and the several U.S.
Underwriters.
Very truly yours,
PAXSON COMMUNICATIONS CORPORATION
By
-----------------------------
Name:
Title:
Each of the Selling
Securityholders named in
Schedule I hereto
By
-----------------------------
Name:
Title: Attorney-in-Fact
By
-----------------------------
Name:
Title: Attorney-in-Fact
SECOND CRYSTAL DIAMOND, L.P.
By
-----------------------------
Name:
Title:
J. PATRICK MICHAELS, JR. FAMILY
TRUST
By
-----------------------------
Name:
Title:
<PAGE> 54
-54-
KIM ENTERPRISES, L.P.
By
-----------------------------
Name:
Title:
PXN INVESTMENT PARTNERSHIP
By
-----------------------------
Name:
Title:
SMITH PXN COMPANY
By
-----------------------------
Name:
Title:
JAMES B. BOCOCK
-----------------------------
DEAN M. GOODMAN
-----------------------------
JON JAY HOKER
-----------------------------
ARTHUR D. TEK
-----------------------------
<PAGE> 55
-55-
ANTHONY L. MORRISON
-----------------------------
S. WILLIAM SCOTT
-----------------------------
SANDLER MEZZANINE PARTNERS, L.P.
By
-----------------------------
Name:
Title:
SANDLER MEZZANINE T-E PARTNERS,
L.P.
By
-----------------------------
Name:
Title:
SANDLER MEZZANINE FOREIGN
PARTNERS, L.P.
By
-----------------------------
Name:
Title:
NATIONAL UNION FIRE INSURANCE
COMPANY
By
-----------------------------
Name:
Title:
<PAGE> 56
-56-
BT INVESTMENT PARTNERS, INC.
By
-----------------------------
Name:
Title:
FIRST UNION CORPORATION OF
VIRGINIA
By
-----------------------------
Name:
Title:
UNION VENTURE CORPORATION
By
-----------------------------
Name:
Title:
<PAGE> 57
-57-
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
U.S. Underwriters named in Schedule II
hereto.
SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
CIBC WOOD GUNDY SECURITIES CORP.
BT SECURITIES CORPORATION
As Representatives of the Several U.S. Underwriters
By SMITH BARNEY INC.
By
--------------------------------
Name:
Title:
<PAGE> 58
SCHEDULE I
PAXSON COMMUNICATIONS CORPORATION
Part A - Firm Shares
<TABLE>
<CAPTION>
Number of
Selling Securityholders Firm Shares
----------------------- -----------
<S> <C>
Second Crystal Diamond, Limited Partner . . . . . . . . . . . . . . . . . . . . . . 952,000
J. Patrick Michaels, Jr. Family Trust . . . . . . . . . . . . . . . . . . . . . . . 14,240
Kim Enterprises, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,080
PXN Investment Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,304
Smith PXN Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,176
James B. Bocock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,400
Dean M. Goodman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,400
Jon Jay Hoker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,800
Arthur D. Tek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,400
Anthony L. Morrison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
S. William Scott . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,076,800
=========
</TABLE>
<PAGE> 59
-2-
Part B - Firm Warrants
<TABLE>
<CAPTION>
Number of
Selling Securityholders Firm Warrants
----------------------- -------------
<S> <C>
Warrants to Purchase Class A and Class B
Common Stock:
Sandler Mezzanine Partners, L.P.
(representing the right to purchase
383,380 Warrant Shares) 13.83771388
Sandler Mezzanine T-E Partners, L.P.
(representing the right to purchase
171,918 Warrant Shares) 6.205221008
Sandler Mezzanine Foreign Partners, L.P.
(representing the right to purchase
82,560 Warrant Shares) 2.979890938
National Union Fire Insurance
(representing the right to purchase
76,542 Warrant Shares) 2.762720619
------------
Total 25.7855464450
=============
Warrants to Purchase Class C Common Stock
BT Investment Partners, Inc. 357,200
First Union Corporation of Virginia 357,200
Union Venture Corporation 54,400
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 768,800
=========
</TABLE>
<PAGE> 60
-3-
Part C - Additional Shares
<TABLE>
<CAPTION>
Number of Number of
Additional Additional
Shares Warrants
---------- ----------
<S> <C> <C>
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614,400
Selling Securityholders
-----------------------
Second Crystal Diamond, Limited
Partnership . . . . . . . . . . . . . . . . . . . . . . . . 313,600
J. Patrick Michaels, Jr. Family Trust . . . . . . . . . . . . . . 14,194
Kim Enterprise, L.P. . . . . . . . . . . . . . . . . . . . . . . 7,040
PXN Investment Partnership . . . . . . . . . . . . . . . . . . . 13,292
Smith PXN Company . . . . . . . . . . . . . . . . . . . . . . . . 4,674
James B. Bocock . . . . . . . . . . . . . . . . . . . . . . . . . 62,400
Dean M. Goodman . . . . . . . . . . . . . . . . . . . . . . . . . 39,200
Jon Jay Hoker . . . . . . . . . . . . . . . . . . . . . . . . . . 11,200
Arthur D. Tek . . . . . . . . . . . . . . . . . . . . . . . . . . 39,200
Anthony L. Morrison . . . . . . . . . . . . . . . . . . . . . . . 8,000
S. William Scott . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Warrents to Purchase Class A and Class
B Common Stock:
Sandler Mezzanine Partners, L.P.
(representing the right to purchase
126,219 Warrant Shares) 4.555749921
Sandler Mezzanine T-E Partners, L.P.
(representing the right to purchase
56,600 Warrant Shares) 2.042927341
Sandler Mezzanine Foreign Partner, L.P.
(representing the right to purchase
27,181 Warrant Shares) 0.981060636
</TABLE>
<PAGE> 61
-4-
<TABLE>
<S> <C> <C>
National Union Fire Insurance
(representing the right to purchase
25,200 Warrant Shares) 0.909568548
Warrants to Purchase Class C
Common Stock:
BT Investment Partners, Inc. 117,600
First Union Corporation of Virginia 117,600
Union Venture Corporation 18,400
--------- -------------
Total . . . . . . . . . . . . . . . . . . . . . . . 1,131,200 8.48930644600*
========= =============
253,600**
============
</TABLE>
- ----------------------------------
* Warrants to Purchase Class A and Class B Common Stock.
** Warrants to Purchase Class C Common Stock.
<PAGE> 62
SCHEDULE II
PAXSON COMMUNICATIONS CORPORATION
<TABLE>
<CAPTION>
Number of
Underwriter Shares
- ----------- ---------
<S> <C>
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,887,500
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,887,500
CIBC Wood Gundy Securities Corp. . . . . . . . . . . . . . . . . . . . . . . . . 1,887,500
BT Securities Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,887,500
Allen & Company Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
J.C. Bradford & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Alex. Brown & Sons Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Cowen & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Dain Bosworth Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Donaldson, Lufkin & Jenrette Securities
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Duff & Phelps Securities Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
A.G. Edwards & Sons, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
First Equity Corporation of Florida . . . . . . . . . . . . . . . . . . . . . . . 100,000
Furman Selz LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Gabelli & Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Gruntal & Co., Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Janco Partners, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Legg Mason Wood Wlaker, Incorporated . . . . . . . . . . . . . . . . . . . . . . 100,000
McDonald & Company Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . 100,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Montgomery Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Needham & Company, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Oppenheimer & Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Principal Financial Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . 100,000
Prudential Securities Incorporated . . . . . . . . . . . . . . . . . . . . . . . 150,000
The Robinson-Humphrey Company, Inc. . . . . . . . . . . . . . . . . . . . . . . 100,000
Schroder Wertheim & Co. Incorporated . . . . . . . . . . . . . . . . . . . . . . 150,000
Wheat, First Securities, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,800,000
==========
</TABLE>
<PAGE> 1
EXHIBIT 1.2
2,700,000 Shares
PAXSON COMMUNICATIONS CORPORATION
Class A Common Stock
INTERNATIONAL UNDERWRITING AGREEMENT
March 28, 1996
SMITH BARNEY INC.
PAINEWEBBER INTERNATIONAL (U.K.) LTD.
CIBC WOOD GUNDY SECURITIES CORP.
BANKERS TRUST INTERNATIONAL PLC
As Lead Managers of the Several Managers
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Paxson Communications Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell an aggregate of 2,060,000 shares of its
Class A Common Stock, $0.001 par value per share, to the several Underwriters
named in Schedule II hereto (the "Managers"), and the persons named in Part A
of Schedule I hereto (the "Selling Stockholders"), severally and not jointly,
propose to sell to the several Managers an aggregate of 269,200 shares of Class
A Common Stock and the persons named in Part B of Schedule I hereto (the
"Selling Warrantholders" and, together with the Selling Stockholders, the
"Selling Securityholders"), severally and not jointly, propose to sell to the
several Managers warrants (the "Firm Warrants") to purchase 370,800 shares of
common stock (the "Common Stock") of the Company (the "Firm Warrant Shares").
The Company and the Selling Securityholders are hereinafter sometimes referred
to as the "Sellers." The Company's Class A Common Stock, $0.001 par value per
share, is hereinafter referred to as the "Class A Common Stock" and the
2,060,000 shares of Class A Common Stock to be issued and sold to the Managers
by the Company and the 269,200 shares of Class A Common Stock to be sold to the
Managers by the Selling Stockholders are hereinafter referred to as the "Firm
Shares." The Firm Shares and the Firm Warrants are hereinafter referred to as
the "Firm Securities." The Company and the Selling Securityholders listed in
Part C of Schedule I hereto, severally and not jointly, also propose to sell to
the Managers,
<PAGE> 2
-2-
upon the terms and conditions set forth in Section 2 hereof, up to an
additional 282,800 shares (the "Additional Shares" and, together with the Firm
Shares, the "International Shares") of Class A Common Stock and warrants (the
"Additional Warrants" and, together with the Firm Warrants, the "International
Warrants") to purchase 122,200 shares of Common Stock (the "Additional Warrant
Shares" and, together with the Firm Warrant Shares, the "International Warrant
Shares"). The Additional Shares and the Additional Warrants are hereinafter
referred to as the "Additional Securities." The International Shares and the
International Warrants are hereinafter referred to as the "International
Securities."
It is understood that the Company and the Selling
Securityholders are concurrently entering into a U.S. Underwriting Agreement,
dated the date hereof (the "U.S. Underwriting Agreement" and, together with the
International Underwriting Agreement, the "Underwriting Agreements"), providing
for (i) the sale of 9,316,800 shares of Class A Common Stock (the "Firm U.S.
Shares"), of which 8,240,000 shares will be sold by the Company and 1,076,800
shares will be sold by the Selling Securityholders, and warrants (the "Firm
U.S. Warrants") to purchase 1,483,200 shares of Common Stock (the "Firm U.S.
Warrant Shares") and (ii) the grant of an option to purchase up to an
additional 1,131,200 shares of Class A Common Stock (the "Additional U.S.
Shares" and, together with the Firm U.S. Shares, the "U.S. Shares") and
warrants (the "Additional U.S. Warrants" and, together with the Firm U.S.
Warrants, the "U.S. Warrants") to purchase 488,800 shares of Common Stock (the
"Additional U.S. Warrant Shares" and, together with the Firm U.S. Warrant
Shares, the "U.S. Warrant Shares"), through arrangements with certain
underwriters in the United States and Canada (the "U.S. Underwriters"), for
whom Smith Barney Inc., PaineWebber Incorporated, CIBC Wood Gundy Securities
Corp. and BT Securities Corporation are acting as representatives (the
"Representatives"). The U.S. Shares and the U.S. Warrants are hereinafter
referred to as the "U.S. Securities." The U.S. Shares and the International
Shares are hereinafter referred to as the "Shares." The U.S. Warrants and the
International Warrants are hereinafter referred to as the "Warrants." The U.S.
Warrant Shares and the International Warrant Shares are hereinafter referred to
as the "Warrant Shares." The U.S. Securities and the International Securities
are hereinafter referred to as the "Securities."
The Company and the Selling Securityholders understand that
the Managers and the U.S. Underwriters intend to exercise the Warrants
immediately upon their receipt and will offer the
<PAGE> 3
-3-
Warrant Shares (which, for purposes of this Agreement, shall mean the shares of
Class A Common Stock issuable upon exercise of the Warrants or into which the
shares of Class B Common Stock, par value $.001 per share (the "Class B Common
Stock"), of the Company are convertible) publicly as described in the
Registration Statement (as hereinafter defined). The Shares and the Warrant
Shares are hereinafter referred to as the "Offered Shares."
The Company and the Selling Securityholders also understand
that the Managers and the U.S. Underwriters have entered into an agreement (the
"Agreement Between U.S. Underwriters and Managers") contemplating the
coordination of certain transactions between the Managers and the U.S.
Underwriters and that, pursuant thereto and subject to the conditions set forth
therein, the Managers may purchase from the U.S. Underwriters a portion of the
U.S. Securities or sell to the U.S. Underwriters a portion of the International
Securities. The Company understands that any such purchases and sales between
the Managers and the U.S. Underwriters shall be governed by the Agreement
Between U.S. Underwriters and Managers and shall not be governed by the terms
of this Agreement or the U.S. Underwriting Agreement.
The Company and the Selling Securityholders wish to confirm as
follows their respective agreements with you (the "Lead Managers") and the
other several Managers on whose behalf you are acting, in connection with the
several purchases of the International Securities by the Managers.
1. Registration Statement and Prospectus. The Company
has prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act") a registration statement on Form S-1 under the Act
(the "Registration Statement"), including prospectuses subject to completion
relating to the Offered Shares. The term "Registration Statement" as used in
this Agreement means the Registration Statement (including all financial
schedules and exhibits) and any registration statement filed pursuant to Rule
462(b) under the Act, each as amended at the time it becomes effective, or, if
the Registration Statement became effective prior to the execution of this
Agreement, as supplemented or amended prior to the execution of this Agreement.
If it is contemplated, at the time this Agreement is executed, that a
post-effective amendment to the Registration Statement will be filed and must
be declared effective before the offering of the
<PAGE> 4
-4-
Offered Shares may commence, the term "Registration Statement" as used in this
Agreement means the Registration Statement as amended by said post-effective
amendment. The term "Prospectuses" as used in this Agreement means the
prospectuses in the forms included in the Registration Statement (including any
prospectus subject to completion meeting the requirements of Rule 434(b) under
the Act), or, if the prospectuses included in the Registration Statement omit
information in reliance on Rule 430A under the Act and such information is
included in the prospectuses or term sheets (within the meaning of Rule 434
under the Act) filed with the Commission pursuant to Rule 424(b) under the Act,
the term "Prospectuses" as used in this Agreement means the prospectuses in the
form included in the Registration Statement as supplemented by the addition of
the Rule 430A information contained in the prospectuses or term sheets (within
the meaning of Rule 434 under the Act) filed with the Commission pursuant to
Rule 424(b). The term "Prepricing Prospectuses" as used in this Agreement
means the prospectuses subject to completion in the forms included in the
Registration Statement at the time of the initial filing of the Registration
Statement with the Commission or in any amendment to the Registration Statement
filed with the Commission, and as such prospectuses shall have been amended
from time to time prior to the date of the Prospectuses.
It is understood that two forms of Prepricing Prospectus and
two forms of Prospectus are to be used in connection with the offering and sale
of the Offered Shares: a Prepricing Prospectus and a Prospectus relating to
the U.S. Shares and the U.S. Warrant Shares that are to be offered and sold in
the United States (as defined herein) or Canada (as defined herein) to U.S. or
Canadian Persons (as defined herein) (the "U.S. Prepricing Prospectus" and the
"U.S. Prospectus," respectively), and a Prepricing Prospectus and a Prospectus
relating to the International Shares and the International Warrant Shares which
are to be offered and sold outside the United States and Canada to persons
other than U.S. or Canadian Persons (the "International Prepricing Prospectus"
and the "International Prospectus," respectively). The U.S. Prospectus and the
International Prospectus are herein collectively called the "Prospectuses," and
the U.S. Prepricing Prospectus and the International Prepricing Prospectus are
herein called the "Prepricing Prospectuses." For purposes of this Agreement:
"Rules and Regulations" means the rules and regulations adopted by the
Commission under the Act; "U.S. or Canadian Person" means any resident or
national of the United States or Canada, any corporation, partnership or other
entity created or organized in or under the laws of the United States or Canada
or any estate or trust the income of which is
<PAGE> 5
-5-
subject to United States or Canadian income taxation regardless of the source
of its income (other than the foreign branch of any U.S. or Canadian Person),
and includes any United States or Canadian branch of a person other than a U.S.
or Canadian Person; "United States" means the United States of America
(including the states thereof and the District of Columbia) and its
territories, its possessions and other areas subject to its jurisdiction; and
"Canada" means Canada and its territories, its possessions and other areas
subject to its jurisdiction.
2. Agreements to Sell and Purchase. Subject to such
adjustments as you may determine in order to avoid fractional shares, the
Company hereby agrees, subject to all the terms and conditions set forth
herein, to issue and sell to each Manager and, upon the basis of the
representations, warranties and agreements of the Company and the Selling
Securityholders herein contained and subject to all the terms and conditions
set forth herein, each Manager, severally and not jointly, agrees to purchase
from the Company, at a purchase price of $15.20 per share (the "purchase price
per share"), the number of Firm Shares which bears the same proportion to the
aggregate number of Firm Shares to be issued and sold by the Company as the
number of Shares set forth opposite the name of such Manager in Schedule II
hereto (or such number of Shares increased as set forth in Section 12 hereof)
bears to the total number of Shares set forth on Schedule II hereto (with
respect to each Manager, such Manager's "Pro Rata Share"). The Company agrees,
upon receipt of the exercise price of the Firm Warrants and surrender of the
certificates, if any, representing such Firm Warrants, to issue to the Managers
the Firm Warrant Shares (including any conversion of Class B Common Stock into
Class A Common Stock).
Subject to such adjustments as you may determine in order to
avoid fractional shares or, indirectly, warrant shares, each Selling
Securityholder hereby agrees, severally and not jointly, and subject to all the
terms and conditions set forth herein, to sell to each Manager and, upon the
basis of the representations, warranties and agreements of the Company and the
Selling Securityholders herein contained and subject to all the terms and
conditions set forth herein, each Manager, severally and not jointly, agrees to
purchase from each Selling Securityholder (i) that number of Firm Shares, if
any, set forth opposite such Selling Securityholder's name on Part A of
Schedule I hereto multiplied by each such Manager's Pro Rata Share at the
purchase price per share and (ii) that number of Firm Warrants, if any, set
forth opposite such Selling Securityholder's name on Part B of Schedule I
hereto multiplied by each such Manager's Pro Rata Share at the warrant purchase
price. "Warrant purchase
<PAGE> 6
-6-
price" for any Warrant means the excess of (i) the purchase price per share
multiplied by the number of Warrant Shares issuable upon the exercise of the
Warrant over (ii) the exercise price payable upon the issuance of such Warrant
Shares pursuant to the exercise of such Warrant.
The Company and the Selling Securityholders listed in Part C
of Schedule I hereto also agree, severally and not jointly, and subject to all
the terms and conditions set forth herein, to sell to the Managers and, upon
the basis of the representations, warranties and agreements of the Company and
the Selling Securityholders herein contained and subject to all the terms and
conditions set forth herein, the Managers shall have the right to purchase from
the Company and the Selling Securityholders listed in Part C of Schedule I
hereto, at the purchase price per share in the case of Additional Shares and at
the warrant purchase price in the case of any Additional Warrants, pursuant to
an option (the "over-allotment option") which may be exercised at any time and
from time to time prior to 9:00 P.M., New York City time, on the 30th day after
the date of the International Prospectus (or, if such 30th day shall be a
Saturday or Sunday or a holiday, on the next business day thereafter when the
American Stock Exchange is open for trading), the number of Additional Shares
and Additional Warrants, if any, is set forth opposite their respective names
in Part C of Schedule I. Additional Shares and Additional Warrants may be
purchased only for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares and the Firm Warrant Shares. The number
of Additional Shares and Additional Warrants which the Managers elect to
purchase upon any exercise of the over-allotment option shall be provided (i)
by the Company in the form of Additional Shares equal to the number of
Additional Shares set forth opposite its name on Part C of Schedule I hereto
multiplied by a fraction, the numerator of which is the aggregate number of
shares of Class A Common Stock which the Managers elect to purchase (either
directly through the purchase of Additional Shares or indirectly through the
purchase and subsequent exercise of Additional Warrants) upon such exercise of
the over-allotment option and the denominator of which is the aggregate number
of Additional Shares and Additional Warrant Shares (such fraction, the
"Purchased Percentage") and (ii) by each Selling Securityholder in the form of
Additional Shares and/or Additional Warrants determined by multiplying the
number of Additional Shares and/or Additional Warrant Shares that would be
issued upon the exercise of such Selling Securityholder's Additional Warrants
each as set forth opposite such Selling Securityholder's name on Part C of
Schedule I hereto by the Purchased Percentage. Upon any exercise of the over-
<PAGE> 7
-7-
allotment option, subject to such adjustments as you may determine in order to
avoid fractional shares or, indirectly, Warrant Shares, each Manager, severally
and not jointly, agrees to (i) purchase from the Company and each Selling
Securityholder who has agreed to sell Additional Shares that number of
Additional Shares to be sold by the Company or such Selling Securityholder
determined pursuant to the preceding sentence multiplied by each Manager's Pro
Rata Share and (ii) purchase from each Selling Securityholder who has agreed to
sell Additional Warrants that number of Additional Warrants to be sold by such
Selling Securityholder determined pursuant to the preceding sentence multiplied
by each such Manager's Pro Rata Share. The Company agrees, upon receipt of the
exercise price of the Additional Warrants and surrender of the certificates, if
any, representing such Additional Warrants, to issue to the Managers the
Additional Warrant Shares (including any conversion of Class B Common Stock
into Class A Common Stock).
Certificates in transferable form for the International Shares
and the International Warrants which each of the Selling Securityholders agrees
to sell pursuant to this Agreement (other than Shares issuable upon the
exercise of options) have been placed in custody with First Union National Bank
of North Carolina (the "Custodian") for delivery under this Agreement pursuant
to a Custody Agreement and Power of Attorney (collectively, the "Custody
Agreement") executed by each of the Selling Securityholders appointing Arthur
D. Tek and Anthony L. Morrison as agents and attorneys-in-fact (the
"Attorneys-in-Fact"). With respect to Shares issuable upon the exercise of
stock options held by certain of the Selling Securityholders, the Selling
Securityholders holding such options have deposited with the Custodian
irrevocable option exercise and payment direction letters in form and substance
satisfactory to the Lead Managers. Each Selling Securityholder agrees,
severally and not jointly, that (i) the International Shares and the
International Warrants represented by the certificates deposited by such
Selling Securityholder in custody pursuant to the Custody Agreement are subject
to the interests of the Managers, the Company and each other Selling
Securityholder, (ii) the arrangements made by such Selling Securityholder for
such custody are, except as specifically provided in the Custody Agreement,
irrevocable, and (iii) to the extent that such Selling Securityholder can, by
reliance on this clause (iii), vary the provisions of any applicable law, the
obligations of such Selling Securityholder hereunder and under the Custody
Agreement shall not be terminated by any act of such Selling Securityholder or
by operation of law, whether upon the death or incapacity of any Selling
Securityholder or the occurrence of any other event,
<PAGE> 8
-8-
except as specifically provided in the Custody Agreement. Subject to the terms
and conditions of the Custody Agreement, if any Selling Securityholder shall
die or be incapacitated or if any other event referred to in clause (iii) of
the immediately preceding sentence shall occur before the delivery of the
International Shares and the International Warrants hereunder, certificates for
the International Shares and the International Warrants of such Selling
Securityholder shall be delivered to the Managers by the Attorneys-in-Fact in
accordance with the terms and conditions of this Agreement and the Custody
Agreement as if such death or incapacity or other event had not occurred,
regardless of whether or not the Attorneys-in-Fact or any Manager shall have
received notice of such death, incapacity or other event. To the extent
specifically provided in the Custody Agreement, each Attorney-in-Fact is
authorized, on behalf of such Selling Securityholder, to execute this Agreement
and certain other documents in connection with the sale of the International
Shares and the International Warrants to be sold hereunder by such Selling
Securityholder including acknowledging, on behalf of such Selling
Securityholder, receipt of the proceeds from the sale of the International
Shares and the International Warrants. Each Attorney-in-Fact agrees to perform
his duties under the Custody Agreement.
3. Terms of Public Offering. The Sellers have been
advised by you that the Managers propose to make a public offering of their
respective portions of the Offered Shares as soon after the Registration
Statement and this Agreement have become effective as in your judgment is
advisable and initially to offer such Offered Shares upon the terms set forth
in the International Prospectus.
4. Delivery of the Securities and Payment Therefor.
Delivery to the Managers of and payment for the Firm Securities shall be made
at the office of Smith Barney Inc., 388 Greenwich Street, New York, NY 10013,
at 10:00 A.M., New York City time, on April 3, 1996 (the "Closing Date"). The
place of closing for the Firm Securities and the Closing Date may be varied by
agreement among you, the Company and the Attorneys-in-Fact.
Delivery to the Managers of and payment for any Additional
Securities to be purchased by the Managers shall be made at the aforementioned
office of Smith Barney Inc. at such times on such dates (each, an "Option
Closing Date"), which may be the same as the Closing Date but shall in no event
be earlier than the Closing Date nor earlier than three nor later than ten
business days after the giving of the notice hereinafter referred to, as shall
be specified in a written notice from you on behalf
<PAGE> 9
-9-
of the Managers to the Company and the Attorneys-in-Fact of the Managers'
determination to purchase a number, specified in such notice, of Additional
Securities. The place of closing for any Additional Securities and the Option
Closing Date for such Additional Securities may be varied by agreement among
you, the Company and the Attorneys-in-Fact.
Certificates for the Firm Shares and the Firm Warrant Shares
and for any Additional Shares and any Additional Warrant Shares to be purchased
hereunder (or acquired upon the exercise of Warrants purchased hereunder) shall
be registered in such names and in such denominations as you shall request
prior to 1:00 P.M., New York City time, on the second business day preceding
the Closing Date or any Option Closing Date, as the case may be. Such
certificates shall be made available to you in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date or the Option Closing Date, as the case may be.
The certificates evidencing the Firm Shares and the Firm Warrant Shares and any
Additional Shares and any Additional Warrant Shares to be purchased hereunder
(or acquired upon the exercise of Warrants purchased hereunder) shall be
delivered to you on the Closing Date or the Option Closing Date, as the case
may be, against payment of the purchase price therefor by certified or official
bank check or checks payable in New York Clearing House (next day) funds to the
order of the Company or the Attorneys-in-Fact, as the case may be.
5. Agreements of the Company. The Company agrees with
the several Managers as follows:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a
post-effective amendment thereto to be declared effective before the
offering of the Offered Shares may commence, the Company will endeavor
to cause the Registration Statement or such post-effective amendment
to become effective as soon as possible and will advise you promptly
and, if requested by you, will confirm such advice in writing, when
the Registration Statement or such post-effective amendment has become
effective.
(b) The Company will advise you promptly and, if
requested by you, will confirm such advice in writing: (i) of any
request by the Commission for amendment of or a supplement to the
Registration Statement, any of the Prepricing Prospectuses or the
Prospectuses or for additional information; (ii) of the issuance by
the Commission
<PAGE> 10
-10-
of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Offered Shares
for offering or sale in any jurisdiction or the initiation of any
proceeding for such purpose; and (iii) within the period of time
referred to in the first sentence of paragraph (f) of this Section 5,
of any change in the Company's or any of its subsidiaries' condition
(financial or other), business, prospects, properties, net worth or
results of operations, or of the happening of any event, which makes
any statement of a material fact made in the Registration Statement or
the Prospectuses (as then amended or supplemented) untrue or which
requires the making of any additions to or changes in the Registration
Statement or the Prospectuses (as then amended or supplemented) in
order to state a material fact required by the Act or the regulations
thereunder to be stated therein or necessary in order to make the
statements therein not misleading, or of the necessity to amend or
supplement the Prospectuses (as then amended or supplemented) to
comply with the Act or any other law. If at any time the Commission
shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will use its best efforts to
obtain the withdrawal of such order at the earliest possible time.
(c) The Company will furnish to you, without charge, five
signed copies of the registration statement as originally filed with
the Commission and of each amendment thereto, including financial
statements and all exhibits thereto, and will also furnish to you,
without charge, such number of conformed copies of the registration
statement as originally filed and of each amendment thereto, but
without exhibits, as you may reasonably request.
(d) The Company will not (i) file any amendment to the
Registration Statement or make any amendment or supplement to the
Prospectuses (including by way of issuance and filing under the Act of
any term sheet within the meaning of Rule 434 under the Act) of which
you shall not previously have been advised or to which you shall
reasonably object within a reasonable period of time after being so
advised or (ii) during such period as, in the reasonable opinion of
counsel for the Managers, a prospectus is required to be delivered in
connection with sales by any Manager or dealer, file any information,
documents or reports pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), without delivering a copy of such
information, documents or reports to you, as Lead Managers for the
Managers, prior to or concurrently with such filing.
<PAGE> 11
-11-
(e) Prior to the execution and delivery of this
Agreement, the Company has delivered to you, without charge, in such
quantities as you have reasonably requested, copies of each form of
the International Prepricing Prospectus. The Company consents to the
use, in accordance with the provisions of the Act and with the
securities or Blue Sky laws of the jurisdictions in which the Offered
Shares are offered by the several Managers and by dealers, prior to
the date of the International Prospectus, of each International
Prepricing Prospectus so furnished by the Company.
(f) As soon after the execution and delivery of this
Agreement as possible and thereafter from time to time for such period
as in the reasonable opinion of counsel for the Managers a prospectus
is required by the Act to be delivered in connection with sales of
Offered Shares by any Manager or dealer, the Company will
expeditiously deliver to each Manager, without charge, as many copies
of the International Prospectus (and of any amendment or supplement
thereto) as you may reasonably request. The Company consents to the
use of the International Prospectus (and of any amendment or
supplement thereto) in accordance with the provisions of the Act and
with the securities or Blue Sky laws of the jurisdictions in which the
Offered Shares are offered by the several Managers and by all dealers
to whom Offered Shares may be sold, both in connection with the
offering and sale of the Offered Shares and for such period of time
thereafter as the International Prospectus is required by the Act to
be delivered in connection with sales by any Manager or dealer. If
during such period of time any event shall occur that in the judgment
of the Company or in the opinion of counsel for the Managers is
required to be set forth in the International Prospectus (as then
amended or supplemented) or should be set forth therein in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to
supplement or amend the International Prospectus in order to comply
with the Act or any other law, the Company will forthwith prepare and,
subject to the provisions of paragraph (d) above, file with the
Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Managers as many copies thereof as they
may reasonably request. In the event that the Company and you, as
Lead Managers for the several Managers, agree that the International
Prospectus should be amended or supplemented, the Company, if
requested by you, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment or
supplement.
<PAGE> 12
-12-
(g) The Company will cooperate with you and with counsel
for the Managers in connection with the registration or qualification
of the Offered Shares for offering and sale by the several Managers
and by dealers under the securities or Blue Sky laws of such
jurisdictions as you may designate and will file such consents to
service of process or other documents necessary or appropriate in
order to effect such registration or qualification; provided that in
no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified or to take any
action which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Offered Shares,
in any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its
security holders a consolidated earning statement, which need not be
audited, covering a twelve-month period commencing after the effective
date of the Registration Statement and ending not later than 15 months
thereafter, as soon as practicable after the end of such period, which
consolidated earning statement shall satisfy the provisions of Section
11(a) of the Act and Rule 158 promulgated thereunder.
(i) During the period of five years hereafter, the
Company will furnish to you promptly after available, a copy of each
report of the Company mailed to common stockholders or filed with the
Commission or the American Stock Exchange (unless the Company has, in
good faith, requested confidential treatment with respect to such
filing).
(j) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof
(otherwise than pursuant to the second paragraph of Section 12 hereof
or by notice given by you terminating this Agreement pursuant to
Section 12 or Section 13 hereof) or if this Agreement shall be
terminated by the Managers because of any failure or refusal on the
part of the Company or the Selling Securityholders to comply with the
terms or fulfill any of the conditions of this Agreement, the Company
agrees to reimburse the Lead Managers for all reasonable out-of-pocket
expenses (including reasonable fees and expenses of counsel for the
Managers) incurred by you in connection herewith.
(k) The Company will apply the net proceeds from the sale
of the Offered Shares to be sold by it hereunder
<PAGE> 13
-13-
substantially in accordance with the description set forth in the
Prospectuses.
(l) If Rule 430A of the Act is employed, the Company will
timely file the Prospectuses pursuant to Rule 424(b) under the Act and
will advise you of the time and manner of such filing.
(m) Except as provided in this Agreement and the U.S.
Underwriting Agreement, the Company will not sell, offer to sell,
solicit an offer to buy, contract to sell, grant any option to
purchase or otherwise transfer or dispose of any common stock of the
Company (the "Common Stock") or any securities convertible into or
exercisable or exchangeable for Common Stock, for a period of 180 days
after the date of the Prospectuses, without the prior written consent
of Smith Barney Inc; provided, however, that the Company may (i)
repurchase from Selling Securityholders Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock, (ii)
issue Common Stock upon the exercise of currently outstanding warrants
or upon the exercise of options granted under the Company's existing
stock option grants or plans or the proposed stock option plan to be
adopted by the Company as described in the Prospectuses, (iii) issue
Class A Common Stock upon conversion or exchange of existing shares of
another class of Common Stock, (iv) grant an option, and permit the
exercise thereof, with respect to 75,000 shares of Class A Common
Stock to John Casey or his designee and (v) issue shares of Common
Stock as consideration for the acquisition of additional broadcast
assets.
(n) Except as stated in this Agreement and in the U.S.
Underwriting Agreement and in the Prepricing Prospectuses and
Prospectuses, the Company has not taken, nor will it take, directly or
indirectly, any action designed to cause or result in stabilization or
manipulation of the price of any of the Company's capital stock (the
"Capital Stock") to facilitate the sale or resale of the Offered
Shares.
(o) The Company will use its best efforts to have the
Offered Shares listed, subject to issuance, on the American Stock
Exchange on or before the Closing Date.
6. Agreements of the Selling Securityholders. Each of
the Selling Securityholders, severally and not jointly, agrees with the several
Managers as follows:
<PAGE> 14
-14-
(a) Such Selling Securityholder will use reasonable
efforts to cooperate to the extent reasonably necessary to cause the
Registration Statement or any post-effective amendment thereto to
become effective at the earliest possible time, to the extent that
such effectiveness is contingent upon an action to be taken by such
Selling Securityholder.
(b) On the Closing Date or the Option Closing Date, as
the case may be, all stock transfer or other taxes (other than income
taxes) which are required to be paid in connection with the sale and
transfer hereunder to the several Managers by such Selling
Securityholder of the Shares or Warrants to be sold by such Selling
Securityholder to the several Managers hereunder on such date will
have been paid or provided for by such Selling Securityholder.
(c) Except as provided in this Agreement and in the U.S.
Underwriting Agreement, such Selling Securityholder will not sell,
offer to sell, solicit an offer to buy, contract to sell, grant any
option to purchase or otherwise transfer or dispose of any Common
Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, for a period of 180 days after the date
of the Prospectuses, without the prior written consent of Smith Barney
Inc; provided, however, that such Selling Securityholder may (i)
transfer shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock to (x) the Company, (y)
any other Selling Securityholder who is bound by the terms of this
paragraph (c) or (z) to any Affiliate (as such term is defined for
purposes of the Securities Exchange Act of 1934, as amended) of any
Selling Securityholder if such Affiliate agrees in writing to be bound
by the terms of this paragraph (c) or (ii) exercise, exchange or
convert stock options, warrants, convertible securities or other
rights entitling such Selling Securityholder to receive shares of
Common Stock or convert or exchange shares of one class of Common
Stock into shares of a different class of Common Stock, with all the
shares of Common Stock received upon any such exercise, exchange or
conversion being subject to the terms of this paragraph (c).
(d) Except as stated in this Agreement and the U.S.
Underwriting Agreement and in the Prepricing Prospectuses and the
Prospectuses, such Selling Securityholder has not taken, nor will it
take, directly or indirectly, any action designed to cause or result
in stabilization or manipulation
<PAGE> 15
-15-
of the price of any Capital Stock to facilitate the sale or resale of
the Offered Shares (it being understood that this paragraph (d) shall
not apply to any stabilization efforts of any affiliate of such
Selling Securityholder who is a U.S. Underwriter or Manager).
(e) Such Selling Securityholder will (promptly after the
same becomes known to such Selling Securityholder) advise you, and if
requested by you, will confirm such advice in writing, within the
period of time referred to in the first sentence of paragraph (f) of
Section 5 hereof (but not in excess of nine months from the date of
this Agreement), of any change in information relating to such Selling
Securityholder previously furnished to you or the Company in writing
by such Selling Securityholder specifically for use in the
Registration Statement.
(f) Such Selling Securityholder agrees to deliver to you
prior to or at the Closing Date a properly completed and executed
United States Treasury Department Form W-9 (or other applicable form
or statement specified by Treasury Department regulations in lieu
thereof).
7. Representations and Warranties of the Company. The
Company represents and warrants to each Manager that:
(a) Each Prospectus complied when filed in all material
respects with the provisions of the Act. The Commission has not
issued any order preventing or suspending the use of any Prepricing
Prospectus.
(b) The Registration Statement in the form in which it
became or becomes effective and also in such form as it may be when
any post-effective amendment thereto shall become effective and the
Prospectuses and any supplement or amendment thereto when filed with
the Commission under Rule 424(b) under the Act complied or will comply
in all material respects with the provisions of the Act and did not
and will not at any such times 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 not misleading,
except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the
Prospectuses made in reliance upon and in conformity with information
relating to any Manager or U.S. Underwriter furnished to the Company
in writing by or on behalf of any Manager or U.S. Underwriter through
you expressly for use therein.
<PAGE> 16
-16-
(c) All the outstanding shares of Capital Stock of the
Company have been duly authorized and validly issued, are fully paid
and nonassessable and are free of any preemptive or similar rights;
the Shares to be issued and sold by the Company have been duly
authorized and, when issued and delivered to the Managers and the U.S.
Underwriters against payment therefor in accordance with the terms
hereof and in the U.S. Underwriting Agreement, will be validly
issued, fully paid and nonassessable and free of any preemptive or
similar rights; and the Capital Stock of the Company conforms in all
material respects to the descriptions thereof in the Registration
Statement and the Prospectuses.
(d) The warrant agreements governing the Warrants (the
"Warrant Agreements") have been duly and validly authorized by the
Company, and the Warrant Agreements have been duly executed and
delivered by the Company and constitute the valid and legally binding
agreements of the Company, enforceable against the Company 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.
(e) The Warrants have been duly and validly authorized by the
Company and have been duly executed and delivered by the Company and
constitute valid and legally binding obligations of the Company
enforceable against the Company 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. The
exercise price for the Warrants is (i) $.01 per Warrant for those
Warrants exerciseable for Class A Common Stock or Class B Common Stock
and (ii) otherwise $.001 per Warrant.
(f) The Warrant Shares have been validly reserved for
issuance; when issued, the Warrant Shares will be duly authorized,
validly issued, fully paid and nonassessable and free of any
preemptive or similar rights.
<PAGE> 17
-17-
(g) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of
Delaware with full corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectuses, and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification,
except where the failure so to register or qualify could not have a
material adverse effect on the condition (financial or other),
business, properties, net worth or results of operations of the
Company and its subsidiaries taken as a whole (a "Material Adverse
Effect").
(h) All the Company's subsidiaries (collectively, the
"Subsidiaries") are listed in an exhibit to the Registration
Statement. Each Subsidiary is either (i) a corporation duly
incorporated or organized, validly existing and in good standing in
the jurisdiction of its incorporation or organization or (ii) a
partnership duly organized and validly existing under the applicable
laws of the State of Florida and, in each case, with full corporate or
partnership power and authority, as the case may be, to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and the Prospectuses, and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of its business requires such registration or qualification,
except where the failure so to register or qualify does not have a
Material Adverse Effect; all the outstanding shares of capital stock
of each Subsidiary which is a corporation have been duly authorized
and validly issued and are fully paid and nonassessable; all of the
outstanding shares of capital stock or outstanding partnership
interests of the Subsidiaries are owned by the Company directly, or
indirectly through one of the other Subsidiaries, and, other than as
set forth in the Prospectuses, are owned free and clear of any lien,
adverse claim, security interest, equity or other encumbrance.
(i) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the
Company or any of the Subsidiaries or any of their respective officers
or directors, or to which the Company or any of the Subsidiaries, or
to which any of their respective properties is subject, that are
required to be
<PAGE> 18
-18-
described in the Registration Statement or the Prospectuses but are
not described as required, and there are no agreements, contracts,
indentures, leases or other instruments that are required to be
described in the Registration Statement or the Prospectuses or to be
filed as an exhibit to the Registration Statement that are not
described or filed as required by the Act.
(j) Neither the Company nor any of the Subsidiaries is in
violation of its certificate or articles of incorporation or by-laws,
or other organizational documents, or of any law, ordinance,
administrative or governmental rule or regulation applicable to the
Company or any of the Subsidiaries or of any decree of any court or
governmental agency or body having jurisdiction over the Company or
any of the Subsidiaries, or in default in any material respect in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
material agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of them
or any of their respective properties may be bound, except as would
not (individually or in the aggregate) have a Material Adverse Effect.
(k) Except as disclosed in the Registration Statement and
the Prospectuses, neither the issuance and sale of the Offered Shares,
the execution, delivery or performance of this Agreement or the other
Transaction Documents (as hereinafter defined) by the Company or the
Subsidiaries (to the extent a party thereto) nor the consummation by
the Company or the Subsidiaries (to the extent a party thereto) of the
transactions contemplated hereby or thereby (i) requires any consent,
approval, authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or other
governmental body, agency or official (except (A) such as may be
required for the registration of the Offered Shares under the Act and
compliance with the securities or Blue Sky and other laws of various
jurisdictions and countries, all of which have been or will be
effected in accordance with this Agreement and (B) as would not
(individually or in the aggregate) have a Material Adverse Effect) or
conflicts or will conflict with or constitutes or will constitute a
breach of, or a default under, the certificate or articles of
incorporation or by-laws, or other organizational documents, of the
Company or any of the Subsidiaries or (ii) conflicts or will conflict
with or constitutes or will
<PAGE> 19
-19-
constitute a breach of, or a default under, any agreement, indenture,
lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or violates or will violate any
statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Company or any of the Subsidiaries or any of
their respective properties, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to the terms
of any agreement or instrument to which any of them is a party or by
which any of them may be bound or to which any of the property or
assets of any of them is subject, except as would not (individually or
in the aggregate) have a Material Adverse Effect.
(l) Each of Price Waterhouse LLP and Voynow, Bayard and
Company, who have certified or shall certify the financial statements
included in the Registration Statement and the Prospectuses (or any
amendment or supplement thereto), are independent public accountants
as required by the Act.
(m) The financial statements of the Company and the
Subsidiaries, together with related schedules and notes, included in
the Registration Statement and the Prospectuses (and any amendment or
supplement thereto) present fairly the consolidated financial
position, results of operations and changes in financial position of
the Company and the Subsidiaries on the basis stated in the
Registration Statement and the Prospectuses at the respective dates or
for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the
other financial and statistical information and data included in the
Registration Statement and the Prospectuses (and any amendment or
supplement thereto) are accurately presented and prepared on a basis
consistent with such financial statements and the books and records of
the Company and the Subsidiaries.
(n) The unaudited pro forma consolidated financial
statements and other pro forma financial information (including the
notes thereto) included in the Registration Statement and the
Prospectuses (A) present fairly in all material respects the
information shown therein; (B) have
<PAGE> 20
-20-
been prepared in accordance with applicable requirements of Regulation
S-X promulgated under the Exchange Act; (C) have been prepared in
accordance with the Commission's rules and guidelines with respect to
pro forma financial statements; and (D) have been properly computed on
the bases described therein. The assumptions used in the preparation
of the pro forma financial statements and other pro forma condensed
consolidated financial information included in the Registration
Statement and the Prospectuses are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(o) The execution and delivery of, and the performance by
the Company of its obligations under, this Agreement have been duly
and validly authorized by the Company, and this Agreement has been
duly executed and delivered by the Company and constitutes the valid
and legally binding agreement of the Company, enforceable against the
Company 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 applicable
securities laws and public policy considerations.
(p) The execution and delivery of, and the performance by
the Company and the Subsidiaries (to the extent a party thereto) of
each of its obligations under, each agreement or instrument executed
or delivered in connection with the Proposed Acquisitions (as defined
in the Prospectuses), the exercise of the Station Options (as defined
in the Prospectuses) and the termination of the put option on the
Company's Class A and Class B Common Stock warrants (collectively,
the "Transaction Documents"), other than this Agreement, have been
duly and validly authorized by the Company and the Subsidiaries (to
the extent a party thereto), and such Transaction Documents have been
duly executed and delivered by the Company and the Subsidiaries (to
the extent a party thereto) and constitute the valid and legally
binding agreement of the Company and the Subsidiaries (to the extent a
party thereto), enforceable against them in accordance with their
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, morato-
<PAGE> 21
-21-
rium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) to general principles of equity
and the discretion of the court before which any proceeding therefor
may be brought.
(q) Except as disclosed in the Registration Statement and
the Prospectuses (or any amendment or supplement thereto), subsequent
to the respective dates as of which such information is given in the
Registration Statement and the Prospectuses (or any amendment or
supplement thereto), neither the Company nor any of the Subsidiaries
has incurred any liability or obligation, contingent or otherwise, or
entered into any transaction, not in the ordinary course of business,
that is material to the Company and the Subsidiaries taken as a whole,
and there has not been any change in the capital stock (other than as
contemplated by the Underwriting Agreements or the exercise of stock
options pursuant to grants or plans described in the Prospectuses), or
material increase in the short-term debt or long-term debt, of the
Company or any of the Subsidiaries, or any material adverse change, or
any development involving or which may reasonably be expected to
involve, a prospective material adverse change, in the condition
(financial or other), business, prospects, properties, net worth or
results of operations of the Company and the Subsidiaries taken as a
whole.
(r) Each of the Company and the Subsidiaries has good and
marketable title to all property (real and personal) described in the
Prospectuses as being owned by it which is material to the business of
the Company and the Subsidiaries, taken as a whole, free and clear of
all liens, claims, security interests or other encumbrances except
such as are described in the Registration Statement and the
Prospectuses or would not (individually or in the aggregate) have a
Material Adverse Effect and all property described in the Registration
Statement (including exhibits thereto) and the Prospectuses as being
held under lease by each of the Company and the Subsidiaries which is
material to the business of the Company and the Subsidiaries, taken as
a whole, is held by it under binding leases that are in force and
effect.
(s) The Company has not distributed and, prior to the
later to occur of (i) the Closing Date and (ii) completion of the
distribution of the Shares, will not distribute any offering material
in connection with the offering and sale of the Offered Shares other
than the Registration Statement,
<PAGE> 22
-22-
the Prepricing Prospectuses, the Prospectuses or other materials, if
any, permitted by the Act.
(t) The Company and each of the Subsidiaries have such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities, including, without limitation, permits,
licenses, franchises and authorizations from the United States Federal
Communications Commission (the "FCC") ("Permits"), as are necessary to
own its respective properties and to conduct its business in the
manner described in the Prospectuses, subject to such qualifications
as may be set forth in the Prospectuses and, except as, individually
or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; the Company and each of the Subsidiaries has
fulfilled and performed all of their respective obligations with
respect to such Permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of
the holder of any such Permit, subject in each case to such
qualifications as may be set forth in the Prospectuses and, except as,
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect; and, except as described in the
Prospectuses, none of such Permits contains any restriction that is
materially burdensome to the Company or any of the Subsidiaries, taken
as a whole. Other than as disclosed in the Prospectuses, there are no
license renewal or rate or tariff proceedings existing, pending or, to
the best knowledge of the Company, threatened that could reasonably be
expected to have a Material Adverse Effect.
(u) To the extent required by the Exchange Act, each of
the Company and the Subsidiaries maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general
or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
<PAGE> 23
-23-
(v) To the Company's knowledge, neither the Company nor
any of the Subsidiaries nor any officer, director, employee or agent
of the Company or any Subsidiary has made any payment of funds of the
Company or any Subsidiary or received or retained any funds in
violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the
Prospectuses.
(w) The Company and each of the Subsidiaries have filed
all tax returns required to be filed, which returns are complete and
correct, and neither the Company nor any Subsidiary is in default in
the payment of any taxes which were payable pursuant to said returns
or any assessments with respect thereto, other than those taxes or
assessments being contested in good faith and those taxes or
assessments for which adequate reserves or accruals have been
established in accordance with generally accepted accounting
principles, except where the failure to file such tax returns or to
pay such taxes or assessments is not reasonably likely to have,
individually 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
would, individually or in the aggregate, be reasonably likely to have
a Material Adverse Effect.
(x) Except as disclosed in the Registration Statement or
the Prospectuses, no holder of any security of the Company has any
right to require registration of any security of the Company because
of the filing of the Registration Statement or consummation of the
transactions contemplated by this Agreement.
(y) The Company and the Subsidiaries own or possess all
patents, trademarks, trademark registrations, service marks, service
mark registrations, trade names, copyrights, licenses, inventions,
trade secrets and rights described in the Prospectuses as being owned
by them or any of them or necessary for the conduct of their
respective businesses, the absence of which would have or could
reasonably be expected to have a Material Adverse Effect, and the
Company is not aware of any claim to the contrary or any challenge by
any other person to the rights of the Company and the Subsidiaries
with respect to the foregoing which claims or challenges, if the
subject of an unfavorable decision, would individually or in the
aggregate, have a Material Adverse Effect.
<PAGE> 24
-24-
(z) The Company has complied with all provisions of
Florida Statutes, Section 517.075, relating to issuers doing business
with Cuba.
(aa) The Company is not now, and after sale of the Shares
to be sold by it hereunder and application of the net proceeds from
such sale as described in the Prospectuses under the caption "Use of
Proceeds" will not be, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(ab) There are no business relationships or related-party
transactions of the nature described in Item 404 of Regulation S-K
involving the Company or any of its Subsidiaries and any persons
described in such Item that are required to be disclosed in the
Prospectuses and which have not been so disclosed.
(ac) Except as stated in this Agreement and in the U.S.
Underwriting Agreement and in the Prepricing Prospectuses and the
Prospectuses, neither the Company nor any of the Subsidiaries, or any
of such entities' directors, officers or controlling persons, has
taken, or will take, directly or indirectly, any action designed to
cause or result in stabilization or manipulation of the price of any
Capital Stock of the Company to facilitate the sale or resale of the
Offered Shares.
8. Representations and Warranties of the Selling
Securityholders. Each Selling Securityholder, severally and not jointly,
represents and warrants to each Manager that:
(a) Such Selling Securityholder now has, and on the
Closing Date and the Option Closing Date will have, valid and
marketable title to the Shares or the Warrants to be sold by such
Selling Securityholder hereunder, free and clear of any lien, claim,
security interest or other encumbrance, including, without limitation,
any restriction on transfer other than those arising under this
Agreement, the Custody Agreement, the Communications Act of 1934, as
amended and the policies, rules and regulations promulgated thereunder
(collectively, the "Communications Act") and any federal or state
securities laws.
(b) Such Selling Securityholder now has, and on the
Closing Date and the Option Closing Date will have, full legal right,
power and authorization to sell, assign, transfer and deliver such
Shares or Warrants in the manner
<PAGE> 25
-25-
and on the terms provided in and contemplated by this Agreement.
Assuming that the Managers have purchased such Shares or Warrants for
value and without notice of any adverse claim, upon delivery of and
payment for such Shares or Warrants hereunder, the several Managers
will acquire valid and marketable title to such Shares or Warrants, as
the case may be, free and clear of any lien, claim, security interest
or other encumbrance, it being understood that no representation or
warranty is being made herein with respect to the securities or Blue
Sky laws of any jurisdiction or the Communications Act.
(c) Each of this Agreement and the Custody Agreement has
been duly authorized, executed and delivered by or on behalf or such
Selling Securityholder and assuming that each has been duly
authorized, executed and delivered by or on behalf of and constitutes
a valid and binding agreement of each other party thereto, constitutes
a valid and binding agreement of such Selling Securityholder
enforceable against such Selling Securityholder 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 applicable laws and public policy
considerations.
(d) Assuming that the agreement among the Company and
certain of the Selling Securityholders setting forth certain
amendments to the Stockholders Agreement (as defined in the
Prospectuses) and certain other instruments and agreements are in full
force and effect, that the waivers and consents given by the other
parties thereto are valid and binding and that the Company's
representations and warranties contained herein are true and complete
in all material respects, neither the execution and delivery of this
Agreement or the Custody Agreement by or on behalf of such Selling
Securityholder nor the performance by such Selling Securityholder of
its obligations hereunder or thereunder requires any consent,
approval, authorization or order of, or filing or registration with,
any court, regulatory body, administrative agency or other
governmental body, agency or official or conflicts with or constitutes
a breach of, or default under, any agreement, indenture or other
instrument to which such Selling Securityholder is a party or by which
<PAGE> 26
-26-
such Selling Securityholder is bound, or any statute, law, rule,
regulation, ruling, judgment, injunction, order or decree applicable
to such Selling Securityholder except, in each case, such as may have
been obtained or as may be required under the Act or the
Communications Act or such as may be required under state securities
or Blue Sky laws or as would not (individually or in the aggregate)
have a material adverse effect on such Selling Securityholder or its
ability to perform its obligations hereunder.
(e) The Registration Statement and the Prospectuses do
not contain an 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 (in the case of the
Prospectuses, in the light of the circumstances under which such
statements were made), provided that the representations and
warranties set forth in this paragraph (e) shall apply only to
statements in or omissions from the Registration Statement or any
Prospectus made in reliance upon and in conformity with the most
recent information relating to such Selling Securityholder provided by
or on behalf of such Selling Securityholder in writing expressly for
use therein.
(f) The representations and warranties of such Selling
Securityholder in the Custody Agreement are true and correct.
9. Indemnification and Contribution. (a) The Company
and Second Crystal Diamond, L.P. (the "Indemnifying Selling Securityholder"),
jointly and severally, agree to indemnify and hold harmless each of you and
each other Manager and each person, if any, who controls any Manager within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act from and
against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Prepricing Prospectus or in the Registration Statement or the Prospectuses
or in any amendment or supplement thereto, or 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 not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information relating to such Manager
furnished in writing to the Company by or on behalf of any
<PAGE> 27
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Manager through you expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with respect
to any Prepricing Prospectus and any other preliminary prospectus, the
Prospectuses or any other amendment or supplement thereto shall not inure to
the benefit of any Manager (or to the benefit of any person controlling such
Manager) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Offered Shares by such Manager to any person if a
copy of the International Prospectus, as amended or supplemented, shall not
have been delivered or sent to such person within the time required by the Act
and the regulations thereunder, and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
International Prepricing Prospectus was corrected in the International
Prospectus; provided that the Company has delivered the International
Prospectus, as amended or supplemented, to the several Managers in requisite
quantity on a timely basis to permit such delivery or sending. The foregoing
indemnity agreement shall be in addition to any liability which the Company or
any Indemnifying Selling Securityholder may otherwise have. Notwithstanding
the foregoing, to the extent any such loss, claim, damage, liability or expense
arises out of matters other than those which are referred to in paragraph 9(c)
hereof and which relate to the Indemnifying Selling Securityholder, each
Manager agrees that it shall seek indemnification or contribution for any claim
hereunder first against the Company and if, and only if, the Company is unable
to fulfill its indemnification or contribution obligations hereunder, the
Managers shall then be entitled to seek any remaining indemnification or
contribution of any claim hereunder from the Indemnifying Selling
Securityholder. The obligations and liability of the Indemnifying Selling
Securityholder, whether with respect to indemnification pursuant to this
Section 9(a) or 9(c), contribution pursuant to Section 9(e) or otherwise, shall
not in any event exceed the aggregate amount of the net proceeds received by
the Indemnifying Selling Securityholder from the sale of Shares sold by the
Indemnifying Selling Securityholder to the Managers pursuant to this Agreement.
(b) If any action, suit or proceeding shall be brought
against any Manager or any person controlling any Manager in respect of which
indemnity may be sought against the Company or the Indemnifying Selling
Securityholder, such Manager or such controlling person shall promptly notify
the parties against whom indemnification is being sought (the "indemnifying
parties"), and such indemnifying parties shall assume the defense thereof,
including the employment of counsel and payment of all fees and expenses. Such
Manager or any such controlling person shall have
<PAGE> 28
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the right to employ separate counsel in any such action, suit or proceeding and
to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Manager or such controlling person
unless (i) the indemnifying parties have agreed in writing to pay such fees and
expenses, (ii) the indemnifying parties have failed to assume the defense and
employ counsel or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such Manager or such
controlling person and the indemnifying parties and such Manager or such
controlling person shall have been advised by its counsel that representation
of such indemnified party and any indemnifying party by the same counsel would
be inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
party shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Manager or such controlling person). It is
understood, however, that the indemnifying parties shall, in connection with
any one such action, suit or proceeding or separate but substantially similar
or related actions, suits or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of only one separate firm of attorneys (in addition to any
local counsel) at any time for all such Managers and controlling persons not
having actual or potential differing interests with you or among themselves,
which firm shall be designated in writing by Smith Barney Inc. and shall be
reasonably acceptable to the indemnified parties, and that all such fees and
expenses shall be reimbursed as they are incurred. The indemnifying parties
shall not be liable for any settlement of any such action, suit or proceeding
effected without their written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such action,
suit or proceeding, the indemnifying parties agree to indemnify and hold
harmless any Manager, to the extent provided in the preceding paragraph, and
any such controlling person from and against any loss, claim, damage, liability
or expense by reason of such settlement or judgment.
(c) Each Selling Securityholder agrees, severally and not
jointly, to indemnify and hold harmless each of you and each other Manager and
each person, if any, who controls any Manager within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, the Company, its directors,
its officers who sign the Registration Statement, and any person who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act from and against any and all losses,
<PAGE> 29
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claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the Prospectuses or in any amendment or supplement thereto, or 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 not
misleading, but only with respect to the information relating to such Selling
Securityholder furnished in writing by or on behalf of such Selling
Securityholder other than the Indemnifying Selling Securityholder expressly for
use in the Registration Statement or any Prospectus, or any amendment or
supplement thereto; provided, however, that (i) such Selling Securityholder
shall not be liable in any such case, whether for indemnification pursuant to
this Section 9(c), contribution pursuant to Section 9(e), or otherwise, if any
such untrue statement or alleged untrue statement or omission or alleged
omission was contained in or omitted from the Registration Statement or any
Prospectus used after such time as the Company shall have been advised by or on
behalf of such Selling Securityholder of such untrue statement or alleged
untrue statement or omission or alleged omission, and (ii) the obligations and
liability of such Selling Securityholder, whether with respect to
indemnification pursuant to this Section 9(c), contribution pursuant to Section
9(e) or otherwise, shall not in any event exceed in the aggregate the amount of
net proceeds received by such Selling Securityholder from the sale of the
Shares or Warrants sold by such Selling Securityholder to the Managers pursuant
to this Agreement. If any action, suit or proceeding shall be brought against
any Manager, any such controlling person of any Manager, the Company, any of
its directors, any such officer, or any such controlling person of the Company,
based on the Registration Statement or any Prospectus or any amendment or
supplement thereto, and in respect of which indemnity may be sought against any
Selling Securityholder pursuant to this paragraph (c), such Selling
Securityholder shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Selling Securityholder shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but the
fees and expenses of such counsel shall be at such Selling Securityholder's
expense), and each Manager, each such controlling person of any Manager, the
Company, its directors, any such officer, and any such controlling person of
the Company shall have the rights and duties given to the Managers by paragraph
(b) above. The foregoing indemnity agreement shall be
<PAGE> 30
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in addition to any liability which any Selling Securityholder may otherwise
have.
(d) Each Manager agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, each Selling Securityholder, and any person who
controls the Company or any Selling Securityholder within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, to the same extent
as the foregoing indemnity from the Company and the Selling Securityholders to
each Manager, but only with respect to information relating to such Manager
furnished in writing by or on behalf of such Manager through you expressly for
use in the Registration Statement, the Prospectus or any Prepricing Prospectus,
or any amendment or supplement thereto. If any action, suit or proceeding
shall be brought against the Company, any of its directors, any such officer,
any Selling Securityholder, or any such controlling person based on the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be
sought against any Manager pursuant to this paragraph (d), such Manager shall
have the rights and duties given to the Company by paragraph (b) above (except
that if the Company shall have assumed the defense thereof such Manager shall
not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at such Manager's expense), and the Company, its directors, any such
officer, the Selling Securityholders, and any such controlling person shall
have the rights and duties given to the Managers by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which any
Manager may otherwise have.
(e) If the indemnification provided for in this Section 9
is unavailable to an indemnified party under paragraphs (a), (c) or (d) hereof
or is insufficient to hold an indemnified party harmless in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
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, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company, the
Selling Securityholders (severally) and the Managers from the sale of the
Shares and the Warrants and the offering of the Offered Shares, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause
<PAGE> 31
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(i) above but also the relative fault of the Company, the Selling
Securityholders (severally) and the Managers in connection with the statements
or omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Selling Securityholders (severally) and
the Managers shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
or such Selling Securityholders (severally) bear to the total underwriting
discounts and commissions received by the Managers, in each case determined as
set forth in the table on the cover page of the International Prospectus;
provided that, in the event that the Managers shall have purchased any
Additional Shares and/or Additional Warrants hereunder, any determination of
the relative benefits received by the Company, the Selling Securityholders
(severally) or the Managers from the offering of the Offered Shares shall
include the net proceeds (before deducting expenses) received by the Company
and the Selling Securityholders (severally), and the underwriting discounts and
commissions received by the Managers, from the sale of such Additional Shares
and Additional Warrants, in each case computed on the basis of the respective
amounts set forth in the notes to the table on the cover page of the
International Prospectus. The relative fault of the Company, the Selling
Securityholders and the Managers 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 Company, the Selling Securityholders or the
Managers and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. In determining
the benefit to, or the fault of, any particular Selling Securityholder, the
benefits to and fault of each other Selling Securityholder and the Company
shall not be taken into account.
(f) The Company, the Selling Securityholders and the
Managers agree that it would not be just and equitable if contribution pursuant
to this Section 9 were determined by a pro rata allocation (even if the
Managers 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 paragraph (e) above. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, liabilities and expenses referred
to in paragraph (e) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating any claim or
<PAGE> 32
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defending any such action, suit or proceeding. Notwithstanding the provisions
of this Section 9, no Manager shall be required to contribute any amount in
excess of the amount by which the total price of the Offered Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Manager 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 Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Managers' obligations to contribute
pursuant to this Section 9 are several in proportion to the respective numbers
of Firm Shares set forth opposite their names in Schedule II hereto (or such
numbers of Firm Shares increased as set forth in Section 12 hereof) and not
joint. The obligations of the Selling Securityholders to contribute pursuant
to this Section 9 are several and not joint and no Selling Securityholder shall
in any event be required to contribute any amount which is in excess of the
amount by which the total net proceeds received by such Selling Securityholder
from the sale of the Shares or Warrants sold by such Selling Securityholder to
the Managers pursuant to this Agreement exceeds the amounts that such Selling
Securityholder has otherwise been required to pay by reason of the statements
or omissions which result in such obligation to contribute.
(g) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been 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 on claims that are the
subject matter of such action, suit or proceeding.
(h) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 9 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses are incurred.
The indemnity and contribution agreements contained in this Section 9 and the
representations and warranties of the Company and the Selling Securityholders
set forth in this Agreement shall remain operative and in full force and
effect, regardless of (i) any investigation made by or on behalf of any Manager
or any person controlling any Manager, the Company, its directors or officers
or the Selling Securityholders or any person controlling the
<PAGE> 33
-33-
Company or any Selling Securityholder, (ii) acceptance of any Shares or
Warrants and payment therefor hereunder and (iii) any termination of this
Agreement. A successor to any Manager or any person controlling any Manager,
to the Company, its directors or officers, or any person controlling the
Company, or to any Selling Securityholder, its directors, officers or partners,
or any person controlling a Selling Securityholder shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section 9.
10. Conditions of Managers' Obligations. The several
obligations of the Managers to purchase the Firm Shares and the Firm Warrants
hereunder are subject to the following conditions:
(a) If, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a
post-effective amendment thereto to be declared effective before the
offering of the Offered Shares may commence, the Registration
Statement or such post-effective amendment shall have become effective
not later than 5:30 P.M. (or, in the case of a Registration Statement
filed pursuant to Rule 462(b) under the Act, not later than 10:00
P.M.), New York City time, on the date hereof, or at such later date
and time as shall be consented to in writing by you, and all filings,
if any, required by Rules 424 and 430A under the Act shall have been
timely made; no stop order suspending the effectiveness of the
Registration Statement shall have been issued and be in effect and no
proceeding for that purpose shall have been instituted or, to the
knowledge of the Company, any Selling Securityholder or any Manager,
threatened by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement
or the Prospectuses or otherwise) shall have been complied with to
your reasonable satisfaction.
(b) Subsequent to the effective date of this Agreement,
there shall not have occurred (i) any change, or any development
involving a prospective change, in or affecting the condition
(financial or other), business, prospects, properties, net worth, or
results of operations of the Company or the Subsidiaries not
contemplated by the Prospectuses, which in your opinion, as Lead
Managers for the several Managers, would materially, adversely affect
the market for the Offered Shares or (ii) any event or development
relating to or involving the Company or any officer or director of the
Company or any Selling Securityholder which makes any statement made
in the Prospectuses
<PAGE> 34
-34-
untrue or which, in the opinion of the Company and its counsel or the
Managers and their counsel, requires the making of any addition to or
change in the Prospectuses in order to state a material fact required
by the Act or any other law to be stated therein or necessary in order
to make the statements therein not misleading if amending or
supplementing the Prospectuses to reflect such event or development
would, in your opinion, as Lead Managers for the several Managers,
materially adversely affect the market for the Offered Shares.
(c) You shall have received on the Closing Date, an
opinion of Holland & Knight, counsel for the Company and Second
Crystal Diamond, L.P., James B. Bocock, Dean M. Goodman, Jon Jay
Hoker, Arthur D. Tek, Anthony L. Morrison and S. William Scott
(collectively, the "Management Stockholders"), dated the Closing Date
and addressed to you, as Lead Managers for the several Managers, to
the effect that:
(i) The Company is a corporation duly incorporated
and validly existing in good standing under the laws of laws
of the State of Delaware. To our knowledge, the Company
has the requisite corporate power to own and operate its
properties and to transact its business as described in the
Registration Statement and the Prospectuses (and any amendment
or supplement thereto), and is duly qualified to transact its
business and is in good standing as a foreign entity in each
jurisdiction in which the character of its business requires
such qualification, except where the failure so to qualify
does not have a Material Adverse Effect;
(ii) Each Subsidiary which is a Florida corporation
or partnership is either (i) a corporation duly incorporated
or organized and currently existing under the laws of the
State of Florida and the status of each thereunder is active
or (ii) a partnership duly organized and currently existing
under the applicable laws of the State of Florida and the
status of each such Subsidiary is active; to the knowledge of
such counsel, each Subsidiary has the requisite corporate or
partnership power to own and operate its properties and to
transact the business in which it is engaged except where the
failure to own or operate such properties or transact such
business would not have a Material Adverse Effect; each
Subsidiary which is a Delaware corporation is duly
incorporated and validly existing
<PAGE> 35
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in good standing under the laws of the State of Delaware;
and each Subsidiary is duly qualified to transact
its business and is in good standing as a foreign entity in
each jurisdiction in which the character of its business
requires such qualification, except where the failure so to
qualify does not have a Material Adverse Effect;
(iii) To the knowledge of such counsel after
reasonable inquiry, the actual authorized and outstanding
Capital Stock of the Company as of December 31, 1995 is as set
forth under the caption "Capitalization" in the Prospectuses;
and the authorized Capital Stock of the Company conforms in
all material respects as to legal matters to the descriptions
thereof contained in the Prospectuses under the caption
"Description of Capital Stock"; to the knowledge of such
counsel after reasonable inquiry, all of the outstanding
shares of capital stock of or ownership interests in each of
the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights;
(iv) All the shares of Capital Stock of the Company
outstanding prior to the issuance of the Shares to be issued
and sold by the Company hereunder and the Warrant Shares have
been duly authorized and validly issued and are fully paid and
nonassessable and, to our knowledge, were not issued in
violation of any preemptive or similar rights; the Warrant
Shares have been validly reserved for issuance; when issued
upon exercise of the Warrants in accordance with the terms
thereof, the Warrant Shares will be duly authorized and
validly issued and, to our knowledge, will be fully paid and
non-assessable and, to our knowledge, will not be issued in
violation of any preemptive or similar rights;
(v) The Offered Shares to be issued and sold
to the Managers by the Company hereunder (including the
Warrant Shares) have been duly authorized and, when issued and
delivered to the Managers against payment therefor in
accordance with the terms hereof, will be validly issued,
fully paid and nonassessable and, to our knowledge, free of
any preemptive or similar rights that entitle or will
entitle any person to
<PAGE> 36
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acquire any securities of the Company upon the issuance
thereof by the Company;
(vi) The form of certificates for the Offered Shares
conforms to the requirements of the Delaware General
Corporation Law;
(vii) The Registration Statement and all post-
effective amendments, if any, have become effective under the
Act and, to the knowledge of such counsel after reasonable
inquiry, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings
for that purpose are pending before or contemplated by the
Commission; and any required filing of the Prospectuses
pursuant to Rule 424(b) has been made in accordance with
Rule 424(b);
(viii) The Company has the requisite corporate power
enter into this Agreement and to issue, sell and deliver the
Offered Shares, and this Agreement has been duly authorized,
executed and delivered by the Company;
(ix) Neither the offer, sale or delivery of the
Offered Shares, the execution, delivery or performance of this
Agreement, compliance by the Company with the provisions
hereof nor consummation by the Company of the transactions
contemplated hereby conflicts or will conflict with or
constitutes or will constitute a breach of, or a default
under, the certificate or articles of incorporation or
by-laws, or other organizational documents, of the Company or
any of the Subsidiaries or to the knowledge of such counsel
after reasonable inquiry any agreement or document relating to
the Capital Stock of the Company, nor will any such action
result in any violation of any law, regulation, rule (assuming
compliance with all applicable state securities and Blue Sky
laws) or to the knowledge of such counsel after reasonable
inquiry judgment, ruling or court decree applicable to the
Company, the Subsidiaries or any of their
respective properties;
(x) No consent, approval, authorization or other
order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental
body, agency, or official is required on the part of the
Company (except as have been obtained under the Act or such
as may be required under state
<PAGE> 37
-37-
securities or Blue Sky laws governing the purchase and
distribution of the Offered Shares) for the valid issuance and
sale of the Offered Shares to the Managers as
contemplated by this Agreement;
(xi) The Registration Statement and the Prospectuses
and any supplements or amendments thereto (except for the
financial statements and the notes thereto and the schedules
and other financial and statistical data included therein, as
to which such counsel need as to form in all material respects
with the requirements of act.
(xii) To the knowledge of such counsel after
reasona ble inquiry, (A) other than as described or
contemplated in the Prospectuses (or any supplement thereto),
there are no legal or governmental proceedings pending or
threatened against the Company or any of the Subsidiaries, or
to which the Company or any of the Subsidiaries, or any of
their property, is subject, which are required to be described
in the Registration Statement or Prospectuses (or any
amendment or supplement thereto) and (B) there are no
agreements, contracts, indentures, leases or other instruments
that are required to be described in the Registration
Statement or the Prospectuses (or any amendment or supplement
thereto) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required, as
the case may be;
(xiii) Other than with respect to federal, state or
local broadcasting, licensing or communications law or
regulatory matters, the statements in the Registration
Statement and Prospectuses, insofar as they are descriptions
of contracts, agreements or other legal documents, or refer to
statements of law or legal conclusions, are accurate and
present fairly the information required to be shown;
(xiv) This Agreement and the Custody
Agreement have each been duly executed and delivered by or on
behalf of each of the Management Stockholders and are valid
and binding agreements of each Management Stockholder
enforceable against each Management Stockholder in
accordance with their respective terms;
(xv) To the knowledge of such counsel after
reasonable inquiry, the Management Stockholder that is
<PAGE> 38
-38-
not a natural person has the requisite partnership power and
authorization by law, to sell, assign, transfer and deliver
good and marketable title to the Shares which such Management
Stockholder has agreed to sell pursuant to this
Agreement;
(xvi) To the knowledge of such counsel after
reasonable inquiry the execution and delivery of this
Agreement and the Custody Agreement by the Management
Stockholder that is not a natural person and the consummation
of the transactions contemplated hereby and thereby will not,
to our knowledge, conflict with, violate, result in a breach
of or constitute a default under the terms or provisions of
any agreement, indenture, mortgage or other instrument known
to such counsel to which such Management Stockholder is a
party or by which it or any of its assets or property is
bound, or any court order or decree or any law, rule, or
regulation applicable to such Management Stockholder or
to any of the property or assets of such Management
Stockholder;
(xvii) Upon delivery of the Offered Shares
and the Warrants pursuant to this Agreement and payment
therefor as contemplated herein, and assuming that each
purchasing Manager shall have purchased the Offered Shares and
the Warrants in good faith without notice of any adverse
claim, such Manager will acquire good and marketable title to
the Offered Shares and Warrants free and clear of any lien,
claim, security interest, or other encumbrance, restriction
on transfer or other defect in title; and
(xviii) The Company is not an "investment company"
or a company "controlled by an investment company" within the
meaning of the Investment Company Act of 1940, as amended.
Such counsel will confirm that they have participated in
conferences with officers and other representatives of the Company,
the Underwriters and the independent certified public accountants of
the Company, at which such conferences the contents of the
Registration Statement and the Prospectuses and related matters were
discussed, and although they have not verified the accuracy or
completeness of the statements contained in the Registration Statement
or the Prospectuses, nothing has come to their attention which leads
them to believe that, at the time the Registration
<PAGE> 39
-39-
Statement became effective and at all times subsequent thereto up to
and on the Closing Date or the Option Closing Date, as the case may
be, the Registration Statement or the Prospectuses and any amendment
or supplement thereto (other than the financial statements including
the notes thereto and supporting schedules and other financial and
statistical information, as to which they will make no comment)
contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading.
(d) You shall have received on the Closing Date an
opinion of Anthony L. Morrison, Esq., General Counsel to the Company,
dated the Closing Date and addressed to you, as Lead Managers for the
several Managers, to the effect that under the laws of the State of
New York, as applicable:
(i) The Company and each of the Subsidiaries has
full corporate or partnership power and authority, and all
necessary governmental authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all
governmental regulatory officials and bodies (except where the
failure so to have full corporate or partnership power or any
such authorizations, approvals, orders, licenses,
certificates, franchises or permits, individually or in the
aggregate, would not have a Material Adverse Effect), to own
their respective properties and to conduct their respective
businesses as now being conducted, as described in the
Prospectuses;
(ii) Except as disclosed in the Prospectuses, all
the outstanding shares of capital stock of each of the
Subsidiaries are owned by the Company directly, or indirectly
through one of the other Subsidiaries, free and clear of any
lien, adverse claim, security interest, equity, or other
encumbrance;
(iii) This Agreement is a valid, legal and binding
agreement of the Company, enforceable against the Company in
accordance with its terms (it being noted, without expressing
any opinion with regard to the federal securities laws and
regulations, that the Commission has expressed the view that
indemnification against securities law liabilities is against
public policy) and subject to the qualification that the
enforceability of the Company's obligations hereunder may be
limited by bankruptcy, fraudulent conveyance,
<PAGE> 40
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insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and by
general equitable principles;
(iv) Each of the Company and the Subsidiaries has
all corporate or partnership power and authority, as the case
may be, to execute, deliver and perform each of the
Transaction Documents to which it is a party, to perform all
of its obligations thereunder and to consummate the
transactions contemplated thereby, except where the failure to
have any such corporate or partnership power and authority
would not have a Material Adverse Effect;
(v) Neither the Company nor any of the
Subsidiaries is in violation of its certificate or articles of
incorporation or by-laws, or other organizational documents,
or to the knowledge of such counsel after reasonable inquiry,
is in default (and no event has occurred which with notice or
lapse of time, or both, would constitute a default) in the
performance of any obligation, agreement or condition
contained in any bond, debenture, note or other evidence of
indebtedness, except in the case of any violation or default
which would not reasonably be expected to result in a
Material Adverse Effect;
(vi) Except as disclosed in the Registration
Statement and the Prospectuses, to the knowledge of such
counsel after reasonable inquiry, neither the offer, sale or
delivery of the Offered Shares, the execution, delivery or
performance of this Agreement and the other Transaction
Documents, compliance by the Company or the Subsidiaries (to
the extent a party thereto) with the provisions hereof or
thereof nor consummation by the Company or the Subsidiaries
(to the extent a party thereto) of the transactions
contemplated hereby or thereby, conflict or will conflict with
or constitute or will constitute a breach of, or a default
under the certificate or articles of incorporation or by-laws,
or other organizational documents, of the Company or any of
the Subsidiaries or any agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is
a party or by which any of them or any of their respective
properties is bound or will result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the
<PAGE> 41
-41-
Subsidiaries which conflict, breach, default or lien
could reasonably be expected to have a Material Adverse
Effect;
(vii) To the knowledge of such counsel after
reasonable inquiry, other than as described in the
Prospectuses (or any supplement thereto), there are no legal
or governmental proceedings pending or threatened against the
Company or any of the Subsidiaries, or to which the Company or
any of the Subsidiaries, or any of their property, is subject,
which are required to be described in the Registration
Statement or Prospectuses (or any amendment or supplement
thereto);
(viii) There are no agreements, contracts, indentures,
leases or other instruments that are required to be described
in the Registration Statement or the Prospectuses (or any
amendment or supplement thereto) that are not described or
filed as required, as the case may be;
(ix) To the knowledge of such counsel after
reasonable inquiry, neither the Company nor any of the
Subsidiaries is in violation of any law, ordinance,
administrative or governmental rule or regulation applicable
to the Company or any of the Subsidiaries or of any decree of
any court or governmental agency or body having jurisdiction
over the Company or any of the Subsidiaries where such
violation could reasonably be expected to have a Material
Adverse Effect;
(x) Except as described in the Prospectuses,
there are no outstanding options, warrants or other rights
calling for the issuance of, and such counsel does not know of
any commitment, plan or arrangement to issue, any shares of
Capital Stock of the Company or any security convertible into
or exchangeable or exercisable for Capital Stock of the
Company; and
(xi) Except as described in the Prospectuses,
there is no holder of any security of the Company or any other
person who has the right, contractual or otherwise, to cause
the Company to sell or otherwise issue to them, or to permit
them to underwrite the sale of, the Offered Shares or the
right to have any Capital Stock or other securities of the
Company included in the Registration Statement or the right,
as a result of the filing of the Registration Statement,
<PAGE> 42
-42-
to require registration under the Act of any shares of
Capital Stock or other securities of the Company.
(e) You shall have received on the Closing Date an
opinion of Dow, Lohnes & Albertson, special communications counsel for
the Company, dated the Closing Date and addressed to you, as Lead
Managers for the several Managers, to the effect that:
(i) Based upon a review of the FCC files, (a)
Whitehead Media, Inc., Bradenton Broadcast Television Company,
Ltd., Todd Communications, Inc., Roberts Broadcasting Company
of Raleigh Durham, L.P. and each subsidiary of the Company
and each subsidiary of The Christian Network, Inc. holds
those broadcast licenses issued by the FCC ("FCC Licenses")
identified as held by such entity and (b) each of the FCC
Licenses authorizes radio or television broadcast operations
by the holder thereof using the channel or frequency
assignment and serving the community of license that is
identified for each of the FCC Licenses;
(ii) To the knowledge of such counsel, based
upon the review of the publicly available records of the FCC
and inquiry to officers of the Company, except as may be
disclosed in the Prospectuses, there is no order, judgment,
decree, notice of apparent liability, or order of forfeiture
outstanding, and no petition, objection, notice of apparent
liability, order of forfeiture, investigation, complaint, or
other proceeding pending before the FCC or threatened by the
FCC against the stations listed (the "Stations") or the FCC
Licenses that reasonably could be expected to result in the
termination, revocation, suspension, or denial of renewal of
any of the FCC Licenses, except for rule making and other
similar proceedings generally applicable to the radio or
television broadcasting industry or substantial segments
thereof;
(iii) To the knowledge of such counsel based upon
the review of the publicly available files of the FCC and
inquiry to officers of the Company, other than as disclosed in
the Prospectuses, (a) there are no license renewal proceedings
pending for any of the FCC Licenses; and (b) except as set
forth on the FCC authorization certificates for the FCC
Licenses or imposed by the generally applicable rules of the
FCC, none of the FCC Licenses is subject to any condition
<PAGE> 43
-43-
imposed by the FCC that reasonably could be expected to
have a material adverse effect on the Company's ability to
conduct its broadcast operations, taken as a whole;
(iv) The issuance, sale and delivery of the Offered
Shares and the Warrants pursuant to this Agreement (A) does
not require any consent or authorization from the FCC, and (B)
does not constitute a violation of the Communications Act or
the published rules and regulations of the FCC promulgated
thereunder;
(v) The identified applications for consent to
assignment or transfer of control of licenses issued by the
FCC in connection with the Proposed Acquisitions and the
exercise of the Station Options (each as defined in the
Prospectuses) have been filed with the FCC; and, to the
knowledge of such counsel based upon the review of the
publicly available files of the FCC and inquiry to officers of
the Company, except as identified, no petition to deny
such applications has been filed with the FCC;
(vi) The statements in the Prospectuses under the
captions "Risk Factors -- Must Carry Regulations," "--
Government Regulation," "-- Multiple Ownership Rules; Time
Brokerage Agreements" and "Business -- Federal Regulation of
Broadcasting," insofar as they constitute summaries of the
Communications Act and the published rules and regulations of
the FCC promulgated thereunder, have been reviewed by
such counsel and are accurate in all material respects;
(vii) The execution, delivery and performance of (x)
this Agreement by the Company and (y) this Agreement and the
Custody Agreement by the Selling Securityholders (A) do not
require any consent or authorization from the FCC, and (B) do
not and will not violate the Communications Act and the rules
and regulations promulgated thereunder;
(viii) There are no restrictions or limitations
imposed by the FCC on the ability of the Company to pay cash
dividends on its shares of Class A Common Stock or, except as
set forth in the Prospectuses, otherwise make distributions
in cash on its shares of Capital Stock.
<PAGE> 44
-44-
(f) You shall have received on the Closing Date an
opinion, to be governed by and interpreted in accordance with the
Legal Opinion Accord of the ABA Section of Business Law (1991) (the
"ABA Accord"), of (i) Baker & Botts L.L.P., special counsel to Sandler
Mezzanine Partners, L.P., a Delaware limited partnership, Sandler
Mezzanine Foreign Partners, L.P., a Delaware limited partnership and
Sandler Mezzanine T-E Partners, L.P., a Delaware limited partnership,
(ii) Mr. Richard D'Alessandri, counsel to National Union Fire
Insurance Company of Pittsburgh, PA, (iii) Mr. Salvatore Palazzolo,
counsel to BT Investment Partners, Inc., (iv) Mr. Hal Clarke, counsel
to First Union Corporation of Virginia, (v) Edwards & Angell, counsel
to J. Patrick Michaels, Jr. Family Trust, Kim Enterprises, L.P. and
PXN Investment Partnership, (vi) Mr. Lynn Smith, counsel to Smith PXN
Company and (vii) Mr. Michael Nakama, counsel to Union Venture
Corporation (in each case, the Selling Securityholder(s) so
represented, the "Stockholders"), dated the Closing Date and addressed
to you, as Lead Managers for the several Managers, to the effect that:
(i) Each of the Stockholders has the necessary
corporate or partnership (as applicable) power and authority
to execute and deliver this Agreement and the Custody
Agreement and to sell to the Managers, in accordance with this
Agreement, the Shares or Warrants to be sold by such
Stockholder to the several Managers pursuant to this
Agreement;
(ii) This Agreement and the Custody Agreement
have been duly executed and delivered by or on behalf
of each Stockholder;
(iii) Assuming this Agreement constitutes the legal,
valid and binding obligation of each of the Managers, the
Company and each of the other Selling Securityholders, this
Agreement is a valid and binding obligation of each of the
Stockholders, except that no opinion is expressed with respect
to rights to indemnity or contribution or with respect to the
validity of this Agreement under, or the effect on the
validity or binding nature of this Agreement of, the
Communications Act; and
(iv) Upon the purchase by, and delivery to, the
several Managers in accordance with the terms of this
Agreement of the Shares or Warrants to be sold by a
Stockholder to the several Managers pursuant to this
<PAGE> 45
-45-
Agreement (including, without limitation, payment for such
Shares or Warrants by the several Managers as provided in this
Agreement) and the registration of such Shares or Warrants in
the respective names of the several purchasing Managers, and
assuming that each purchasing Manager shall have purchased
such Shares or Warrants in good faith and without notice of
any adverse claim (within the meaning of Section 8-302 of the
Uniform Commercial Code), such purchasing Manager will have
acquired all of the rights of such Stockholder in such Shares
or Warrants so purchased by such Manager that such Stockholder
had or had authority to convey free of any adverse claims.
Such counsel may limit such opinion in all respects to the
laws of the State of New York and federal law (excluding the
Communications Act (and also excluding the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended)) normally applicable to similar
transactions in the experience of such counsel, to the limited
partnership or corporation statute of the jurisdiction of formation of
any Stockholder which is an entity and insofar as such opinions are
based on any such limited partnership or corporation statute, may base
such opinions solely on such counsel's reading of such statute,
without consultation of any judicial or administrative interpretations
thereof. If this Agreement shall have been executed and delivered on
behalf of any Stockholder by any Attorney-in-Fact pursuant to the
Custody Agreement, then such counsel may assume that such execution
and delivery was duly and validly made. Such opinion may be made to
any other assumptions, qualifications, exceptions and limitations as
are customary for similar opinions rendered in similar circumstances
or as are contemplated by the ABA Accord.
(g) You shall have received on the Closing Date an
opinion of Cahill Gordon & Reindel, counsel for the Managers, dated
the Closing Date and addressed to you, as Lead Managers for the
several Managers, with respect to the matters referred to in clauses
(v), (vii), (viii) and (xi) and the final clause of the foregoing
paragraph (c) and such other related matters as you may request.
(h) You shall have received "cold comfort" letters
addressed to you, as Lead Managers for the several Managers, and dated
the date hereof and the Closing Date from Price Waterhouse LLP,
independent certified public accountants, substantially in the forms
heretofore approved by you.
<PAGE> 46
-46-
(i) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
that purpose shall have been taken or, to the knowledge of the
Company, the Selling Securityholders or the Underwriters, shall be
contemplated by the Commission at or prior to the Closing Date; (ii)
there shall not have been any change in the Capital Stock of the
Company nor any material increase in the consolidated short-term or
long-term debt of the Company (other than in the ordinary course of
business) from that set forth or contemplated in the Registration
Statement or the Prospectuses (or any amendment or supplement
thereto); (iii) there shall not have been, since the respective dates
as of which information is given in the Registration Statement and the
Prospectuses (or any amendment or supplement thereto), except as may
otherwise be stated in the Registration Statement and Prospectuses (or
any amendment or supplement thereto), any material adverse change in
the condition (financial or other), business, prospects, properties,
net worth or results of operations of the Company and the Subsidiaries
taken as a whole; (iv) the Company and the Subsidiaries shall not have
any liabilities or obligations, contingent or otherwise (whether or
not in the ordinary course of business), that are material to the
Company and the Subsidiaries, taken as a whole, other than those
reflected in the Registration Statement or the Prospectuses (or any
amendment or supplement thereto); and (v) all the representations and
warranties of the Company contained in this Agreement shall be true
and correct on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date, and you shall have
received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief financial officer of the Company (or
such other officers as are acceptable to you), to the effect set forth
in this Section 10(i) and in Section 10(j) hereof.
(j) The Company shall not have failed at or prior to the
Closing Date to have performed or complied with any of its agreements
herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(k) All the representations and warranties of the Selling
Securityholders contained in this Agreement shall be true and correct
on and as of the date hereof and on and as of the Closing Date as if
made on and as of the Closing Date, and you shall have received one or
more certificates, dated the Closing Date and signed by or on behalf
of the
<PAGE> 47
-47-
several Selling Securityholders to the effect set forth in this
Section 10(k) and in Section 10(l) hereof.
(l) The Selling Securityholders shall not have failed at
or prior to the Closing Date to have performed or complied with any of
their agreements herein contained and required to be performed or
complied with by them hereunder at or prior to the Closing Date.
(m) Prior to the Closing Date the Offered Shares shall
have been listed, subject to issuance, on the American Stock Exchange.
(n) The Sellers shall have furnished or caused to be
furnished to you such further certificates and documents as you shall
have requested.
(o) The closing under the U.S. Underwriting Agreement
shall have occurred concurrently with the closing hereunder on the
Closing Date.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to you and your counsel.
Any certificate or document signed by any officer of the
Company or any Attorney-in-Fact or any Selling Securityholder and delivered to
you, as Lead Managers for the Managers, or to counsel for the Managers, shall
be deemed a representation and warranty by the Company, the Selling
Securityholders or the particular Selling Securityholder, as the case may be,
to each Manager as to the statements made therein.
The several obligations of the Managers to purchase Additional
Securities hereunder are subject to the satisfaction on and as of any Option
Closing Date of the conditions set forth in this Section 10, except that, if
any Option Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in paragraphs (c) through (l) shall be dated
the Option Closing Date in question and the opinions called for by paragraphs
(c), (d), (e), (f) and (g) shall be revised to reflect the sale of Additional
Securities.
11. Expenses. Notwithstanding any termination of this
Agreement (pursuant to Section 12, Section 13 or otherwise), the Company agrees
to pay the following costs and expenses and all other costs and expenses
incident to the performance by the
<PAGE> 48
-48-
Sellers of their obligations hereunder: (i) the preparation, printing or
reproduction, and filing with the Commission of the registration statement
(including financial statements and exhibits thereto), each of the Prepricing
Prospectuses, the Prospectuses, and each amendment or supplement to any of
them; (ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
registration statement, each Prepricing Prospectus, the Prospectuses, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Offered Shares; (iii) the
preparation, printing, authentication, issuance and delivery of certificates
for the Offered Shares, including any stamp taxes in connection with the
original issuance and sale of the Offered Shares; (iv) the printing (or
reproduction) and delivery of this Agreement, the preliminary and supplemental
Blue Sky Memoranda and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Offered
Shares; (v) the listing of the Offered Shares on the American Stock Exchange;
(vi) the registration or qualification of the Offered Shares for offer and sale
under the securities or Blue Sky laws of the several states as provided in
Section 5(g) hereof (including the reasonable fees, expenses and disbursements
of counsel for the Managers relating to the preparation, printing or
reproduction, and delivery of the preliminary and supplemental Blue Sky
Memoranda and such registration and qualification); (vii) the filing fees and
the reasonable fees and expenses of counsel for the Managers in connection with
any filings required to be made with the National Association of Securities
Dealers, Inc.; (viii) the transportation and other expenses incurred by or on
behalf of Company representatives in connection with presentations to
prospective purchasers of the Offered Shares; and (ix) the fees and expenses of
the Company's accountants and the fees and expenses of counsel (including local
and special counsel) for the Company.
12. Effective Date of Agreement. This Agreement shall
become effective: (i) upon the execution and delivery hereof by the parties
hereto; or (ii) if, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective before the offering of the Offered Shares may
commence, when notification of the effectiveness of the registration statement
or such post-effective amendment has been released by the Commission. Until
such time as this Agreement shall have become effective, it may be terminated
by the Company, by notifying you and the Selling Securityholders, or by you, as
Lead
<PAGE> 49
-49-
Managers for the several Managers, by notifying the Company and the Selling
Securityholders.
If any one or more of the Managers shall fail or refuse to
purchase Shares or Warrants which it or they are obligated to purchase
hereunder on the Closing Date, and the aggregate number of Shares or Warrants
which such defaulting Manager or Managers are obligated but fail or refuse to
purchase is not more than one-tenth of the aggregate number of Shares or
Warrants, respectively, which the Managers are obligated to purchase on the
Closing Date, each non-defaulting Manager shall be obligated, severally, in
the proportion which the number of Shares set forth opposite its name in
Schedule II hereto bears to the aggregate number of Shares set forth opposite
the names of all non-defaulting Managers or in such other proportion as you may
specify in accordance with Section 20 of the Master Agreement Among
Underwriters of Smith Barney Inc., to purchase the Firm Shares and Firm
Warrants which such defaulting Manager or Managers are obligated, but fail or
refuse, to purchase. If any one or more of the Managers shall fail or refuse
to purchase Shares or Warrants which it or they are obligated to purchase on
the Closing Date and the aggregate number of Shares or Warrants with respect to
which such default occurs is more than one-tenth of the aggregate number of
Shares or Warrants, respectively, which the Managers are obligated to purchase
on the Closing Date and arrangements satisfactory to you and the Company for
the purchase of such Shares or Warrants by one or more non-defaulting Managers
or other party or parties approved by you and the Company are not made within
36 hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Manager, the Company or the Selling
Securityholders. In any such case which does not result in termination of this
Agreement, either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectuses or
any other documents or arrangements may be effected. Any action taken under
this paragraph shall not relieve any defaulting Manager from liability in
respect of any such default of any such Manager under this Agreement. The term
"Manager" as used in this Agreement includes, for all purposes of this
Agreement, any party not listed in Schedule II hereto who, with your approval
and the approval of the Company, purchases Shares or Warrants which a
defaulting Manager is obligated, but fails or refuses, to purchase.
<PAGE> 50
-50-
Any notice under this Section 12 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.
13. Termination of Agreement. This Agreement shall be
subject to termination in your absolute discretion, without liability on the
part of any Manager to the Company or any Selling Securityholder, by notice to
the Company and the Selling Securityholders, if prior to the Closing Date or
any Option Closing Date (if different from the Closing Date and then only as to
the Additional Securities), as the case may be, (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market shall have been suspended or materially limited, (ii) a
general moratorium on commercial banking activities in New York or Florida
shall have been declared by either federal or state authorities, or (iii) there
shall have occurred any outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in political, financial or
economic conditions, the effect of which on the financial markets of the United
States is such as to make it, in your judgment, impracticable or inadvisable to
commence or continue the offering of the Offered Shares at the offering price
to the public set forth on the cover page of the Prospectuses or to enforce
contracts for the resale of the Offered Shares by the Managers. Notice of such
termination may be given to the Company and the Selling Securityholders by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
14. Information Furnished by the Managers. The
statements set forth in the last paragraph on the cover page, the stabilization
legend on the inside cover page, and the statements in the first, fourth,
ninth, tenth, eleventh and fifteenth paragraphs under the caption
"Underwriting" in any International Prepricing Prospectus and in the
International Prospectus constitute the only information furnished by or on
behalf of the Managers through you as such information is referred to in
Sections 7(b) and 9 hereof.
15. Miscellaneous. Except as otherwise provided in
Sections 5, 12 and 13 hereof, notice given pursuant to any provision of this
Agreement shall be in writing and shall be delivered (i) if to the Company or
the Management Stockholders, at the office of the Company at 601 Clearwater
Park Road, West Palm Beach, Florida 33401, Attention: Anthony L. Morrison,
Esq., Vice President and General Counsel; or (ii) if to the Selling
Securityholders, at Paxson Communications Corporation, 601 Clearwater Park
Road, West Palm Beach, Florida 33401, Attention:
<PAGE> 51
-51-
Anthony L. Morrison and Arthur D. Tek, Attorneys-in-Fact, with copies to be
delivered as follows: (A) Sandler Mezzanine Partners, L.P., General Motors
Building, 767 Fifth Avenue, New York, New York 10153, Attn: Michael J.
Marocco, (B) Joseph E. Young, Baker & Botts, 885 Third Avenue, New York, New
York 10022, (C) BT Investment Partners, Inc., One Bankers Trust Plaza, New
York, New York 10006, Attn: Joseph T. Wood and (D) First Union Corporation of
Virginia, 301 South College Street, 18th Floor, Charlotte, North Carolina
28288-0732, Attn: Watts Hamrick; or (iii) if to you, as Lead Managers for the
several Managers, care of Smith Barney Inc., 388 Greenwich Street, New York,
New York 10013, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of
the several Managers, the Company, its directors and officers, the other
controlling persons referred to in Section 9 hereof and the Selling
Securityholders, their controlling persons and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from any Manager of any of the Shares in his status
as such purchaser.
16. Applicable Law; Counterparts. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York applicable to contracts made and to be performed within the State of New
York.
This Agreement may be signed in various counterparts which
together constitute one and the same instrument. If signed in counterparts,
this Agreement shall not become effective unless at least one counterpart
hereof shall have been executed and delivered on behalf of each party hereto.
<PAGE> 52
-52-
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Selling Securityholders and the several
Managers.
Very truly yours,
PAXSON COMMUNICATIONS CORPORATION
By
-----------------------------
Name:
Title:
Each of the Selling
Securityholders named in
Schedule I hereto
By
-----------------------------
Name:
Title: Attorney-in-Fact
By
-----------------------------
Name:
Title: Attorney-in-Fact
SECOND CRYSTAL DIAMOND, L.P.
By
-----------------------------
Name:
Title:
J. PATRICK MICHAELS, JR. FAMILY
TRUST
By
-----------------------------
Name:
Title:
<PAGE> 53
-53-
KIM ENTERPRISES, L.P.
By
-----------------------------
Name:
Title:
PXN INVESTMENT PARTNERSHIP
By
-----------------------------
Name:
Title:
SMITH PXN COMPANY
By
-----------------------------
Name:
Title:
JAMES B. BOCOCK
-----------------------------
DEAN M. GOODMAN
-----------------------------
JON JAY HOKER
-----------------------------
ARTHUR D. TEK
-----------------------------
<PAGE> 54
-54-
ANTHONY L. MORRISON
-----------------------------
S. WILLIAM SCOTT
-----------------------------
SANDLER MEZZANINE PARTNERS, L.P.
By
-----------------------------
Name:
Title:
SANDLER MEZZANINE T-E PARTNERS, L.P.
By
-----------------------------
Name:
Title:
SANDLER MEZZANINE FOREIGN
PARTNERS, L.P.
By
-----------------------------
Name:
Title:
NATIONAL UNION FIRE INSURANCE
COMPANY
By
-----------------------------
Name:
Title:
<PAGE> 55
-55-
BT INVESTMENT PARTNERS, INC.
By
-----------------------------
Name:
Title:
FIRST UNION CORPORATION OF
VIRGINIA
By
-----------------------------
Name:
Title:
UNION VENTURE CORPORATION
By
-----------------------------
Name:
Title:
<PAGE> 56
-56-
Confirmed as of the date first
above mentioned on behalf of
themselves and the other several
Managers named in Schedule II
hereto.
SMITH BARNEY INC.
PAINEWEBBER INTERNATIONAL (U.K.) LTD.
CIBC WOOD GUNDY SECURITIES CORP.
BANKERS TRUST INTERNATIONAL PLC
As Lead Managers for the Several Managers
By SMITH BARNEY INC.
By
--------------------------------
Name:
Title:
<PAGE> 57
SCHEDULE I
PAXSON COMMUNICATIONS CORPORATION
Part A - Firm Shares
- ---------------------
<TABLE>
<CAPTION>
Number of
Selling Securityholders Firm Shares
- ----------------------- -----------
<S> <C>
Second Crystal Diamond, Limited Partner . . . . . . . . . . . . . . . . . . . . . . 238,000
J. Patrick Michaels, Jr. Family Trust . . . . . . . . . . . . . . . . . . . . . . . 3,560
Kim Enterprises, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,770
PXN Investment Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,326
Smith PXN Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,544
James B. Bocock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,600
Dean M. Goodman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,600
Jon Jay Hoker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200
Arthur D. Tek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,600
Anthony L. Morrison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
S. William Scott . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269,200
=======
</TABLE>
<PAGE> 58
Part B - Firm Warrants
<TABLE>
<CAPTION>
Number of
Selling Securityholders Firm Warrants
----------------------- -------------
<S> <C>
Warrants to Purchase Class A and Class B
Common Stock:
Sandler Mezzanine Partners, L.P.
(representing the right to purchase
95,845 Warrant Shares) 3.45942847
Sandler Mezzanine T-E Partners, L.P.
(representing the right to purchase
42,980 Warrant Shares) 1.551305252
Sandler Mezzanine Foreign Partners, L.P.
(representing the right to purchase
20,639 Warrant Shares) 0.744972735
National Union Fire Insurance
(representing the right to purchase
19,136 Warrant Shares) 0.690680155
-----------
Total 6.44638661200
=============
Warrants to Purchase Class C Common Stock:
BT Investment Partners, Inc. 89,300
First Union Corporation of Virginia 89,300
Union Venture Corporation 13,600
------
Total . . . . . . . . . . . . . . . . . . . . . . . 192,200
=======
</TABLE>
<PAGE> 59
Part C - Additional Shares
- --------------------------
<TABLE>
<CAPTION>
Number of Number of
Additional Additional
Shares Warrants
---------- ----------
<S> <C>
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153,600
Selling Securityholders
-----------------------
Second Crystal Diamond, Limited Partnership . . . . . . . . . . . . . . . . . 78,400
J. Patrick Michaels, Jr. Family Trust . . . . . . . . . . . . . . . . . . . . 3,548
Kim Enterprise, L.P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,760
PXN Investment Partnership . . . . . . . . . . . . . . . . . . . . . . . . . 3,324
Smith PXN Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,168
James B. Bocock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,600
Dean M. Goodman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,800
Jon Jay Hoker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,800
Arthur D. Tek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,800
Anthony L. Morrison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000
S. William Scott . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000
Warrants to Purchase Class A and Class B
Common Stock
Sandler Mezzanine Partners, L.P.
(representing the right to purchase
31,555 Warrant Shares) 1.13893748
Sandler Mezzanine T-E Partners, L.P.
(representing the right to purchase
14,150 Warrant Shares) 0.510731835
Sandler Mezzanine Foreign Partner, L.P.
(representing the right to purchase
6,795 Warrant Shares) 0.245265159
National Union Fire Insurance
(representing the right to purchase
6,300 Warrant Shares) 0.227392137
</TABLE>
<PAGE> 60
<TABLE>
<S> <C> <C>
Warrants to Purchase Class C Common Stock
BT Investment Partners, Inc. 29,400
First Union Corporation of Virginia 29,400
Union Venture Corporation 4,600
------- --------------
Total . . . . . . . . . . . . . . . . . . . . . 282,800 2.12232661100*
======= =============
63,400**
=============
</TABLE>
- ----------------------------------
* Warrants to Purchase Class A and Class B Common Stock
** Warrants to Purchase Class C Common Stock
<PAGE> 61
SCHEDULE II
PAXSON COMMUNICATIONS CORPORATION
<TABLE>
<CAPTION>
Number of
Manager Shares
- ------- ---------
<S> <C>
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 581,250
PaineWebber International (U.K.) Ltd. . . . . . . . . . . . . . . . . . 581,250
CIBC Wood Gundy Securities Corp. . . . . . . . . . . . . . . . . . . . . 581,250
Bankers Trust International PLC . . . . . . . . . . . . . . . . . . . . . 581,250
Bayerische Landesbank Gironzentrale . . . . . . . . . . . . . . . . . . . 75,000
Kleinwort Benson Limited . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Nomura International plc . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Banque Paribas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
UBS Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
---------
Total 2,700,000
=========
</TABLE>
<PAGE> 1
EXHIBIT 10.87
FIRST AMENDMENT
This FIRST AMENDMENT (the "Amendment") is dated as of February 29,
1996, by and between Channel 55 of Albany, Inc., a Florida corporation
("Buyer") , and Cornerstone Television, Inc., a non-profit corporation
("Seller").
WHEREAS, Buyer and Seller are parties to an Asset Purchase Agreement
(the "Purchase Agreement"), dated as of December 11, 1995; and
WHEREAS, Buyer and Seller desire to amend the terms of the Purchase
Agreement.
NOW, THEREFORE, in consideration of the agreements set forth herein
and in the Purchase Agreement and other valuable consideration the sufficiency
of which is hereby acknowledged, Buyer and Seller agree as follows:
1. Capitalized Terms. All capitalized terms not otherwise
defined herein shall have the meanings ascribed to such terms in the Purchase
Agreement.
2. Amendments.
a. The first four lines of Section 2.3 of the Purchase
Agreement are hereby amended to read in their entirety as follows:
"2.3 Purchase Price. The Purchase Price for
the Assets shall be TWO MILLION FOUR HUNDRED NINETY THOUSAND
DOLLARS ($2,490,000), adjusted as provided below, plus FIFTY
THOUSAND DOLLARS ($50,000) in payment of the Noncompetition
Agreement:"
b. Section 2.4 of the Purchase Agreement is hereby
amended to read in its entirety as follows:
"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 (i) the sum of EIGHT
HUNDRED FORTY THOUSAND DOLLARS ($840,000), adjusted as
provided above, by wire transfer of immediately available
funds pursuant to wire instructions which shall be delivered
by Seller to Buyer, at least two days prior to the Closing
Date; and (ii) a Promissory Note and Guaranty in the form of
Schedule 2.4, in the principal amount of ONE MILLION SIX
HUNDRED FIFTY THOUSAND DOLLARS ($1,650,000).
<PAGE> 2
-2-
3. Consent. Seller hereby consents to the transfer of all of the
capital stock of Buyer from The Christian Network, Inc. to Paxson
Communications Television, Inc. or an affiliate thereof.
4. Effect of Amendment. Except as expressly modified hereby, the
provisions of the Purchase Agreement shall remain unchanged and shall remain in
full force and effect.
5. Reference to Purchase Agreement. It shall not be necessary to
refer to this Amendment in any reference to the Purchase Agreement. Any
reference to the Purchase Agreement shall be deemed to be a reference to the
Purchase Agreement as amended hereby.
6. Governing Law. This Amendment 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).
7. Counterparts. This Amendment may be executed in one or more
counterparts and each executed copy shall constitute an original.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.
CHANNEL 55 OF ALBANY, INC.
By: /s/ William L. Watson
-----------------------------------
Name: William L. Watson
Title: Secretary
CORNERSTONE TELEVISION, INC.
By:
-----------------------------------
Name:
Title:
<PAGE> 3
-2-
3. Consent. Seller hereby consents to the transfer of all of the
capital stock of Buyer from The Christian Network, Inc. to Paxson
Communications Television, Inc. or an affiliate thereof.
4. Effect of Amendment. Except as expressly modified hereby, the
provisions of the Purchase Agreement shall remain unchanged and shall remain in
full force and effect.
5. Reference to Purchase Agreement. It shall not be necessary to
refer to this Amendment in any reference to the Purchase Agreement. Any
reference to the Purchase Agreement shall be deemed to be a reference to the
Purchase Agreement as amended hereby.
6. Governing Law. This Amendment 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).
7. Counterparts. This Amendment may be executed in one or more
counterparts and each executed copy shall constitute an original.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first above written.
CHANNEL 55 OF ALBANY, INC.
By:
-----------------------------------
Name:
Title:
CORNERSTONE TELEVISION, INC.
By: /s/ Olsen Engle
-----------------------------------
Name: Olsen Engle
Title: President
<PAGE> 1
EXHIBIT 10.88
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
DATED AS OF MARCH 29, 1996
BY AND BETWEEN
PAXSON COMMUNICATIONS OF COOKEVILLE, INC.
AND
WHUB, INC.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Accounts Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assumed Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Consents". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Escrow Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FAA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Consent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Licenses". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Final Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Intangibles" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Licenses". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Purchase Price". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2 PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Assumption of Liabilities and Obligations. . . . . . . . . . . . . . . . . . 7
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . 7
3.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . 7
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . 7
3.3 Absence of Conflicting Agreements. . . . . . . . . . . . . . . . . . . . . . 8
3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Title to and Condition of Real Property. . . . . . . . . . . . . . . . . . . 9
3.6 Title to and Condition of Tangible Personal Property . . . . . . . . . . . . 9
3.7 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
3.11 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.12 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.13 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.14 Labor Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.16 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.18 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.19 Conduct of Business in Ordinary Course . . . . . . . . . . . . . . . . . . . 15
3.20 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 16
3.21 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.22 Full Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . . . . . . . . 16
4.1 Organization, Standing, and Authority. . . . . . . . . . . . . . . . . . . . 16
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . 16
4.3 Absence of Conflicting Agreements. . . . . . . . . . . . . . . . . . . . . . 17
4.4 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5 OPERATIONS OF THE STATIONS PRIOR TO CLOSING. . . . . . . . . . . . . . . . . 17
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.6 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.7 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.8 Maintenance of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.10 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.11 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.12 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.13 Financial Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.14 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.15 Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.16 Programming. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.17 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.18 Collection of Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . 20
5.19 Personnel Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION> Page
----
<S> <C> <C>
5.20 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.21 Inconsistent Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 20
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Control of the Stations. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.3 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.8 Title Insurance and Surveys. . . . . . . . . . . . . . . . . . . . . . . . . 23
6.9 Access to Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . 23
6.10 Environmental Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.11 Engineering Study. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.12 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.13 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING . . . . . . . . . . 24
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . 25
7.2 Conditions to Obligations of Seller. . . . . . . . . . . . . . . . . . . . . 25
SECTION 8 CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 Deliveries by Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 Termination by Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.3 Escrow Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.4 Rights on Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN
REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 30
10.2 Indemnification by Seller. . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
10.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.6 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 11 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.1 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.2 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.6 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.8 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . 36
11.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.12 Press Releases.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.13 No-Shop. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<CAPTION>
LIST OF SCHEDULES
TAB
---
<S> <C> <C> <C>
Schedule 3.3 - Consents A
Schedule 3.4 - Licenses B
Schedule 3.5 - Real Property C
Schedule 3.6 - Tangible Personal Property D
Schedule 3.7 - Contracts E
Schedule 3.9 - Intangibles F
Schedule 3.10 - Financial Statements G
Schedule 3.11 - Insurance H
Schedule 3.13 - Employee - Employee Benefits I
Schedule 3.16 - Claims and Legal Actions J
Schedule 3.17 - Environmental Matters K
Schedule 4.3 - Buyer Consents L
Schedule 6.12 - Noncompetition Agreement M
Schedule 8.2(h) - Counsel Opinion (Seller) N
Schedule 8.3(d) - Counsel Opinion (Buyer) O
Schedule 9.3 - Escrow Agreement P
</TABLE>
-v-
<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of March 29, 1996, by and
between Paxson Communications of Cookeville, Inc., a Florida corporation
("Buyer"), and WHUB, Inc., a Tennessee corporation ("Seller").
RECITALS
A. Seller is the licensee of and owns and operates radio stations WHUB-AM
and WHUB-FM, Cookeville, Tennessee (the "Stations") pursuant to licenses issued
by the Federal Communications Commission.
B. Seller also operates Channel 7 operations on the Cookeville cable
system (the "Cable Operation").
C. Seller desires to sell, and Buyer wishes to buy, substantially all the
assets that are used or useful in the business or operations of the Stations
and the Cable Operation, 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 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 Stations prior to the Closing Date.
"Assets" means the assets to be sold, transferred, or otherwise conveyed
to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7 that
are designated to indicate that they will be assumed by Buyer upon its purchase
of the Stations, (ii) any Contracts entered into by Seller between the date of
this Agreement and the Closing Date that Buyer agrees in writing to assume, and
(iii) Contracts entered into by Seller in compliance with Section 5.3.
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"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 Stations or
the Cable Operation.
"Escrow Agent" means First Union National Bank of Florida.
"FAA" means the Federal Aviation Administration.
"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 Stations.
"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 Stations, together with any
additions thereto between the date of this Agreement and the Closing Date.
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"Licenses" means all licenses, permits, and other authorizations issued
by the FCC, the FAA or any other federal, state, or local governmental
authorities to Seller, in connection with the conduct of the business or
operations of the Stations, 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, easements, 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 Stations, 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, inventory, spare
parts, and other tangible personal property which is used or useful in the
conduct of the business or operations of the Stations, together with any
additions thereto between the date of this Agreement and the Closing Date.
SECTION 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 Stations or the Cable Operation, 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, including executed copies thereof;
(e) The Intangibles and all intangible assets of Seller relating to
the Stations or the Cable Operation that are not specifically included within
the Intangibles, including the goodwill of the Stations, if any;
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(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 Stations;
(g) All choses in action of Seller relating to the Stations; and
(h) All books and records relating to the business or operations of the
Stations, and all records required by the FCC to be kept by the Stations.
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; deposits;
and any stocks, bonds, certificates of deposit and similar investments;
(b) All books and records relating to Seller's internal corporate
organization;
(c) Any pension, profit-sharing, or employee benefit plans, and any
collective bargaining agreements;
(d) The Accounts Receivable; and
(e) Any Contracts not included among the Assumed Contracts.
2.3 Purchase Price.
(a) Purchase Price. The Purchase Price for the Assets shall be Three
Million Eight Hundred Thousand Dollars ($3,800,000) in cash on the Closing Date
(the "Purchase Price"), adjusted as set forth in Section 2.3(b), payable by
federal wire transfer of immediately available funds pursuant to wire
instructions which shall be delivered by Seller to Buyer at least two business
days prior to the Closing Date.
(b) Adjustments.
(1) Expenses. The Purchase Price shall be increased or decreased
as required to effectuate the proration of expenses. All expenses arising
from the operation of the Stations, including annual regulatory fees imposed by
the FCC and other 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 and similar prepaid and deferred items, shall be prorated between Buyer
and
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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 foregoing, there shall be no adjustment or proration for,
and Seller shall remain solely liable with respect to, (i) any Contracts not
included in the Assumed Contracts and any other obligation or liability not
being assumed by Buyer in accordance with Section 2.4 hereof and (ii) any
commissions, wages, bonuses, incentive programs, payroll taxes, vacation pay,
sick leave, severance benefits, or other benefits of employees of any Station
with respect to periods prior to or arising by virtue of the Closing all of
which obligations shall be discharged and satisfied in full at or prior to the
Closing.
(2) Revenues. The Purchase Price shall be decreased by the amount
of any revenues received by Seller under any Assumed Contract to the extent such
revenues relate to the performance of obligations on or after the Closing Date.
(3) Trade and Barter. If, on the Closing Date, the aggregate value
of the Stations' obligations on or after the Closing Date under trade,
barter or similar arrangements for the sale of advertising time other than for
cash, minus the aggregate value of the goods, services or other items to be
received on or after the Closing Date under such trade and barter arrangements,
exceeds $25,000, then Buyer shall receive a credit against the Purchase Price
for the amount of such excess. The liability of the Stations for unperformed
time for purposes of this Section shall be valued according to the Stations'
prevailing rates as of the Closing Date.
(c) Manner of Determining Adjustments. The Purchase Price, taking
into account the adjustments and prorations pursuant to Section 2.3(a), will be
determined finally in accordance with the following procedures:
(1) Seller shall prepare and deliver to Buyer not later than five
days before the Closing Date a preliminary settlement statement which
shall set forth Seller's good faith estimate of the adjustments to the Purchase
Price under Section 2.3(b). The preliminary settlement statement (A) shall
contain all information reasonably necessary to determine the adjustments to the
Purchase Price under Section 2.3(b), to the extent such adjustments 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 Seller to be true and complete to the best of Seller's
knowledge as of the date thereof. Buyer and Seller shall use their good faith
efforts to agree upon the adjustments under Section 2.3(b) hereof prior to the
Closing. The Purchase Price payable at Closing under Section 2.3(a) shall be
increased or decreased, as applicable, based on the adjustments set forth in
the preliminary settlement statement except that any adjustments set forth in
the preliminary settlement statement to which Buyer objects in good faith shall
be deemed omitted from such
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<PAGE> 12
preliminary settlement statement and shall instead be determined as part
of the post-closing adjustments under this Section 2.3(c).
(2) No later than 45 days after the Closing Date, Buyer will
deliver to Seller a statement setting forth Buyer's determination of the
Purchase Price as adjusted pursuant to Section 2.3(b). If Seller disputes the
amount of the Purchase Price determined by Buyer, it shall deliver to Buyer
within 30 days after their receipt of Buyer's statement a statement setting
forth their determination of the amount of the Purchase Price (the "Seller
Statement"). If Seller notifies Buyer of its acceptance of Buyer's statement,
or if Seller fails to deliver its statement within the 30-day period specified
in the preceding sentence, Buyer's determination of the Purchase Price shall be
conclusive and binding on the parties as of the last day of the 30-day period.
(3) Buyer and Seller shall use good faith efforts to resolve any
dispute involving the determination of the Purchase Price. If the parties
are unable to resolve the dispute within 15 days following the delivery
of Seller's Statement, Buyer and Seller shall jointly designate an independent
certified public accountant, who shall be knowledgeable and experienced in the
operation of radio broadcasting stations, to resolve the dispute. The
accountant's resolution of the dispute shall be final and binding on the
parties, and a judgment may be entered thereon in any court of competent
jurisdiction. Any fees of such accountant shall be split equally between the
parties.
(4) If the Purchase Price as finally determined pursuant to this
Section 2.3(c) exceeds the Purchase Price paid by Buyer on the Closing
Date (the "Estimated Purchase Price"), Buyer shall pay to Seller, in immediately
available funds within five days after the date on which the Purchase Price is
finally determined pursuant to this Section 2.3(c), the difference between the
Purchase Price and the Estimated Purchase Price. If the Purchase Price as
finally determined pursuant to Section 2.3(c) is less than the Estimated
Purchase Price, Seller shall pay to Buyer, in immediately available funds within
five days after the date on which the Purchase Price is finally determined
pursuant to this Section 2.3(c), the difference between the Purchase Price and
the Estimated Purchase Price. If Seller fails to make the payment required by
the preceding sentence, Buyer may retain the difference between the Estimated
Purchase Price and the Purchase Price from the amounts collected by Buyer
pursuant to Section 6.4 with respect to the Accounts Receivable provided that
such right of set-off shall not cure any breach of this Section 2.3(c)(4) by
Seller.
2.4 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
Stations 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
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<PAGE> 13
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 Stations prior to the Closing, (iv) any obligations or
liabilities arising under capitalized leases or other financing agreements, (v)
any obligations or liabilities of Seller under any employee pension, retirement,
or other benefit plans or collective bargaining agreements, (vi) any obligation
to any employee of the Stations for commissions, wages, bonuses, incentive
programs, payroll taxes, vacation pay, sick leave, severance benefits or other
benefits with respect to periods prior to or arising by virtue of the Closing or
(vii) any obligations or liabilities caused by, arising out of, or resulting
from any action or omission of Seller prior to the Closing.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a Tennessee
corporation duly organized, validly existing, and in good standing under
the laws of the State of Tennessee. 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 Stations 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 in any joint venture or partnership with any other person or entity
with respect to any part of the operations of the Stations or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller has been duly authorized by all
necessary actions on the part of Seller and its Shareholders. This Agreement
has been duly executed and delivered by Seller and 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, and performance of this
Agreement and the documents contemplated hereby (with or without the giving of
notice, the lapse of time, or both): (i) do not require the consent of any
third party; (ii) will not conflict with any provision of the Articles of
Incorporation or By-Laws of Seller; (iii) will not conflict with, result in a
breach of, or constitute a default under, any law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance
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<PAGE> 14
required by the terms of, any agreement, instrument, license, or permit to
which Seller is a party or by which Seller may be bound; and (v) will not
create any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon any of the Assets.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete
list of the Licenses. Seller has delivered to Buyer true and complete
copies of the Licenses (including any amendments and other modifications
thereto). The Licenses have been validly issued, and Seller is the authorized
legal holder thereof. The Licenses listed on Schedule 3.4 comprise all of the
licenses, permits, and other authorizations required from any governmental or
regulatory authority for the lawful conduct of the business and operations of
the Stations 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 Stations as now operated. The Licenses are in full
force and effect, and the conduct of the business and operations of the Stations
are 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 based upon events occurring prior to Closing.
3.5 Title to and Condition of Real Property.
(a) 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
Stations as now conducted. Seller has good and marketable fee simple title,
insurable at standard rates, to all fee estates (including the improvements
therein) included in the Real Property, free and clear of all liens, mortgages,
pledges, covenants, easements, restrictions, encroachments, leases, changes and
other claims and encumbrances of any nature whatsoever, except for liens for
real estate taxes not yet due and payable.
(b) With respect to each leasehold or subleasehold interest included
in the Real Property being conveyed under this Agreement (the "Leased
Property"), so long as the Seller fulfills its obligations under the lease
therefor, Seller has enforceable rights to nondisturbance and quiet enjoyment.
Seller has good title to the Leased Property, free and clear of all liens,
claims, and encumbrances, except as specifically stated in Schedule 3.5. With
respect to each such lease, (i) the leases are in full force and effect, and
are valid, binding and enforceable in accordance with their respective terms,
(ii) all accrued and currently payable rents and other payments required by
such leases have been paid, (iii) neither any Seller nor any other party is in
default in any respect under any such leases, (iv) no party has asserted any
defense, set off or counterclaim thereunder, and (v) no notice of default or
termination has been given or received, no event of default has occurred, and
no condition exists and no event has occurred that, with the giving of notice,
the lapse of time,
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or the happening of any further event would become a default or permit
early termination under any such lease. Except as set forth in Schedule 3.3
hereto, no third-party consent or approval is required for the assignment of
any such lease to Buyer, or for the consummation of the transactions
contemplated herein. All improvements located on the Real Property are in good
condition and repair (ordinary wear and tear excepted), are available for
immediate use in the conduct of the business or operations of the Stations and
comply with all applicable building and zoning codes. All towers, guy anchors,
buildings and other improvements included in the Assets are located entirely on
the Real Property. Seller have full legal and practical access to the Real
Property.
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 Stations as now conducted. Except as described in Schedule 3.6, Seller owns
and has good title to each item of Tangible Personal Property, and none of the
Tangible Personal Property owned by Seller is subject to any security interest,
mortgage, pledge, conditional sales agreement, or other lien or encumbrance,
except for liens for current taxes not yet due and payable. Each item of
Tangible Personal Property is available for immediate use in the business and
operations of the Stations. 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 Stations and any auxiliary broadcast facilities related
thereto to operate in accordance with the terms of the FCC Licenses and the
rules and regulations of the FCC and the FAA.
3.7 Contracts. Schedule 3.7 is a true and complete list of all Contracts
except (i) contracts with advertisers for the sale of advertising time on the
Stations for cash at prevailing rates and which have not been prepaid and which
may be canceled by the Stations without penalty on not more than thirty days'
notice and (ii) contracts or commitments for the purchase or sale of goods,
supplies, equipment, capital assets, products or services, that do not involve
more than $2,500 for each such contract or commitment and more than $10,000 in
the aggregate for all such contracts or commitments. With respect to the
Contracts listed on Schedule 3.7, Seller has delivered to Buyer true and
complete copies of all written Contracts, true and complete memoranda of all
oral Contracts (including any amendments and other modifications to such
Contracts), and a schedule summarizing Seller' obligations under trade and
barter agreements relating to the Stations. 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
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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 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. The
Contracts listed on Schedule 3.7 hereto constitute all of the contracts
necessary to conduct the business and operations of the Stations as currently
conducted.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1
and the other Consents described in Schedule 3.3, no consent, approval,
permit, or authorization of, or declaration to or filing with any governmental
or regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Stations 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 existing documents that establish or evidence any of the
Intangibles. To Seller's knowledge, 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 Stations as now conducted.
3.10 Financial Statements. Schedule 3.10 represents true and complete
copies of (i) unaudited financial statements of the Stations containing
balance sheets, statements of income and statements of cash flow at and for the
Stations' fiscal years ended [December 31], 1994 and [December 31], 1995, (ii)
unaudited financial statements of the Stations containing balance sheets,
statements of income and statements of cash flow at and for the ______ month
period ended ______________, 1996 and (iii) an unaudited statement of Operating
Cash Flow for the twelve month period ended [February 29, 1996](collectively,
the "Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and maintained throughout the periods indicated, are complete and correct in
all material respects, and present fairly the financial condition of the
Stations 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 Stations,
fails to disclose any material contingent liabilities, or inflates the revenues
of the Stations.
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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 Stations. 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
Stations against all customary and foreseeable risks.
3.12 Reports. All tax returns, ownership and employment reports, and
other material documents that the Stations are 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 Stations have been complied with in all
material respects. All of such returns, reports, and statements are complete and
correct in all material respects as filed. Seller has timely paid to the FCC
all annual regulatory fees payable with respect to the FCC Licenses.
3.13 Employee Benefits.
(a) All of Seller's Employee Plans and Compensation Arrangements are
listed in Schedule 3.13, and complete and accurate copies of any such
written Employee Plans and Compensation Arrangements (or related insurance
policies) have been furnished to Buyer, along with copies of any employee
handbooks or similar documents describing such Employee Plans and Compensation
Arrangements. Descriptions of any unwritten Employee Plans or Compensation
Arrangements also are provided in Schedule 3.13. Schedule 3.13 also contains a
true and complete list of all employees of the Stations, their job description,
date of hire, salary and amount and date of last salary increase.
(b) Each Employee Plan and Compensation Arrangement has been administered
in compliance with its own terms and in material compliance with the provisions
of ERISA, the Code, the Age Discrimination in Employment Act and any other
applicable Federal or state laws. Seller is not aware of the existence of any
governmental audit or examination of any Employee Plan or Compensation
Arrangement or of any facts which would lead it to believe that any such audit
or examination is pending or threatened. There exists no action, suit or claim
(other than routine claims for benefits) with respect to any Employee Plan or
Compensation Arrangement pending or, to the best knowledge of Seller, threatened
against any of such plans or arrangements, and Seller possesses no knowledge of
any facts which could give rise to any such action, suit or claim.
(c) Seller does not contribute to and is not required to contribute to any
Multi-employer Plan with respect to the employees of the Stations, and neither
Seller nor any other trade or business under common control with Seller (within
the meaning of Sections 414(b), (c), (m) or (o) of the Code) has incurred or
reasonably expects to incur any "withdrawal liability," as defined under
Section 4201 et seq. of ERISA.
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(d) Except as described in Schedule 3.13, neither Seller nor any other
trade or business under common control with Seller (within the meaning of
Sections 414(b), (c), (m) or (o) of the Code) sponsor, maintain or contribute
to any Employee Plan or Compensation Arrangement that provides retiree medical
or retiree life insurance coverage to former employees of Seller at the
Stations.
(e) Except as described in Schedule 3.13, with respect to each Employee
Plan and, to the extent applicable, each Compensation Arrangement: (i) each
Employee Plan that is intended to be tax-qualified, and each amendment thereto,
is the subject of a favorable determination letter, and no plan amendment that
is not the subject of a favorable determination letter would affect the validity
of an Employee Plan's letter; (ii) no prohibited transaction, within the
definition of section 4975 of the Code or Title 1, Part 4 of ERISA, has occurred
which would subject Seller to any liability; and (iii) all contributions,
premiums or payments accrued, in whole or in part, under each Employee Plan or
Compensation Arrangement or with respect thereto as of the Closing will be paid
by Seller prior to the Closing, including, but not limited to, contributions
thereto with respect to the plan year ending immediately prior to the Closing.
(f) For purposes of this Agreement, the following terms shall have the
meaning indicated: (i) "Employee Plan" shall mean any pension,
profit-sharing, deferred compensation, vacation, bonus, incentive, medical,
vision, dental, disability, life insurance or any other employee benefit plan as
defined in Section 3(3) of ERISA to which Seller or any entity related to Seller
(under the terms of Section 414(b), (c), (m) or (o) of the Code) contribute or
to which Seller or any entity related to Seller (under the terms of Sections
414(b), (c), (m) or (o) of the Code) sponsor, maintain or otherwise are bound
which provides benefits to persons employed or previously employed at the
Stations; (ii) "Code" shall mean the Internal Revenue Code of 1986, as amended,
any successor thereto and any regulations promulgated thereunder; (iii)
"Compensation Arrangement" shall mean any plan or compensation arrangement other
than an Employee Plan, whether written or unwritten, which provides to
employees, former employees, officers, directors and shareholders of Seller or
any entity related to Seller (under the terms of Section 414(b), (c), (m) or (o)
of the Code) employed or previously employed at the Stations any compensation or
other benefits, whether deferred or not, in excess of base salary or wages,
including, but not limited to, any bonus or incentive plan, stock rights plan,
deferred compensation arrangement, life insurance, stock purchase plan,
severance pay plan and any other employee fringe benefit plan; (iv) "ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as amended, any
successor thereto and any regulations promulgated thereunder; and (v)
"Multi-employer Plan" means a plan, as defined in ERISA Section 3(37), to which
Seller or any entity related to Seller (under the terms of Section 414(b) or (c)
of the Code) contribute or are required to contribute.
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3.14 Labor Relations. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Stations. Seller has no
written or oral contracts of employment with any employee of the Stations,
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 Seller 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 Seller's knowledge, threatened, between Seller and any employee
(singly or collectively) of the Stations. No labor union or other collective
bargaining unit represents or claims to represent any of the employees of the
Stations. To Seller's knowledge, there is no union campaign being conducted to
represent employees of the Stations or 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 Stations.
3.15 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 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. 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
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
Seller.
3.16 Claims and Legal Actions. Except as disclosed on Schedule 3.16,
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 or otherwise relating to
the Assets or the business or operations of the Stations, 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 their knowledge,
threatened (i) before the FCC relating to the business or operations of the
Stations other than rulemaking proceedings which affect the radio industry
generally, (ii) before any federal or state agency relating to the business or
operations of the Stations 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
Stations involving zoning issues under any federal, state, or local zoning law,
rule, or regulation.
3.17 Environmental Matters.
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(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 or the Stations alleging any failure to comply with any such law, rule,
or regulation.
(b) Seller has no liability relating to its ownership and operation of the
Stations (and there is no basis related to the past or present operations,
properties, or facilities of the Stations by 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 the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Federal Water Pollution Control
Act, the Clean Air Act, the Safe Drinking Water Act, the Toxic Substances
Control Act, the Refuse Act, the Emergency Planning and Community Right-to-Know
Act, or the Occupational Safety and Health Act (each as amended), or any other
law, rule, or regulation of any federal, state, or local government (or agency
thereof) concerning release or threatened release of hazardous substances,
public or employee health and safety, or pollution or protection of the
environment.
(c) Seller has no liability relating to its ownership and operation of the
Stations (and there is no basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand, under the
common law or pursuant to any statute, against Seller giving rise to any such
liability) arising out of such Seller's handling, disposal or arranging for
disposal of any substance.
(d) Seller has no liability relating to its ownership and operation of the
Stations (and there is no basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand, under the
common law or pursuant to a statute, against Seller giving rise to any such
liability) for any illness or personal injury to any employee.
(e) Except as set forth on Schedule 3.17, all properties and equipment
used in the business of the Stations are and have been free of friable
asbestos, and all transformers used in the operations of the Stations are free
of PCB's.
(f) No pollutant, contaminant, industrial, hazardous, or toxic material or
waste is located on the Real Property.
3.18 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
Stations. Neither the ownership or use of
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the properties of the Stations nor the conduct of the business or operations of
the Stations conflicts with the rights of any other person or entity.
3.19 Conduct of Business in Ordinary Course. Since [December 31, 1995],
Seller has conducted the business and operations of the Stations only in the
ordinary course and have not:
(a) Suffered any material adverse change in the business, assets, or
properties of the Stations, including any damage, destruction, or loss
affecting any assets used or useful in the conduct of the business of the
Stations;
(b) Made any material increase in compensation payable or to become
payable to any of the employees of the Stations, or any bonus payment made or
promised to any employee of the Stations, or any material change in personnel
policies, employee benefits, or other compensation arrangements affecting the
employees of the Stations;
(c) Made any sale, assignment, lease, or other transfer of any of the
Stations' 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 any Seller with
respect to the Stations, 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 Stations;
(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 Stations;
(g) Incurred any obligation or liability (fixed or contingent) except
normal trade or business obligations and liabilities incurred in the ordinary
course of business; or
(h) Mortgaged, pledged or subjected to any lien any of the Assets other
than in the ordinary course of business.
3.20 Transactions with Affiliates . Seller has not been involved in any
business arrangement or relationship relating to the Stations with any
affiliate of any Seller, and no affiliate of Seller owns any property or right,
tangible or intangible, which is used in the business of the Stations. As used
in this paragraph, "affiliate" has the meaning set forth in Rule 12b-2
promulgated under the Securities and Exchange Act of 1934.
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3.21 Broker. Neither Seller 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 Services Group.
3.22 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 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 Florida
corporation duly organized, validly existing, and in good standing
under the laws of the State of Florida and, as of the Closing, will be
qualified to conduct business in the State of Tennessee. 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 corporate actions on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents and except as set forth in Schedule 4.3, the execution,
delivery, and performance by Buyer of this Agreement and the documents
contemplated hereby (with or without the giving of notice, the lapse of time,
or both): (i) do not require the consent of any third party under any
agreement, license or law applicable to Buyer; (ii) will not conflict with the
Articles of Incorporation or By-Laws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality applicable to Buyer; 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, that may impair Buyer's ability to
acquire or operate the Assets.
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4.4 Broker. Neither Buyer 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.
4.5 Full Disclosure. No representation or warranty made by Buyer in this
Agreement or in any certificate, document, or other instrument furnished or to
be furnished by Buyer pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
required to make any statement made herein or therein not misleading.
SECTION 5 OPERATIONS OF THE STATIONS PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this Agreement
and the Closing Date, Seller shall operate the Stations diligently in
the ordinary course of business in accordance with their 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 Stations, except in
accordance with past practices.
5.3 Contracts. Seller will not incur any obligation (including
obligations relating to the borrowing of money or the guaranteeing of
indebtedness) that will be binding on Buyer after Closing, enter into any
contract or commitment relating to the Stations or the Assets, or amend
or terminate any Contract (or waive any material right thereunder), except for
(i) cash time sales agreements made in the ordinary course of business and (ii)
other contracts and commitments entered into in the ordinary course of business
(other than trade or barter agreements) which will not obligate Buyer to an
amount of more than $2,500 in respect to each contract or commitment and
$10,000 in respect to all such contracts and commitments and which will not
obligate Buyer to perform any material non-monetary obligations. 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 assets that are no
longer used or useful in the business or operations of the Stations and assets
that are disposed of 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) matters disclosed on
Schedule 3.5 and Schedule 3.6, which
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shall be removed prior to the Closing Date, (ii) liens for current taxes not
yet due and payable or (iii) mechanics' liens and other similar liens, which
shall be removed prior to the Closing Date.
5.6 Licenses. Seller shall not cause or permit, by any act or failure to
act, any of the Licenses to expire or to be revoked, suspended, or modified, or
take any action that could cause the FCC or any other governmental authority to
institute proceedings for the suspension, revocation, or adverse modification
of any of the Licenses. Seller shall not fail to prosecute with due diligence
any applications to any governmental authority in connection with the operation
of the Stations.
5.7 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 Stations 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 the
Stations that Buyer may reasonably request (including any financial reports and
operations reports produced with respect to the affairs and business of the
Stations but excluding advertiser lists for the Stations that shall not be
delivered to Buyer until the Closing). 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 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.
5.8 Maintenance of Assets. Seller shall 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. 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.
5.9 Insurance. Seller shall maintain the existing insurance policies
on the Stations and the Assets.
5.10 Consents. Seller shall use its best efforts to obtain the Consents
and the estoppel certificates described in Section 8.2(b), without any
change in the terms or
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conditions of any Contract or License that could be less advantageous to the
Stations 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.
5.11 Books and Records. Seller shall maintain its books and records
relating to the Stations in accordance with past practices.
5.12 Notification. Seller shall promptly notify Buyer in writing of any
unusual or material developments with respect to the business or operations of
the Stations, and of any material change in any of the information contained in
Seller's representations and warranties contained in Section 3 of this
Agreement, provided that such notification shall not relieve Seller of any
obligations hereunder.
5.13 Financial Information. Seller shall furnish to Buyer within
fifteen days after the end of each calendar month ending between the
date of this Agreement and the Closing Date a statement of income and expense
of the Stations for the month just ended and such other financial information
(including information on payables and receivables) as Buyer may reasonably
request, all of which financial information shall comply with the standards
contained in the representations and warranties set forth in Section 3.10.
5.14 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 Stations.
5.15 Financing Leases. Seller shall 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.
5.16 Programming. Seller shall not make any material changes in the
broadcast hours or in the percentages of types of programming broadcast
by the Stations, or make any other material change in the Stations' programming
policies, except such changes as in the good faith judgment of Seller are
required by the public interest.
5.17 Preservation of Business. Seller shall use its best efforts to
preserve the business and organization of the Stations and use its best
efforts to keep available to the Stations their present employees and to
preserve the audience of the Stations and the Stations' present relationships
with suppliers, advertisers, and others having business relations with them, to
the end that the business, operations, and prospects of the Stations shall be
unimpaired at the Closing Date. The ordinary and customary operating,
marketing, promotional, sales, and advertising practices of the Stations shall
be maintained.
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5.18 Collection of Accounts Receivable. Seller shall collect the
accounts receivable of the Stations only in the ordinary course consistent
with their past practices.
5.19 Personnel Recommendations. Seller shall promptly notify Buyer as
personnel vacancies occur at the Stations and consider for employment all
personnel recommended by Buyer for such vacant position.
5.20 Rights. Seller shall not knowingly waive any material rights
relating to the Stations or any of the Assets.
5.21 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.
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 appropriate applications
for the FCC Consent and shall file such applications with the FCC on or
before the tenth business day after the execution of this Agreement. The
parties shall prosecute the applications with all reasonable diligence and
otherwise use their reasonable commercial 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, 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 such 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 Stations. Prior to Closing, Buyer shall not, directly
or indirectly, control, supervise, direct, or attempt to control, supervise, or
direct, the operations of the Stations; such operations, including complete
control and supervision of all
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of the Stations' programs, employees, and policies, shall be the sole
responsibility of Seller until the Closing.
6.3 Accounts Receivable.
(a) Collection. As of the Closing, Seller shall designate Buyer as
its agent solely for the purposes of collecting the Accounts Receivable.
Seller shall deliver to Buyer as soon as practicable a complete and detailed
statement showing the name, amount and age of each Account Receivable. Buyer
shall make reasonable efforts in accordance with Buyer's customary business
practices to collect the Accounts Receivable during the "Collection Period,"
which shall be the period beginning on the Closing, and ending four months
later. Buyer shall not be obligated to use any efforts to collect any of the
Accounts Receivable that are more extensive than the efforts that Buyer uses to
collect its own accounts receivable. Buyer shall not refer any Accounts
Receivable 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 the Accounts Receivable, except with the approval of Seller. During the
Collection Period, neither Seller nor its agents shall make any direct
solicitation with respect to any of the Accounts Receivable. Buyer shall incur
no liability to Seller for any uncollected account unless Buyer shall have
engaged in wilful misconduct or gross negligence in the collection of such
account.
(b) Payments to Seller. On or before the fifteenth 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 the Accounts Receivable, and (ii) the amount collected
during such month with respect to the Accounts Receivable, less the amounts
permitted to be retained by Buyer pursuant to Section 2.3(c). On or before the
fifteenth day after the end of the Collection Period, Buyer shall furnish
Seller with a list of all of the Accounts Receivable 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 6.4(b) and to remit to Seller any payments
with respect to any of the Accounts Receivable that Buyer subsequently
receives, and Seller may act to collect any of the Accounts Receivable that
continue to remain uncollected.
6.4 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.
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
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requirements of federal or state securities laws and rules and regulations
of securities markets, each party will keep confidential any information
of a confidential nature 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 such party from the other party in connection with the transactions
contemplated by this Agreement.
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 commercially reasonable efforts to
consummate the transaction contemplated hereby and to fulfill their obligations
under this Agreement. Notwithstanding the foregoing, Buyer shall have no
obligation (i) to expend funds to obtain any of the Consents or (ii) to agree
to any adverse change in any License or Assumed Contract to obtain a Consent
required with respect thereto, and Seller shall have no obligation to expend
funds (other than the incidental cost of preparing and submitting requests,
responding to reasonable inquiries and ordinary and customary filing fees and
processing charges) to obtain any of the Consents.
6.7 Bulk Sales Law. If applicable, the bulk sales law of the State of
Tennessee 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.
6.8 Title Insurance and Surveys.
(a) Title Insurance. With respect to each parcel of Real Property,
Seller will obtain and deliver to Buyer (1) as soon as practicable after
the date of this Agreement, a title commitment disclosing the condition
of title to all Real Property 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, accompanied by copies of all instruments evidencing the
scope and extent of all such easements, rights of way, and restrictions of
record, and (2) at or prior to Closing, an ALTA Leasehold Policy of Title
Insurance on a form customarily used in the State of Tennessee, issued by a
title insurer satisfactory to Buyer, in an amount equal to the fair market
value of Seller' leasehold interest (as reasonably determined by Buyer),
insuring title to such leasehold interest 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, except to the extent
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that title insurers in the State of Tennessee are not lawfully permitted
to issue such policies or unless otherwise agreed by Buyer, (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" or similar modification insuring over or otherwise eliminating the
general exceptions customarily contained in title policies, (3) 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 and (4)
contain a "contiguity" endorsement with respect to any Real Property consisting
of more than one record parcel. Seller shall cause prior to Closing all lease
agreements included in the Real Property or memorandums of lease relating
thereto to be recorded in the appropriate public recording office in the county
where such Real Property is located.
(c) Surveys. With respect to each parcel of Real Property, Seller
will obtain and deliver to Buyer as soon as practicable after the date
of this Agreement 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.
(d) Associated Fees and Costs. Seller shall be responsible for the
costs associated with obtaining the title commitments and the surveys described
above, and Buyer shall be responsible for the costs associated with obtaining
the title insurance policy with the special endorsements described above.
6.9 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 but not included in the Assets. Buyer shall
provide Seller access and the right to copy for a period of three years from
the Closing Date any books and records relating to the Assets that are included
in the Assets.
6.10 Environmental Audit. Buyer may, at its option and sole expense,
retain an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Stations which survey shall be
commenced within thirty days of the execution of this Agreement and promptly
completed thereafter. 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 and shall
promptly provide Seller with a copy of the Phase I environmental survey and all
ancillary reports.
6.11 Engineering Study. Buyer may, at its option and sole expense,
retain an engineering firm to conduct a proof of performance study of the
Stations and to prepare a report on the Stations' compliance with customary
engineering practices and all applicable
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FCC rules, regulations, prescribed practices, and technical standards which
study shall be commenced within thirty days of the execution of this
Agreement and promptly completed thereafter. If the survey discloses any
material deficiencies in the operations or equipment of the Stations, Buyer
shall so notify Seller as soon as practicable and shall promptly provide Seller
with a copy of all such studies and reports.
6.12 Noncompetition Agreement. At Closing, Buyer, Seller and Seller's
Shareholders shall enter into a Noncompetition Agreement in the form of
Schedule 6.12 and Buyer shall pay the amounts due thereunder.
6.13 Employees. At Closing, Buyer shall offer employment to all of the
Stations' existing employees.
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing are subject at Buyer's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and
as of that time.
(b) Covenants and Conditions. Seller shall have performed and
complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by them
prior to or on the Closing Date.
(c) Consents. All Consents shall have been obtained and delivered
to Buyer without any adverse change in the terms or conditions of any License
or Assumed Contract.
(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 them by the FCC Consent, and the FCC Consent shall have become a
Final Order.
(e) Governmental Authorizations. Seller shall be the holders of
all Licenses and there shall not have been any modification of any License that
could have an adverse effect on any 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.
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<PAGE> 31
(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 Stations, including any damage, destruction, or
loss affecting any assets used or useful in the conduct of the business of the
Stations that has not been repaired, restored or remedied, excepting normal
wear and tear to the Assets.
7.2 Conditions to Obligations of Seller . All obligations of Seller
at the Closing are subject at Seller' option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing to make all
the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted without the
imposition on Seller of any conditions that need not be complied with by Seller
under Section 6.1 hereof and Buyer shall have complied with any conditions
imposed on it by the FCC Consent.
SECTION 8 CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00 a.m. on a
date, to be set by Buyer on at least five days' written notice to Seller,
that is (1) not earlier than the first business day after the FCC Consent is
granted, and (2) not later than ten business days following the date upon
which the FCC grant of the Stations' license renewals has become a Final
Order provided, however, that Buyer and Seller agree that the Closing shall not
take place until the Stations' license renewals have been granted by the FCC.
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
grant of the Stations' renewals becomes a Final Order,
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<PAGE> 32
the Closing shall take place on the tenth business day after the date upon
which the FCC grant of the Stations' renewals become a Final Order.
Closing Place. The Closing shall be held at the offices of Dow, Lohnes &
Albertson, 1200 New Hampshire Avenue, N.W, Suite 800, Washington, D.C. 20036,
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 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;
(b) Estoppel Certificates. Estoppel certificates of the lessors of
all leasehold and subleasehold interests included in the Real Property including
consents to the collateral assignment of such interests by Buyer to its lenders
as collateral security for Buyer's obligations to such lenders;
(c) Consents. A manually executed copy of any instrument evidencing
receipt of any Consent;
(d) Certificate. A certificate, dated as of the Closing Date,
executed by a duly authorized officer of Seller on behalf of Seller,
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 6.8;
(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
Tennessee, and in the records of those counties in Tennessee 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,
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<PAGE> 33
engineering records, and all files and records used by Seller in connection
with the operations of the Stations;
(h) Opinion of Counsel. Opinion of Seller's counsel dated as of the
Closing Date, in substantially the form attached hereto as Schedule
8.2(h), and if requested by Buyer, Buyer's lenders shall be permitted to rely
on such opinion;
(i) Lender's Certificate. If requested by Buyer, Seller shall
deliver to Buyer's lenders such closing certificates as Buyer's lenders may
reasonably request;
(j) Noncompetition Agreement. The executed Noncompetition Agreement,
in the form of Schedule 6.12, for which $76,000 of the Purchase Price shall be
allocated; and
(k) Other Instruments. Such other instruments and certificates or
other documentation as Seller is required by the terms hereof to deliver or as
Buyer may reasonably request.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in Section
2.3(a);
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform all obligations
and liabilities of Seller under the Licenses and Assumed Contracts insofar
as they relate to the time on or after the Closing Date and arise out of
events related to Buyer's ownership of the Assets or its operation of the
Stations on or after the Closing Date;
(c) Certificate. A certificate, dated as of the Closing Date
executed by a duly authorized officer of the Buyer on behalf of Buyer,
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) hereof;
(e) Other Instruments. Such other instruments and certificates or
other documentation as Buyer is required by the terms hereof to deliver or as
Seller may reasonably request; and
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<PAGE> 34
(f) Noncompetition Agreement. The executed Noncompetition Agreement
in the form of Schedule 6.12 and the portion of the Purchase Price allocated
thereto.
SECTION 9 TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by Seller
and the purchase and sale of the Stations abandoned, if Seller is not then in
material default, upon written notice to Buyer, upon the occurrence of any of
the following:
(a) Conditions. If on the date that would otherwise be the Closing
Date any of the conditions precedent to the obligations of Seller set forth in
this Agreement have not been satisfied or waived in writing by Seller.
(b) Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree, or order that would prevent
or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by December
31, 1996.
(d) Breach. Without limiting Seller' rights under the other
provisions of this Section 9.1, if Buyer has failed to cure any material breach
of any of its representations, warranties, or covenants under this Agreement
within fifteen days after Buyer received written notice of such breach from
Seller.
9.2 Termination by Buyer . This Agreement may be terminated by Buyer and
the purchase and sale of the Stations abandoned, if Buyer is not then in
material default, upon written notice to Seller, upon the occurrence of any of
the following:
(a) Conditions. If on the date that would otherwise be the Closing
Date any of the conditions precedent to the obligations of Buyer set forth in
this Agreement have not been satisfied or waived in writing by Buyer.
(b) Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by December
31, 1996.
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<PAGE> 35
(d) Interruption of Service. If any event shall have occurred that
prevented signal transmission of the Stations in the normal and usual
manner for a continuous period of three days.
(e) Breach. Without limiting Buyer's rights under the other provisions
of this Section 9.2, if Seller has failed to cure any material breach of any of
its representations, warranties, or covenants under this Agreement within
fifteen days after Seller received written notice of such breach from Buyer.
(f) 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 6.10, within 30 days of the execution of this Agreement,
and the cause thereof shall not have been remedied prior to the Closing Date,
Seller having no obligation to perform such remediation.
(g) 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 6.11, within 30
days of the execution of this Agreement, and the cause thereof shall not have
been remedied prior to the Closing Date, Seller having no obligation to perform
such remediation.
9.3 Escrow Deposit. Simultaneously with the execution and delivery of
this Agreement, Buyer has deposited with the Escrow Agent Two Hundred
Fifty Thousand Dollars ($250,000) (the "Escrow Deposit") in accordance with an
Escrow Agreement among Buyer, Seller, and the Escrow Agent (the "Escrow
Agreement") in the form attached hereto as 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 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 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, and Seller has complied in all material respects
with the terms of this Agreement, then the Escrow Deposit shall be
disbursed by the Escrow Agent to or at the direction of Seller, and all other
amounts held by the Escrow Agent pursuant to the Escrow
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<PAGE> 36
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.
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
this Agreement and Seller shall have complied in all material respects with the
terms 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 breach
of this Agreement. Seller and Buyer agree in advance that actual damages would
be difficult to ascertain and that the amount of the Escrow Deposit is a fair
and equitable amount to reimburse Seller for damages sustained due to Buyer's
material breach of this Agreement. If this Agreement is terminated by Buyer
due to Seller's material breach of this Agreement, Buyer shall have all rights
and remedies available at law or equity.
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the Closing for a period of eighteen months. Any
investigations by or on behalf of any party hereto shall not constitute a
waiver as to enforcement of any representation, warranty, or covenant contained
in this Agreement. No notice or information delivered by Seller shall affect
Buyer's right to rely on any representation or warranty made by Seller or
relieve Seller of any obligations under this Agreement as the result of a
breach of any of their 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 agree 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.
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<PAGE> 37
(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 Stations 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 Stations 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
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<PAGE> 38
filed by a third party against Claimant, such notice shall be given by
Claimant 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
or its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree at
or prior to the expiration of the thirty-day period (or any mutually agreed
upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the
Indemnifying Party. If the Indemnifying Party elects to assume control
of the defense of any third-party claim, the Claimant shall have the right to
participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnifications rights provided in Sections 10.2 and 10.3
shall extend to the shareholders, directors, officers, employees,
representatives and successors and assigns 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 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
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<PAGE> 39
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. Buyer shall pay any escrow agent fees under the
Escrow Agreement. Seller shall pay on or before Closing the brokers' fee due to
Media Services Group in connection with the transactions contemplated by this
Agreement. 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 fees payable to the FCC in connection with the filing of the
applications for the 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 or
in Section 2.3(c), any dispute arising out of or related to this Agreement that
Seller and Buyer are unable to resolve by themselves shall be settled by
arbitration 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.
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<PAGE> 40
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: WHUB, Inc.
136 East Spring Street
Cookeville, Tennessee 38501
Attention: M.L. Medley
With a copy to: Mark N. Lipp, Esquire
Mullin, Rhyne, Emmons & Topel, P.C.
1225 Connecticut Avenue, N.W., Suite 300
Washington, D.C. 20036
If to Buyer: Paxson Communications of Cookeville, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Mr. Lowell W. Paxson
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson
A Professional Limited Liability Company
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
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, except
that Buyer may assign its rights and obligations under this Agreement, in whole
or in part, without Seller's consent to one or more subsidiaries or commonly
controlled affiliates of Buyer and Buyer may collaterally assign its rights and
obligations hereunder to its lenders without obtaining Seller' consent. Upon
any permitted assignment by Buyer or Seller in accordance with this Section
11.4, all reference 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.
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<PAGE> 41
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
Seller, any additional bills of sale, deeds, or other transfer documents that,
in the reasonable opinion of Buyer, may be necessary to ensure, complete, and
evidence the full and effective transfer of the Assets to Buyer pursuant to
this Agreement.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF 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 among the parties, including,
without limitation, the letter of intent among the parties hereto dated
February 22, 1996, 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. The parties hereto acknowledge that no
representations or warranties have been made with respect to matters relating
to the transactions contemplated by this Agreement other than as expressly set
forth in this Agreement.
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
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<PAGE> 42
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 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.
11.13 No-Shop. Without limiting the generality of the foregoing, Seller
covenants that neither it nor any of its members, 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 discussion 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. 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
11.13, Buyer shall have the right to seek specific performance of Seller's
obligations hereunder.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
PAXSON COMMUNICATIONS OF
COOKEVILLE, INC.
By: /s/ James B. Bocock
-------------------------------
Name: James B. Bocock
Title: President
WHUB, INC.
By:
-------------------------------
Name:
Title:
<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset Purchase
Agreement as of the day and year first above written.
PAXSON COMMUNICATIONS OF
COOKEVILLE, INC
By:
-------------------------------
Name:
Title:
WHUB, INC.
By: /s/
-------------------------------
Name:
Title: President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 42,224,690
<SECURITIES> 0
<RECEIVABLES> 17,181,737
<ALLOWANCES> 986,719
<INVENTORY> 0
<CURRENT-ASSETS> 61,309,385
<PP&E> 110,744,703
<DEPRECIATION> 23,279,829
<TOTAL-ASSETS> 313,976,082
<CURRENT-LIABILITIES> 21,107,880
<BONDS> 227,435,282
62,123,912
0
<COMMON> 34,575
<OTHER-SE> (27,049,075)
<TOTAL-LIABILITY-AND-EQUITY> 313,976,082
<SALES> 32,128,767
<TOTAL-REVENUES> 32,128,767
<CGS> 0
<TOTAL-COSTS> 31,896,907
<OTHER-EXPENSES> 874,258
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