<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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: (561) 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 October 31, 1996:
<TABLE>
<CAPTION>
CLASS OF STOCK NUMBER OF SHARES
- ------------------------ --------------------------------
<S> <C>
COMMON STOCK-CLASS A, $0.001
PAR VALUE PER SHARE --------------------- 38,673,309
COMMON STOCK-CLASS B, $0.001
PAR VALUE PER SHARE ---------------------- 8,311,639
REDEEMABLE EXCHANGEABLE PREFERRED
STOCK, $0.001 PAR VALUE ------------------- 150,000
REDEEMABLE CUMULATIVE JUNIOR
PREFERRED STOCK, $0.001 PAR VALUE --------- 33,000
</TABLE>
<PAGE> 2
PAXSON COMMUNICATIONS CORPORATION
INDEX
- --------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations
Nine Months Ended September 30, 1996 and 1995 4
Consolidated Statements of Operations
Three Months Ended September 30, 1996 and 1995 5
Consolidated Statements of Changes in
Common Stockholders' Equity 6
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 7-8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 10-19
Part II - Other Information
Item 1. Legal Proceedings 20
Item 6. Exhibits and Reports on Form 8-K 20-21
</TABLE>
Signatures 22
2
<PAGE> 3
PAXSON COMMUNICATIONS CORPORATION
Consolidated Balance Sheets
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 34,372,721 $ 68,070,990
Accounts receivable, less allowance for doubtful
accounts of $1,337,992 and $909,713
respectively 22,549,586 17,726,415
Prepaid expenses and other current assets 2,831,186 971,363
Current program rights 1,312,498 1,412,544
------------ ------------
Total current assets 61,065,991 88,181,312
Property and equipment, net 128,645,751 79,859,080
Intangible assets, net 178,732,208 84,318,147
Other assets, net 32,220,339 19,896,694
Investments in broadcast properties 43,966,022 21,192,030
Program rights, net 1,109,542 384,814
------------ ------------
Total assets $445,739,853 $293,832,077
============ ============
LIABILITIES, REDEEMABLE SECURITIES AND COMMON
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 12,393,114 $ 5,030,692
Accrued interest 13,368,748 6,932,342
Current portion of program rights payable 1,264,160 1,449,602
Current portion of long-term debt 599,132 430,590
------------ ------------
Total current liabilities 27,625,154 13,843,226
Program rights payable 1,172,645 432,750
Long-term debt 3,594,001 12,484,024
Senior subordinated notes, net 227,584,120 227,374,911
Redeemable Cumulative Compounding Senior
preferred stock, $0.001 par value; 15%
dividend rate per annum, 2,000 shares
authorized, issued and outstanding 19,192,339 16,824,082
Redeemable Class A & B common stock warrants - 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 3,308,973 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 35,435,378 31,533,910
Class A common stock, $0.001 par value; one vote
per share; 150,000,000 shares authorized,
38,672,309 shares issued and outstanding 38,672 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 A & B common stock warrants 6,862,647 -
Class C common stock warrants 4,281,852 5,338,952
Stock subscription notes receivable (17,500) (115,714)
Additional paid-in capital 197,448,091 34,342,086
Deferred option plan compensation (1,514,366) (1,384,267)
Accumulated deficit (79,280,465) (55,694,393)
Commitments and contingencies
------------ ------------
Total liabilities, redeemable securities
and common stockholders' equity $445,739,853 $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
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1996 1995
(Unaudited)
<S> <C> <C>
Revenue:
Local and national advertising $102,281,411 $ 65,333,616
Other 4,491,557 3,837,003
Trade and barter 2,728,554 2,353,098
------------ ------------
Total revenue 109,501,522 71,523,717
Operating expenses:
Direct 24,697,573 17,624,276
Programming 12,281,370 9,358,796
Sales and promotion 9,116,041 6,767,364
Technical 5,548,642 3,674,362
General and administrative 22,525,238 15,912,555
Trade and barter 2,048,538 2,081,962
Time brokerage agreement fees 5,984,938 757,369
Sports rights fees 1,213,701 1,509,565
Option plan compensation 2,727,223 9,809,105
Program rights amortization 1,080,430 1,291,754
Depreciation and amortization 18,378,035 13,079,041
------------ ------------
Total operating expenses 105,601,729 81,866,149
------------ ------------
Income (loss) from operations 3,899,793 (10,342,432)
Other income (expense):
Interest expense (22,352,540) (8,715,113)
Interest income 5,388,855 861,924
Other income, net (645,054) (45,773)
------------ ------------
Loss before income tax benefit (13,708,946) (18,241,394)
Income tax benefit - 960,000
------------ ------------
Loss before extraordinary item (13,708,946) (17,281,394)
Extraordinary item - (10,625,727)
------------ ------------
Net loss (13,708,946) (27,907,121)
Dividends and accretion on preferred stock
and common stock warrants (9,877,126) (9,121,480)
------------ ------------
Net loss attributable to common stock and
common stock equivalents $(23,586,072) $(37,028,601)
============ ============
Loss per share before extraordinary item $ (.32) $ (.50)
Extraordinary item - (.31)
------------ ------------
Net loss per share (.32) (.81)
Dividends and accretion on preferred stock
and common stock warrants (.23) (.27)
------------ ------------
Net loss per share attributable to common
stock and common stock equivalents $ (.55) $ (1.08)
============ ============
Weighted average shares outstanding primary
and fully diluted 42,721,280 34,404,800
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
4
<PAGE> 5
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Operations
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months
Ended September 30,
1996 1995
(Unaudited)
<S> <C> <C>
Revenue:
Local and national advertising $37,277,378 $ 24,878,716
Other 1,893,317 1,339,280
Trade and barter 960,561 949,373
----------- ------------
Total revenue 40,131,256 27,167,369
Operating expenses:
Direct 9,259,056 6,069,426
Programming 4,782,996 3,418,730
Sales and promotion 3,618,971 2,294,178
Technical 2,226,855 1,527,073
General and administrative 8,442,118 5,922,881
Trade and barter 691,520 888,119
Time brokerage agreement fees 2,944,555 207,422
Sports rights fees 447,541 490,210
Option plan compensation 435,306 404,976
Program rights amortization 358,628 514,697
Depreciation and amortization 6,641,106 5,024,785
----------- ------------
Total operating expenses 39,848,652 26,762,497
----------- ------------
Income from operations 282,604 404,872
Other income (expense):
Interest expense (7,254,399) (3,827,887)
Interest income 1,354,179 283,344
Other income, net (86,001) (32,010)
----------- ------------
Loss before income tax benefit (5,703,617) (3,171,681)
Income tax benefit - 320,000
----------- ------------
Loss before extraordinary item (5,703,617) (2,851,681)
Extraordinary item - (10,625,727)
----------- ------------
Net loss (5,703,617) (13,477,408)
Dividends and accretion on preferred stock
and common stock warrants (2,463,092) (3,257,319)
----------- ------------
Net loss attributable to common stock and
common stock equivalents $(8,166,709) $(16,734,727)
============ ============
Loss per share before extraordinary item $ (.12) $ (.08)
Extraordinary item - (.31)
----------- ------------
Net loss per share (.12) (.39)
Dividends and accretion on preferred stock
and common stock warrants (.05) (.10)
----------- ------------
Net loss per share attributable to common
stock and common stock equivalents $ (.17) $ (.49)
=========== ============
Weighted average shares outstanding primary
and fully diluted 46,983,274 34,458,766
=========== ============
</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 Changes in Common Stockholders' Equity
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock
----------------------
Class Class Class ClassA&B Class Stock
A B C Common C Subscription
Stock Common Stock Notes
Warrants Warrants Receivable
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $26,042 $8,312 $0 $0 $5,338,952 $(77,666)
Stock issued for Cookeville
acquisition 95
Deferred option plan compensation
Option plan compensation
Stock options exercised 90
Increase in stock subscription
receivable (48,029)
Note repayments 9,981
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 (115,714)
Release of Put on Class A&B common
stock warrants (unaudited) 9,116,399
Issuance of common stock, net of
issuance costs of $10 million
(unaudited) 10,300
Exercise of Class A,B&C common stock
warrants (unaudited) 1,854 (2,253,752) (1,057,100)
Stock issued for Todd Communications
acquisition (unaudited) 139
Deferred option plan compensation
(unaudited)
Option plan compensation(unaudited)
Stock options exercised (unaudited) 152
Note repayments (unaudited) 98,214
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 September 30, 1996
(unaudited) $38,672 $8,312 $0 $6,862,647 $ 4,281,852 $(17,500)
======= ====== ===== ========== =========== =========
<CAPTION>
Additional Deferred
Paid-in Option Plan Accumulated
Capital Compensation Deficit
<S> <C> <C> <C>
Balance at December 31, 1994 $ 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
Note repayments
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 34,342,086 (1,384,267) (55,694,393)
Release of Put on Class A&B common
stock warrants (unaudited)
Issuance of common stock, net of
issuance costs of $10 million
(unaudited) 154,789,700
Exercise of Class A,B&C common stock
warrants (unaudited) 3,308,999
Stock issued for Todd Communications
acquisition (unaudited) 1,534,967
Deferred option plan compensation
(unaudited) 2,857,322 (2,857,322)
Option plan compensation(unaudited) 2,727,223
Stock options exercised (unaudited) 615,017
Note repayments (unaudited)
Dividends on redeemable
preferred stock (unaudited) (6,175,339)
Accretion on Senior redeemable
preferred stock (unaudited) (256,092)
Accretion on Series B preferred
stock (unaudited) (307,050)
Accretion on Junior preferred
stock (unaudited) (487,563)
Accretion on Class A & B common
stock warrants (unaudited) (2,651,082)
Net loss (unaudited) (13,708,946)
------------ ----------- ------------
Balance at September 30, 1996
(unaudited) $197,448,091 $(1,514,366) $(79,280,465)
============ =========== ============
</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
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1996 1995
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $(13,708,946) $(27,907,121)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 18,378,035 13,079,041
Option plan compensation 2,727,223 9,809,105
Program rights amortization 1,080,430 1,291,754
Provision for doubtful accounts 799,753 653,602
Deferred income taxes - (960,000)
Loss on sale of assets 61,392 98,556
Extraordinary loss on write-off of loan costs - 10,625,727
Increase in accounts receivable (5,622,924) (1,257,071)
Decrease (increase) in prepaid expenses and
other current assets (1,859,823) 21,432
Increase in intangible assets - (1,200,000)
Decrease (increase) in other assets 6,727,610 (1,056,165)
Increase in accounts payable and accrued
liabilities 7,362,422 907,249
Increase in accrued interest 6,436,406 16,797
------------ ------------
Net cash provided by operating activities 22,381,578 4,122,906
------------ ------------
Cash flows from investing activities:
Acquisitions of broadcast properties (146,040,428) (53,847,917)
Increase in deposits on broadcast properties (8,427,000) (2,660,000)
Proceeds from sale of fixed assets 228,279 716,820
Increase in investments in broadcast properties (22,773,992) (28,763,671)
Purchase of property and equipment (22,931,929) (18,864,364)
------------ ------------
Net cash used in investing activities (199,945,070) (103,419,132)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 164,800,000 -
Issuance expenses of common stock sale (10,000,000) -
Proceeds from note payable to related party - 1,200,000
Proceeds from long-term debt 17,700,000 317,539,000
Payments of long-term debt (28,071,481) (169,639,157)
Payments of loan origination costs - (13,032,399)
Proceeds from exercise of common stock options 489,149 69,084
Repayments of stock subscription notes receivable 98,214 5,833
Payments for program rights (1,150,659) (472,335)
------------ ------------
Net cash provided by financing activities 143,865,223 135,670,026
------------ ------------
Increase (decrease) in cash and cash equivalents (33,698,269) 36,373,800
------------ ------------
Cash and cash equivalents at beginning of period 68,070,990 21,571,658
------------ ------------
Cash and cash equivalents at end of period $ 34,372,721 $ 57,945,458
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
7
<PAGE> 8
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows (continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1996 1995
(Unaudited)
<S> <C> <C>
Supplemental disclosures of cash flow
information:
Cash paid for interest $14,694,387 $8,188,957
=========== ==========
Cash paid for income taxes $ - $ -
=========== ==========
Non-cash operating and financing activities:
Accretion of discount on senior subordinated notes $ 209,209 $ -
=========== ==========
Issuance of common stock for Cookeville partner buyout $ - $1,200,000
=========== ==========
Issuance of common stock for Todd Communications
acquisition $ 1,535,106 $ -
=========== ==========
Note payable incurred for WOCD acquisition $ 1,650,000 $ -
=========== ==========
Dividends accreted on redeemable preferred stock $ 6,175,339 $5,507,650
=========== ==========
Accretion on redeemable securities $ 3,701,787 $3,613,830
=========== ==========
Trade and barter revenue $ 2,728,554 $2,353,098
=========== ==========
Trade and barter expense $ 2,048,538 $2,081,962
=========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
8
<PAGE> 9
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Paxson Communications Corporation's (the "Company") financial information
contained in the financial statements and notes thereto as of September 30,
1996 and for the nine and three month periods ended September 30, 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 since the period ended December 31, 1995. The
composition of accounts has changed to reflect the sale of Class A common
stock and the operations of acquisitions discussed below.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements, footnotes, and
discussions should be read in conjunction with the December 31, 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,
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and June
30, 1996, and the definitive proxy statement for the annual meeting of
stockholders held May 16, 1996, all of which were filed with the United States
Securities and Exchange Commission. Also, in connection with the April 3, 1996
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. In connection with the sale of 150,000 shares of 12
1/2% Cumulative Exchangeable Preferred Stock, the Company filed a Registration
Statement on Form S-3 with the Securities and Exchange Commission on August 15,
1996 which, as amended, was declared effective September 30, 1996. The sale of
the related shares of exchangeable preferred stock was consummated on October 4,
1996. The Company used a portion of the proceeds of the exchangeable preferred
stock sale to redeem the Senior preferred stock and the Series B preferred
stock. The pro forma effect of the exchangeable preferred stock sale and
redemption of the Senior preferred stock and Series B preferred stock has been
presented in Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The Company has engaged the services of an investment banking firm to advise it
on strategic alternatives with regard to its network-affiliated television
operations in the West Palm Beach, Florida market. Such alternatives may
include the possible sale or exchange of these assets. The Company has received
a verbal expression of interest in making an offer to acquire these operations
for approximately $120 million. There can be no assurance that this expression
of interest will result in an offer being made, or an acceptable contract or
eventual sale closing.
This Form 10-Q and the documents incorporated by reference herein contain
forward-looking statements which involve risks and uncertainties and are made
pursuant to the safe harbor provisions of the Securities Litigation Reform Act
of 1995. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, fluctuations in the
Company's quarterly activities and results of operations, the risks inherent
in the Company's business as well as other factors discussed in this Form 10-Q
or in the documents incorporated by reference herein.
9
<PAGE> 10
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 included in the consolidated
statement of operations 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 currently owned,
operated or affiliated with the Company are listed below:
<TABLE>
<CAPTION>
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. WSHE-TV 1996 Owned
Dallas,TX (2)(3) Channel 68 1996 Owned
Atlanta, GA WTLK-TV 1994 Owned
Atlanta, GA WNGM-TV 1996 Time Brokerage
Houston, TX KTFH-TV 1995 Owned
Cleveland, OH WOAC-TV 1995 Time Brokerage
Cleveland, OH WAKC-TV 1996 Owned
Minneapolis, MN KXLI-TV 1996 Owned
Tampa, FL WFCT-TV 1994 Time Brokerage
Miami, FL WCTD-TV 1994 Time Brokerage
Phoenix,AZ KWBF-TV 1996 Owned
Denver, CO KUBD-TV 1995 Owned
Sacramento, CA KCMY-TV 1995 Time Brokerage
St. Louis, MO WCEE-TV 1996 Owned
Orlando, FL WIRB-TV 1994 Time Brokerage
Hartford, CT (4) WTWS-TV 1995 Owned
Raleigh, NC (5) WRMY-TV 1996 Time Brokerage
Milwaukee, WI WHKE-TV 1996 Time Brokerage
Salt Lake City, UT (2)(7) KZAR-TV 1996 Time Brokerage
Grand Rapids, MI (2)(3) WJUE-TV 1996 Time Brokerage
Oklahoma City, OK KMNZ-TV 1996 Owned
Greensboro, NC WAAP-TV 1996 Owned
Birmingham, AL WNAL-TV 1996 Time Brokerage
Albany, NY WOCD-TV 1996 Owned
Dayton, OH WTJC-TV 1995 Owned
Tulsa, OK (2)(3) KGLB-TV 1996 Owned
San Juan, Puerto Rico WSJN-TV 1996 Owned
Ponce, Puerto Rico WKPV-TV 1996 Owned
San Sebastian, Puerto Rico WJWN-TV 1996 Owned
Philadelphia, PA WTVE-TV 1996 Affiliate
Indianapolis, IN WIIB-TV 1996 Affiliate
Norfolk, VA WJCB-TV 1995 Affiliate
Fresno, CA KGMC-TV 1996 Affiliate
</TABLE>
10
<PAGE> 11
PAXSON RADIO COMMENCEMENT
RADIO MARKET SERVED (1) STATION FORMAT OF OPERATIONS OWNERSHIP
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Miami, FL WLVE-FM Smooth Jazz 1993 Owned
WZTA-FM Active Rock 1992 Owned
WINZ-AM News 1992 Owned
WPLL-FM Modern AC 1996 Time Brokerage
WFTL-AM Hot Talk 1995 Owned
WSRF-AM Block/Long-Form 1996 Time Brokerage
WIOD-AM Talk/Sports/Ent 1996 Owned
Tampa, FL WHPT-FM Rock AC 1991 Owned
WSJT-FM Smooth Jazz 1995 Owned
WHNZ-AM News 1991 Owned
WZTM-AM Sports 1994 Owned
Orlando, FL WMGF-FM Soft AC 1992 Owned
WJRR-FM Active Rock 1992 Owned
WSHE-FM Modern AC 1996 Owned
WTKS-FM Hot Talk 1996 Time Brokerage(6)
WWNZ-AM News 1992 Owned
WQTM-AM Sports 1994 Owned
Jacksonville, FL WROO-FM Country 1991 Owned
WPLA-FM Rock Alternative 1992 Owned
WFSJ-FM Smooth Jazz 1996 Owned
WNZS-AM Sports 1993 Owned
WZNZ-AM News 1992 Owned
WTLK-FM Hot Talk 1996 Time Brokerage
Pensacola, FL WYCL-TV Rock Alternative 1996 Owned
WTKX-FM Album Oriented Rock 1996 Owned
Tallahassee, FL WSNI-FM Oldies 1996 Owned
WXSR-FM Active Rock 1996 Owned
WJZT-FM Hot AC 1996 Owned
WTNT-FM Country 1996 Owned
WNLS-AM Sports 1996 Owned
Panama City, FL WPBH-FM Soft AC 1996 Owned
WPAP-FM Country 1996 Owned
WFSY-FM Hot AC 1996 Owned
WSHF-FM Big Band 1996 Owned
WDIZ-AM Smooth Jazz 1996 Owned
Cookeville, TN WGSQ-FM Country 1994 Owned
WPTN-AM Talk 1994 Owned
WHUB-FM Adult Contemporary 1996 Owned
WHUB-AM Country 1996 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
University of Miami Sports Network Sports 1995 Owned
Penn State Sports Network Sports 1994 Owned
</TABLE>
BILLBOARD PROPERTIES
The Company currently owns 457 billboard faces in Florida, including 172
faces in the Tampa, Florida market and 285 faces in the Orlando, Florida
market.
11
<PAGE> 12
<TABLE>
<CAPTION>
PAXSON NETWORK-AFFILIATED TELEVISION COMMENCEMENT
TV MARKET SERVED (1) STATION AFFILIATION OF OPERATIONS OWNERSHIP
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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) Station is currently under construction or presently not
operational.
(3) The Company owns 49% and has an option to acquire the
remaining 51% upon completion of construction.
(4) 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.
(5) The Company has an option to acquire a 40% ownership interest in
WRMY-TV.
(6) Operated pursuant to a time brokerage agreement. The Company
has a contract to acquire the station for $25 million upon
completion of Federal Trade Commission and FCC review and approval.
(7) The Company has an option to acquire a 50% ownership interest in
KZAR-TV.
In August 1996, the Company purchased the assets of Boardworks Outdoor
Advertising Company, Inc. for approximately $1.3 million.
In August 1996, the Company purchased the assets of WHUB-FM and WHUB-AM for
approximately $3.8 million.
In August 1996, the Company purchased a 50% ownership interest in WSJN-TV,
WKPV-TV and WJWN-TV for approximately $4 million. These stations are
currently operated under a time brokerage agreement. The Company is
currently negotiating the purchase of the remaining 50% ownership of these
stations for approximately $7 million.
In September 1996, the Company purchased the assets of WSIT-LP for
approximately $1.5 million. This "low power" station will be utilized to
simulcast the signal of the Company's WSHE-TV station.
In September 1996, the Company purchased the assets of WSNI-FM, WTNT-FM,
WJZT-FM (formerly WTPS-FM), WXSR-FM, WNLS-AM, WYCL-FM (formerly WOWW-FM),
WTKX-FM, WPAP-FM and WPBH-FM for approximately $21.3 million.
In September 1996, the Company purchased the assets of WDIZ-AM (formerly
WGNE-AM), WFSY-FM and WSHF-FM (formerly WEBZ-FM) for approximately $2.8
million.
In September 1996, the Company loaned $8 million to WNAL-TV and began
operating the station pursuant to a time brokerage agreement pending
completion of the acquisition of the station for $10 million currently
scheduled for January 1997.
In September 1996, the Company purchased KXLI-TV for approximately $12
million.
In September 1996, the Company financed the purchase of WMTO-FM in Panama
City, Florida by DP Media, Inc., which is beneficially owned by a member of
Mr. Paxson's family, for aggregate consideration of $500,000. The Company
has recorded a note receivable from DP Media, Inc. which bears interest at
10% and is payable on demand.
In September 1996, the Company began operating WTLK-FM (formerly WPVJ-FM)
pursuant to a time brokerage agreement pending completion of the acquisition
for $4 million.
The Company has loaned an aggregate of $5 million to KCMY-TV and began
operating the station pursuant to a time brokerage agreement on October 1,
1996 pending completion of the acquisition of the station for $17 million.
In October 1996, the Company purchased WIOD-AM and WSHE-FM (formerly WDIZ-FM)
and KMNZ-TV for approximately $14 million, $22 million and $6.5 million,
respectively.
In October 1996, the Company purchased WRAP-LP for approximately $1.3
million. This "low power" station will be utilized to simulcast the signal
of the Company's WGOT-TV station.
12
<PAGE> 13
In October 1996, the Company financed the acquisition of 48 acres of land
located in Orange County, Florida, through a $4.5 million secured loan which
matures March 1998. In connection with such financing, the Company was granted
an option to acquire easements on such property, for a price of $1.5 million
payable through the forgiveness of an equivalent principal amount of the loan,
to construct 18 billboard faces.
The Company's operating results throughout the periods discussed have been
impacted significantly by the timing and mix of radio, television and inTV
acquisitions. 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 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 find it necessary 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 September 30, 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.
13
<PAGE> 14
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected financial
information as a percentage of revenues.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS FOR THE THREE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Operating Expenses:
Direct 22.6% 24.6% 23.1% 22.3%
Programming 11.2 13.1 11.9 12.6
Sales and promotion 8.3 9.5 9.0 8.4
Technical 5.1 5.1 5.5 5.6
General and administrative 20.5 22.2 21.1 21.8
Trade and barter 1.9 2.9 1.7 3.3
Time brokerage agreement fees 5.5 1.1 7.3 0.8
Sport rights fees 1.1 2.1 1.1 1.8
Option plan compensation 2.5 13.7 1.1 1.5
Program rights amortization 1.0 1.8 0.9 1.9
Depreciation and amortization 16.7 18.4 16.6 18.5
----- ----- ----- -----
Total operating expenses 96.4 114.5 99.3 98.5
----- ----- ----- -----
Income (loss) from operations 3.6 -14.5 0.7 1.5
----- ----- ----- -----
Other income (expense):
Interest expense -20.4 -12.2 -18.1 -14.1
Interest income 4.9 1.2 3.4 1.0
Other income, net -0.6 - -0.2 -0.1
----- ----- ----- -----
Loss before income tax benefit -12.5 -25.5 -14.2 -11.7
----- ----- ----- -----
Income tax benefit - 1.3 - 1.2
----- ----- ----- -----
Loss before extraordinary item -12.5% -24.2% -14.2% -10.5%
----- ----- ----- -----
</TABLE>
14
<PAGE> 15
The following sets forth, for the periods indicated, selected information for
the Company's business segments:
<TABLE>
<CAPTION>
As of and for the nine As of and for the three
months ended September 30, months ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INFOMALL TV NETWORK
Total revenue $ 41,918,555 $ 19,055,392 $ 14,591,515 $ 8,329,700
Operating expenses, less
depreciation, amortization
and option plan compensation 23,216,124 10,643,262 8,733,515 4,426,943
Depreciation and amortization 7,592,973 3,214,841 3,154,920 1,140,613
Option plan compensation 10,854 - 3,616 -
------------ ------------ ------------ ------------
Income (loss) from operations $ 11,098,604 $ 5,197,289 $ 2,699,464 $ 2,762,144
============ ============ ============ ============
Operating cash flow $ 20,621,000 $ 9,120,000 $ 6,633,000 $ 4,102,000
============ ============ ============ ============
Total identifiable assets $214,739,495 $ 89,455,069 $214,739,495 $ 89,455,069
============ ============ ============ ============
Capital expenditures $ 12,237,344 $ 4,466,582 $ 5,699,792 $ 3,581,213
============ ============ ============ ============
PAXSON RADIO
Total revenue $ 52,481,390 $ 39,526,546 $ 20,854,445 $ 14,404,734
Operating expenses, less
depreciation, amortization
and option plan compensation 41,953,024 32,858,027 16,868,997 11,432,097
Depreciation and amortization 7,681,352 6,714,087 2,381,541 2,578,883
Option plan compensation 381,357 1,628,000 127,106 67,000
------------ ------------ ------------ ------------
Income (loss) from operations $ 2,465,657 $ (1,673,568) $ 1,476,801 $ 326,754
============ ============ ============ ============
Operating cash flow $ 12,411,000 $ 7,295,000 $ 5,399,000 $ 3,087,000
============ ============ ============ ============
Total identifiable assets $123,716,563 $ 70,254,836 $123,716,563 $ 70,254,836
============ ============ ============ ============
Capital expenditures $ 2,911,853 $ 8,474,741 $ 1,466,819 $ 4,383,561
============ ============ ============ ============
PAXSON NETWORK-AFFILIATED TELEVISION
Total revenue $ 14,022,574 $ 11,236,018 $ 4,326,304 $ 3,929,050
Operating expenses, less
depreciation, amortization
and option plan compensation 12,255,042 8,299,345 4,163,037 3,040,864
Depreciation and amortization 2,148,175 2,664,011 683,055 1,091,898
Option plan compensation - - - -
------------ ------------ ------------ ------------
Income (loss) from operations $ (380,643) $ 272,662 $ (519,788) $ (203,712)
============ ============ ============ ============
Operating cash flow $ 3,366,000 $ 3,467,000 $ 644,000 $ 1,127,000
============ ============ ============ ============
Total identifiable assets $ 39,068,243 $ 54,139,779 $ 39,068,243 $ 54,139,779
============ ============ ============ ============
Capital expenditures $ 826,739 $ 2,287,669 $ (55,020) $ 764,261
============ ============ ============ ============
CORPORATE AND OTHER
Total revenue $ 1,079,003 $ 1,705,761 $ 358,992 $ 503,885
Operating expenses, less
depreciation,amortization
and option plan compensation 7,072,281 7,177,370 3,006,691 2,432,833
Depreciation and amortization 955,535 486,101 421,590 213,390
Option plan compensation 2,335,012 8,181,105 304,584 337,976
------------ ------------ ------------ ------------
Income (loss) from operations $ (9,283,825) $(14,138,815) $ (3,373,873) $ (2,480,314)
============ ============ ============ ============
Operating cash flow $ (5,994,000) $ (4,323,000) $ (2,648,000) $ (1,721,000)
============ ============ ============ ============
Total identifiable assets $ 68,215,552 $ 70,079,790 $ 68,215,552 $ 70,079,790
============ ============ ============ ============
Capital expenditures $ 6,955,993 $ 3,635,372 $ 1,884,234 $ 545,852
============ ============ ============ ============
CONSOLIDATED
Total revenue $109,501,522 $ 71,523,717 $ 40,131,256 $ 27,167,369
Operating expenses, less
depreciation,amortization
and option plan compensation 84,496,471 58,978,004 32,772,240 21,332,737
Depreciation and amortization 18,378,035 13,079,040 6,641,106 5,024,784
Option plan compensation 2,727,223 9,809,105 435,306 404,976
------------ ------------ ------------ ------------
Income (loss) from operations $ 3,899,793 $(10,342,432) $ 282,604 $ 404,872
============ ============ ============ ============
Operating cash flow $ 30,404,000 $ 15,559,000 $ 10,028,000 $ 6,595,000
============ ============ ============ ============
Total identifiable assets $445,739,853 $283,929,474 $445,739,853 $283,929,474
============ ============ ============ ============
Capital expenditures $ 22,931,929 $ 18,864,364 $ 8,995,825 $ 9,274,887
============ ============ ============ ============
</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
15
<PAGE> 16
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.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Consolidated revenues for the nine months ended September 30, 1996 increased
53% (or $38 million) to $109.5 million from $71.5 million for the nine months
ended September 30, 1995. This increase was primarily due to new television
station acquisitions and time brokerage operations ($20.9 million), new radio
stations ($8.4 million) and increased revenues from existing television
stations ($4.8 million) and radio stations ($5.8 million).
Operating expenses for the nine months ended September 30, 1996 increased 29%
(or $23.7 million) to $105.6 million from $81.9 million for the nine months
ended September 30, 1995. The increase was due to higher direct expenses such as
commissions which rise in proportion to revenues ($7.1 million), other
non-direct costs of operating new television stations ($5.4 million) and radio
stations ($4.2 million), increased non-direct costs of network-affiliated
television operations ($2.0 million) which is primarily due to the addition of
WTVX, higher depreciation and amortization related to assets acquired ($5.3
million), and increased time brokerage agreement fees ($5.2 million), all of
which were partially offset by lower option plan compensation costs ($7.1
million).
Operating cash flow for the nine months ended September 30, 1996 increased
95% (or $14.8 million) to $30.4 million, from $15.6 million for the nine
months ended September 30, 1995. The increase in operating cash flow was
primarily a result of television station acquisitions and time brokerage
operations ($8.4 million), new radio stations ($1.8 million) and improved
performance of existing television ($2.2 million) and radio stations ($3.4
million).
Interest expense for the nine months ended September 30, 1996 increased to
$22.4 million from $8.7 million for the nine months ended September 30, 1995,
an increase of 156% primarily due to a greater level of debt throughout the
period and higher borrowing rates. As a result of acquisitions, at September
30, 1996, total long-term debt and senior subordinated notes were $231.8
million, compared with the balance of $230.3 million outstanding a year
prior. The September 30, 1995 balance reflects the private sale of $230
million of 11 5/8% Senior Subordinated Notes at a discount netting $227.3
million before transaction costs on September 28, 1995.
Interest income for the nine months ended September 30, 1996 increased to
$5.4 million from $.9 million, primarily due to greater levels of cash and
cash equivalents invested throughout the period primarily as a result of the
receipt of the proceeds of the April 1996 common stock sale.
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Consolidated revenues for the three months ended September 30, 1996 increased
48% (or $12.9 million) to $40.1 million from $27.2 million for the three
months ended September 30, 1995. This increase was primarily due to new
television station acquisitions and time brokerage operations ($4.7 million),
new radio stations ($4.3 million) and increased revenues from existing
television stations ($2.1 million) and radio stations ($2.9 million).
Operating expenses for the three months ended September 30, 1996 increased
49% (or $13.0 million) to $39.8 million from $26.8 million for the three
months ended September 30, 1995. The increase was due to higher direct
expenses such as commissions which rise in proportion to revenues ($3.2
million), other non-direct costs of operating new television stations ($2.0
million) and radio stations ($2.5 million), increased non-direct costs of
network-affiliated television operations ($.7 million) which is primarily due
to the addition of WTVX, higher depreciation and amortization related to
assets acquired ($1.6 million), and increased time brokerage agreement fees
($2.7 million).
Operating cash flow for the three months ended September 30, 1996 increased
52% (or $3.4 million) to $10.0 million, from $6.6 million for the three
months ended September 30, 1995. The increase in operating cash flow was
primarily a result of television station acquisitions and time brokerage
operations ($.3 million), new radio stations ($.7 million) and improved
performance of existing television ($1.6 million) and radio stations ($1.7
million).
Interest expense for the three months ended September 30, 1996 increased to
$7.3 million from $3.8 million for the three months ended September 30, 1995,
an increase of 90% primarily due to a greater level of debt throughout the
period and higher borrowing rates. As a result of acquisitions, at September
30, 1996, total long-term debt and senior
16
<PAGE> 17
subordinated notes were $231.8 million, compared with the balance of $230.3
million outstanding a year prior. The September 30, 1995 balance reflects the
private sale of $230 million of 11 5/8% Senior Subordinated Notes at a discount
netting $227.3 million before transaction costs on September 28, 1995.
Interest income for the three months ended September 30, 1996 increased to
$1.4 million from $.3 million, primarily due to greater levels of cash and
cash equivalents invested throughout the period primarily as a result of the
receipt of the proceeds of the April 1996 common stock sale.
LIQUIDITY AND CAPITAL RESOURCES
On October 4, 1996, the Company completed an offering ("the Offering") of
150,000 shares of Exchangeable preferred stock, resulting in gross proceeds of
$150 million before transaction costs. Total issuance costs (including those
prepaid) are approximately $6.2 million, resulting in net proceeds of
approximately $143.8 million. A portion of the Offering proceeds was used by
the Company to redeem the outstanding Senior preferred stock and Series B
preferred stock aggregating approximately $28.5 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 cash and capitalization
of the Company as of September 30, 1996. Pro forma capitalization gives effect
to (i) the consummation of the Offering; and (ii) the redemption of the Senior
preferred stock and Series B preferred stock.
<TABLE>
<CAPTION>
As of September 30,
1996
------------------------
Actual Proforma
------ --------
(in thousands)
<S> <C> <C>
Cash and cash equivalents $ 34,373 $149,667
======== ========
Long-term debt (including current maturities) $ 4,193 $ 4,193
Senior subordinated notes, net (1) 227,584 227,584
-------- --------
231,777 231,777
-------- --------
Redeemable Senior Preferred Stock (2) 19,192 -
Redeemable Series B Preferred Stock (2) 3,309 -
Redeemable Junior Preferred Stock 35,435 35,435
Redeemable Exchangeable Preferred Stock - 143,750
Class A Common Stock 39 39
Class B Common Stock 8 8
Class C Common Stock - -
Class A and B Common Stock Warrants 6,863 6,863
Class C Common Stock Warrants 4,282 4,282
Stock subscription notes receivable (18) (18)
Additional paid-in capital 197,448 197,448
Deferred option plan compensation (1,514) (1,514)
Accumulated deficit (3) (79,280) (85,235)
-------- --------
Total capitalization $417,541 $532,835
======== ========
</TABLE>
(1) Net of issue discount.
(2) Reflects redemption concurrent with the completion of the offering.
(3) Reflects additional accretion and dividends in connection with
redemption of Senior preferred stock and Series B preferred stock.
The Company's working capital at September 30, 1996 and December 31, 1995 was
$33.4 million and $74.3 million, respectively, and the ratio of current
assets to current liabilities was 2.21:1 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 $22.4 million and $4.1 million for
the nine months ended September 30, 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 the Offering and long term debt
borrowings net of debt repayments. In addition, the Company has advanced
$1,350,000 to The Christian Network, Inc.
17
<PAGE> 18
("CNI") during the nine months ended September 30, 1996 under a demand note
bearing interest at the prime rate (currently 8.25%). At September 30, 1996 the
Company had total advances to CNI outstanding of approximately $2.5 million,
which has been included in investments in broadcast properties. Non-cash
activity relates to option plan compensation, stock issued for the WFSJ-FM
acquisition, a note payable incurred with the WOCD-TV acquisition, 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.
The Company has engaged the services of an investment banking firm to advise it
on strategic alternatives with regard to its network-affiliated television
operations in the West Palm Beach, Florida market. Such alternatives may
include the possible sale or exchange of these assets. The Company has received
a verbal expression of interest in making an offer to acquire these operations
for approximately $120 million. There can be no assurance that this expression
of interest will result in an offer being made, or an acceptable contract or
eventual sale closing.
The Company's primary capital requirements are for the acquisition of
broadcasting properties and related capital expenditures and interest and
principal payments on indebtedness. The Company's outstanding senior
subordinated notes require semi-annual interest payments at a fixed rate. The
Company presently has no outstanding borrowings under its $100 million senior
secured revolving credit facility ("Senior Facility"). Borrowings under the
Senior Facility bear interest at floating rates and require interest payments on
varying dates depending on the interest rate option selected by the Company.
The Company believes that it will require additional financing to consummate the
acquisitions discussed below (including the expected capital expenditures
associated therewith), and to meet its anticipated short term and long term
working capital requirements for its existing properties. The Company presently
has available to it the full $100 million in borrowing capacity under the Senior
Facility. The Company has received underwriting commitments to increase its
borrowing capacity under the Senior Facility to $200 million. The Company has
completed the negotiation and expects to enter into an amended and restated
credit facility, to reflect such change, but there can be no assurance that the
Company will be able to borrow under the amended facility. The failure to raise
funds necessary to finance the Company's future cash requirements could
adversely affect the Company's ability to pursue its business strategy. 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
find it necessary to pay cable systems for carriage. In addition, should the
Company suffer a significant impairment to its cash flow from operations due to
the occurrence of one or more adverse events, its liquidity could become
insufficient on a short term basis due to diminished borrowing capacity under
the Senior Facility and, on a long term basis, the Company could have
insufficient resources to repay indebtedness under the Senior Facility or the
senior subordinated notes when due.
18
<PAGE> 19
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>
<CAPTION>
Property Market Served (1) Purchase Price
- ----------------------- ---------------------- --------------
<S> <C> <C>
Infomall TV Network:
KCMY-TV Sacramento, CA (2) $17,000,000
WHRC-TV Boston, MA $15,000,000
KAJW-TV Phoenix, AZ $12,000,000
WNAL-TV Birmingham, AL (3) $10,000,000
KBCB-TV Seattle, WA $ 8,000,000
KOOG-TV Salt Lake City, UT $ 7,700,000
WSJN-TV,WKPV-TV,WJWN-TV Puerto Rico (4) $ 7,000,000
WHBI-TV West Palm Beach,FL (5)(6) $ 3,000,000
KVUT-TV Little Rock (5) $ 2,500,000
WOST-TV Providence, RI (5)(7) $ 1,000,000
KGLB-TV Tulsa, OK (8) $ 421,000
Paxson Radio:
WSHE-FM,WSRF-AM Ft. Lauderdale, FL (9) $57,500,000
WKES-FM Tampa, FL $35,323,000
WTKS-FM Orlando, FL (10) $25,000,000
WTLK-FM Jacksonville, FL (10) $ 4,000,000
</TABLE>
(1) Each station is licensed by the FCC to serve a specific community,
which is included in the listed market.
(2) The Company has loaned an aggregate of $5 million to KCMY-TV and began
operating the station pursuant to a time brokerage agreement on October 1,
1996 pending completion of the acquisition of the station for $17 million.
(3) In September 1996, the Company loaned $8,000,000 to WNAL-TV and began
operating the station pursuant to a time brokerage agreement pending
completion of the acquisition of the station for $10 million currently
scheduled for January 1997.
(4) The Company has purchased a 50% ownership interest in these stations
which are currently operated under a time brokerage agreement and is
negotiating the purchase of the remaining 50%.
(5) Station is currently under construction or not operating.
(6) Pending inTV affiliate. The Company has advanced approximately $2.3
million through September 30, 1996 on this property.
(7) 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.
(8) The Company has acquired a 49% interest in this property, amount
represents purchase price for the remaining 51%.
(9) Purchase price includes a cash payment of $47.5 million and $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 began operating WTKS-FM pursuant to a time brokerage
agreement on June 17, 1996 and will acquire the station upon completion
of Federal Trade Commission and FCC review and approval. The Company
began operating WTLK-FM (formerly WPVJ-FM) pursuant to a time brokerage
agreement on September 25, 1996 pending completion of the acquisition of
the station.
19
<PAGE> 20
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.
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
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 The Company's Certificate of Designations of the
Company's 12 1/2% Cumulative Exchangeable Preferred Stock ****
3.1.6 Bylaws of the Company***
4.1 Form of Stock Certificate of Class A Common Stock*
10.127 Asset purchase agreement, dated July 31, 1996, by and
between Paxson Communications of Oklahoma City-62, Inc. and
Aracelis Ortiz for Television Station KMNZ-TV, Oklahoma City,
Oklahoma
10.128 Purchase agreement, dated July 31, 1996, by and among
America 51, L.P., Paxson Communications of Phoenix-51, Inc.,
and Hector Garcia Salvatierra for Television Station Channel
51, Tolleson, Arizona
10.129 Loan, Option and Related Transactions, dated August 19,
1996, between Paxson Communications of Seattle-24, Inc. and
World Television of Washington, L.L.C. for Television Station
KBCB(TV), Bellingham, Washington
10.130 Stock Purchase and Related Transactions, dated August
21, 1996, between Paxson Communications of Little Rock-42 Inc.,
Leininger-Geddes Partnership and Channel 42 of Little Rock,
Inc. for Television Station KVUT(TV), Little Rock, Arkansas
10.131 Asset purchase and sale agreement, dated August 27,
1996, between Intermart Broadcasting First Coast, Inc., and
Paxson Broadcasting of Jacksonville, Limited Partnership for
Radio Station WPVJ-FM of Ponte Vedra Beach, Florida
10.132 Purchase agreement, dated August 29, 1996, by and
between Boardworks Outdoor Advertising Company, Inc., and
Paxson Outdoor, Inc.
</TABLE>
20
<PAGE> 21
<TABLE>
<S> <C>
10.133 Asset purchase agreement, dated August 30, 1996, by and
between Paxson Communications Television, Inc. and Alpha &
Omega Communications,L.L.C. for Television Station KOOG-TV,
Ogden, Utah
10.134 Loan agreement, dated September 6, 1996, by and between
Ponce-Nicasio Broadcasting, A Limited Partnership and Paxson
Communications of Sacramento-29, Inc. for Television Station
KCMY-TV, Sacramento, California
10.135 Option agreement, dated September 6, 1996, by and
between Ponce-Nicasio Broadcasting, A Limited Partnership and
Paxson Communications of Sacramento for Television Station
KCMY-TV, Sacramento, California
10.136 Asset purchase agreement, dated September 12, 1996, by
and between The Moody Bible Institute of Chicago and Paxson
Broadcasting of Tampa, Limited Partnership for Radio Station
WKES-FM, St, Petersburg, Florida
10.137 Asset purchase agreement, dated September 27, 1996, by
and between Channel 46 of Boston, Inc. and Massachusett
Redevelopment Limited Liability Company for Television Station
WHRC(TV), Norwell, Massachusetts
10.138 Easement agreement, dated October 9, 1996, by and
between Kartworlds of Central Florida L.C. and Paxson Outdoor,
Inc.
10.139 Contract for sale and purchase, dated October 22, 1996,
between Southern Land Investors, LTD., and Paxson Outdoor, Inc.
10.139.1 Promissory note, dated October 22, 1996, between
Southern Land Investors, LTD. and Paxson Outdoor, Inc.
10.139.2 Real estate mortgage, dated October 22, 1996, Southern
Land Investors, Ltd. and Paxson Outdoor, Inc.
10.139.3 Assignment of rights under pre-annexation agreement,
dated October 22, 1996, by and between Michael J. Grindstaff
and Southern Land Investors, Ltd.
27 Financial Data Schedule (for SEC use only)
- -------------------------
* 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.
**** Filed with the Company's Registration Statement on Form
S-3, as amended, filed August 15, 1996, Registration No.
333-10267 and incorporated herein by reference.
</TABLE>
(b) Reports on Form 8-K. None.
21
<PAGE> 22
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: November 13, 1996 By: /s/ Lowell W. Paxson
-------------------------------------
Lowell W. Paxson
Chairman of the Board of Directors
and Chief Executive Officer
Date: November 13, 1996 By: /s/ Arthur D. Tek
------------------------------------
Arthur D. Tek
Vice President, Chief
Financial Officer, Director
22
<PAGE> 1
EXHIBIT 10.127
===============================================================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
OKLAHOMA CITY-62, INC.
AND
ARACELIS ORTIZ
FOR
TELEVISION STATION KMNZ-TV
OKLAHOMA CITY, OKLAHOMA
* * *
JULY 31, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Accounts Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assumed Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Consents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
" Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Escrow Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Escrow Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Title to and Condition of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Title to and Condition of Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.7 Assumed Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.11 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.12 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
3.14 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.15 Environmental; Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.17 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.18 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.19 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5. CONSTRUCTION AND OPERATION OF THE STATION
PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.5 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.7 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.8 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.9 Maintenance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.11 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.12 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.13 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.14 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.15 Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.16 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.17 Personnel Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Control of the Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.7 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.8 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
6.9 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.10 Cable Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.11 Construction Permit Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND
SELLER AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 9. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.3 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.11 Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
- iii -
<PAGE> 5
LIST OF SCHEDULES
Schedule 2.2 - Excluded Assets
Schedule 3.3 - Consents
Schedule 3.4 - Licenses
Schedule 3.5 - Real Property
Schedule 3.6 - Tangible Personal Property
Schedule 3.7 - Contracts
Schedule 3.9 - Intangibles
Schedule 3.10 - Insurance Matters
Schedule 6.12 - Noncompetition Agreement
Schedule 8.2(g) - Opinion of Seller's Counsel
Schedule 8.3(d) - Opinion of Buyer's Counsel
Schedule 9.4 - Escrow Agreement
- iv -
<PAGE> 6
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 31st day of July,
1996, by and between Paxson Communications of Oklahoma City-62, Inc., a Florida
corporation ("Buyer"), and Aracelis Ortiz, an individual residing at 168
Meadowbrook Lane, San Benito, Texas 78586 ("Seller").
RECITALS
A. Seller is the permittee of television station KMNZ-TV, Channel
62, Oklahoma City, Oklahoma (the "Station"), pursuant to a construction permit
issued by the Federal Communications Commission ("FCC") and has filed with the
FCC a license application to cover the construction.
B. Seller desires to sell, and Buyer desires to buy,
substantially all the assets that are used or useful in the operation of the
Station, for the price and on the terms and conditions set forth in this
Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Seller, intending to be
bound legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the sale
of advertising time run on the Station by Seller prior to the Closing Date.
"Assets" means the assets to be sold, transferred, or otherwise conveyed
to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7 that
are specifically designated in Schedule 3.7 as Contracts to be assumed by Buyer
upon its purchase of the Station, and (ii) any Contracts entered into by Seller
between the date of this Agreement and the Closing Date that Buyer agrees in
writing to assume.
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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 operation of
the Station, and (i) which are in effect on the date of this Agreement or (ii)
which are entered into by Seller between the date of this Agreement and the
Closing Date.
"Escrow Agent" means First Union National Bank of Florida.
"Escrow Agreement" means the Escrow Agreement dated as of the date
hereof among Buyer, Seller and the Escrow Agent.
"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 construction or operation of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by Seller or under which Seller is licensed or franchised and which are used or
useful in the construction, business and operation of the Station, 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 Federal Aviation Administration, or any other federal,
state, or local governmental authorities to Seller in connection with the
construction, business or operation of the Station, together with any additions
thereto between the date of this Agreement and the Closing Date.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real
property, including fee estates, leaseholds and subleaseholds, purchase
options, easements, licenses, rights to access, and rights of way, and all
buildings and other improvements thereon, and other real property interests
which are used or useful in the construction, business or operation of the
Station, together with any additions thereto between the date of this Agreement
and the Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property which is used or
useful in the construction, business or operation of the Station, together with
any additions thereto between the date of this Agreement and the Closing Date.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell, transfer,
and deliver to Buyer on the Closing Date, and Buyer agrees to purchase, all of
the tangible and intangible assets used or useful in connection with the
construction, business or operation of the Station, together with any additions
thereto between the date of this Agreement and the Closing Date, but excluding
the assets described in Section 2.2, free and clear of any claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever (except for liens for current taxes not
yet due and payable), including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of Seller
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
(f) All of Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams,
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blueprints, and schematics, including filings with the FCC relating to the
construction and operation of the Station;
(g) The Accounts Receivable as of 11:59 p.m., Oklahoma
City time, on the day prior to the Closing Date;
(h) All choses in action of Seller relating to the
Station; and
(i) All books and records relating to the construction,
business or operation of the Station, including executed copies of the Assumed
Contracts, and all records required by the FCC to be kept by the Station.
2.2 Excluded Assets. The Assets shall exclude the following
assets:
(a) Seller's cash or cash equivalents on hand as of the
Closing and all other cash in any of Seller's bank or savings accounts; any
insurance policies, letters of credit, or other similar items and cash
surrender value in regard thereto; and any stocks, bonds, certificates of
deposit and similar investments;
(b) Any pension, profit-sharing, or employee benefit
plans, and any collective bargaining agreements; and
(c) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets and the
covenants of Seller set forth in the Noncompetition Agreement referred to in
Section 6.12 shall be SIX MILLION FIVE HUNDRED THOUSAND DOLLARS ($6,500,000),
adjusted as provided in Schedule 3.6 and below:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses. All expenses
arising from the construction or operation of the Station, including business
and license fees, utility charges, real and personal property taxes and
assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, taxes (except
for taxes arising from the transfer of the Assets under this Agreement), FCC
annual regulatory fees and similar prepaid and deferred items, shall be
prorated between Buyer and Seller in accordance with the principle that Seller
shall be responsible for all expenses, costs, and liabilities allocable to the
period prior to the Closing Date, and Buyer shall be responsible for all
expenses, costs, and obligations allocable to the period on and after the
Closing Date. Notwithstanding the preceding sentence, there shall be no
adjustment for, and Seller shall remain solely liable with respect to, any
Contracts not included in the Assumed Contracts and any other obligation or
liability not being assumed by Buyer in accordance with Section 2.5.
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(b) Manner of Determining Adjustments. Any adjustments
will, insofar as feasible, be determined and paid on the Closing Date, with
final settlement and payment by the appropriate party occurring no later than
ninety (90) days after the Closing Date or such other date as the parties shall
mutually agree upon. Seller shall prepare and deliver to Buyer not later than
five (5) 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(a). The preliminary settlement statement (i) shall
contain all information reasonably necessary to determine the adjustments to
the Purchase Price under Section 2.3(a), 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 (ii)
shall be certified by Seller to be true and complete in all material respects
as of the date thereof.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer at
least two (2) days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of Seller under the Licenses and the Assumed
Contracts insofar as they relate to the time on and after the Closing Date, and
arise out of events related to Buyer's ownership of the Assets or its operation
of the Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or
proceedings relating to the construction or operation of the Station prior to
the Closing, (iv) any obligations or liabilities arising under capitalized
leases or other financing agreements, (v) any obligations or liabilities
arising under agreements entered into other than in the ordinary course of
business, (vi) any obligations or liabilities of Seller under any employee
pension, retirement, health and welfare, or other benefit plans or collective
bargaining agreements, (vii) any obligation to any employee of the Station for
severance benefits, vacation time, or sick leave accrued prior to the Closing
Date, or (viii) any obligations or liabilities caused by, arising out of, or
resulting from any action or omission of Seller prior to the Closing, and all
such obligations and liabilities shall remain and be the obligations and
liabilities solely of Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Authority. Seller has all requisite power and authority (i)
to own, lease, and use the Assets as now owned, leased, and used, (ii) to
construct and operate the Station, and (iii) to execute and deliver this
Agreement, the Escrow Agreement and the documents contemplated hereby and
thereby, and to perform and comply with all of the terms,
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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
construction or operation of the Station or any of the Assets.
3.2 Binding Obligation. This Agreement and the Escrow Agreement
have been duly executed and delivered by Seller and constitute the legal,
valid, and binding obligations of Seller, enforceable against her in accordance
with their respective terms except as the enforceability of this Agreement and
the Escrow Agreement may be affected by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally, and by judicial discretion in the
enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the Escrow Agreement and the documents contemplated hereby
and thereby (with or without the giving of notice, the lapse of time, or both):
(i) do not require the consent of any third party; (ii) will not conflict with,
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; (iii) will not conflict with, constitute grounds
for termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Seller is a party or
by which Seller may be bound; and (iv) 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 construction and operation of the Station,
and none of the Licenses is subject to any restriction or condition that would
delay or adversely affect such construction and operation. The Licenses are in
full force and effect, and the construction of the Station has been completed,
is in accordance therewith and a license application is pending. Seller has no
reason to believe that any of the Licenses would not be extended or renewed by
the FCC or other granting authority in the ordinary course. The Station's city
of license, as determined by the FCC, is located within the Oklahoma City,
Oklahoma Area of Dominant Influence as defined by the 1991-1992 Area of
Dominant Influence Market Guide published by The Arbitron Co. and the Oklahoma
City, Oklahoma Designated Market Area as defined by the 1994 United States
Television Household Estimates published by Nielsen Media Research.
3.5 Title to and Condition of Real Property. Schedule 3.5
contains a complete and accurate description of all the Real Property and
Seller's interests therein (including street
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address, legal description, owner, and use and the location of all improvements
thereon). The Real Property listed on Schedule 3.5 constitutes the Station's
transmitter site (leasehold interest) and does not include any studio facility
for the Station. With respect to each leasehold or subleasehold interest
included in the Real Property being conveyed under this Agreement so long as
Seller fulfills her obligations under the lease therefor, Seller has
enforceable rights to nondisturbance and quiet enjoyment, and no third party
holds any interest in the leased premises with the right to foreclose upon
Seller's leasehold or subleasehold interest. All towers, guy anchors, and
buildings and other improvements included in the Assets are located entirely on
the Real Property listed in Schedule 3.5. All Real Property (including the
improvements thereon) (i) is in good condition and repair consistent with its
present use, (ii) is available for immediate use in the construction and
operation of the Station, and (iii) complies with all applicable building or
zoning codes and the regulations of any governmental authority having
jurisdiction. Seller has full legal and practical access to the Real Property.
All easements, rights-of-way, and real property licenses have been properly
recorded in the appropriate public recording offices.
3.6 Title to and Condition of Tangible Personal Property.
Schedule 3.6 lists all material items of Tangible Personal Property. Except as
described on Schedule 3.6, the Tangible Personal Property listed on Schedule
3.6 comprises all material items of tangible personal property necessary to
complete construction of and operate the Station in accordance with the terms
of the Licenses. 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 construction
and operation of the Station. All items of transmitting and studio equipment
included in the Tangible Personal Property (i) have been installed and
maintained in a manner consistent with generally accepted standards of good
engineering practice, and (ii) will permit the Station to operate in accordance
with the terms of the FCC Licenses and the rules and regulations of the FCC,
and with all other applicable federal, state, and local statutes, ordinances,
rules, and regulations.
3.7 Assumed Contracts. Schedule 3.7 is a true and complete list
of all Contracts. Seller has delivered to Buyer true and complete copies of
all written Contracts, and true and complete memoranda of all oral Contracts
(including any amendments and other modifications to such Contracts). Other
than the Contracts listed on Schedule 3.7, Seller requires no contract, lease,
or other agreement to enable her to operate the Station in accordance with the
terms of the Licenses. All of the Contracts are in full force and effect, and
are valid, binding, and enforceable in accordance with their terms. There is
not under any 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 Contract (i) to terminate such
contract or amend the terms thereof, (ii) to refuse to renew the Contract upon
expiration of its term, or (iii) to renew the Contract upon expiration only on
terms and conditions which are more onerous than those now existing. Except
for the need
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to obtain the Consents listed in Schedule 3.3, Seller has full legal power and
authority to assign her rights under the Assumed Contracts to Buyer in
accordance with this Agreement, and such assignment will not affect the
validity, enforceability, or continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section
6.1 and the other Consents described in Schedule 3.3, no consent, approval,
permit, or authorization of, or declaration to or filing with any governmental
or regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Station.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles, all of which are valid and in good standing and uncontested.
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.
3.10 Insurance. Schedule 3.10 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the
construction or operation of the Station. All policies of insurance listed in
Schedule 3.10 are in full force and effect.
3.11 Reports. All returns, reports, and statements that the
Station is currently required to file with the FCC or with any other
governmental agency have been filed, and all reporting requirements of the FCC
and other governmental authorities having jurisdiction over Seller and the
Station have been complied with. All of such returns, reports, and statements
are substantially complete and correct as filed.
3.12 Personnel. Other than Seller, no person currently is, or at
any time has been, retained or engaged as an employee with respect to the
construction or operation of the Station.
3.13 Taxes. 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 Station, and no
event has occurred that could impose on Buyer any transferee liability for any
taxes, penalties, or interest due or to become due from Seller.
3.14 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry, there is no claim,
legal action, counterclaim, suit, arbitration, governmental investigation or
other legal, administrative, or tax proceeding, nor any order, decree or
judgment, in progress or pending, or to the knowledge of Seller threatened,
against or relating to Seller with respect to her ownership, construction or
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operation of the Station or otherwise relating to the Assets or the Station,
nor does Seller know or have reason to be aware of any basis for the same. In
particular, but without limiting the generality of the foregoing, there are no
applications, except as disclosed on Schedule 3.4, complaints or proceedings
pending or, to the best of Seller's knowledge, threatened (i) before the FCC
relating to the construction, business or operation of the Station other than
rule making proceedings which affect the television industry generally, (ii)
before any federal or state agency relating to the construction, business or
operation of the Station involving charges of illegal discrimination under any
federal or state employment laws or regulations, or (iii) before any federal,
state, or local agency relating to the construction, business or operation of
the Station involving zoning issues under any federal, state, or local zoning
law, rule, or regulation.
3.15 Environmental; Hazardous Materials. There are no claims,
notices, suits, proceedings or investigations pending or, to Seller's
knowledge, threatened, and there are no judgments against Seller or the Station
by or before any governmental authority concerning environmental compliance.
To Seller's knowledge, after due inquiry, (i) no toxic materials, hazardous
waste, or hazardous substances, including any asbestos or asbestos-related
products, any oils, petroleum-derived compounds or pesticides (hereinafter
collectively referred to as the "Hazardous Materials") have been or are located
on or about the Leasehold Interests; (ii) the Leasehold Interests has not been
previously used for the storage, manufacture or disposal of Hazardous
Materials; and (iii) no underground storage tank or related equipment ("UST")
is located at the Leasehold Interests.
3.16 Compliance with Laws. Seller has complied in all material
respects with the Licenses and all material, federal, state, and local laws,
rules, regulations, and ordinances applicable or relating to the ownership,
construction or operation of the Station. Neither the ownership or use of the
properties of the Station nor the construction or operation of the Station
conflicts with the rights of any other person or entity.
3.17 Transactions with Affiliates. Seller has not been involved in
any business arrangement or relationship relating to the Station with any
affiliate of Seller, and no affiliate of Seller owns any property or right,
tangible or intangible, which is used in the construction or operation of the
Station. As used in this paragraph, "affiliate" has the meaning set forth in
Rule 12b-2 promulgated under the Securities and Exchange Act of 1934.
3.18 Broker. Neither Seller nor any person acting on Seller's
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement,
except for a commission payable by Seller to Patrick Communications
Corporation.
3.19 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
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omits or will omit to state any material fact and required to make any statement
made herein or therein not misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida and at Closing will be duly qualified to conduct business as a
foreign corporation in the State of Oklahoma. Buyer has all requisite
corporate power and authority to execute and deliver this Agreement and the
Escrow Agreement and the documents contemplated hereby and thereby, and to
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement and the Escrow Agreement by Buyer
have been duly authorized by all necessary corporate actions on the part of
Buyer. This Agreement and the Escrow Agreement have been duly executed and
delivered by Buyer and constitute the legal, valid, and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms
except as the enforceability of this Agreement and the Escrow Agreement may be
affected by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the Escrow Agreement and the documents contemplated hereby and thereby
(with or without the giving of notice, the lapse of time, or both): (i) do not
require the consent of any third party; (ii) will not conflict with the
Articles of Incorporation or Bylaws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's 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
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omits or will omit to state any material fact and required to make any
statement made herein or therein not misleading.
SECTION 5. CONSTRUCTION AND OPERATION OF THE STATION
PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall take all actions required to
operate the Station diligently in the ordinary course of business (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 Contracts. Seller will not enter into any contract or
commitment relating to the Station or the Assets, or amend or terminate any
Contract (or waive any material right thereunder), or incur any obligation
(including obligations relating to the borrowing of money or the guaranteeing
of indebtedness) that will be binding on Buyer after Closing. 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.
5.3 Disposition of Assets. Seller shall not sell, assign, lease,
or otherwise transfer or dispose of any of the Assets, except where no longer
used or useful in the construction or operation of the Station or in connection
with the acquisition of replacement property of equivalent kind and value.
5.4 Encumbrances. Seller shall not create, assume or permit to
exist any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets, except for (i) liens
disclosed on Schedule 3.5 and Schedule 3.6, which shall be removed prior to the
Closing Date, (ii) liens for current taxes not yet due and payable, and (iii)
mechanics' liens and other similar liens, which shall be removed prior to the
Closing Date.
5.5 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 the FCC or any other governmental authority
in connection with the construction or operation of the Station.
5.6 Rights. Seller shall not waive any right relating to the
Station or any of the Assets.
5.7 No Inconsistent Action. Seller shall not take any action that
is inconsistent with her obligations under this Agreement or that could hinder
or delay the consummation of the transactions contemplated by this Agreement.
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5.8 Access to Information. Seller shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives
reasonable access to the Assets and to all other properties, equipment, books,
records, Contracts, and documents relating to the Station for the purpose of
audit and inspection.
5.9 Maintenance of Assets. Seller shall use her best efforts and
take all actions to maintain all of the Assets in good condition (ordinary wear
and tear excepted), and install, use, operate, and maintain all of the Assets
in a reasonable manner and in accordance with the terms of the FCC Licenses,
all rules and regulations of the FCC and generally accepted standards of good
engineering practice. 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.
5.10 Insurance. Seller shall maintain the existing insurance
policies on the Station and the Assets.
5.11 Consents. Seller shall obtain the Consents and the estoppel
certificates described in Section 8.2(b), without any change in the terms or
conditions of any Contract or License that could be less advantageous to the
Station than those pertaining under the Contract or License as in effect on the
date of this Agreement. Seller shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon Buyer's request, Seller
shall cooperate with Buyer and use her best efforts to obtain from the lessors
under each Real Property lease such estoppel certificates and consents to the
collateral assignment of the lessee's interest under each such lease as Buyer's
lenders may request.
5.12 Books and Records. Seller shall maintain her books and
records relating to the Station in accordance with past practices.
5.13 Notification. Seller shall promptly notify Buyer in writing
of any unusual or material developments with respect to the construction or
operation of the Station, and of any material change in any of the information
contained in Seller's representations and warranties contained in Section 3 of
this Agreement.
5.14 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership, construction and operation of the Station.
5.15 Financing Leases. Seller will satisfy at or prior to Closing
all outstanding obligations under capital and financing leases with respect to
any of the Assets and obtain good title to the Assets leased by Seller pursuant
to those leases so that those Assets shall be transferred to Buyer at Closing
free of any interest of the lessors.
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5.16 Preservation of Business. Seller shall use her best efforts
to preserve the Station's present relationships with suppliers and others
having business relations with it, to the end that the business, operations,
and prospects of the Station shall be unimpaired at the Closing Date.
5.17 Personnel Recommendations. Seller shall consider for
employment all personnel recommended by Buyer.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with
the purchase and sale of the Assets pursuant to this Agreement shall be subject
to the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an
appropriate application for the FCC Consent and shall file the application with
the FCC within seven (7) business days of the execution of this Agreement. The
parties shall prosecute the application with all reasonable diligence and
otherwise use their best efforts to obtain a grant of the application as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on her or it by the FCC Consent, except that no party shall be required
to comply with a condition if (1) the condition was imposed on her or it as the
result of a circumstance the existence of which does not constitute a breach by
the party of any of her or its representations, warranties, or covenants under
this Agreement, and (2) compliance with the condition would have a material
adverse effect upon her or 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 her or its rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of Seller until the Closing.
6.3 Risk of Loss.
(a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing.
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(b) If any damage or destruction of the Assets or any
other event occurs which (i) prevents the completion of construction of the
Station within the period specified in the current construction permit issued
to Seller by the FCC or (ii) following the Station's commencement of broadcast
operations, (A) causes the Station to cease broadcasting operations for a
period of three or more days or (B) prevents in any material respect signal
transmission by the Station in the normal and usual manner and Seller fails to
restore or replace the Assets so that normal and usual transmission is resumed
within seven days of the damage, destruction or other event, Buyer, in its sole
discretion, may (x) terminate this Agreement forthwith without any further
obligations hereunder upon written notice to Seller, in which event all funds
held by the Escrow Agent pursuant to the Escrow Agreement, including all
interest and other proceeds from the investment of such funds, shall be
immediately returned to Buyer, or (y) proceed to consummate the transaction
contemplated by this Agreement and complete the restoration and replacement of
the Assets after the Closing Date, in which event Seller shall deliver to Buyer
all insurance proceeds received in connection with such damage, destruction or
other event.
6.4 Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, Buyer shall have no obligation (i) to expend
funds to obtain any of the Consents or (ii) to agree to any adverse change in
any License or Assumed Contract to obtain a Consent required with respect
thereto.
6.6 Bulk Sales Law. If applicable, the Bulk Sales law of the
State of Oklahoma 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.
6.7 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
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the Assets that are 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.
6.8 Appraisal. Buyer and Seller agree to allocate the Purchase
Price for tax and recording purposes in accordance with an appraisal to be
conducted by an appraisal firm selected and paid for by Buyer with experience
in the valuation and appraisal of television station assets.
6.9 Noncompetition Agreement. At Closing, Buyer and Seller shall
enter into a Noncompetition Agreement in the form of Schedule 6.12 and $130,000
of the Purchase Price shall be allocated to the covenants of Seller set forth
therein.
6.10 Cable Matters. Seller and Buyer shall cooperate regarding the
Station's election of must carry/retransmission consent for cable systems
within the Station's ADI and, with Buyer's cooperation, Seller shall timely
make such elections utilizing a list of cable systems provided to Seller by
Buyer.
6.11 Construction Permit Application. Seller filed with the FCC an
application to modify the Station's facilities and with Buyer's cooperation
shall use its best efforts to secure FCC approval for that application prior to
Closing.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND
SELLER AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing are subject at Buyer's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Seller contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Seller shall have
performed and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
her prior to or on the Closing Date.
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been
granted without the imposition on Buyer of any conditions that need not be
complied with by Buyer under
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Section 6.1 hereof, Seller shall have complied with any conditions imposed on
her by the FCC Consent, and the FCC Consent shall have become a Final Order.
(e) Governmental Authorizations. Seller shall be the
holder of all Licenses and there shall not have been any modification of any
License that could have an adverse effect on the Station or the conduct of its
business and operations. No proceeding shall be pending or threatened, the
effect of which could be to revoke, cancel, fail to renew, suspend, or modify
adversely any License.
(f) Deliveries. Seller shall have made or stand willing
to make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change in the
assets or properties of the Station, including any damage, destruction, or loss
affecting any assets used or useful in the conduct of the business of the
Station.
7.2 Conditions to Obligations of Seller. All obligations of
Seller at the Closing are subject at Seller's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Buyer contained in this 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
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following the date upon which the FCC Consent has become a Final Order, subject
to satisfaction or waiver of all other conditions precedent to the holding of
the Closing. If Buyer fails to specify the date for Closing prior to the fifth
business day after the date upon which the FCC Consent becomes a Final Order,
the Closing shall take place on the tenth business day after the date upon
which the FCC Consent becomes a Final Order.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson, 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, motor vehicle titles, assignments, and other transfer documents which
shall be sufficient to vest good and marketable title to the Assets in the name
of Buyer, free and clear of all 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 and of those parties to the Assumed Contracts listed in Schedule 3.7
that are designated to indicate that estoppel certificates are required under
this paragraph;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(d) Seller's Certificate. A certificate, dated as of the
Closing Date, executed by 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 her obligations, covenants, and agreements set forth in this Agreement
to be performed and complied with on or prior to the Closing Date;
(e) Tax, Lien, and Judgment Searches. Results of a
search for tax, lien, and judgment filings in the Secretary of State's records
of the State of Oklahoma as well as the records of those counties in Oklahoma
in which any of the Assets are located, such searches having been made no
earlier than fifteen days prior to the Closing Date;
(f) Licenses, Contracts, Business Records, Etc. Copies
of all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by
Seller in connection with the Station's construction or operation;
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(g) Opinion of Counsel. An Opinion of Seller's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.2(g)
hereto;
(h) Noncompetition Agreement. The Noncompetition
Agreement in the form of Schedule 6.9, duly executed on behalf of Seller; and
(i) Lenders Certificates. Such certificates and
confirmations to Buyer's lenders as Buyer may reasonably request in connection
with obtaining financing for the performance of its payment obligations
hereunder.
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 her counsel:
(a) Purchase Price. The Purchase Price as provided in
Section 2.3;
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Seller's obligations under the Licenses and Assumed Contracts insofar as they
relate to the time on and after the Closing Date, and arise out of events
related to Buyer's ownership of the Assets or its operation of the Station on
or after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Buyer by an officer 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)
hereto.
(e) Noncompetition Agreement. The Noncompetition
Agreement in the form of Schedule 6.9 duly executed by Buyer and the payment of
$130,000 to Seller thereunder.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
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(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 May 1, 1997.
(d) Breach. Without limiting Seller's rights under the
other provisions of this Section 9.1, if Buyer has failed to cure any material
breach of any of its representations, warranties, or covenants under this
Agreement within fifteen days after Buyer received written notice of such
breach from Seller.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Station abandoned, if Buyer is not then
in material default, upon written notice to Seller, upon the occurrence of any
of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer
set forth in this Agreement have not been satisfied or waived in writing by
Buyer.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
May 1, 1997.
(d) Interruption of Service. If any event shall have
occurred that prevented signal transmission of the Station in the normal and
usual manner for a continuous period of 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 her representations, warranties, or covenants under this
Agreement within fifteen days after Seller received written notice of such
breach from Buyer.
9.3 Rights on Termination. If this Agreement is terminated
pursuant to Section 9.1 or Section 9.2 and neither party is in material breach
of 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, then the payment to Seller of $625,000 pursuant to Section 9.4 below
shall be liquidated damages and shall constitute full payment and the exclusive
remedy for any
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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 $625,000 is a fair and equitable
amount to reimburse Seller for damages sustained due to Buyer's material breach
of this Agreement. If this Agreement is terminated by Buyer due to Seller's
material breach of this Agreement, Buyer shall have all rights and remedies
available at law or equity.
9.4 Escrow Deposit. Buyer has deposited with the Escrow Agent the
sum of $625,000 in accordance with the Escrow Agreement in the form of Schedule
9.4 hereof. All such funds deposited with the Escrow Agent shall be held and
disbursed in accordance with the terms of the Escrow Agreement and the
following provisions:
(a) At the Closing, all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, shall be disbursed to or at
the direction of Buyer.
(b) If this Agreement is terminated pursuant to Section
9.1 or 9.2 and Buyer is not in material breach of this Agreement, all amounts
held by the Escrow Agent pursuant to the Escrow Agreement, including any
interest or other proceeds from the investment of funds held by the Escrow
Agent, shall be disbursed to or at the direction of Buyer.
(c) If this Agreement is terminated by Seller due to
Buyer's material breach of this Agreement, then $625,000 of the amount held by
the Escrow Agent pursuant to the Escrow Agreement shall be disbursed to or at
the direction of Seller as liquidated damages under Section 9.3 above and any
interest or other proceeds from the investment of funds held by the Escrow
Agent shall be disbursed by the Escrow Agent to or at the direction of Buyer.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
eighteen months. Any investigations by or on behalf of any party hereto shall
not constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
Seller shall affect Buyer's right to rely on any representation or warranty
made by Seller or relieve Seller of any obligations under this Agreement as the
result of a breach of any of her 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,
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Seller hereby agrees to indemnify and hold Buyer harmless against and with
respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Seller contained in this Agreement or in any certificate, document,
or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by
Buyer pursuant to this Agreement, including any liabilities arising at any time
under any Contract not included in the Assumed Contracts.
(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 ownership, construction or operation of the Station prior to the
Closing, including any liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring prior the Closing Date.
(e) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer hereby agrees to indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, document,
or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station on and after the Closing.
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any
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of the foregoing or incurred in investigating or attempting to avoid the same
or to oppose the imposition thereof, or in enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim. If the claim relates to an action, suit, or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant within five days
after written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or her 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 her or 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 her or its own expense.
If the Indemnifying Party does not elect to assume control or otherwise
participate in the defense of any third party claim, it shall be bound by the
results obtained by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnifications rights provided in Sections 10.2
and 10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any
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Claimant although for the purpose of the procedures set forth in this Section
10.4, any indemnification claims by such parties shall be made by and through
the Claimant.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other
remedies that may be available, including money damages, to obtain specific
performance of the terms of this Agreement. If any action is brought by Buyer
to enforce this Agreement, Seller shall waive the defense that there is an
adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either party
which results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing party shall be entitled to reimbursement from
the other party of her or its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Seller
to Buyer pursuant to this Agreement shall be paid by Seller. Buyer and Seller
shall each pay one-half of any fees payable to the Escrow Agreement and all
filing fees required by the FCC in connection with the FCC Consent. Except as
otherwise provided in this Agreement, each party shall pay her or 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. Seller shall pay at the Closing all
brokerage fees and commissions payable to Patrick Communications Corporation,
and each party shall be responsible for all fees or commissions payable to any
other finder, broker, advisor, or similar person retained by or on behalf of
such party.
11.2 Arbitration. Except as otherwise provided to the contrary
below, any dispute arising out of or related to this Agreement that Seller and
Buyer are unable to resolve by themselves shall be settled by arbitration by a
panel of three (3) neutral arbitrators who shall be selected in accordance with
the procedures set forth in the commercial arbitration rules of the American
Arbitration Association. The persons selected as arbitrators shall have prior
experience in the broadcasting industry but need not be professional
arbitrators, and persons such as lawyers, accountants, brokers and bankers
shall be acceptable. Before undertaking to resolve the dispute, each
arbitrator shall be duly sworn faithfully and fairly to hear and examine the
matters in controversy and to make a just award according to the best of his or
her understanding. The arbitration hearing shall be conducted in accordance
with the commercial arbitration rules of the American Arbitration Association
in Washington, D.C. 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
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shall be set forth in the decision and award of the arbitrators. Judgment on
the award, if it is not paid within thirty days, may be entered in any court
having jurisdiction over the matter. No action at law or suit in equity based
upon any claim arising out of or related to this Agreement shall be instituted
in any court by Seller or Buyer against the other except (i) an action to
compel arbitration pursuant to this Section, (ii) an action to enforce the
award of the arbitration panel rendered in accordance with this Section, or
(iii) a suit for specific performance pursuant to Section 10.5.
11.3 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed
to have been given on the date of personal delivery or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
If to Seller: Aracelis Ortiz
168 Meadowbrook Lane
San Benito, TX 78586
With a copy to: Robert Allen, Esq.
Allen & Harold, PLC
10610-A Crestwood Drive
Manassas, VA 22110
If to Buyer: Lowell W. Paxson, Chairman
Paxson Communications of
Oklahoma City-62, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
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;
provided, however, that Buyer may assign its rights and obligations under this
Agreement, in whole or in part, to one or more subsidiaries or commonly
controlled affiliates of Buyer without seeking or obtaining
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Seller's prior approval in which event Buyer shall have no further obligation
hereunder and Buyer may collaterally assign its rights and interests hereunder
to its lenders without seeking or obtaining Seller's prior approval. Upon any
permitted assignment by Buyer or Seller in accordance with this Section 11.4,
all references to "Buyer" herein shall be deemed to be references to Buyer's
assignee and all references to "Seller" herein shall be deemed to be references
to Seller's assignee, as the case may be. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
Seller, any additional bills of sale, deeds, or other transfer documents that,
in the reasonable opinion of Buyer, may be necessary to ensure, complete, and
evidence the full and effective transfer of the Assets to Buyer pursuant to
this Agreement.
11.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT
REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for
ease of reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless
of the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply with
any obligation, representation, warranty, covenant, agreement, or condition
herein may be waived by the party entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
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<PAGE> 31
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in her or its judgement be required or
advisable in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
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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
OKLAHOMA CITY-62, INC.
By:/s/William L. Watson
------------------------
Name:
Title:
ARACELIS ORTIZ
/s/ Aracelis Ortiz
------------------------
<PAGE> 1
EXHIBIT 10.128
- --------------------------------------------------------------------------------
PURCHASE AGREEMENT
BY AND AMONG
AMERICA 51, L.P.,
PAXSON COMMUNICATIONS
OF PHOENIX-51, INC.,
HECTOR GARCIA SALVATIERRA, L.P.
AND
HECTOR GARCIA SALVATIERRA
FOR
TELEVISION STATION CHANNEL 51
TOLLESON, ARIZONA
* * *
JULY 31, 1996
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<PAGE> 2
TABLE OF CONTENTS
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ARTICLE 1. CERTAIN DEFINITIONS.............................................................................2
Section 1.1 Terms Defined in this Section..........................................................2
Section 1.2 Clarifications.........................................................................4
Section 1.3 Other Terms............................................................................5
ARTICLE 2. THE INITIAL CLOSING.............................................................................5
Section 2.1 The Initial Closing....................................................................5
Section 2.2 Sale of Initial Interest...............................................................6
Section 2.3 Purchase Price.........................................................................6
Section 2.4 Acquisition of Limited Partnership Interest............................................6
Section 2.5 Assignment of Construction Permit and Site License.....................................6
ARTICLE 3. ACTIONS TO BE TAKEN PRIOR TO THE INITIAL CLOSING................................................6
Section 3.1 FCC Consents...........................................................................6
Section 3.2 Conduct Pending the Initial Closing....................................................7
Section 3.3 Extension Application..................................................................7
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER
REGARDING THE INITIAL CLOSING...................................................................7
Section 4.1 Organization and Standing..............................................................7
Section 4.2 Power and Authority....................................................................8
Section 4.3 Conflicts..............................................................................8
Section 4.4 Investment.............................................................................8
Section 4.5 Qualifications.........................................................................8
Section 4.6 Broker.................................................................................8
Section 4.7 Disclosure.............................................................................8
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER,
SALVATIERRA AND THE COMPANY REGARDING THE INITIAL
CLOSING.........................................................................................9
Section 5.1 Organization and Standing..............................................................9
Section 5.2 Power and Authority....................................................................9
Section 5.3 Conflicts..............................................................................9
Section 5.4 Exchange Act; Investment Company Act..................................................10
Section 5.5 Ownership of Partnership Interests....................................................10
Section 5.6 Assets and Liabilities of the Company. ..............................................10
Section 5.7 Broker................................................................................10
Section 5.8 Site License..........................................................................10
Section 5.9 Disclosure............................................................................10
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ARTICLE 6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
AT THE INITIAL CLOSING.........................................................................11
Section 6.1 Representations and Warranties........................................................11
Section 6.2 Covenants and Conditions..............................................................11
Section 6.3 Contribution..........................................................................11
Section 6.4 Site License..........................................................................11
Section 6.5 Deliveries. .........................................................................11
Section 6.6 Adverse Proceedings...................................................................12
Section 6.7 Extension Application.................................................................12
Section 6.8 Limited Partner Interest..............................................................12
ARTICLE 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
SELLER, SALVATIERRA AND THE COMPANY AT THE
INITIAL CLOSING................................................................................13
Section 7.1 Representations and Warranties........................................................13
Section 7.2 316 Consent...........................................................................13
Section 7.3 Covenants and Conditions..............................................................13
Section 7.4 Deliveries............................................................................13
Section 7.5 Adverse Proceedings...................................................................14
ARTICLE 8. CONSTRUCTION AND OPERATION OF THE STATION......................................................14
Section 8.1 General...............................................................................14
Section 8.2 FCC Consent...........................................................................14
Section 8.3 Employee Benefit Plans................................................................15
Section 8.4 Labor Relations.......................................................................15
Section 8.5 Licenses..............................................................................15
Section 8.6 Compliance with Laws..................................................................15
Section 8.7 Construction of the Station...........................................................15
Section 8.8 Notification..........................................................................15
Section 8.9 Preservation of Business..............................................................16
Section 8.10 Performance of Agreements.............................................................16
Section 8.11 Cable Carriage........................................................................16
ARTICLE 9. THE OPTIONS AND THE SECOND CLOSING.............................................................16
Section 9.1 Call Option...........................................................................16
Section 9.2 Put Option............................................................................17
Section 9.3 The Second Closing....................................................................17
Section 9.4 Purchase Price for Option Interest....................................................17
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ARTICLE 10. COVENANTS OF THE COMPANY AND SELLER REGARDING
THE SECOND CLOSING...........................................................................18
Section 10.1 Contracts.............................................................................18
Section 10.2 Copyrights, Trademarks and Similar Rights.............................................18
Section 10.3 Governmental Authorizations...........................................................18
Section 10.4 Title to and Condition of Real Property...............................................18
Section 10.5 Title to and Condition of Tangible Personal Property..................................18
Section 10.6 Compliance With Laws..................................................................19
Section 10.7 Reports...............................................................................19
Section 10.8 Public Inspection File................................................................19
Section 10.9 Taxes.................................................................................19
Section 10.10 Distributions and Redemptions.........................................................19
Section 10.11 Liabilities of the Company............................................................19
ARTICLE 11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
AT THE SECOND CLOSING........................................................................20
Section 11.1 Representations and Warranties........................................................20
Section 11.2 Covenants and Conditions..............................................................20
Section 11.3 FCC Consent...........................................................................20
Section 11.4 Consents..............................................................................20
Section 11.5 Deliveries. .........................................................................20
Section 11.6 Adverse Proceedings...................................................................21
Section 11.7 Time Brokerage Agreement..............................................................21
Section 11.8 Adverse Change........................................................................21
ARTICLE 12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
AND THE COMPANY AT THE SECOND CLOSING........................................................21
Section 12.1 Representations and Warranties........................................................22
Section 12.2 Covenants and Conditions..............................................................22
Section 12.3 FCC Consent...........................................................................22
Section 12.4 Consents..............................................................................22
Section 12.5 Deliveries. .........................................................................22
Section 12.6 Time Brokerage Agreement..............................................................23
Section 12.7 Adverse Proceedings...................................................................23
ARTICLE 13. JOINT COVENANTS..............................................................................23
Section 13.1 Confidentiality.......................................................................23
Section 13.2 Cooperation...........................................................................23
Section 13.3 Governmental Consents.................................................................23
Section 13.4 Station Operation.....................................................................24
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ARTICLE 14. TRANSFER TAXES; FEES AND EXPENSES............................................................24
Section 14.1 Transfer Taxes........................................................................24
Section 14.2 Filing Fees...........................................................................24
Section 14.3 Expenses..............................................................................24
ARTICLE 15. RISK OF LOSS.................................................................................24
Section 15.1 Risk of Loss..........................................................................24
Section 15.2 Postponement of the Second Closing Date...............................................25
Section 15.3 Option to Terminate...................................................................25
ARTICLE 16. TERMINATION RIGHTS...........................................................................25
Section 16.1 Termination by the Parties............................................................25
Section 16.2 Termination by Buyer..................................................................26
ARTICLE 17. SPECIFIC PERFORMANCE.........................................................................26
ARTICLE 18. INDEMNIFICATION..............................................................................26
Section 18.1 Seller's Indemnification..............................................................26
Section 18.2 Buyer's Indemnification...............................................................26
Section 18.3 Notice of Claim.......................................................................26
Section 18.4 Assumption and Defense of Third-Party Action..........................................27
Section 18.5 Limitation Period.....................................................................27
ARTICLE 19. OTHER PROVISIONS.............................................................................27
Section 19.1 Survival of Representations, Warranties and Covenants.................................27
Section 19.2 Press Releases........................................................................27
Section 19.3 Further Assurances....................................................................28
Section 19.4 Benefit and Assignment................................................................28
Section 19.5 Entire Agreement......................................................................28
Section 19.6 Headings..............................................................................28
Section 19.7 Governing Law.........................................................................28
Section 19.8 Notices...............................................................................28
Section 19.9 Counterparts..........................................................................29
Section 19.10 PCC Guarantee.........................................................................29
Section 19.11 Attorney's Fees.......................................................................29
Section 19.12 No Third Party Beneficiaries..........................................................29
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<PAGE> 6
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is dated as of the 31st day
of July, 1996, by and among AMERICA 51, L.P., a Delaware limited partnership
(the "Company"); PAXSON COMMUNICATIONS OF PHOENIX-51, INC., a Florida
corporation ("Buyer"), HECTOR GARCIA SALVATIERRA, L.P., an Arizona limited
partnership ("Seller"), and HECTOR GARCIA SALVATIERRA ("Salvatierra").
W I T N E S S E T H
WHEREAS, Seller is the holder of a construction permit, File
No.BPCT-850215LB (as subsequently modified through the date hereof, the
"Construction Permit"), issued by the Federal Communications Commission ("FCC")
for new television station KAJW (TV), Channel 51, Tolleson, Arizona (the
"Station");
WHEREAS, pursuant to the Limited Partnership Agreement of the Company,
dated as of July 30, 1996 (the "Partnership Agreement"), Seller is the holder of
all of the general partnership interest and ninety-nine percent (99%) of the
limited partnership interest of the Company and Salvatierra is the holder of one
percent (1%) of the limited partnership interest of the Company;
WHEREAS, subject to FCC approval of the assignment of the Construction
Permit from Seller to the Company, Seller intends to convey (i) the Construction
Permit and (ii) that certain South Mountain Communications Site License (the
"Site License"), No. 70648, dated as of January 12, 1995, by and between Seller
and the City of Phoenix, Arizona Parks and Recreation Board, to the Company as a
capital contribution to the Company;
WHEREAS, Buyer desires to purchase from Seller, following the
acquisition of the Construction Permit by the Company, a forty-nine percent
(49%) limited partnership interest of the Company, subject to the terms and
conditions set forth herein, and concurrently with the consummation of such
purchase, Seller shall acquire the remaining one percent (1%) limited
partnership interest of the Company from Salvatierra and all of Seller's
remaining interest in the Company shall become general partnership interest;
WHEREAS, Buyer desires to grant to Seller an option to require Buyer to
purchase the remaining general and limited partnership interests of the Company,
and Seller desires to grant to Buyer an option to purchase such partnership
interests, subject to the terms and conditions set forth herein;
<PAGE> 7
WHEREAS, in connection with the foregoing transactions, (a) Buyer and
the Company have entered into a Construction and Lease Agreement dated as of the
date hereof, pursuant to which Buyer agrees to provide certain services in
connection with the construction of the Station and pursuant to which Buyer
agrees to lease to the Company certain assets to be used in the business and
operations of the Station, and (b) Buyer and the Company have entered into a
Time Brokerage Agreement dated as of the date hereof, pursuant to which, upon
completion of construction of the Station and commencement of broadcast
operations, Buyer shall provide programming for broadcast on the Station,
subject to the rules, regulations and policies of the FCC;
NOW, THEREFORE, in consideration of these premises and the mutual
covenants, conditions and promises contained herein, and for valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
ARTICLE 1. CERTAIN DEFINITIONS
Section 1.1 Terms Defined in this Section. The following terms, as used
in this Agreement, have the meanings set forth in this Section:
"316 Application" means the application filed by Seller, Buyer and the
Company with the FCC requesting approval of the assignment of the Construction
Permit by Seller to the Company concurrently with the purchase of the Initial
Interest by Buyer from Seller.
"316 Consent" means the action by the FCC granting its consent to the
316 Application.
"Closings" means the collective reference to the Initial Closing and
the Second Closing.
"Communications Act" means the Communications Act of 1934, as amended
by the Telecommunications Act of 1996, and the rules and regulations promulgated
thereunder.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Construction
Permit and the Site License to the Company and to transfer the Partnership
Interests to Buyer or otherwise to consummate the transactions contemplated by
this Agreement.
"Construction and Lease Agreement" means the Construction and Lease
Agreement dated as of the date hereof, by and between Buyer and the Company.
"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 the
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<PAGE> 8
Company is a party or that are binding upon the Company and that relate to or
affect the assets or the business or operations of the Station, and (a) that are
in effect on the date of this Agreement or (b) that are entered into by the
Company between the date of this Agreement and the Second Closing Date in
conformity with the terms hereof.
"FCC Consent" means action by the FCC granting its consent to the
transfer of control of the Company as contemplated by this Agreement.
"FCC Licenses" means those licenses, permits, and authorizations issued
by the FCC in connection with the business and operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"General Partnership Interest" means the general partnership interest
of the Company.
"Initial Closing" means the consummation of the purchase and sale of
the Initial Interest pursuant to this Agreement in accordance with the
provisions of Article 2.
"Initial Closing Date" means the date on which the Initial Closing
occurs, as determined pursuant to Section 2.1.
"Initial Interest" means a 49% Limited Partnership Interest.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by the
Company or under which the Company is licensed or franchised and that are used
or useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Second Closing
Date.
"Licenses" means all licenses, permits, construction permits, and other
authorizations issued as of the date hereof by the FCC, the Federal Aviation
Administration, or any other federal, state, or local governmental authorities
for the construction or operation of the Station, together with any additions
thereto between the date of this Agreement and the Second Closing Date.
"Limited Partnership Interest" means the limited partnership interest
of the Company.
"Option Interest" means all Partnership Interests other than the
Initial Interest.
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<PAGE> 9
"Partnership Interests" mean, collectively, the Limited Partnership
Interest and the General Partnership Interest.
"Real Property" means all real property, and all buildings and other
improvements thereon, whether or not owned or held by Seller or the Company,
used or useful in the business or operations of the Station.
"Real Property Interests" means all interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings and
other improvements thereon, owned or held by Seller or the Company that are used
or useful in the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Second Closing
Date.
"Second Closing" means the consummation of the purchase and sale of the
Option Interest pursuant to this Agreement in accordance with the provision of
Article 9.
"Second Closing Date" means the date on which the Second Closing
occurs, as determined pursuant to Section 9.3.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts, and other tangible personal property owned or held by Seller or the
Company that is used or useful in the conduct of the business or operations of
the Station, together with any additions thereto between the date of this
Agreement and the Second Closing Date.
"Taxes" means all federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, capital, transfer, employment, withholding and other
taxes and assessments, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties.
"Tax Returns" means all federal, state, local and foreign income,
franchise, sales, use, occupation, property, excise, alternative or add-on
minimum, social security, employees' withholding, unemployment, disability,
transfer, capital stock and other tax returns and tax reports.
"Time Brokerage Agreement" means the Time Brokerage Agreement dated as
of the date hereof, by and between Buyer and the Company.
"Transaction Documents" means the Construction and Lease Agreement and
Time Brokerage Agreement.
Section 1.2 Clarifications. Words used herein, regardless of the gender
and number specifically used, shall be deemed and construed to include any other
gender and any
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<PAGE> 10
other number as the context requires. Use of the word "including" herein shall
be deemed and construed to mean "including but not limited to." Except as
specifically otherwise provided in this Agreement in a particular instance, a
reference to a Section, Exhibit or Schedule is a reference to a Section of this
Agreement or a Schedule or an Exhibit hereto, and the terms "hereof," "herein"
and other like terms refer to this Agreement as a whole, including the Schedules
and Exhibits hereto, and not solely to any particular part hereof.
Section 1.3 Other Terms. The following terms shall have the meanings
specified in the sections of this Agreement set forth opposite such terms:
"Agreement"................................................Preamble
"Buyer"....................................................Preamble
"Call Notice"...........................................Section 9.1
"Call Option"...........................................Section 9.1
"Claimant".............................................Section 18.3
"Company"..................................................Preamble
"Construction Permit"......................................Recitals
"Extension Application".................................Section 3.5
"FCC"......................................................Recitals
"Financial Statements"..................................Section 5.8
"Indemnifying Party"...................................Section 18.3
"Option Period".........................................Section 9.1
"Option Price"..........................................Section 9.5
"Outstanding Stock".....................................Section 5.5
"Partnership Agreement"....................................Recitals
"Purchase Price"........................................Section 2.3
"Put Notice"............................................Section 9.2
"Put Option"............................................Section 9.2
"Salvatierra"..............................................Preamble
"Seller"...................................................Preamble
"Station"..................................................Recitals
ARTICLE 2. THE INITIAL CLOSING
Section 2.1 The Initial Closing. Except as otherwise agreed to by Buyer
and Seller, the Initial Closing shall take place at 10:00 a.m., Washington, D.C.
time, on a date to be set by Buyer on no less than five (5) days' written notice
to Seller, which date shall not be sooner than the first business day after the
date on which the 316 Consent has become a Final Order and shall not be later
than the tenth business day after the date on which the 316 Consent has become a
Final Order, or, if the Buyer shall have waived the condition precedent of a
Final Order on the date specified by Buyer to Seller on not less than five (5)
days written notice following the later of the effective date of the 316 Consent
or the waiver by Buyer of such condition precedent. The Initial Closing shall
take place at the offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue,
N.W., Suite 800, Washington, D.C. 20036, or
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<PAGE> 11
such other place as the parties shall mutually agree. If Buyer fails to specify
the date for Initial Closing prior to the fifth business day after the date upon
which the 316 Consent has become a Final Order, the Initial Closing shall take
place on the tenth business day after the date upon which the 316 Consent has
become a Final Order.
Section 2.2 Sale of Initial Interest Subject to the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell, transfer
and deliver to Buyer on the Initial Closing Date, and Buyer agrees to purchase,
the Initial Interest, free and clear of any claims, liabilities, security
interests, mortgages, liens, pledges, conditions, charges or encumbrances of any
nature whatsoever.
Section 2.3 Purchase Price. The purchase price for the Initial Interest
(the "Purchase Price") shall be Five Million Four Hundred Thousand Dollars
($5,400,000). The Purchase Price shall be paid at the Initial Closing by Buyer
to Seller, in accordance with written instructions provided by Seller to Buyer
no less than two (2) business days prior to the Initial Closing Date, by wire
transfer of immediately available federal funds or other means mutually
satisfactory to Buyer and Seller.
Section 2.4 Acquisition of Limited Partnership Interest. Subject to the
terms and conditions set forth in this Agreement, Salvatierra hereby agrees to
sell, transfer and deliver to Seller, on the Initial Closing Date, and Seller
agrees to purchase for a purchase price of One Hundred Eleven Thousand One
Hundred Eleven Dollars ($111,111), all of Salvatierra's interest in the Company,
free and clear of any claims, liabilities, security interests, mortgages, liens,
pledges, conditions, charges or encumbrances of any nature whatsoever. Following
the consummation of the purchase of the Initial Interest by Buyer and the
acquisition of Salvatierra's interest in the Company by Seller, Buyer shall be
the sole limited partner of the Company.
Section 2.5 Assignment of Construction Permit and Site License.
Concurrently with the consummation of the purchase of the Initial Interest by
Buyer at the Initial Closing, and subject to the grant of the 316 Consent,
Seller shall transfer the Construction Permit and the Site License to the
Company as a capital contribution, pursuant to conveyancing documents in form
and substance acceptable to Buyer.
ARTICLE 3. ACTIONS TO BE TAKEN PRIOR TO THE INITIAL CLOSING
Section 3.1 FCC Consents. Within five (5) business days after the date
of this Agreement, Seller, the Company and Buyer shall file with the FCC the 316
Application. Each of Buyer, Seller and the Company shall thereafter prosecute
the application for the 316 Application with all diligence and otherwise use
their best efforts to obtain a grant of the 316 Consent as expeditiously as
possible. Each party agrees to comply with any condition imposed on it by the
316 Consent, except that no party shall be required to comply with a condition
if (i) the condition was imposed on it as the result of a circumstance the
existence of which does not constitute a breach by that party of any of its
representations, warranties,
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<PAGE> 12
or covenants hereunder, and (ii) compliance with the condition would have a
material adverse effect upon it. Buyer, the Company and Seller shall oppose any
petitions to deny or other objections filed with respect to the application for
the 316 Consent and any requests for reconsideration or judicial review of the
316 Consent.
Section 3.2 Conduct Pending the Initial Closing. Between the date
hereof and the Initial Closing Date, unless Buyer shall otherwise consent in
writing, Seller, Salvatierra and the Company covenant and agree:
(a) to perform all acts necessary to carry out the
transactions contemplated by this Agreement and to not: (i) create, incur,
assume or guarantee any indebtedness, obligation or liability or make any
payments in respect thereto except in the ordinary course of business and
consistent with past practices; (ii) sell, transfer or encumber any Partnership
Interests or any of the assets of the Company, including the Station or any
interest therein; or (iii) perform or suffer any acts within the control of any
of them that are inconsistent with their representations, warranties, covenants
and agreements set forth herein; and
(b) to notify Buyer promptly of (i) any adverse development
with respect to the 316 Application or (ii) the commencement or threat of any
claim, suit, action, arbitration, legal, administrative or other proceeding,
governmental investigation, or tax audit against Seller or the Company or
affecting the Station; and
(c) to cooperate fully with Buyer in taking any and all
actions necessary or desirable for the consummation of the transactions
contemplated by this Agreement.
(d) not to amend or modify in any respect the Partnership
Agreement.
Section 3.3 Extension Application. If the Initial Closing shall not
have occurred on or before December 6, 1996, Seller shall file with the FCC an
application requesting an extension of the Construction Permit (the "Extension
Application") and shall use its best efforts to cause the FCC to grant the
Extension Application as expeditiously as possible.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER
REGARDING THE INITIAL CLOSING
As an inducement to Seller and the Company to enter into this Agreement
and consummate the transactions contemplated to occur upon the Initial Closing,
Buyer represents and warrants to Seller and the Company as follows:
Section 4.1 Organization and Standing. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida and shall be, on or before the Initial Closing Date, duly qualified
to conduct business as a foreign corporation in the State of Arizona.
- 7 -
<PAGE> 13
Section 4.2 Power and Authority. Buyer has full corporate power and
authority to enter into this Agreement and the other agreements and instruments
contemplated hereby, and to perform and comply with the terms, covenants and
conditions to be performed or complied with by Buyer hereunder and thereunder.
This Agreement and each other agreement contemplated hereby constitutes or, when
executed and delivered by Buyer, will constitute the legal, valid and binding
obligations of Buyer, enforceable in accordance with their terms, except as such
enforceability may be affected by bankruptcy, insolvency or similar laws or by
equitable principles.
Section 4.3 Conflicts. The execution and delivery of this Agreement and
the other agreements and instruments delivered or to be delivered by Buyer
pursuant to this Agreement, the consummation of the transactions contemplated by
this Agreement and such other agreements and instruments at the Initial Closing,
and compliance with the terms, conditions and provisions of this Agreement and
such other agreements and instruments at the Initial Closing by Buyer, with or
without the giving of notice or the passage of time, or both, do not and will
not: (i) contravene any provision of Buyer's Articles of Incorporation or
By-Laws; or (ii) conflict with or result in a breach of or constitute a default
under any of the terms, conditions or provisions of any indenture, mortgage,
loan or credit agreement or any other agreement or instrument to which Buyer is
a party or by which it or its assets may be bound or affected, or any decree,
judgment or order of any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign, or any applicable law,
ordinance, rule or regulation, including but not limited to the Communications
Act.
Section 4.4 Investment. Buyer will acquire the Initial Interest for its
own account for investment and not with a present view to distribute or resell
the same.
Section 4.5 Qualifications. Buyer knows of no fact that, under existing
rules and regulations of the FCC, could reasonably be expected to cause the FCC
to determine that Buyer is not qualified to be the transferee of the Initial
Interest.
Section 4.6 Broker Neither Buyer nor any person acting on its behalf
has incurred any liability for any finder's or broker's fees or commissions in
connection with the transactions contemplated by this Agreement.
Section 4.7 Disclosure. No representation or warranty by Buyer in this
Agreement, and no schedule, document, statement, certificate furnished or to be
furnished by Buyer to Seller or the Company pursuant hereto, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
a material fact necessary to make the statements or facts contained herein or
therein not misleading
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ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER,
SALVATIERRA AND THE COMPANY REGARDING THE INITIAL
CLOSING
As an inducement to Buyer to enter into this Agreement and consummate
the transactions contemplated to occur upon the Initial Closing, Seller,
Salvatierra and the Company jointly and severally represent and warrant to Buyer
as follows:
Section 5.1 Organization and Standing. The Company is a limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of Delaware and shall be, on or before the Initial Closing,
duly qualified to conduct business in the State of Arizona. Seller is a limited
partnership formed under the laws of the State of Arizona and is in good
standing under the laws of the State of Arizona. Seller has delivered to Buyer
true and complete copies of (a) the Limited Partnership Agreement of Seller, (b)
the Partnership Agreement and (c) the Certificate of Limited Partnership of each
of Seller and the Company.
Section 5.2 Power and Authority. Seller and the Company each has full
partnership power and authority to enter into this Agreement and the other
agreements and instruments contemplated hereby, and to perform and comply with
the terms, covenants and conditions to be performed or complied with by Seller
or the Company hereunder or thereunder. This Agreement and each other agreement
or instrument contemplated hereby constitute, or, when executed and delivered,
will constitute, the legal, valid and binding obligations of Seller, Salvatierra
and the Company, as the case may be, enforceable in accordance with their terms,
except as such enforceability may be affected by bankruptcy, insolvency or
similar laws and by equitable principles.
Section 5.3 Conflicts. The execution and delivery of this Agreement and
the other agreements and instruments delivered or to be delivered by Seller,
Salvatierra or the Company pursuant to this Agreement, the consummation of the
transactions contemplated by this Agreement and such other agreements and
instruments at the Initial Closing, and compliance with the terms, conditions
and provisions of this Agreement and such other agreements and instruments at
the Initial Closing by Seller, Salvatierra and the Company, with or without the
giving of notice or the passage of time, or both, do not and will not: (i)
contravene any provision of the Partnership Agreement of either of Seller or the
Company, (ii) conflict with or result in a breach of or constitute a default
under any of the terms, conditions or provisions of any indenture, mortgage,
loan or credit agreement or any other agreement or instrument to which Seller or
the Company is a party or by which Seller, Salvatierra or the Company or any of
their respective assets may be bound or affected, or any decree, judgment or
order of any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, or any applicable law, ordinance, rule or
regulation, including the Communications Act; or (iii) result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the assets of Seller, Salvatierra or the Company or the Initial Interest or
give to others any interests or rights therein.
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Section 5.4 Exchange Act; Investment Company Act. No securities of the
Company are required to be registered under Section 12 of the Securities
Exchange Act of 1934, as amended. Neither Seller nor the Company is an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
Section 5.5 Ownership of Partnership Interests. Seller and Salvatierra
hold all of the issued and outstanding Partnership Interests. There are no
outstanding securities convertible into or exchangeable for, and no outstanding
options, warrants or other rights to purchase or to subscribe for, any
Partnership Interest, other than as set forth herein. There are no outstanding
agreements, arrangements, commitments or understandings of any kind affecting or
relating to the voting, issuance, purchase, redemption, repurchase or transfer
of any Partnership, other than as set forth herein or in the Partnership
Agreement. Each of Seller and Salvatierra has good and valid marketable title to
the Partnership Interest held by such person and the sole right to vote, sell,
transfer and deliver such Partnership Interest. Except as contemplated by this
Agreement, none of the Company, Salvatierra or Seller has agreed with any person
to sell, transfer or deliver any Partnership Interest. Upon the sale of the
Initial Interest to Buyer hereunder, Buyer shall have good and valid title
thereto, free and clear of all liens, encumbrances, security interests and
restrictions of any kind.
Section 5.6 Assets and Liabilities of the Company. As of the Initial
Closing Date, the Company shall own and have good and marketable title to the
assets and properties listed on Schedule 5.6, and shall have no debts,
obligations or liabilities of any kind whatsoever, whether accrued, contingent
or otherwise, except those arising under the Site License (other than as a
result of default thereunder) and the Transaction Documents.
Section 5.7 Broker None of Seller, Salvatierra or the Company or any
person acting on their behalf has incurred any liability from any finder's or
broker's fees or commissions in connection with the transactions contemplated by
this Agreement, except for such fees and commissions owed by Seller to Kalil and
Company, which fees and commissions shall be the sole responsibility of Seller.
Section 5.8 Site License. Seller has delivered to Buyer a true and
complete copy of the Site License. The Site License is in full force and effect
and is valid, binding, and enforceable in accordance with its terms. Seller has
full legal power and authority to assign its rights under the Site License to
the Company, subject to the approval of the City of Phoenix, Arizona Parks and
Recreation Board, in accordance with this Agreement, and neither such assignment
nor the purchase by Buyer of the Initial Interest or the Option Interest will
affect the validity, enforceability, or continuation of the Site License.
Section 5.9 Disclosure. No representation or warranty by Seller,
Salvatierra or the Company in this Agreement, and no schedule, document,
statement, certificate furnished or to be furnished by Seller, Salvatierra or
the Company to Buyer pursuant hereto, contains or
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will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading.
ARTICLE 6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
AT THE INITIAL CLOSING
The obligations of Buyer at the Initial Closing are subject to the
fulfillment prior to or at the Initial Closing of the following conditions (any
one or more of which may be waived in whole or in part by Buyer at Buyer's
option):
Section 6.1 Representations and Warranties. The representations and
warranties of Seller, Salvatierra and the Company contained in this Agreement
relating to the Initial Closing shall be true and complete in all material
respects on and as of the Initial Closing Date, with the same force and effect
as though made on and as of such date.
Section 6.2 Covenants and Conditions. Seller, Salvatierra and the
Company shall have performed in all material respects all of their respective
obligations and agreements and complied with all of their respective covenants
and conditions contained in this Agreement to be performed or complied with by
Seller, Salvatierra and the Company on or before the Initial Closing Date.
Section 6.3 Contribution. The 316 Consent shall have become a Final
Order, and Seller shall have contributed the Construction Permit to the Company
in accordance with Section 2.5.
Section 6.4 Site License. Seller shall have obtained the consent of the
Phoenix Parks and Recreation Board to the assignment of the Site License to the
Company and the other transactions contemplated hereby, shall have contributed
the Site License to the Company in accordance with Section 2.5 and the Site
License shall be in full force and effect and enforceable in accordance with its
terms.
Section 6.5 Deliveries. Seller, Salvatierra and the Company shall have
delivered to Buyer the following, in form and substance reasonably satisfactory
to Buyer and Buyer's Counsel:
(a) Initial Interest. Documents evidencing the transfer of the
Initial Interest to Buyer, free and clear of any liens, claims, pledges, charges
or any other encumbrance of any nature whatsoever.
(b) Resolutions. Copies of written actions or resolutions
adopted by the general partner of each of Seller and the Company, authorizing
and approving the execution and delivery of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby, certified by the general partner of Seller and the Company,
respectively, as being true and complete on the Initial Closing Date.
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(c) Certificates. Certificates, dated as of the Initial
Closing Date, executed on behalf of Seller, Salvatierra and the Company, each
certifying: (1) that the representations and warranties of Seller, Salvatierra
and the Company contained in this Agreement are true and complete in all
material respects as of the Initial Closing Date as though made on and as of
that date; and (2) that Seller, Salvatierra and the Company have performed in
all material respects all of their respective obligations and agreements in this
Agreement to be performed and complied with all of their respective covenants
and conditions contained in this Agreement to be complied with by Seller,
Salvatierra or the Company, respectively, on or before the Initial Closing Date.
(d) Opinions of Counsel. Opinions of Seller's and the
Company's counsel and communications counsel dated as of the Initial Closing
Date in form and substance reasonably satisfactory to Buyer and Buyer's counsel.
(e) Consents. Evidence of receipt of any Consent.
(f) Partnership Agreement. A copy of the Partnership Agreement
executed by Seller.
(g) Additional Instruments. Such additional instruments and
documents as may be required to consummate the transactions contemplated hereby.
Section 6.6 Adverse Proceedings. Except for proceedings relating to the
television broadcast industry generally, there shall not be any order, decree or
judgment in effect or any lawsuit, claim, legal action, proceeding or
investigation pending or threatened before any court, administrative agency or
arbitrator which is reasonably likely to result in any material adverse effect
upon the construction, business, property, assets or condition (financial or
otherwise) of the Station or which seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken pursuant to or in
connection with this Agreement.
Section 6.7 Extension Application. If the Initial Closing shall not
have occurred on or before December 6, 1996, the FCC shall have granted the
Extension Application without the imposition on Seller or the Station of any
conditions that could reasonably be expected to have a material adverse effect
on the construction or operation of the Station, and such grant shall have
become a Final Order.
Section 6.8 Limited Partnership Interest. Following the consumation of
the purchase of the Initial Interest by Buyer and the acquisition of
Salvatierra's interest in the Company by Seller, Buyer shall be the sole limited
partner of the Company.
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ARTICLE 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER,
SALVATIERRA AND THE COMPANY AT THE INITIAL CLOSING
The obligations of Seller, Salvatierra and the Company at the Initial
Closing are subject to the fulfillment prior to or at the Initial Closing of the
following conditions (any one or more of which may be waived in whole or in part
by Seller at its option):
Section 7.1 Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement relating to the Initial Closing
shall be true and complete in all material respects on and as of the Initial
Closing Date, with the same force and effect as though made on and as of such
date.
Section 7.2 316 Consent. The 316 Consent shall have become a Final
Order.
Section 7.3 Covenants and Conditions. Buyer shall have performed in all
material respects all of its obligations and agreements and complied with all of
its covenants and conditions contained in this Agreement to be performed or
complied with by Buyer on or before the Initial Closing Date.
Section 7.4 Deliveries. Buyer shall have delivered to Seller the
following in form and substance reasonably satisfactory to Seller:
(a) Purchase Price. The Purchase Price described in Section
2.3.
(b) Resolutions. Copies of resolutions adopted by the Board of
Directors of Buyer, authorizing and approving the execution of this Agreement
and the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby, certified by its Secretary as being true and
correct on the Initial Closing Date.
(c) Certificate. A certificate, dated as of the Initial
Closing Date, executed 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 Initial Closing Date as though made
on and as of that date, and (2) that Buyer has performed in all material
respects all of its obligations and agreements in this Agreement to be performed
and complied with all of the covenants and conditions contained in the Agreement
to be complied with by Buyer on or before the Initial Closing Date.
(d) Opinion of Counsel. An opinion of Buyer's counsel dated as
of the Initial Closing Date in form and substance reasonably satisfactory to
Seller and Seller's counsel.
(e) Partnership Agreement. A copy of the Partnership Agreement
executed by Buyer.
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(f) Additional Instruments. Such additional instruments and
documents as may be required to consummate the transactions contemplated hereby.
Section 7.5 Adverse Proceedings. There shall not be any order, decree
or judgment in effect or any lawsuit, claim, legal action, proceeding or
investigation pending or threatened before any court, administrative agency or
arbitrator which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection with
this Agreement.
ARTICLE 8. CONSTRUCTION AND OPERATION OF THE STATION
Section 8.1 General. Following the date hereof and prior to the Second
Closing Date: (i) none of Salvatierra, the Company or Seller shall enter into
any contracts or agreements for the sale or transfer of any assets of the
Company or the Station or any Partnership Interests or creating any security
interests, mortgages, liens or encumbrances on either the assets of the Company
or the Station (except pursuant to the Construction and Lease Agreement) or any
Partnership Interests; (ii) the Company shall be operated in a prudent and
businesslike manner and in accordance with the other covenants in this Article
8; (iii) none of Salvatierra, Seller or the Company shall permit the Partnership
Agreement to be amended; and (iv) none of Salvatierra, Seller or the Company
shall take or permit, or agree to take or permit, any action within the control
of any of them that is inconsistent with the proper performance of their
obligations under this Agreement, including the issuance or sale of any
Partnership Interest or the granting to any person or entity, other than Buyer,
an option or similar right to purchase any Partnership Interest.
Section 8.2 FCC Consent.
(a) The conveyance of the Option Interest by Seller to Buyer
as contemplated by this Agreement is subject to the prior consent and approval
of the FCC.
(b) Subject to the provisions of Sections 9.1(c) and 9.2(c),
Seller and Buyer shall prepare and, within five (5) business days after the
first to occur of Buyer's receipt of the Put Notice (as defined below) or
Seller's receipt of the Call Notice (as defined below), shall file with the FCC
an appropriate application for the FCC Consent. Seller and Buyer shall
thereafter prosecute the application for the FCC Consent with all diligence and
otherwise use their respective best efforts to obtain a grant of the application
for the FCC Consent as expeditiously as possible. 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 (i) the condition was imposed on it as
the result of a circumstance the existence of which does not constitute a breach
by that party of any of its representations, warranties, or covenants hereunder,
and (ii) compliance with the condition would have a material adverse effect upon
it. Buyer and Seller shall oppose any petitions to deny or other objections
filed with respect to the application for the FCC Consent and any requests for
reconsideration or judicial review of the FCC Consent.
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(c) If the Second 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 Article 16, the parties shall jointly
request one or more extensions of the effective period of the FCC Consent. No
extension of the effective period of the FCC Consent shall limit the exercise by
either party of its right to terminate the Agreement under Article 16.
Section 8.3 Employee Benefit Plans. Except as may be consented to in
writing by Buyer, the Company will not adopt any employee benefit plans or
arrangements applicable to the employees of the Company, including, without
limitation, pension or thrift plans, individual or supplemental pension or
accrued compensation arrangements, incentive plans, or bonus and termination
arrangements; provided, however, that nothing herein shall prevent the Company
from adopting reasonable policies on vacation and sick leave for its employees
or offering them participation in employer-paid group health plans or any other
benefits required by law.
Section 8.4 Labor Relations. None of Seller, Salvatierra or the Company
(i) will enter into any collective bargaining agreement with respect to the
Station; (ii) will enter into any written or oral contracts of employment; (iii)
will incur any fixed or contingent liabilities or obligations with respect to
any person employed at the Station; and (iv) will fail to comply in any material
respect with applicable laws, rules and regulations relating to the employment
of labor including, without limitation, those related to wages, hours,
collective bargaining, occupational safety, discrimination, and the payment of
social security and other payroll related taxes.
Section 8.5 Licenses. None of Seller, Salvatierra or the Company shall
cause, or fail to take any action within its reasonable control necessary to
prevent, (i) any License to expire, be surrendered or modified; (ii) any
governmental authority to institute proceedings for the suspension, revocation,
or adverse modification of any License; (iii) any governmental authority to
dismiss or deny any pending application concerning the construction or operation
of the Station.
Section 8.6 Compliance with Laws. The Seller and the Company shall
construct and operate the Station in all material respects in accordance with
all applicable laws, rules and regulations and the terms of all Licenses.
Section 8.7 Construction of the Station. None of Seller, Salvatierra or
the Company shall take any action that interferes with or delays the
construction of the Station pursuant to the Construction and Lease Agreement.
Section 8.8 Notification. Seller, Salvatierra and the Company shall
give Buyer prompt written notice of any material change in any of the
information contained in the
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representations and warranties of Seller and the Company set forth in this
Agreement or in the Schedules hereto.
Section 8.9 Preservation of Business. Seller, Salvatierra and the
Company shall preserve the business and organization of the Station intact and
use their best efforts to keep available to the Station its employees and to
preserve the Station's relationships with suppliers, advertisers and others
having business relations with it, to the end that the business, operations, and
prospects of the Station shall be unimpaired at the Second Closing.
Section 8.10 Performance of Agreements. The Company, Seller and Buyer
shall perform their respective obligations under the Time Brokerage Agreement
and Construction and Lease Agreement, in each case in accordance with the terms
thereof.
Section 8.11 Cable Carriage. Consistent with the rules and regulations
of the FCC, the Company shall notify the cable operators within the Phoenix,
Arizona Area of Dominant Influence of the Station's election to be carried on a
"must-carry" basis on such cable operators' cable television systems. The
Company shall use its best efforts to provide such notices on the date that is
sixty (60) days prior to commencing operations pursuant to program test
authority as defined by FCC rules and regulations, but in no event shall such
notices be provided later than thirty (30) days after the commencement of such
operations.
ARTICLE 9. THE OPTIONS AND THE SECOND CLOSING
Section 9.1 Call Option.
(a) In consideration of Buyer's undertakings herein and in the
Transaction Documents, the receipt and sufficiency of which are hereby
acknowledged by Seller, Seller hereby grants to Buyer an exclusive and
irrevocable option to purchase (or to allow Buyer's designee to purchase) from
Seller the Option Interest (the "Call Option"), free and clear of any claims,
liabilities, security interests, mortgages, liens, pledges, conditions, charges
or encumbrances of any nature whatsoever.
(b) Buyer may give written notice to Seller of Buyer's
intention to exercise the Call Option (the "Call Notice") at any time during the
ninety (90) day period beginning on the one year anniversary of the date of the
Station's commencement of operations pursuant to program test authority (the
"Option Period"). In the event that Buyer fails to give Seller the Call Notice
prior to the end of the Option Period, then the Call Option shall expire.
(c) Upon Buyer's exercise of the Call Option, Seller and Buyer
shall file such notices with, and obtain such approvals of, any governmental
authorities that are required for the acquisition by Buyer or Buyer's designee
of the Option Interest and shall diligently and expeditiously prosecute such
filings.
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Section 9.2 Put Option.
(a) In consideration of Seller's and the Company's
undertakings herein and in the Transaction Documents, the receipt and
sufficiency of which are hereby acknowledged by Buyer, Buyer hereby grants to
Seller an exclusive and irrevocable option to require Buyer or Buyer's designee
(which shall be an affiliate or financially responsible person or entity) to
purchase from Seller the Option Interest (the "Put Option"), free and clear of
any claims, liabilities, security interests, mortgages, liens, pledges,
conditions, charges or encumbrances of any nature whatsoever.
(b) Seller may give written notice to Buyer of Seller's
intention to exercise the Put Option (the "Put Notice") at any time during the
Option Period. In the event that Seller fails to give Buyer the Put Notice prior
to the end of the Option Period, then the Put Option shall expire.
(c) Upon Seller's exercise of the Put Option, Buyer and Seller
shall file such notices with, and obtain such approvals of, any governmental
authorities that are required for the acquisition by Buyer or Buyer's designee
of the Option Interest and shall diligently and expeditiously prosecute such
filings.
Section 9.3 The Second Closing. The Second Closing shall take place at
10:00 a.m., Washington, D.C. time, on a date to be set by Buyer on no less than
five (5) days' written notice to Seller, which date shall not be sooner than the
first business day after the date on which the FCC Consent is granted and shall
not be later than the tenth business day after the date on which the FCC Consent
has become a Final Order, subject to the satisfaction of all other conditions
precedent to the holding of the Second Closing. The Second Closing shall take
place at the offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue,
N.W., Suite 800, Washington, D.C. 20036, or such other place as the parties
shall mutually agree. If Buyer fails to specify the date for Second Closing
prior to the fifth business day after the date upon which the FCC Consent has
become a Final Order, the Second Closing shall take place on the tenth business
day after the date upon which the FCC Consent has become a Final Order.
Section 9.4 Purchase Price for Option Interest. The purchase price for
the Option Interest (the "Option Price") shall be Six Million Six Hundred
Thousand Dollars ($6,600,000). The Option Price shall be paid at the Second
Closing by Buyer or Buyer's designee to Seller by wire transfer of immediately
available federal funds or other means mutually satisfactory to Buyer and Seller
in accordance with written instructions provided by Seller to Buyer no less than
two (2) business days prior to the Second Closing Date.
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ARTICLE 10. COVENANTS OF THE COMPANY AND SELLER REGARDING
THE SECOND CLOSING
Seller and the Company further covenant to Buyer as follows:
Section 10.1 Contracts. Within ten (10) days after Seller receives the
Call Notice or Buyer receives the Put Notice, Seller shall deliver to Buyer a
true and complete list and copies of the Contracts. The Contracts shall be valid
and binding agreements of the Company enforceable in accordance with their
terms. The Company shall have complied with the Contracts in all material
respects, and the Company shall not be in default under any of the Contracts;
provided the Buyer is not in material default under any such Contracts to which
it is a party.
Section 10.2 Copyrights, Trademarks and Similar Rights. Within ten (10)
days after Seller receives the Call Notice or Buyer receives the Put Notice,
Seller shall deliver to Buyer a true and complete list and copies of all
Intangibles.
Section 10.3 Governmental Authorizations. Within ten (10) days after
Seller receives the Call Notice or Buyer receives the Put Notice, Seller shall
deliver to Buyer a true and complete list and copies of the Licenses. The
Company shall be the authorized legal holder of the Licenses. At all times prior
to the Second Closing Date, the Licenses shall comprise all of the licenses,
permits and other authorizations required from governmental and regulatory
authorities for the lawful conduct of the business and operations of the Station
and none of the Licenses shall be subject to any restriction or condition which
would limit the full operation of the Station. The Licenses shall be in full
force and effect, and the operation of the Station shall be in accordance
therewith.
Section 10.4 Title to and Condition of Real Property. Within ten (10)
days after Seller receives the Call Notice or Buyer receives the Put Notice,
Seller shall deliver to Buyer a true and complete description of all the Real
Property and the Company's interests therein. The Real Property shall comprise
all real property interests necessary to conduct the business and operations of
the Station as then conducted. The Company shall have good and marketable fee
simple title, insurable at standard rates, to all fee estates (including the
improvements thereon) included in the Real Property, free and clear of all
liens, mortgages, pledges, covenants, easements, restrictions, encroachments,
leases, charges, and other claims and encumbrances of any nature whatsoever, and
without reservation or exclusion of any mineral, timber, or other rights or
interests. All Real Property (including the improvements thereon) (i) shall be
in good condition and repair consistent with its present use, (ii) shall be
available for immediate use in the conduct of the business and operations of the
Station, and (iii) shall comply with all applicable building or zoning codes and
the regulations of any governmental authority having jurisdiction.
Section 10.5 Title to and Condition of Tangible Personal Property.
Within ten (10) days after Seller receives the Call Notice or Buyer receives the
Put Notice, Seller shall
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deliver to Buyer a true and complete list of all material items of Tangible
Personal Property. Seller shall own and have good title to each item of Tangible
Personal Property, and none of the Tangible Personal Property shall be subject
to any security interest, mortgage, pledge, conditional sales agreement, or
other lien or encumbrance. All items of transmitting and studio equipment
included in the Tangible Personal Property (i) shall have been maintained in a
manner consistent with generally accepted standards of good engineering
practice, and (ii) shall permit the Station to operate in accordance with the
terms of the FCC Licenses and the rules and regulations of the FCC, and with all
other applicable federal, state, and local statutes, ordinances, rules, and
regulations.
Section 10.6 Compliance With Laws. The Company shall comply in all
material respects with all laws, regulations and governmental orders applicable
to the ownership or use of its assets and the conduct of the business and
operations of the Station.
Section 10.7 Reports. The Company shall file all returns, reports and
statements which the Station is required to file with the FCC or with any other
governmental agency.
Section 10.8 Public Inspection File. The Company shall maintain the
Station's public inspection file at the Station's main studio and cause it to
contain the original or copies of all applications, reports and other documents
and records relating to the operation of the Station that are required to be in
such file under the rules and regulations of the FCC.
Section 10.9 Taxes. (a) The Company shall file all Tax Returns and
shall have paid all Taxes shown on such Tax Returns on any assessment received
by the Company, provided that the Company shall not be required to pay any Tax
the validity of which is being contested by the Company in good faith and
pursuant to appropriate proceedings, (b) the company shall prepare such reports
and Tax Returns shall have been prepared in accordance with applicable
provisions of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder and with applicable provisions of state laws, rules and
regulations concerning taxation, and (c) the Company shall not waive any statute
of limitations with respect to the payment of any taxes.
Section 10.10 Distributions and Redemptions. The Company shall not make
at any time any distribution in respect of any Partnership Interests or other
equity interests of the Company, or any direct or indirect redemption, purchase
or other acquisition of such Partnership Interests or other equity interests.
Section 10.11 Liabilities of the Company. As of the Second Closing
Date, the Company shall have no liabilities or obligations of any sort
whatsoever, except those arising under the Licenses, those arising under the
Transaction Documents and those consented to in writing by Buyer.
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ARTICLE 11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
AT THE SECOND CLOSING
The obligations of Buyer under this Agreement at the Second Closing are
subject to the fulfillment prior to or at the Second Closing of the following
conditions (any one or more of which may be waived in whole or in part by Buyer
at Buyer's option):
Section 11.1 Representations and Warranties. The representations and
warranties of Seller and the Company contained in this Agreement shall be true
and complete in all material respects on and as of the Second Closing Date, with
the same force and effect as though such representations and warranties had been
made on and as of such date. For the purpose of this Section 11.1, each
reference in Article 5 to the "Initial Closing," "Initial Interest" or "Initial
Closing Date" shall be deemed to be a reference to the Second Closing, Option
Interest and Second Closing Date, respectively.
Section 11.2 Covenants and Conditions. Seller and the Company shall
have performed in all material respects all of their respective obligations and
agreements and complied with all of their respective covenants and conditions
contained in this Agreement to be performed or complied with by Seller and the
Company on or before the Second Closing Date.
Section 11.3 FCC Consent. The FCC Consent shall have become a Final
Order.
Section 11.4 Consents. All material consents and approvals of all other
governmental authorities, bodies or agencies necessary for the consummation of
the transactions contemplated by this Agreement to occur at the Second Closing,
shall have been obtained, all without any conditions which would be unduly
burdensome on, or have a material adverse effect upon Buyer or the Company.
Section 11.5 Deliveries. Seller and the Company shall have delivered to
Buyer the following, in form and substance reasonably satisfactory to Buyer and
Buyer's Counsel:
(a) Option Interest. Documents evidencing the transfer of the
Option Interest to Buyer or Buyer's designee, free and clear of any liens,
claims, pledges, charges or any other encumbrance of any nature whatsoever.
(b) Resolutions. Copies of resolutions adopted by the general
partner of Seller and the Company, respectively, authorizing and approving the
execution and delivery of this Agreement and the Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, certified by
the general partner of Seller and the Company, respectively, as being true and
complete on the Second Closing Date.
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent.
- 20 -
<PAGE> 26
(d) Estoppel Certificates. Estoppel Certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property Interests.
(e) Certificates. Certificates, dated as of the Second Closing
Date, executed on behalf of Seller and the Company, each certifying: (1) that
the representations and warranties of Seller and the Company contained in this
Agreement are true and complete in all material respects as of the Second
Closing Date as though made on and as of that date; and (2) that Seller and the
Company have performed in all material respects all of their respective
obligations and agreements in this Agreement to be performed and complied with
all of their respective covenants and conditions contained in this Agreement to
be complied with by Seller or the Company, respectively, on or before the Second
Closing Date.
(f) Opinions of Counsel. Opinions of Seller's and the
Company's counsel and communications counsel dated as of the Second Closing
Date, in form and substance reasonably satisfactory to Buyer and Buyer's
counsel.
(g) Additional Instruments. Such additional instruments and
documents as may be required to consummate the transactions contemplated hereby.
Section 11.6 Adverse Proceedings. Except for proceedings relating to
the television broadcast industry generally, there shall not be any order,
decree or judgment in effect or any lawsuit, claim, legal action, proceeding or
investigation pending or threatened before any court, administrative agency or
arbitrator which is reasonably likely to result in any material adverse effect
upon the construction, business, property, assets or condition (financial or
otherwise) of the Station or which seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken pursuant to or in
connection with this Agreement.
Section 11.7 Time Brokerage Agreement. The Time Brokerage Agreement
shall be in full force and effect, unless earlier terminated by the parties
thereto pursuant to Section 6.1(c) of the Time Brokerage Agreement or by Buyer
pursuant to Section 6.1(e) thereof, and the Company shall have complied in all
material respects with its obligations thereunder.
Section 11.8 Adverse Change. Between the date of this Agreement and the
Second Closing Date, there shall have been no damage, destruction, or loss
affecting any assets that are material to the conduct of the business of the
Station, other than as a result of any action by Buyer under either the
Construction and Lease Agreement or the Time Brokerage Agreement.
ARTICLE 12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
AND THE COMPANY AT THE SECOND CLOSING
The obligations of Seller and the Company at the Second Closing under
this Agreement are subject to the fulfillment prior to or at the Second Closing
of the following
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<PAGE> 27
conditions (any one or more of which may be waived in whole or in part by Seller
or the Company at their option):
Section 12.1 Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement relating to the Second Closing
shall be true and complete in all material respects on and as of the Second
Closing Date, with the same force and effect as though such representations and
warranties had been made on and as of such date. For the purpose of this Section
12.1, each reference in Article 4 to the "Initial Closing," "Initial Interest"
or "Initial Closing Date" shall be deemed to be a reference to the Second
Closing, Option Interest and Second Closing Date, respectively.
Section 12.2 Covenants and Conditions. Buyer shall have performed in
all material respects all of its obligations and agreements and complied with
all of its covenants and conditions contained in the Agreement to be performed
or completed with or before the Second Closing Date.
Section 12.3 FCC Consent. The FCC shall have granted the FCC Consent.
Section 12.4 Consents. All material consents and approvals of all other
governmental authorities, bodies or agencies necessary for the consummation of
the transactions contemplated by this Agreement to occur at the Second Closing,
shall have been obtained, all without any conditions which would be unduly
burdensome on, or have a material adverse effect upon Seller.
Section 12.5 Deliveries. Buyer (or Buyer's designee) shall have
delivered the following, in form and substance reasonably satisfactory to
Seller, the Company and their Counsel:
(a) Option Price. The Option Price.
(b) Resolutions. Copies of resolutions adopted by the Board of
Directors of Buyer or its designee, authorizing and approving the consummation
of the transactions contemplated hereby and, in the case of Buyer, the execution
of this Agreement, certified by its Secretary as being true and correct on the
Second Closing Date.
(c) Officer's Certificate. A certificate, dated as of the
Second Closing Date, executed on behalf of Buyer (or Buyer's designee) by the
Chairman or President of Buyer, certifying (1) that the representations and
warranties of Buyer contained in this Agreement are (or that such
representations, if made by Buyer's designee, would be) true and complete in all
material respects as of the Second Closing Date as though made on and as of that
date, and (2) that Buyer (or Buyer's designee) has performed in all material
respects all of its obligations and agreements in this Agreement to be performed
and complied with all of the covenants and conditions in this Agreement to be
complied with by Buyer (or Buyer's designee) on or prior to the Second Closing
Date.
- 22 -
<PAGE> 28
(d) Opinion of Counsel. An opinion of Buyer's (or Buyer's
Designee's) counsel dated as of the Second Closing Date, in form and substance
reasonably satisfactory to Seller and Seller's counsel.
Section 12.6 Time Brokerage Agreement. The Time Brokerage Agreement
shall be in full force and effect, unless earlier terminated by the parties
thereto pursuant to Section 6.1(c) of the Time Brokerage Agreement or by the
Company pursuant to Section 6.1(e) thereof, and Buyer shall have complied in all
material respects with its obligations thereunder.
Section 12.7 Adverse Proceedings. There shall not be any order, decree
or judgment in effect or any lawsuit, claim, legal action, proceeding or
investigation pending or threatened before any court, administrative agency or
arbitrator which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection with
this Agreement.
ARTICLE 13. JOINT COVENANTS
Section 13.1 Confidentiality. Buyer, on the one hand, and each of
Seller, Salvatierra and the Company, on the other hand, shall each keep
confidential all confidential information obtained by it with respect to the
other in connection with this Agreement (except for such disclosure to
attorneys, bankers, underwriters, and investors, as may be appropriate in the
furtherance of the transactions contemplated by this Agreement and except as may
be required by law, regulation or securities exchange rules), and if the
transactions contemplated hereby are not consummated for any reason, each shall,
to the extent reasonably possible, return to the other, without retaining a copy
thereof, any confidential schedules, documents or other written information
obtained from the other in connection with this Agreement and the transactions
contemplated hereby.
Section 13.2 Cooperation. Buyer, Salvatierra, Seller and the Company
shall cooperate fully with each other and their respective counsels and
accountants in connection with any actions required to be taken as part of their
obligations under this Agreement. No party shall take any action that is
inconsistent with its obligations under this Agreement, that would render any of
its representations or warranties herein untrue or incomplete or that could
hinder or delay the consummation of the transactions contemplated by this
Agreement. Notwithstanding the foregoing, and except as otherwise expressed in
this Agreement, Buyer shall have no obligation (a) to expend funds to obtain any
of the Consents or (b) to agree to any adverse change in any License or Contract
in order to obtain a Consent required with respect thereto.
Section 13.3 Governmental Consents. If any governmental consent
required for the consummation of the transactions contemplated hereby or the
satisfaction of any condition contained herein includes any condition, the party
upon which such condition is imposed
- 23 -
<PAGE> 29
shall use its best efforts to comply therewith before the respective Closing to
which such consent relates; provided, however, that no party hereto shall be
required to comply with any condition that would be unduly burdensome or would
have a material adverse effect upon such party.
Section 13.4 Station Operation. Buyer and Seller specifically
acknowledge that, as of the Initial Closing Date, the Station will not have
commenced broadcast operations. Seller and the Company shall use their
respective best efforts to complete construction of the Station and commence
broadcast operations at the Station as expeditiously as possible. Seller and the
Company shall file such applications with the FCC and other governmental
authorities as are necessary to enable the Station to operate in compliance with
FCC and other applicable rules and regulations.
ARTICLE 14. TRANSFER TAXES; FEES AND EXPENSES
Section 14.1 Transfer Taxes. Buyer and Seller shall each pay one-half
of all transfer and documentary taxes or fees incurred in connection with the
transfer of the Initial Interest and Option Interest; provided, however, that
Seller shall be responsible for the payment of any federal, state or local
income tax applicable to Seller or the Company in connection with the
transactions contemplated by this Agreement.
Section 14.2 Filing Fees. Buyer and Seller shall each pay one-half of
all FCC filing fees and any other filing fee imposed by any other governmental
authority in connection with the transactions contemplated hereby.
Section 14.3 Expenses. All costs and expenses incurred in connection
with the negotiation, preparation and performance of and compliance with this
Agreement shall be borne by the party incurring such costs and expenses. In
connection with the FCC application for the transfer of the Option Interest to
Buyer at the Second Closing, Seller shall be responsible for the payment of any
costs or expenses that are incurred as a result of the filing of an objection to
such FCC application based upon the qualifications of Seller or the Company, or
the acts or omissions of Seller or the Company with respect to the acquisition
or construction of the Station, and Buyer shall be responsible for the payment
of any costs or expenses that are incurred as a result of the filing of an
objection to such FCC application based upon the qualifications of Buyer or the
acts or omissions of Buyer with respect to the acquisition or construction of
the Station. Seller shall have paid Kalil and Company on or before the Second
Closing Date the broker's fees and commissions payable by Seller in connection
with the transactions contemplated by this Agreement.
- 24 -
<PAGE> 30
ARTICLE 15. RISK OF LOSS
Section 15.1 Risk of Loss. The risk of any loss, damage or impairment,
confiscation or condemnation of any of the assets of the Company from any cause
whatsoever shall be borne by the Company. In the event of any such loss, damage
or impairment, confiscation or condemnation, the proceeds of, or any claim for
any loss payable under, any insurance policy, judgment or award with respect
thereto shall be applied to repair, replace or restore such assets to their
prior condition as soon as possible after such loss, impairment, condemnation or
confiscation.
Section 15.2 Postponement of the Second Closing Date. If any damage or
destruction of Seller's or the Company's assets occurs and such assets cannot be
restored or replaced on or before the Second Closing Date, the Second Closing
Date shall be postponed, the exact date and time of such postponed closing date
to be such date and time within the effective period of the FCC Consent as shall
be as agreed to by Seller, Buyer and the Company. If such assets cannot be
restored or replaced within the effective period of the FCC Consent, the parties
shall join in requesting an extension of the effective period of such consent
for a period not to exceed an additional one hundred twenty (120) days from the
date of FCC Consent.
Section 15.3 Option to Terminate. In the event of any damage or
destruction of the assets, if such assets have not been restored or replaced
within the effective period of the FCC Consent as extended, Buyer may, if not
then in material default hereunder, terminate this Agreement forthwith without
any further obligation hereunder by written notice to Seller. Alternatively,
Buyer may, at its option, proceed to close this Agreement, in which event Seller
shall deliver to Buyer all insurance proceeds payable to it and received in
connection with such damage or destruction of the assets without limitation as
to the costs and expenses arising in connection with such restoration and
replacement.
ARTICLE 16. TERMINATION RIGHTS
Section 16.1 Termination by the Parties. This Agreement may be
terminated by either Buyer or Seller, if not then in material default, upon
written notice to the other upon the occurrence of any of the following:
(a) If the purchase of the Initial Interest by Buyer pursuant
to this Agreement shall not have occurred on or prior to December 31, 1997;
(b) If the other party defaults in the observance or in the
due and timely performance of any of its material covenants or agreements
contained herein and such default has not been cured within ten (10) days after
notice by that party not in default;
(c) If on the date of either of the Closings, any of the
conditions precedent to the obligations of a party set forth in this Agreement
as to that Closing have not been
- 25 -
<PAGE> 31
satisfied or waived by the other party and such condition shall remain
unsatisfied ten (10) days after notice thereof by the other party; or
(d) If there shall be in effect on the date of either of the
Closings any final judgment, decree or order that would prevent or make unlawful
the actions to be taken at such Closing.
Section 16.2 Termination by Buyer. This Agreement may be terminated by
Buyer, if not then in material default, upon written notice to Seller and the
Company, if the FCC denies the Extension Application or the 316 Application.
ARTICLE 17. SPECIFIC PERFORMANCE
Seller and the Company agree that the Initial Interest and the Option
Interest are unique and valuable properties such that Buyer shall be entitled to
sue for specific performance of the terms of this Agreement in the event of a
breach by Seller or the Company with respect to either the Initial Closing or
the Second Closing, in which case Seller and the Company shall waive the defense
that there is an adequate remedy at law.
ARTICLE 18. INDEMNIFICATION
Section 18.1 Seller's Indemnification. Seller shall indemnify, defend
and hold Buyer harmless from and against any and all loss, cost, liability,
damage and expense (including legal and other expenses incident thereto) of
every kind, nature or description, arising out of: (a) the breach of any
representation or warranty of Seller, Salvatierra or the Company set forth in
this Agreement or in any schedule or certificate delivered to Buyer pursuant
hereto; (b) the breach of any of their covenants or other agreements contained
in or arising out of this Agreement or the transactions contemplated hereby; or
(c) the conduct of the business and operations of the Station, including, but
not limited to, any liability, judgment or damages against the Company or
Seller, their officers, directors, employees or agents, as a result of
litigation involving the Company, Salvatierra, Seller or the operation of the
Station prior to each of the Closings, except as provided in the Construction
and Lease Agreement and the Time Brokerage Agreement.
Section 18.2 Buyer's Indemnification. Buyer shall indemnify, defend and
hold Seller harmless from and against any and all loss, cost, liability, damage
and expense (including legal and other expenses incident thereto) of every kind,
nature or description, arising out of: (i) the breach of any representation or
warranty of Buyer set forth in this Agreement (including the Schedules hereto);
(ii) the ownership or operation of the Station after the Second Closing, or
(iii) the breach of any of its other agreements contained in or arising out of
this Agreement or the transactions contemplated hereby.
Section 18.3 Notice of Claim. Buyer, on the one hand, and seller and
the Company, on the other hand, upon discovery of the breach of any of the
representations,
- 26 -
<PAGE> 32
warranties and covenants of the other under this Agreement, shall give to the
other prompt written notice of the discovery of such breach. If any action, suit
or proceeding shall be commenced against, or any claim or demand be asserted
against Buyer, Seller or the Company, as the case may be, in respect of which
such party proposes to seek indemnification from the other under this Article
19, then such party (hereinafter the "Claimant") shall notify the party from
whom indemnification is sought (hereinafter the "Indemnifying Party") to that
effect in writing with reasonable promptness and in any event, if such claim
arises out of a claim by a person or entity other than the Claimant, then within
fifteen (15) days after written notice of such claim was given to the Claimant.
Section 18.4 Assumption and Defense of Third-Party Action. If any claim
hereunder arises out of a claim against the Claimant by a third party, 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 fully
cooperate with the Indemnifying Party subject to reimbursement for actual
out-of-pocket expenses incurred 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 a claim requires immediate action,
the parties will make every effort to reach a decision with respect thereto as
expeditiously as possible. 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.
Section 18.5 Limitation Period. No party shall be entitled to
indemnification hereunder with respect to the breach of any representation or
warranty or any covenant to be performed before the Second Closing contained
herein unless such claim for indemnification is asserted in writing to the party
from whom indemnification is sought within six (6) months after the Second
Closing, except that any claim for indemnification related to a claim by a third
party, including claims by the Internal Revenue Service against the Company or
Seller, shall be made within the statute of limitations period applicable to
such third-party claim.
ARTICLE 19. OTHER PROVISIONS
Section 19.1 Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants, indemnities and agreements contained
herein are and will be deemed and construed to be continuing representations,
warranties, covenants, indemnities and agreements and will survive the
respective Closings as to which breach or claim is asserted until the
termination of the limitation period set forth in Section 18.5 hereof. Any
investigations by or on behalf of any party hereto prior to or after the
Closings shall not constitute a waiver as to enforcement of any representation,
warranty, covenant or agreement contained herein.
Section 19.2 Press Releases. Buyer, Seller and the Company shall
jointly prepare, and determine the timing of, any press release or other
announcement relating to the
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<PAGE> 33
transactions contemplated by the Agreement. No party will issue any press
release or make any other public announcement relating to the transactions
contemplated by the Agreement without the prior consent of the other parties,
except that any party may make any disclosure required to be made by it under
applicable law (including the federal securities laws) or by this Agreement if
it determines in good faith that it is appropriate to do so and provided further
that it gives prior notice of any such disclosure to the other party hereto.
Section 19.3 Further Assurances. At and after each of the Closings,
Buyer, Seller and the Company will, without further consideration, execute and
deliver such further instruments and documents and do such other acts and things
as the other parties may reasonably request in order to effect or confirm the
transactions contemplated by this Agreement.
Section 19.4 Benefit and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. No party hereto may assign, transfer, encumber or
otherwise convey its interest under this Agreement without the prior written
consent of the other parties hereto; provided, however, that Buyer may assign
its rights and interests under this Agreement to its lenders as collateral
security for Buyer's obligations to such lenders.
Section 19.5 Entire Agreement. This Agreement and the schedules
attached hereto embody the entire agreement and understanding of the parties and
supersedes any and all prior agreements, arrangements and understandings
relating to matters provided for herein. No amendment, waiver of compliance with
any provision or condition hereof, or consent pursuant to this Agreement will be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, extension or discharge is
sought.
Section 19.6 Headings. The headings are for convenience only and will
not control or affect the meaning or construction of the provisions of this
Agreement.
Section 19.7 Governing Law. The construction and performance of this
Agreement will be governed by the laws of the State of Delaware (except for the
choice of law provisions thereof). The exclusive venue for the adjudication of
any dispute or proceeding arising out of this Agreement shall be the state
courts of Arizona or the United States federal courts located in the State of
Arizona, and the parties hereto hereby consent to and submit to the jurisdiction
of any such federal court located in the State of Arizona.
Section 19.8 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:
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<PAGE> 34
To Buyer: Paxson Communications
of Phoenix-51, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Lowell W. Paxson
With a copy (which shall John R. Feore, Jr., Esq.
not constitute notice) to: Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
To Company and Seller: Hector Garcia Salvatierra, L.P.
11 West Medlock Drive
Phoenix, AZ 85013
Attention: Hector Garcia Salvatierra
With a copy (which shall John Quale, Esq.
not constitute notice) to: Wiley Rein & Fielding
1776 K Street, N.W.
Washington, DC 20006
To Salvatierra: Hector Garcia Salvatierra
11 West Medlock Drive
Phoenix, AZ 85013
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 21.8.
Section 19.9 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
Section 19.10 PCC Guaranty. In consideration of the execution and
delivery of this Agreement by Seller, the Company and Salvatierra and their
agreement to perform the transactions contemplated hereby, Paxson Communications
Corporation, a Florida corporation ("PCC"), hereby guarantees Buyer's full,
complete and timely performance of and compliance with all of its covenants,
agreements and obligations set forth herein and in the Construction and Lease
Agreement and Time Brokerage Agreement. PCC agrees that no formal change,
amendment, modification or waiver of any term or condition hereof or thereof, no
extension in whole or in part of the time for the performance by Buyer of any of
its obligations hereunder or thereunder, and no settlement, compromise, release,
surrender, modification or impairment of, or exercise or failure to exercise any
claim, right or remedy of any kind or nature in connection herewith or
therewith, shall affect, impair or discharge,
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<PAGE> 35
in whole or in part, the liability of PCC for the full prompt and unconditional
performance of the obligations of Buyer under this Agreement or the Construction
and Lease Agreement or Time Brokerage Agreement.
Section 19.11 Attorney's Fees. In the event an action is brought to
enforce or construe any of the terms or conditions of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees and costs.
Section 19.12 No Third Party Beneficiaries. This Agreement is not
intended to, and shall not be construed to, create any right enforceable by any
person or entity not a party hereto, except for permitted assigns hereunder.
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<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have duly executed this Purchase
Agreement as of the date first above written.
HECTOR GARCIA SALVATIERRA, L.P.
By: /s/ Hector Garcia Salvatierra
------------------------------------
Name:
Title: Gen. Ptr.
AMERICA 51, L.P.
By: Hector Garcia Salvatierra, L.P., its
General Partner
By: /s/ Hector Garcia Salvatierra
---------------------------
Name:
Title: Gen. Ptr.
/s/ HECTOR GARCIA SALVATIERRA
---------------------------------------
HECTOR GARCIA SALVATIERRA
PAXSON COMMUNICATIONS
OF PHOENIX-51, INC.
By: /s/ James B. Bocock
------------------------------------
Name: James B. Bocock
Title: President
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<PAGE> 37
Solely with respect to Section 19.10 hereof:
By: /s/ James B. Bocock
------------------------------------
Name: James B. Bocock
Title: President
- 32 -
<PAGE> 1
EXHIBIT 10.129
================================================================================
PAXSON COMMUNICATIONS OF
SEATTLE-24,-INC.
AND
WORLD TELEVISION OF WASHINGTON, L.L.C.
* * *
TELEVISION STATION KBCB(iV)
BELLINGHAM, WASHINGTON
* * *
LOAN, OPTION AND
RELATED TRANSACTIONS
* * *
AUGUST 19, 1996
================================================================================
<PAGE> 2
TELEVISION STATION KBCB(TV)
BELLINGHAM, WASHINGTON
* * *
LOAN, OPTION AND
RELATED TRANSACTIONS
* * *
AUGUST 19, 1996
* * *
INDEX
<TABLE>
<CAPTION>
TAB
---
<S> <C>
Loan Agreement (with Exhibits) by and between Paxson Communications
of Seattle-24, Inc. ("Paxson-24") and World Television of Washington, L.L.C
("World Television"), dated as of August 19, 1996 ...................................... 1
Escrow Agreement by and among Paxson-24, World Television and First Union
National Bank of Florida, dated as of August 19, 1996 .................................. 2
Time Brokerage Agreement (with Attachments) by and between World Television
and Paxson-24, dated as of August 19, 1996 ............................................. 3
Option Agreement (with Schedule) by and between Paxson-24 and World
Television, dated as of August 19, 1996 ................................................ 4
Lease Agreement by and between Paxson-24 and World
Television, dated as of August 19, 1996 ................................................ 5
Construction Agreement by and between Paxson-24 and World
Television, dated as of August 19, 1996 ................................................ 6
</TABLE>
<PAGE> 3
================================================================================
LOAN AGREEMENT
BY AND BETWEEN
WORLD TELEVISION OF WASHINGTON, L.L.C.
AND
PAXSON COMMUNICATIONS OF SEATTLE-24, INC.
RELATING TO
TELEVISION STATION KBCB(TV)
BELLINGHAM, WASHINGTON
* * *
AUGUST 19, 1996
================================================================================
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I AMOUNT AND TERMS OF THE LOANS...................................................................2
Section 1.1 The Loan...............................................................................2
Section 1.2 The Promissory Note....................................................................2
Section 1.3 Interest...............................................................................2
Section 1.4 Principal..............................................................................2
Section 1.5 Conditions on Repayment................................................................2
Section 1.6 Information............................................................................5
Section 1.7 Prepayment.............................................................................5
Section 1.8 Payment on Non-Business Days...........................................................6
Section 1.9 Taxes..................................................................................6
ARTICLE II CLOSING.........................................................................................6
Section 2.1 Closing Date...........................................................................6
ARTICLE III SECURITY........................................................................................6
Section 3.1 Security Interest......................................................................6
Section 3.2 Pledge Agreement.......................................................................6
Section 3.3 No Personal Guarantees.................................................................6
Section 3.4 Mortgages..............................................................................7
ARTICLE IV CONDITIONS OF LENDING...........................................................................7
Section 4.1 Conditions Precedent to Loan...........................................................7
Section 4.2 Compliance.............................................................................8
Section 4.3 Initial Disbursement Date..............................................................9
ARTICLE V REPRESENTATIONS AND WARRANTIES..................................................................9
Section 5.1 Existence and Standing.................................................................9
Section 5.2 Authorizations, Compliance with Laws...................................................9
Section 5.3 Capitalization........................................................................10
Section 5.4 No Consent............................................................................10
Section 5.5 Binding Obligations...................................................................10
Section 5.6 Litigation............................................................................10
Section 5.7 No Default............................................................................10
Section 5.8 Compliance with Laws..................................................................11
Section 5.9 Taxes.................................................................................11
Section 5.10 Title to Properties...................................................................11
Section 5.11 Certain Transactions; Absence of Undisclosed Liabilities..............................11
Section 5.12 Solvency..............................................................................11
Section 5.13 Material Misstatement.................................................................12
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VI COVENANTS OF BORROWER ................................................................12
Section 6.1 Affirmative Covenants.................................................................12
Section 6.2 Negative Covenants....................................................................14
Section 6.3 Reporting Requirements................................................................16
ARTICLE VII EVENTS OF DEFAULT.....................................................................17
Section 7.1 Events of Default.....................................................................17
Section 7.2 Effect of Event of Default............................................................19
ARTICLE VIII MISCELLANEOUS.........................................................................19
Section 8.1 No Waiver; Cumulative Remedies........................................................19
Section 8.2 Amendments............................................................................19
Section 8.3 Conflicts.............................................................................20
Section 8.4 Address for Notices...................................................................20
Section 8.5 Expenses..............................................................................20
Section 8.6 Binding Effect; Assignment............................................................21
Section 8.7 Governing Law.........................................................................21
Section 8.8 Severability of Provisions............................................................21
Section 8.9 Headings..............................................................................21
Section 8.10 Rights Affected by Extensions.........................................................22
Section 8.11 Survival of Representations and Warranties............................................22
Section 8.12 FCC Compliance........................................................................22
Section 8.13 Further Assurances....................................................................22
Section 8.14 Indemnification.......................................................................22
Section 8.15 Waiver................................................................................23
Section 8.16 Maximum Interest......................................................................23
</TABLE>
LIST OF EXHIBITS
Exhibit 1 -- Promissory Note
Exhibit 2 -- Security Agreement
Exhibit 3 -- Pledge Agreement
- ii -
<PAGE> 6
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 19th day of August, 1996, is by
and between PAXSON COMMUNICATIONS OF SEATTLE-24, INC., a Florida corporation
having its principal offices at 601 Clearwater Park Road, West Palm Beach,
Florida 33401 ("Lender"), and WORLD TELEVISION OF WASHINGTON, L.L.C., a Delaware
limited liability company having its principal offices at 6611 Santa Monica
Boulevard, Los Angeles, California 90038 ("Borrower").
W I T N E S E T H :
WHEREAS, Borrower is the permittee of television station KBCB(TV),
Channel 24, Bellingham, Washington (the "Station");
WHEREAS, Larry Rogow, Gary Spire and Frank Washington are the Members
of the Borrower (individually a "Member" and collectively "Members");
WHEREAS, Lender and the Borrower have agreed to enter into a
Construction Agreement, Lease Agreement and a Time Brokerage Agreement relating
to the Station;
WHEREAS, Lender and the Borrower have entered into an Option Agreement
dated as of August 19, 1996 (the "Option Agreement") and Escrow Agreement of the
same date, pursuant to which, among other things, Borrower has agreed to sell
and Lender has agreed to purchase all of the assets used or useful in the
operations of the Station subject to the prior approval of the Federal
Communications Commission ("FCC") and the terms and conditions set forth in the
Option Agreement;
WHEREAS, Lender has agreed to make a loan to Borrower in the total
principal amount of Three Million Seven Hundred Ninety Seven Thousand Five
Hundred Dollars ($3,797,500);
WHEREAS, such Loan shall be evidenced by a promissory note in the same
amount, which shall be issued by Borrower and dated as of the date hereof;
WHEREAS, the Borrower has agreed to guarantee its obligations under
this Agreement and the Note and to secure such guarantee by (i) granting Lender
a first party security interest in the Station's assets, ("Security Interest"),
(ii) by the pledge of all of the Members' interests in the Borrower (the
"Pledged Shares").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, Lender, Borrower and the Members agree as follows:
<PAGE> 7
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ARTICLE I AMOUNT AND TERMS OF THE LOANS
Section 1.1 The Loan. Lender agrees, upon the terms and conditions
hereinafter set forth, to make a loan or loans to Borrower in an aggregate
principal amount not to exceed at any one time outstanding Three Million Seven
Hundred Ninety Seven Thousand Five Hundred Dollars ($3,797,500) (the "Loan").
Section 1.2 The Promissory Note. The outstanding principal amount of
the Loan shall be evidenced by and subject to the terms of a promissory note,
dated of even date herewith, substantially in the form set forth as Exhibit 1
hereto (as amended, renewed, restated, increased, consolidated or substituted
from time to time, the "Note"), payable to the order of Lender and representing
the obligation of Borrower to pay Lender the amount of the Loan, with interest
thereon, as prescribed in Section 1.4. All references to the "Note" in this Loan
Agreement, the Security Agreement and the Pledge Agreement (each as defined in
this Loan Agreement) and in such other agreements and documents executed and
delivered in connection with this Loan Agreement shall be deemed to be
references to the Note referred to in this Section.
Section 1.3 Interest. The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum at all times equal to eight percent
(8%). Interest shall be calculated on the basis of a year of three-hundred and
sixty (360) days and the actual number of days elapsed during the period for
which such interest is payable. Interest shall begin to accrue on the
outstanding principal amount of the Loan on the date of disbursement of all or a
portion of the Loan and shall be repaid on a monthly basis commencing thirty
(30) days after the Station begins broadcasting pursuant to program test
authority.
Section 1.4 Principal. The outstanding principal balance of the Loan
plus any accrued interest thereon shall be due and payable on March 31, 1999
(the "Maturity Date") except that upon the Closing pursuant to the Option
Agreement, all unpaid Principal and Accrued Interest shall be forgiven.
Section 1.5 Conditions on Repayment.
(a) Lender understands and agrees that a completed sale and
Closing, pursuant to the Asset Purchase Agreement, shall thereby and at the
Closing of the asset purchase extinguish all outstanding obligations of Borrower
to pay principal, to repay interest or to pay any other charges with respect to
this Loan.
(b) In the event that the Lender declines to exercise the
option under the Option Agreement during its allowed period, then Borrower shall
receive forgiveness of all
<PAGE> 8
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outstanding obligation to repay principal, interest or any other charges with
respect to this Loan.
(c) In the event that the Parties enter into an Asset Purchase
Agreement, and no such purchase is consummated as the result of Material default
by Buyer (Lender here), and provided that Seller (Borrower here) is not in
default, then Borrower, in addition to such other relief as it may have, shall
receive forgiveness of all outstanding obligation to repay principal, interest
or any other charges with respect to this Loan.
(d) In the event that the Parties enter into the Asset
Purchase Agreement, and thereafter the agreement is terminated by Buyer
(Lender), as the result of material default by Seller then Lender, in addition
to such other relief as it may have, shall be entitled at its election in
writing to accelerate the maturity of the Loan, and all principal and accrued
interest shall be repaid by Borrower within 60 days of the termination of the
Asset Purchase Agreement.
(e) In the event that Lender exercises the Option accorded it
by the Option Agreement, and thereafter the Asset Purchase Agreement is
terminated, as the result of the Parties being unable to secure an FCC approval
of the assignment, notwithstanding their mutual good faith efforts, and neither
Party being in default of the provisions of the Asset Purchase Agreement, then
the loan shall be forgiven under the same terms and conditions as in
subparagraph (c) hereof, and the Buyer shall acquire a 49% membership interest,
under the same terms and conditions as in subparagraphs (f) and (g) hereof.
(f) In the event that subsections (b), (c), (d) or (e) hereof
are triggered, Borrower and its Members shall deliver to Lender, in
consideration therefor, a Forty-Nine Percent (49%) ownership interest in
Borrower free and clear of all encumbrances. This ownership interest shall be
conveyed to Lender at the termination of the Asset Purchase Agreement pursuant
to subsections (d) and (e) and at the forgiveness of the Loan pursuant to
subsections (b) or (c).
(g) At the time of any such conveyance of the ownership
interest to Lender, Borrower's Operating Agreement shall be amended to provide
that the 51% Members may not, without the consent of the Lender (as 49%
Members), cause the Borrower to do any of 14 things enumerated as follows,
provided that should the triggering event be a default under Section 1.5(c)
hereof, the actions of the 51% Members shall be restricted only to the actions
enumerated in Section 1.5(g) items 6, 12, 13 and 14.
(1) acquire or agree to acquire any business other
than the Station;
<PAGE> 9
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(2) [Reserved];
(3) become a party to any consolidation, merger,
recapitalization, or other form of reorganization or become a party to any joint
venture or other partnership;
(4) make, execute, or deliver any assignment for the
benefit of creditors;
(5) guarantee the obligation of any person;
(6) do any act in contravention of the Operating
Agreement;
(7) do any act that would make it impossible to carry
on the business of the Borrower except upon the dissolution of the Borrower in
accordance with the Operating Agreement;
(8) confess a judgment against the Borrower;
(9) use any funds or assets of the Borrower other
than for the benefit of the Borrower;
(10) possess Borrower property, or assign any rights
in specific Borrower property, for other than a Borrower purpose;
(11) cause or permit any property of Borrower to be
held other than in the name of the Borrower;
(12) take any action that would subject the Lender in
its capacity as the 49% owner to personal liability;
(13) admit additional Members to the Borrower;
(14) enter into any transaction with the 51% owners
or any of their Affiliates; or
(15) make any expenditure that is materially
inconsistent with the operating or capital budgets, which are the responsibility
of the 51% owner subject to the consent of the Lender; provided that the consent
of the Lender to any such expenditure shall not be unreasonably withheld.
<PAGE> 10
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(h) So long as Lender is a 49% member of Borrower, the
Borrower will not sell, transfer assign, or otherwise dispose of any material
part of the assets of the Station, without first obtaining a "Bona Fide Offer"
with respect to such assets. A "Bona Fide Offer" means a legally sufficient,
written offer to purchase the assets described therein, which was made in good
faith by an offeror that is not an Affiliate of the Borrower and is financially
capable of carrying out the terms of the offer. If the Borrower receives a Bona
Fide Offer (regardless whether the Borrower solicited such Bona Fide Offer) and
the Borrower desires to accept the Bona Fide Offer, the Borrower shall promptly
send a notice to the Lender:
(a) containing a true and complete copy of the Bona
Fide Offer, setting forth all the terms and conditions of the proposed sale or
other disposition of any material part of the assets of the Station;
(b) setting forth the name, business address, and
business or other occupation of the Person making the Bona Fide Offer; and
(c) offering to sell the assets that are the subject
of the Bona Fide Offer to the Lender on the terms set forth in the Bona Fide
Offer.
If the Lender desires to purchase the assets that are
the subject of the Bona Fide Offer pursuant to the Borrower's offer, the Lender
shall deliver a written acceptance of the Borrower's offer to the Borrower
within ten days after its receipt of the Borrower's offer. After compliance with
the foregoing provisions of this Section, if the assets that are the subject of
the Bona Fide Offer are not purchased by the Lender, the Borrower may sell those
assets so long as:
(a) the sale is made to the Person making the Bona
Fide Offer on the terms of the Bona Fide Offer; and
(b) the sale is consummated within 120 days after the
deadline for the Lender's acceptance of the Borrower's offer.
Section 1.6 Information. Borrower agrees to furnish to Lender such
information as Lender may reasonably request in connection with the Loan or the
Station.
Section 1.7 Prepayment. Borrower may prepay the Note in whole at any
time, or from time to time in part, with accrued interest to the date of
prepayment on the amount prepaid, without penalty, provided that each payment,
other than that for the full amount of
<PAGE> 11
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the outstanding balance, shall be in the amount of Ten Thousand Dollars
($10,000) or an integral multiple thereof, provided, however, that Borrower
shall reimburse Lender for any prepayment penalty imposed on Lender or its
affiliates under their debt agreements or instruments as a result of Borrower's
prepayment. Each prepayment on the Note shall be applied to installments of
principal payable on the Note in the inverse order of maturity.
Section 1.8 Payment on Non-Business Days. Whenever any payment to be
made hereunder or under the Note shall be due on a Saturday, Sunday or public
holiday, such payment may be made on the next succeeding business day, and such
extension of time in such case shall be included in the computation of interest
hereunder and under the Note.
Section 1.9 Taxes. All sums payable by Borrower hereunder or under the
Note, whether of principal, interest, fees, expenses or otherwise, shall be paid
in full, free of any deductions or withholdings for any and all present and
future taxes, levies, imposts, stamps, duties, fees, assessments, deductions,
withholdings, and other governmental charges and all liabilities with respect
thereto. If Borrower's is prohibited by law from making payments hereunder or
under the Note free of such deductions or withholdings, then Borrower shall pay
such additional amount as may be necessary in order that the actual amount
received by Lender after such deduction or withholding shall equal the full
amount stated to be payable hereunder or under the Note.
ARTICLE II CLOSING
Section 2.1 Closing Date. Closing of the transactions contemplated by
this Agreement shall occur on the Initial Disbursement Date as that is defined
in Section 4.3 hereof (the "Closing Date").
ARTICLE III SECURITY
Section 3.1 Security Interest. As partial security for the Loan,
Borrower shall execute and deliver to Lender, on or before the Closing Date, a
security agreement in the form of Exhibit 2 hereto (the "Security Agreement").
Section 3.2 Pledge Agreement. As further security for the Loan, on or
before the Closing Date, the Members shall each execute and deliver to Lender a
pledge agreement in the form of Exhibit 3 hereto (the "Pledge Agreement"),
pursuant to which the Members pledge to Lender all of their rights and interests
in the Borrower.
Section 3.3 No Personal Guarantees. Lender understands and agrees that
the obligation of Borrower to pay interest and to repay principal are secured
only as expressly
<PAGE> 12
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stated herein, and as set forth in the Security Agreement and Pledge Agreement.
The three individual sole Members and officers of Borrower in no event obligate
personal assets (other than their Membership interests in Borrower) to
guarantee, directly or indirectly, or to assure the performance of any duty
hereunder.
Section 3.4 Mortgages. At such time as the Borrower acquires any parcel
of real estate, the Borrower shall execute a first mortgage or deed of trust in
favor of Lender on such parcel, in form and substance acceptable to Lender (a
"Mortgage"). If requested by Lender, the Borrower shall also deliver to Lender
with respect to such property one or more of the following documents, each of
which shall be in form and substance satisfactory to Lender: (i) fixture filing
UCC-1 financing statements, (ii) copies of any lease relating to such property,
if any, (iii) executed tenant subordination agreements and estoppel
certificates, if applicable, (iv) a survey of such real property, (v) a
mortgagee title insurance policy, with such coverage and with such endorsements,
including, without limitation, usury, first loss, last dollar, revolving credit,
variable rate, doing business, zoning comprehensive, contiguity (as applicable)
and survey, to the extent available in the state where the property is located,
as Lender may require, and (vi) any other document required by applicable law to
create or perfect a mortgage lien with respect to such property or reasonably
required by Lender.
ARTICLE IV CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to Loan. The obligation of Lender to
disburse from time to time any portion of the Loan hereunder is subject to the
following conditions precedent:
(a) The Option Agreement, Construction Agreement, Lease
Agreement and Time Brokerage Agreement shall be duly executed by Lender and the
Borrower and shall be in full force and effect; and
(b) Lender shall have received all of the following, on or
before the Closing Date, in form and substance satisfactory to Lender:
(i) The Note, duly executed and delivered by
Borrower;
(ii) The Security Agreement, together with
appropriate UCC-1 forms duly executed and delivered by the Borrower;
(iii) The Pledge Agreement, duly executed and
delivered by the Members, together with ownership certificates;
<PAGE> 13
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(iv) Certified copies of the resolutions of the
Borrower evidencing approval of the execution, delivery and performance of this
Agreement and the Security Agreement and other matters contemplated hereby;
(v) Certificates of Good Standing for the Borrower
from the State of Washington issued no more than ten (10) days prior to the
Closing Date;
(vi) Copies of UCC, judgment and tax lien searches in
each jurisdiction in which Collateral covered by the Security Agreement is
located;
(vii) With respect to owned real property, if any,
the documents required by Section 3.4;
(viii) Copies of the certificates evidencing the
insurance required to be maintained by the Borrower pursuant to Section 6.1(e);
(ix) Written evidence, satisfactory to Lender, that
the Borrower holds a valid construction permit issued by the Federal
Communications Commission ("FCC") authorizing construction of the Station at the
Lyman Mountains site and that the Company has obtained all necessary FAA and
zoning approvals/permits for the site;
(x) An executed transmitter site lease for the Lyman
Mountain site acceptable to Lender;
(xi) Written confirmation that the Station's signal
will be delivered to the four main headends in the Seattle ADI via fiber and/or
microwave at a cost acceptable to Lender;
(xii) Joint written instructions of Lender and
Borrower to Escrow Agent to release to Lender the escrow deposit held pursuant
to the Escrow Agreement; and
(xiii) Such other agreements, certificates, opinions
of counsel and documents that Lender may reasonably require.
Section 4.2 Compliance. All of the representations and warranties of
Borrower in this Loan Agreement shall be true and accurate in all material
respects on and as of the Closing Date and the date of any subsequent
disbursement of any portion of the Loan, as if made on and as of such date and
time. Borrower shall be in compliance with all of the applicable terms and
provisions of this Agreement and no Event of Default or any event which with the
lapse of any applicable grace period or the giving of notice or both would
<PAGE> 14
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constitute an Event of Default shall have occurred and be continuing. Borrower
shall have performed all obligations and taken all actions to be performed or
taken by it hereunder on or prior to such date. On the Closing Date, Borrower
shall deliver to Lender a certificate, dated as of such date and signed by
Borrower, certifying compliance with the conditions of this Section 4.2. Each
disbursement of all or a portion of the Loan to Borrower shall in and of itself,
constitute a representation and warranty that Borrower as of the date of such
Loan, is in compliance with this Section and if Borrower is not in compliance
with this Section, Lender shall not be required to disburse such Loan to
Borrower.
Section 4.3 Initial Disbursement Date. Only provided that Borrower has
fully and in all respects achieved and certified its compliance pursuant to
Section 4.2 and all conditions of Section 4.1 have been satisfied, then Borrower
may at any time request in writing, and Lender shall provide immediately, but in
no event later than five business days after the receipt of a request, a Loan or
Loans, up to the principal amount provided in this Loan Agreement. The actual
receipt by Borrower of the first disbursement shall constitute the Initial
Disbursement Date and Closing Date under this Loan Agreement.
ARTICLE V REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and make the
Loan, Borrower represents and warrants as follows:
Section 5.1 Existence and Standing. Borrower is a limited liability
company duly incorporated, validly existing and in good standing under the laws
of the State of Delaware and is qualified to do business and in good standing
under the laws of any other jurisdiction in which it conducts its business, and
has all requisite power and authority, corporate or otherwise, to conduct its
business, to own its properties and to execute and deliver, and to perform all
of their obligations under this Agreement, the Note, any Mortgage, the Security
Agreement, and all other documents that have been or will be executed and
delivered by Borrower pursuant to this Agreement (the foregoing documents,
together with the Pledge Agreement, are collectively, the "Loan Documents").
Section 5.2 Authorizations, Compliance with Laws. The execution,
delivery and performance by Borrower of this Agreement, the Note, any Mortgage,
the Security Agreement, and all other documents required to be executed and
delivered by Borrower pursuant to this Agreement, and the execution, delivery
and performance of the Pledge Agreement by the Members, have been duly
authorized by all necessary action and do not and will not (i) violate (A) any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to the
Borrower; or the Station or (B) any provision of the Operating Agreement of
Borrower; or
<PAGE> 15
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(ii) result in a breach of or constitute a default under any agreement or
instrument to which Borrower is a party or by which its properties may be
affected; or (iii) result in the creation of a lien, charge or encumbrance of
any nature upon Borrower's properties or assets other than as contemplated by
this Agreement.
Section 5.3 Capitalization. All of the issued and outstanding Units of
the Borrower have been duly and validly issued are fully paid and nonassessable
and are free and clear of any liens, security interests or other claims or
encumbrances, except those granted to Lender pursuant to the terms of this Loan
Agreement. Except as provided in the Option Agreement or this Agreement, neither
the Borrower nor any of the Members has any commitment or obligation, either
firm or conditional, to issue, deliver, purchase or sell, under any offer,
option agreement, bonus agreement, purchase plan, incentive plan, compensation
plan, warrant, conversion rights, contingent share agreement, stockholders
agreement, partnership agreement or otherwise, any ownership or other equity
securities or securities convertible into shares of ownership of the Borrower.
Section 5.4 No Consent. Except for such filings with and approvals of
the FCC that may be required in connection with the exercise by Lender of its
rights under the Loan Documents, upon an Event of Default, no authorization,
consent, approval, license, exemption of or filing or registration with any
court or governmental department or agency, is or will be necessary for the
valid execution, delivery and performance by Borrower of this Agreement, the
Note, any Mortgage, the Security Agreement, or any other document required to be
executed and delivered by Borrower pursuant to this Agreement or the Pledge
Agreement.
Section 5.5 Binding Obligations. This Agreement, the Note, any
Mortgage, the Security Agreement, the Pledge Agreement and all other documents
required to be executed and delivered by Borrower pursuant to this Agreement
have been executed and delivered by Borrower and constitute the legal, valid and
binding obligations of Borrower.
Section 5.6 Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of Borrower, threatened against or affecting the
Borrower or its properties before any court or governmental department or agency
which materially adversely affects the transactions contemplated by this
Agreement or which would have a material adverse effect on the business,
properties, prospects, operation or condition (financial or otherwise) of the
Station or the Borrower.
Section 5.7 No Default. Borrower is not in default in the performance,
observance or fulfillment of any of the obligations or conditions contained in
any material agreement or
<PAGE> 16
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instrument to which they are a party, nor with respect to any order, judgment,
writ, injunction or decree of any court, governmental authority or arbitration
board.
Section 5.8 Compliance with Laws. The Borrower has complied with all
applicable federal, state and local laws. The Borrower has obtained all
necessary licenses and permits required for the conduct of its business and
operations or such licenses and permits have been applied for and are now being
diligently pursued.
Section 5.9 Taxes. The Borrower has filed all tax returns and reports
(federal, state and local) required to be filed by it, and has paid all taxes
shown thereon, including interest and penalties, and all assessments received by
it (except to the extent that the same are being contested in good faith by
appropriate proceedings diligently prosecuted and as to which adequate reserves
have been set aside on the books of the Borrower in conformity with generally
accepted accounting principles).
Section 5.10 Title to Properties. The Borrower has good and marketable
title to all of its property and assets and valid and enforceable leasehold
interests in the property which it holds under lease, all such property, assets
and leasehold interests being free and clear of any and all mortgages, deeds of
trust, assignments, liens, security interests, charges or encumbrances of any
nature whatsoever, except for those created hereby, and no mortgages, deeds of
trust, financing statements or other evidences of security interests covering
all or any of the aforesaid property are on file among the records of any public
office, except those evidencing a security interest in favor of Lender.
Section 5.11 Certain Transactions; Absence of Undisclosed Liabilities.
Borrower has an undischarged liability to repay loans advanced by one-time
stockholders of a predecessor company, in the amount of $66,933.35. The Parties
understand that Lender is remitting at the Closing separately and not as part of
the Loan, the sum of $200,000 to Communications Equity Associates, Inc. as
brokerage commission. Excepting these transactions and except for (i)
obligations arising under the Loan Documents, (ii) liabilities and obligations
incurred pursuant to the terms of the Option Agreement, and (iii) liabilities
incurred in the ordinary course of business (other than for borrowed money),
Borrower has on the date hereof no material liabilities or obligations relating
to the Station or otherwise of any nature, whether accrued, absolute, contingent
or otherwise.
Section 5.12 Solvency. Borrower is not insolvent as defined in Section
101 of Title 11 of the United States Code or any applicable state insolvency
statute, nor, after giving effect to the consummation of the transactions
contemplated herein, will Borrower be rendered insolvent by the execution and
delivery of this Agreement, the Note or the other Loan Documents to Lender.
Borrower is not engaged, and Borrower is not about to engage,
<PAGE> 17
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in any business or transaction for which the assets retained by it shall be an
unreasonably small capital, taking into consideration the obligations to Lender
incurred hereunder and under the Loan Documents. Borrower does not intend to,
and Borrower does not believe that it will, incur debts beyond its ability to
pay them as they mature.
Section 5.13 Material Misstatement. No statement made herein or
information, exhibit or report furnished by Borrower to Lender in connection
with this Agreement or its negotiation, contains any material misstatement of
fact or omits to state a material fact or any fact necessary to make the
foregoing not misleading.
ARTICLE VI COVENANTS OF BORROWER
Section 6.1 Affirmative Covenants. So long as the Note shall remain
unpaid, Borrower hereby covenants and agrees that it will, unless Lender shall
otherwise consent in writing:
(a) Payment of Obligations. Pay punctually and discharge for
the Borrower when due: (i) all indebtedness heretofore or hereafter incurred;
(ii) all taxes, assessments and governmental charges or levies imposed upon it
or its income or profits, or upon any properties belonging to it; (iii) claims
or demands of materialmen, mechanics, carriers, warehousemen, landlords and
other like persons which, if unpaid might become a lien or charge upon the
property of the Borrower or the Members; provided that this covenant shall not
require the payment of any of the matters set forth in (i), (ii) and (iii) above
if the same shall be contested in good faith and by proper proceedings
diligently pursued and as to which adequate reserves have been set aside on the
books of the Borrower in accordance with generally accepted accounting
principles.
(b) Preservation of Existence. Preserve and maintain the
Borrower's respective corporate existence, rights, franchises and privileges in
the jurisdiction of its incorporation.
(c) Maintenance of Properties. Maintain and preserve all of
the Borrower's properties necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
(d) Compliance with Laws. Comply in all material respects with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority.
<PAGE> 18
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(e) Maintenance of Insurance. Maintain with responsible and
reputable insurance companies policies on all of the Borrower's properties and
covering such risks, including public liability and workers' compensation, in
such amounts as are usually carried by companies engaged in similar businesses
and owning similar properties as the Borrower and promptly upon execution
thereof provide to Lender copies of all such policies and any riders or
amendments thereto. The policies of insurance required hereunder shall name
Lender as an additional loss payee or additional insured, as applicable, and
shall provide that Lender shall receive at least thirty (30) days' written
notice prior to the cancellation, termination or alteration of any such policy.
(f) Operations in Ordinary Course. Continue to operate the
Borrower's business in the ordinary course.
(g) Perfection of Liens. Do all things requested by Lender to
preserve and perfect as first liens and security interests the liens and
security interests of Lender arising pursuant to the Security Agreement, the
Pledge Agreement, any Mortgage or any other agreement required hereunder.
(h) FCC Approval. If counsel to Lender reasonably determines
that the consent of the FCC is required in connection with the execution,
delivery and performance of this Agreement, the Pledge Agreement, the Security
Agreement, any Mortgage or any other document delivered to Lender in connection
herewith or therewith or as a result of any action which may be taken pursuant
hereto or thereto, then Borrower, at its sole cost and expense, agree to use its
best efforts to secure such consent and to cooperate with Lender in any action
commenced by Lender to secure such consent.
(i) Agreements. Comply with the Borrower's obligations under
the Option Agreement, Time Brokerage Agreement, Construction Agreement and Lease
Agreement.
(j) Information and Inspection. Insure that the Borrower shall
furnish to Lender from time to time, upon request, full information pertaining
to any covenant, provision or condition hereof, or to any matter connected with
its books, records, operations, financial condition, properties, activities or
business. At all reasonable times, Borrower shall permit any authorized
representatives designated by Lender to visit and inspect any of the properties
of the Borrower and its books and records, and to take extracts therefrom and
make copies thereof, and to discuss the Borrower's affairs, finances and
accounts with the management and independent accountants of the Borrower.
<PAGE> 19
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Section 6.2 Negative Covenants. So long as the Note shall remain unpaid
and the Agreement shall not have been terminated, Borrower hereby covenant that
it will not, without Lender's prior written approval, permit the Borrower to:
(a) Indebtedness. Create or incur, assume or suffer to exist
any indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, except for:
(i) indebtedness (other than for borrowed money) incurred in the ordinary course
of business not to exceed Seventy-Five Thousand Dollars ($75,000) in the
aggregate at any one time; (ii) obligations or liabilities arising under the
indemnification provisions of the Option Agreement.
(b) Liens. Create, assume or suffer to exist, directly or
indirectly, any security interest, mortgage, deed of trust, pledge, lien, charge
or other encumbrance, of any nature whatsoever upon any of its properties or
assets, now owned or hereafter as acquired, excluding, however, from the
operation of this covenant:
(i) any security interest or lien created pursuant to
or in connection with this Agreement or securing the Loan, the Security
Agreement, the Pledge Agreement, or any Mortgage;
(ii) liens for taxes or assessments either not
delinquent or the validity of which are being contested in good faith by
appropriate legal or administrative proceedings and as to which adequate
reserves shall have been set aside on its books, in conformity with generally
accepted accounting principles;
(iii) materialmen's, mechanics', carriers',
workmen's, repairmen's, warehousemen's or other like liens arising in the
ordinary course of business and either not yet due and payable or being
contested in good faith by appropriate legal proceedings and as to which
adequate reserves shall have been set aside on its books, in conformity with
generally accepted accounting principles;
(iv) deposits or pledges to secure payment of
workers' compensation, unemployment insurance or other social security benefits
or obligations; or
(v) any judgment lien, singly or aggregated with
other judgment liens, in an amount less than Fifty Thousand Dollars ($50,000),
unless the judgment it secures shall not, within thirty (30) days after the
entry thereof, have been discharged, vacated, reversed, or execution thereof
stayed pending appeal, or shall not have been discharged, vacated or reversed
within thirty (30) days after the expiration of any such stay.
<PAGE> 20
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(c) Disposition of Assets. Except pursuant to the terms of the
Option Agreement, sell, transfer, lease or otherwise dispose of any of its
assets or properties other than sales of assets in the ordinary course of
business (which sales in the ordinary course of business shall expressly not
include any transfer or assignment of any FCC License).
(d) Merger. Enter into any consolidation or merger with, or
into any acquisition of all or substantially all of the properties or assets of
any person or entity.
(e) Transfer or Issuance of Ownership Interests. Issue or
permit the transfer of any Units of the Borrower, or any options, warrants,
convertible securities or other rights to purchase an ownership interest in the
Borrower. The preceding sentence shall not apply to issuances or transfers to
Lender.
(f) Change of Business. Change, in any material respect, the
nature or character of its business as intended, or engage in any activity not
reasonably related to such business.
(g) Remove Assets. Remove any of the assets procured with the
proceeds of the borrowings provided for herein, or any replacements for such
assets, to a jurisdiction in which no financing statement on Form UCC-1 has been
filed by Lender with respect to such assets.
(h) Ownership Interests. Incur any liability for the purchase,
acquisition, redemption or retirement of any ownership interest of the Borrower.
(i) Transactions with Affiliates. Enter into any transaction
or agreement, other than the Transaction Documents, with any affiliate of the
Borrower.
(j) Contracts. Enter into any contract or commitment relating
to its stock or assets except for contracts involving aggregate payments of less
than Twenty Thousand Dollars ($20,000) and contracts which can be terminated
without penalty on thirty (30) days' notice or less, or amend or terminate any
material contract (or waive any substantial right thereunder), or incur any
obligation (including obligations relating to the borrowing of money or
guarantee of indebtedness).
(k) Adverse Change. Suffer any damage, destruction or loss
affecting any assets used or useful in the conduct of the business of the
Borrower.
<PAGE> 21
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(l) Cancellation of Debts. Cancel any debts owed to or claims
held by the Borrower.
(m) Write-Down. Suffer any significant write-down of the value
of any assets or any significant write-off as uncollectible of any accounts
receivable without the prior written consent of Lender except and as required by
generally accepted accounting principles as required to present accurate
financial information on the Borrower.
(n) Rights. Transfer or grant any right under, or enter into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, service mark, trade name, franchise, or similar right, or
modify any existing right relating to the Borrower.
(o) Agreements. Terminate, amend or commit any material breach
or default under the Option Agreement.
Section 6.3 Reporting Requirements. So long as the Note shall remain
unpaid and the Agreement shall not have been terminated, the Borrower shall,
unless Lender shall otherwise consent in writing, furnish to Lender:
(a) Default Certificate. As soon as possible and in any event
within five (5) business days after the occurrence of each Event of Default (as
defined in Section 7.1) of which the Borrower has knowledge, the statement of an
authorized Member of the Borrower setting forth details of such Event of Default
and the action which the Borrower proposes to take with respect thereto.
(b) Financial Statements. Quarterly financial statements
within thirty (30) days after the end of each fiscal quarter; within ninety (90)
days after the end of each fiscal year of the Borrower, a copy of the audited
financial statements for such year for the Borrower, including therein a balance
sheet of the Borrower as of the end of such fiscal year, statements of income
and expense of the Borrower for such fiscal year, and a statement of cash flow
of Borrower for such fiscal year, in each case prepared by an independent public
accountant of recognized standing acceptable to Lender, except that Lender may
waive the audit requirement and accept a review of the Borrower's financial
records.
(c) Notice of Litigation. Promptly give written notice of all
actions, suits and proceedings before any court or governmental agency, domestic
or foreign, which may be commenced or threatened against the Borrower in which
the claim involved is Five
<PAGE> 22
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Thousand Dollars ($5,000) or more and of any other matter of the type described
in Section 5.6.
(d) Other Information. Such other information respecting the
business, properties, operations or the condition, financial or otherwise, of
the Borrower or the Station as Lender may from time to time reasonably request.
ARTICLE VII EVENTS OF DEFAULT
Section 7.1 Events of Default. Under this Agreement, an Event of
Default shall be any of the following:
(a) Borrower shall fail to pay any installment of principal or
interest on the Note, or any other obligation to Lender when due whether at the
due date thereof or by acceleration or otherwise, and, in the case of any
installment of interest, such default shall remain unremedied for a period of
five (5) days; or
(b) The security interest or lien of Lender in any material
portion of the collateral covered by the Security Agreement, Pledge Agreement or
any Mortgage shall at any time not constitute a legal, valid and enforceable
security interest or lien; or
(c) Any representation or warranty made by Borrower herein, in
the Security Agreement or any Mortgage, or in the Pledge Agreement or in any
certificate, agreement, instrument or statement contemplated by or made or
delivered pursuant to or in connection with this Agreement, the Note, any
Mortgage, the Security Agreement or the Pledge Agreement, shall prove to have
been incorrect in any material respect when made; or
(d) Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement, the Note, the Security
Agreement, any Mortgage, or the Borrower shall fail to perform or observe any
term, covenant or agreement contained in the Pledge Agreement, and any such
failure remains unremedied for thirty (30) days after written notice thereof
shall have been given to Borrower by Lender; or
(e) The Borrower shall fail to pay any indebtedness for
borrowed money owing by the Borrower or any interest or premium thereon, when
due, whether such indebtedness shall become due by scheduled maturity, by
required prepayment, by acceleration, by demand or otherwise, or the Borrower
shall fail to perform any term, covenant or agreement under any agreement or
instrument evidencing or securing or relating to any such indebtedness owing by
the Borrower if the effect of such failure is to accelerate,
<PAGE> 23
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or to permit the holder of such indebtedness to accelerate the maturity of such
indebtedness; or
(f) Either (i) the Borrower shall fail to pay its debts as
they mature in the ordinary course of business; or (ii) the Borrower shall file
a petition commencing a voluntary case concerning it under any Chapter of Title
11 of the United States Code entitled "Bankruptcy"; or (iii) the Borrower shall
apply for or consent to the appointment of any receiver, trustee, custodian or
similar officer for it or for all or any substantial part of its property; or
(iv) such receiver, trustee, custodian or similar officer shall be appointed
without the application or consent of the Borrower and such appointment shall
continue undischarged for a period of thirty (30) days; or (v) an involuntary
case is commenced against the Borrower under any Chapter of the aforementioned
Title 11 and an order for relief under such Title 11 is entered or the petition
commencing the case is controverted but is not dismissed within thirty (30) days
after the commencement of the case; or (vi) the Borrower shall institute (by
petition, application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to it under the laws of any jurisdiction; or (vii)
any such proceeding shall be instituted against the Borrower and shall remain
undismissed for a period of thirty (30) days; or (viii) the Borrower shall take
any action for the purpose of effectuating the foregoing; or
(g) Any court, government, or government agency shall condemn,
seize or otherwise appropriate or take custody or control of all or a
substantial portion of the property or assets of the Borrower; or
(h) There shall be a cancellation, denial or revocation of any
material FCC License for the Station (including the Construction Permit), the
Borrower shall be finally denied renewal of any such FCC License; or
(i) Any money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an amount in excess of
Fifty Thousand Dollars ($50,000), or (ii) in the aggregate at any time an amount
in excess of Fifty Thousand Dollars ($50,000), and in either case not adequately
covered by insurance as to which the insurance Borrower has acknowledged
coverage, shall be entered or filed against the Borrower or its assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 30 days or
in any event later than five days prior to the date of any proposed sale
thereunder; or
(j) Any material change shall occur in assets, (a) the ability
of the Borrower, or any other party to a Loan Document (other than Lender) to
perform its obligations hereunder, under the Pledge Agreement or under any other
Loan Document to
<PAGE> 24
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which it is a party, (b) the validity or enforceability of this Agreement, the
Note, any other Loan Document or the Pledge Agreement, (c) the rights or
remedies of Lender under this Agreement, the Note, any other Loan Document, the
Pledge Agreement or at law or in equity.
Section 7.2 Effect of Event of Default. Should an Event of Default
occur, Lender shall give Borrower written notice thereof. Upon such notice,
Borrower shall have 30 days in which to cure the default. The 30 day opportunity
shall not toll any other existing or continuing obligation of Borrower to
Lender. Failure to cure the default within the time allowed shall be an Event of
Default. Lender may at its option by written notice to Borrower declare the
entire unpaid principal amount of the Note, together with all unpaid interest
and all other amounts payable under this Agreement and every other obligation of
Borrower to Lender, immediately due and payable, whereupon the Note and all such
obligations shall become and be forthwith due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by Borrower, anything contained herein or in the Note or in such other
note or evidence of indebtedness to the contrary notwithstanding; provided,
however, that in case of an Event of Default under Section 7.1(g), all the
obligations of Borrower under this Agreement and the Note shall become
immediately due and payable as of the date of any such Event of Default
regardless of the cause of such Event of Default and without any notice to
Borrower required from Lender. Lender shall have, in addition to all other
rights and remedies allowed by law, the rights and remedies of a secured party
under the Uniform Commercial Code and, without limiting the generality of the
foregoing, the rights and remedies provided for in the Security Agreement,
Pledge Agreements, and any Mortgage or Leasehold Mortgage, which provisions are
hereby incorporated by reference.
ARTICLE VIII MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies. No failure or delay on the
part of Lender in exercising any right, power or remedy hereunder shall operate
as a waiver, nor shall any single or partial exercise of any such right, power
or remedy hereunder. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 8.2 Amendments. No amendment, modification, termination or
waiver of any provision of this Agreement, the Note, the Security Agreement, the
Pledge Agreement or any Mortgage, nor consent to any departure by Borrower
therefrom, shall in any event be effective unless in writing, signed by Lender
and then only in the specific instance and for the specific purpose for which
given. No notice to or demand on Borrower in any case shall entitle it to any
other or further notice or demand in similar or other circumstances.
<PAGE> 25
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Section 8.3 Conflicts. In the event of any conflict or inconsistency
between any provision of this Agreement and a provision of the Note, the
Security Agreement, the Pledge Agreement or any Mortgage, the provisions of this
Agreement shall control.
Section 8.4 Address for Notices. All notices and other communications
under this Agreement shall be in writing and shall be served by personal service
or by mailing a copy thereof by registered or certified mail, return receipt
requested, to the applicable party at the addresses indicated below:
If to Borrower : Mr. Larry Rogow
World Television of Washington, L.L.C.
6611 Santa Monica Boulevard
Los Angeles, CA 90038-1311
If to Lender: Mr. Lowell W. Paxson
Paxson Communications of Seattle-24, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
or at such other address as may be designated by either party in a written
notice to the other complying as to delivery with the terms of this Section. All
such notices and other communications shall be effective when deposited in the
mails.
Section 8.5 Expenses. Borrower agrees to pay on demand all costs and
expenses incurred by Lender directly in the enforcement of this Agreement, the
Note, the Security Agreement, any Mortgage, the Pledge Agreement and other
instruments and documents to be delivered hereunder, including, without
limitation, the reasonable fees and expenses of any attorney to whom the Note is
referred for collection (whether or not litigation is commenced) or for
representation out of court, in trial, on appeal or in proceedings under any
bankruptcy or insolvency law or otherwise. In addition, Borrower shall pay any
and all taxes and fees payable or determined to be payable in connection with
the execution, delivery or recordation of any instruments and documents to be
delivered hereunder. In addition, Borrower agrees to pay (i) all the actual and
reasonable costs and expenses of Lender in connection with the negotiation,
preparation and execution of the Loan Documents and all the costs of furnishing
all opinions by counsel for Borrower, and of Borrower's performance of and
compliance with all agreements and conditions contained herein and in the other
Loan Documents on its part to be performed or complied with including, without
limitation, confirming compliance with environmental and insurance requirements;
(ii) the reasonable fees, expenses and disbursements of counsel to Lender
(including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Loan
<PAGE> 26
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Documents and the Loan and any consents, amendments, waivers or other
modifications hereto or thereto; and (iii) all the actual and reasonable costs
and expenses of creating and perfecting liens in favor of Lender pursuant to any
Loan Document.
Section 8.6 Binding Effect; Assignment. This Agreement shall become
effective when executed and thereafter shall be binding upon and inure to the
benefit of Borrower, Lender and their respective successors and assigns, except
that Borrower shall not have the right to assign any rights or obligations
hereunder without the prior written consent of Lender. Lender shall be permitted
to assign, without Borrower's consent, all or any portion of Lender's rights and
interests hereunder and under each other document executed in connection with
this Loan Agreement (x) to one or more other affiliates of Lender, and, upon any
such assignment, each reference herein or in such other document to "Lender"
shall be deemed to be and include a reference to such other affiliate and as
necessary or appropriate to receive any payment hereunder and to secure the
right to receive such payment (y) to creditors of Lender or its affiliates as
security for indebtedness of Lender or such affiliates. For purposes of this
section, the term affiliate shall mean, as applied to any entity or individual,
any other entity or individual directly or indirectly controlling, controlled
by, or under common control with, that entity or individual. For purposes of
this definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and under "common control with"), as applied to
any entity or individual, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
entity or individual, whether through the ownership of voting securities,
partnership interests or otherwise by contract.
Section 8.7 Governing Law. This Agreement, the Note, the Security
Agreement, the Pledge Agreement and related documents shall be governed by, and
construed in accordance with, the laws of the State of Florida with the
exception of its conflicts of laws provisions; provided that the effect of any
recordation shall be determined by the State thereof.
Section 8.8 Severability of Provisions. Any provision of this
Agreement, the Note, the Pledge Agreement, the Security Agreement, or any
Mortgage that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions or affecting the
validity or enforceability of any provisions in any other jurisdiction.
Section 8.9 Headings. Article and Section headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
<PAGE> 27
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Section 8.10 Rights Affected by Extensions. The rights of Lender and
its assigns shall not be impaired by any indulgence, release, renewal, extension
or modification which Lender may grant with respect to the indebtedness or any
part thereof, or with respect to the collateral or with respect to any endorser,
guarantor, or surety without notice or consent of Borrower or any endorser,
guarantee, or surety.
Section 8.11 Survival of Representations and Warranties. All
representations and warranties made in this Agreement and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Agreement and the Note and the making of the Loan hereunder
and continue in full force and effect, as of the respective dates as of which
they were made, until all of the obligations of Borrower to Lender hereunder
have been paid in full.
Section 8.12 FCC Compliance. Notwithstanding anything herein or in any
of the other Loan Documents to the contrary, but without limiting or waiving
Borrower's obligations hereunder or under any of the other Loan Documents,
Lender's remedies hereunder and under the other Loan Documents are subject to
compliance with the Communications Act of 1934, as amended, and all applicable
rules, regulations and policies of the FCC, and Lender will not take any action
pursuant to this Agreement or any of the other Loan Documents that would
constitute or result in any assignment of any FCC authorization held by the
Borrower or any change of control of the Station if such assignment or change of
control would require under then existing law (including the written rules and
regulations promulgated by the FCC), the prior approval of the FCC, without
first obtaining such approval of the FCC. This Agreement, the other Loan
Documents and the transactions contemplated hereby and thereby do not and will
not constitute, create, or have the effect of constituting or creating, directly
or indirectly, actual or practical ownership of the Borrower by Lender or
control, affirmative or negative, direct or indirect, of the Borrower by Lender,
over the programming, management or any other aspect of the operation of the
Borrower, which ownership and control remain exclusively and at all times in the
Borrower until such time as Lender has complied with such law, rules,
regulations and policies.
Section 8.13 Further Assurances. From time to time, Borrower shall
execute and deliver to Lender such additional documents as Lender may reasonably
require to carry out the purposes of this Agreement or any of the documents
entered into in connection herewith, or to preserve and protect the rights of
Lender hereunder or thereunder.
Section 8.14 Indemnification. Borrower hereby indemnifies and holds
harmless Lender and its directors, officers, shareholders, employees, agents,
counsel, subsidiaries and affiliates (the "Indemnified Persons") from and
against any and all losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
<PAGE> 28
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of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against any Indemnified Person in any way relating to or arising out of
this Agreement, the documents entered into in connection herewith, or any of
them or any of the transactions contemplated hereby or thereby; provided,
however, that Borrower shall not be liable to any Indemnified Person, if there
is a judicial determination that such losses, liabilities, obligations, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the gross negligence or willful misconduct of such Indemnified
Person.
Section 8.15 Waiver. EACH OF LENDER AND BORROWER HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND THE
LENDER/Borrower RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, REPLACEMENTS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN.
Section 8.16 Maximum Interest. Lender and Borrower intend that this
Agreement and the other Loan Documents conform to all applicable usury laws.
Accordingly, no provisions of the Loan Documents shall require the payment or
permit the collection of interest in excess of the maximum rate permitted by
applicable law ("Maximum Rate"), or obligate Borrower to pay any taxes,
assessments, charges, insurance premiums or other amounts which are held to
constitute interest to the extent that such payments, when added to the other
obligations under the Loan Documents, would be held to constitute contracting
for, or the payment by Borrower of, interest at a rate greater than the Maximum
Rate. Lender and Borrower further agree that:
(i) if any excess of interest in such respect is
herein or in any such other instrument provided for, or shall be adjudicated to
be so provided for herein or in any such instrument, the provisions of this
subsection 8.16 shall govern, and neither Borrower nor its successors or assigns
shall be obligated to pay the amount of such interest to the extent it is in
excess of the Maximum Rate;
(ii) if at any time the amount of interest under any
of the Loan Documents for a calendar year exceeds the Maximum Rate had the
Maximum Rate at all times been in effect, the interest chargeable under any such
Loan Document shall be limited to the amount of interest that could have been
charged if the Maximum Rate had at all times
<PAGE> 29
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been in effect, but any subsequent reductions in the interest due shall not
reduce the rate of interest chargeable under any such Loan Document below the
Maximum Rate until the total amount of interest accrued under any such Loan
Document equals the amount of interest that would have accrued if the interest
provided for in any such Loan Document had at all times been in effect and
collectible;
(iii) if the maturity of any Loan Document is
accelerated for any reason, or in the event of any prepayment by Borrower , or
in any other event, earned interest may never include more than the Maximum
Rate, computed from the date of disbursement of the funds evidenced by such Loan
Document until payment, and any interest otherwise payable under such Loan
Document that is in excess of the Maximum Rate shall be canceled automatically
as of such acceleration or such other event and (if theretofore paid) shall be
credited against principal;
(iv) if it should be held that any interest payable
or chargeable under any Loan Document is in excess of the Maximum Rate, the
interest payable or chargeable under such Loan Document shall be reduced to the
maximum amount permitted by applicable federal or state law, whichever shall
permit the higher lawful interest, as construed by courts having jurisdiction
thereof; and
(v) the spreading, prorating and amortizing of
interest over the Maturity Date of the Loan Documents shall be allowed to the
fullest extent permitted by applicable law.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 30
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IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be executed by their respective duly authorized officers as of the
date first above written.
PAXSON COMMUNICATIONS
OF SEATTLE-24, INC.
By: /s/ Anthony L. Morrison
--------------------------------
Name: Anthony L. Morrison
Title: Vice President
WORLD TELEVISION OF
WASHINGTON, L.L.C.
By:
--------------------------------
<PAGE> 31
EXHIBIT 1
PROMISSORY NOTE
$3,895,500 _______________
FOR VALUE RECEIVED, the undersigned, WORLD TELEVISION OF WASHINGTON,
L.L.C., with its address at 6611 Santa Monica Boulevard, Los Angeles, California
90038 (the "Maker"), promises to pay to the order of PAXSON COMMUNICATIONS OF
SEATTLE-24, INC., a Florida corporation with its address at 601 Clearwater Park
Road, West Palm Beach, Florida, 33401 (the "Payee"), or its designee, in the
manner set forth below, the principal sum of Three Million Eight Hundred Ninety
Five Thousand Five Hundred Dollars ($3,895,500), together with interest thereon
as provided herein. All capitalized terms not otherwise defined herein shall
have the meanings ascribed to such terms in the Loan Agreement (as defined
below).
1. The holder of this Note is authorized to endorse the date
and amount of each loan evidenced hereby and each payment of principal and/or
interest with respect thereto on Schedule A annexed hereto and made a part
hereof, but the failure of the holder of this Note to make such endorsement
shall not affect the rights of the Payee or the obligations of the Maker under
this Note, the Loan Agreement dated as of August 19, 1996, between Maker and
Payee (the "Loan Agreement") and any documents executed in connection therewith
or under applicable law.
2. The principal balance of and all interest on the Loan
evidenced hereby shall be due and payable as provided in Sections 1.3 and 1.4 of
the Loan Agreement.
3. This Note evidences indebtedness of the Maker to the Payee
arising under the Loan Agreement, to which reference is hereby made for a
statement of the rights of the Payee and the duties and obligations of the Maker
in relation thereto. Neither this reference to the Loan Agreement nor any
provision thereof shall affect or impair the absolute and unconditional
obligation of the Maker to pay the principal of or interest on this Note when
due.
4. In the event any installment of principal or interest on
this Note is not paid when due, whether such installment comes due by
acceleration or otherwise, such installment shall bear interest equal to the
lower of the highest rate permitted by law or 18% per annum from and after the
due date thereof until paid in full.
<PAGE> 32
- 2 -
5. The payment of this Note is secured by a Security Agreement
and Pledge Agreement, all as more fully identified in the Loan Agreement.
6. Payment upon this Note shall be made by check or checks
payable to the Payee at 601 Clearwater Park Road, West Palm Beach, Florida,
33401, or such other place as the Payee or a subsequent holder of this Note
shall designate to the Maker in writing, in lawful money of the United States of
America.
7. This Note may be prepaid by the Maker, in whole or in part
in integral multiples of Ten Thousand Dollars ($10,000), at any time without
premium or penalty. Each prepayment on this Note shall be applied to
installments of principal payable on this Note in the inverse order of maturity.
8. The Maker hereby waive any defenses based upon, and
specifically assents to, any and all extensions and postponements of the time of
payment and all other indulgences or forbearances which may be granted to any
party liable hereon by the Payee or any subsequent holder of this Note.
9. The Maker hereby waive presentment, demand for payment,
notice of protest, notice of non-payment, protest, and all other demands and
notices in connection with the delivery, acceptance, performance, default or
enforcement of this Note.
10. No delay or omission on the part of the Payee or any
subsequent holder of this Note in exercising any right hereunder shall operate
as a waiver of such right or of any other right of the Payee or such holder, nor
shall any delay, omission or waiver on any one occasion be deemed a bar to or
waiver of the same or any other right on any other occasion.
11. No single or partial exercise by the Payee or any
subsequent holder hereof of any power hereunder shall preclude any other or
future exercise thereof or the exercise of any other power.
12. If any Event of Default shall occur, the Payee shall be
under no further obligation to make any Loan or advances of any Loan under the
Loan Agreement and the Payee may at its option by written notice to the Maker
declare the entire unpaid principal amount of this Note, together with all
unpaid interest and all other amounts payable under the Loan Agreement and every
other obligation of the Maker to the Payee, immediately due and payable,
whereupon this Note and all such obligations shall become and be forthwith due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are, except as expressly provided in the Loan Agreement, hereby
expressly waived by the Maker; provided, however, that in the case of an Event
of Default under Section 7.1(g) of
<PAGE> 33
- 3 -
the Loan Agreement, all of the obligations of the Maker under the Loan Agreement
and this Note shall become immediately due and payable as of the date of any
such Event of Default regardless of the cause of such Event of Default and
without any notice to the Maker required from the Payee. The Payee shall have,
in addition to all other rights and remedies allowed by law, the rights and
remedies of a secured party under the Uniform Commercial Code and, without
limiting the generality of the foregoing, the rights and remedies provided for
in the Loan Agreement, any Mortgage, the Security Agreement or Pledge Agreement.
13. The Maker shall pay on demand of the Payee or any
subsequent holder of this Note all costs of collection, including reasonable
attorneys' fees incurred by the Payee or such holder in enforcing collection of
this Note on default. However, if any litigation arises between the parties in
connection with this Note, the prevailing party shall be entitled to recover
reasonable attorneys' fees in addition to all other damages and remedies.
14. No provision of this Note shall be modified except by a
written instrument executed by the Maker and by the Payee or a subsequent holder
hereof expressly referring to this Note and to the provision modified.
15. This Note and the provisions hereof are to be binding on
the assigns or successors of the Maker and shall be enforceable in accordance
with the laws of the State of Florida (without regard to the conflicts of law
provisions thereof).
<PAGE> 34
- 4 -
16. The provisions of this Note are hereby declared to be
severable and if any such provision or the application of any such provision to
any person or in any circumstances shall be held to be invalid or
unconstitutional, such invalidity or unconstitutionality shall not be construed
to affect the validity or constitutionality of any of the remaining provisions
as applied to such person, or in circumstances other than those as to which it
is held invalid.
[SEAL] WORLD TELEVISION OF WASHINGTON, L.L.C.
By:__________________________________
<PAGE> 35
SCHEDULE A
<TABLE>
<CAPTION>
Date Amount of Loan Amount Repaid Unpaid Balance Notation Made By
<S> <C> <C> <C> <C>
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
- ----- -------------- ------------- -------------- ----------------
</TABLE>
<PAGE> 36
EXHIBIT 2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is dated as of this ___ day of _______, 1996,
by and between WORLD TELEVISION OF WASHINGTON, L.L.C., a Delaware limited
liability company (the "Debtor"), and PAXSON COMMUNICATIONS OF SEATTLE-24, INC.,
a Florida corporation (the "Secured Party").
W I T N E S S E T H:
WHEREAS, Debtor and Secured Party are parties to various Agreements
dated as of August 19, 1996 relating to Television Station KBCB(TV), Bellingham,
Washington
("Station");
WHEREAS, Debtor and Secured Party have also entered into a Loan
Agreement dated as of August 19, 1996 (the "Loan Agreement"), pursuant to which
Secured Party has agreed to make a loan (the "Loan") to the owners of the Debtor
in an amount up to Three Million Seven Hundred Ninety Seven Thousand Five
Hundred Dollars ($3,797,500);
WHEREAS, the Debtor has executed a promissory note of even date
herewith (as amended, renewed, restated, increased, consolidated or substituted
from time to time, the "Note"), evidencing their indebtedness to the Secured
Party under the Loan Agreement; and
WHEREAS, the Loan Agreement requires Debtor to execute and deliver to
Lender this Security Agreement to secure its obligations under the Loan
Agreement and the Note by granting Secured Party a security interest in
substantially all of Debtor's personal property.
NOW, THEREFORE, in consideration of the promises and agreements
contained herein and the Secured Party's extension of the Loan pursuant to the
Note and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Secured Party and the Debtor agree as follows:
ARTICLE 1. GRANT OF SECURITY INTEREST
In order to secure the payment of any and all amounts (a) loaned by
Secured Party to the owners of the Debtor pursuant to the Agreement and the
Note, plus interest accrued thereon and all other obligations of the Debtor to
Secured Party (being hereinafter collectively referred to as the "Obligations"),
Debtor hereby grants to Secured Party a first priority security interest in all
of Debtor's right, title and interest in and to all of its personal
- 1 -
<PAGE> 37
property, both tangible and intangible and of every kind and description,
whether now or hereafter existing, or now owned or hereafter acquired, and
wherever located, and all proceeds, products, replacements, additions,
accessions and/or substitutes therefor, including, without limitation, all
goods, machinery, equipment, furniture, furnishings, fixtures, inventory,
accounts, chattel paper, instruments and general intangibles, as such terms, may
be defined in the Uniform Commercial Code in the jurisdiction in which such
assets are located, including, without limitation, all properties and assets of
Debtor used or useful in the construction and operation of the Station, and the
proceeds and products of any and all of the foregoing assets and properties
described in this Article 1, including proceeds of insurance policies relating
to any and all of the foregoing assets and properties; provided, however, that
such security interest does not include any permits or licenses granted by the
FCC to the extent that Debtor is prohibited from granting a security interest
therein pursuant to the Communications Act of 1934, as amended, and the
regulations promulgated thereunder, and any other licenses to the extent the
transfer or pledging thereof is prohibited by the granting authority.
All of the foregoing shall be hereinafter referred to as the
"Collateral."
ARTICLE 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF
DEBTOR
Debtor represents, warrants and covenants that:
(a) the Collateral (and all records pertaining thereto) will
at all times be kept at the locations specified on Exhibit A hereto and Debtor
will not change the location at which any of the Collateral is usually kept or
the location of its chief executive office or principal place of business
without giving thirty (30) days' prior written notice to Secured Party;
(b) Debtor owns and has possession of the Collateral except
that portion to be hereafter acquired;
(c) all the Collateral is genuine and enforceable and free
from liens, adverse claims, charges, encumbrances, taxes or assessments, other
than the liens created hereby, and Debtor shall defend the same against all
claims and demands of all persons at any time claiming against the same or any
interests therein adverse to Secured Party;
(d) all items of the Collateral comply with applicable laws,
including, where applicable, Federal Reserve Regulations and any state consumer
credit and usury laws;
(e) no financing statement covering any of the Collateral, and
naming any secured party other than Secured Party, is on file in any public
office;
- 2 -
<PAGE> 38
(f) Debtor will, at its sole cost and expense, maintain,
replace, repair, service and take other action as may be necessary from time to
time to keep and preserve its inventory, machinery and equipment in general
repair and good working order and any inventory, machinery or equipment which
wears out or is destroyed will be replaced or restored if necessary for the
operation of the business of Debtor in the ordinary course. Debtor will within
10 days notify Secured Party of any event comprising loss or decrease in the
value of the Collateral in excess of $20,000;
(g) Debtor will comply with all laws, rules and regulations
relating to, and shall pay prior to delinquency, all license fees, registration
fees, taxes and assessments and all other charges, which may be levied upon or
assessed against, or which may become security interests, liens or other
encumbrances upon the ownership, operation, possession or maintenance of the
Collateral; provided that Debtor shall not be required to comply with any such
law, rule or regulation or to pay any such tax or assessment or other such
charge, the validity of which is being contested by Debtor in good faith by
appropriate proceedings commenced and prosecuted with due diligence and with
respect to which adequate reserves have been established and are being
maintained in accordance with generally accepted accounting principles;
(h) Debtor will execute and at its expense file and refile
such financing statements, continuation statements and other documents in such
offices as Secured Party may deem necessary or appropriate in order to protect
or preserve Secured Party's security interest in the Collateral;
(i) Debtor will not sell, offer to sell, hypothecate or
otherwise dispose of any material part of the Collateral (including proceeds)
subject hereto, or any part thereof or interest therein at any time other than
in the ordinary course of business and in exchange for Collateral of like value
in which Secured Party shall have a security interest;
(j) Debtor will at all times keep accurate records with
respect to the Collateral which are as complete and comprehensive as those which
are customarily maintained by those engaged in similar businesses, and Secured
Party will have the right to inspect such records at such times and from time to
time as Secured Party may reasonably request;
(k) Debtor will provide any service and do any other acts or
things necessary to keep the Collateral free and clear of all defenses, rights
of offset and counterclaims. Secured Party may, at any time prior to termination
hereof, require Debtor from time to time to deliver to Secured Party (i)
schedules describing all the Collateral subject hereto, and (ii) instruments and
chattel paper included in the Collateral, appropriately assigned and endorsed to
Secured Party;
(l) Debtor will maintain such insurance on the Collateral as
may be reasonably required by Secured Party. In the event of failure to provide
and maintain
- 3 -
<PAGE> 39
insurance as herein provided, Secured Party may, at its option, provide such
insurance and Debtor hereby promises to pay Secured Party on demand the amount
of any disbursements made by Secured Party for such purpose. Risk of loss or
damage shall accrue to Debtor to the extent of any deficiency in any effective
insurance. Debtor shall furnish to Secured Party certificates or other evidence
satisfactory to Secured Party of compliance with the foregoing insurance
provisions. Debtor shall give immediate written notice to Secured Party and to
the insurers of any loss or damage to the Collateral or any part thereof in
excess of $20,000 and shall promptly file all necessary or appropriate proof of
loss with the insurers. Any amounts collected or received under any such
insurance policies may be applied by Debtor either to the replacement or
restoration of the Collateral or to any of the Obligations secured hereby in the
manner provided in Article 8 hereof; and
(m) Debtor shall not change its name, identity or corporate
structure, voluntarily or involuntarily, without giving 30 days' prior written
notice to Secured Party.
ARTICLE 3. AUTHORITY TO COLLECT
Except as otherwise hereinafter set forth, unless and until the
occurrence of an event which constitutes an Event of Default under the Loan
Agreement, Debtor shall continue to collect, and upon the occurrence of such an
event, Debtor may, at the direction of Secured Party, continue to collect, at
its own expense, all amounts due and to become due under any accounts, chattel
paper, instruments or general intangibles and in connection therewith may take
such action as it may deem necessary, advisable, convenient or proper for the
enforcement, collection, adjustment, settlement or compromise thereof.
ARTICLE 4. REMEDIES
Upon the occurrence of an Event of Default, as defined in the Loan
Agreement, Secured Party shall have the right to declare immediately due and
payable all of the Obligations, without other notice or demand, and to terminate
any commitments to make loans or otherwise extend credit to Debtor. Secured
Party shall have all the rights and remedies of a secured party under the
Uniform Commercial Code and all other rights, privileges, powers and remedies
provided by law or equity.
Without limiting the generality of the foregoing, after the
occurrence of an Event of Default:
(a) Secured Party shall have the power to notify the account
debtor or debtors obligated under any accounts, chattel paper, instruments and
general intangibles of the assignment of such accounts, chattel paper, and
general intangibles to Secured Party and of its security interest therein and to
direct such account debtor or debtors to make payment of all amounts due or to
become due to Debtor thereunder directly to Secured Party and, upon such
notification to the account debtor or debtors, to enforce collection of any
thereof in the same manner and to the same extent as Debtor might have done. The
funds so
- 4 -
<PAGE> 40
collected shall be held as security for the payment of the Obligations secured
hereby and applied in the manner provided in Article 8 hereof.
Debtor hereby constitutes and appoints Secured Party as its
true and lawful attorney, in the place and stead of Debtor and with full power
of substitution, either in Secured Party's own name or in the name of Debtor, to
ask for, demand, collect, receive and give acquittance for any and all monies
due or to become due under and by virtue of any account, chattel paper,
instruments and general intangibles, to endorse checks, drafts, orders and other
instruments for the repayment of monies payable to Debtor on account thereof,
and to settle, compromise, prosecute or defend any action, claim or proceeding
with respect thereto and to sell, assign, pledge, transfer and make any
agreement respecting, or otherwise deal with, the same; provided, however, that
nothing herein contained shall be construed as requiring or obligating Secured
Party to make any demand, or to make any inquiry as to the nature or sufficiency
of any payment received by it, or to present or file any claim or notice or to
take any action with respect to any account, chattel paper, instruments or
general intangible or the monies due or to become due thereunder or the property
covered thereby, and no action taken or omitted to be taken by Secured Party
with respect to any account, chattel paper, instruments or general intangible
shall give rise to any defense, counterclaim or set off in favor of Debtor or to
any claim or action against Secured Party;
(b) Debtor will deliver to Secured Party from time to time, as
requested by Secured Party, current lists of the Collateral;
(c) Debtor will not dispose of the Collateral, except on terms
approved in writing by Secured Party;
(d) Debtor will collect, assemble and deliver all of the
Collateral and books and records pertaining thereto, to Secured Party at a
reasonably convenient place designated by Secured Party; and
(e) Secured Party may, to the extent permitted by law, enter
onto Debtor's premises and take possession of the Collateral, and assign, sell,
lease or otherwise dispose of Debtor's interest in the Collateral for the
account of Debtor and Debtor shall then be liable for the difference between the
payments and other amounts due under the Note and amounts received pursuant to
such assignment or contract of sale or lease or other disposition of Debtor's
interest in the Collateral and the amount of such difference shall then be
immediately due and payable. Secured Party may, in its sole discretion,
designate a custodian or agent to take physical possession of the Collateral.
Secured Party shall give Debtor reasonable notice of the time and place of any
public sale of the Collateral or the time after which any private sale or other
intended disposition thereof is to be made. The requirement of reasonable notice
shall be met if notice of the sale or other intended disposition is mailed, by
first class mail, postage prepaid, to Debtor at its address set forth in Article
15 hereof or such other address as Debtor may by notice have furnished Secured
- 5 -
<PAGE> 41
Party in writing for such purpose, at least fifteen (15) days prior to the time
of such sale or other intended disposition.
All notices of public or private sale shall specify that the
assignment of any FCC permit or license for the Station must first be approved
by the FCC and such notice shall be given to all persons attending a public
sale. Debtor agrees that it will join and cooperate fully with Secured Party or
with the successful bidder or bidders at any public or private sale in the
filing of an application, and furnishing any additional information that may be
required in connection with such application, requesting the FCC's prior
approval of the assignment of such license or permit for the Station to Secured
Party or the successful bidder or bidders. Debtor will take such further
actions, or cause such further actions to be taken that may be necessary or
desirable to obtain such FCC approval and will execute and deliver, or will
cause the execution and delivery of, all applications, certificates, instruments
and other documents that may be necessary or desirable in connection with such
approval. The parties agree that the Collateral and the permit or license shall
not be assigned and transferred to separate parties.
Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Debtor, and Debtor hereby
waives (to the extent permitted by law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted.
ARTICLE 5. POWERS OF SECURED PARTY
Debtor appoints Secured Party as its true attorney in fact to perform
any of the following powers, which are coupled with an interest, and are
irrevocable until termination of this Security Agreement and may be exercised by
Secured Party's officers and employees, or any of them, upon the occurrence of
an Event of Default under the Loan Agreement:
(a) to perform any obligation of Debtor hereunder in Debtor's
name or otherwise;
(b) to give notice of Secured Party's rights in the
Collateral, to enforce the same, and make extension agreements with respect
thereto;
(c) to release persons liable on the Collateral and to give
receipts and acquittance and compromise disputes in connection therewith;
(d) to release security;
(e) to resort to security in any order;
- 6 -
<PAGE> 42
(f) to prepare, execute, file, record or deliver notes,
assignments, schedules, designation statements, financing statements,
continuation statements, termination statements, statements of assignment and
applications or registration or like papers to perfect, preserve or release
Secured Party's interest in the Collateral;
(g) to verify facts concerning the Collateral by inquiry of
obligors thereon, or otherwise;
(h) to endorse, collect, deliver and receive payment under
instruments for the payment of money constituting or relating to Collateral;
(i) to prepare, adjust, execute, deliver and receive payment
under insurance claims;
(j) to exercise all rights, powers and remedies which Debtor
would have, but for this Security Agreement, under all of the Collateral subject
to this Security Agreement; and
(k) to do all acts and things and execute all documents in the
name of Debtor or otherwise deemed by Secured Party as necessary, proper and
convenient in connection with the preservation, perfection or enforcement of its
rights hereunder.
ARTICLE 6. REMITTANCES
Debtor agrees that upon the occurrence and during the continuance of an
event which constitutes an Event of Default under the Loan Agreement, all cash
or proceeds received by Debtor as a result of the sale, lease or other
disposition of any Collateral, whether received by Debtor in the exercise of its
collection rights hereunder or otherwise, shall be, at Secured Party's
discretion, remitted to Secured Party or deposited to an account for the benefit
of Secured Party (according to its instructions) in the form received (properly
endorsed to the order of Secured Party or for collection in accordance with
Secured Party's instructions) not later than the banking business day following
the day of receipt, to be held as security for the payment of the Obligations
secured hereby and applied by Secured Party as provided in Article 7 hereof.
Debtor agrees not to commingle any such collections or proceeds with any of its
other funds or property and agrees to hold the same upon an express trust for
Secured Party until remitted to Secured Party.
ARTICLE 7. APPLICATION OF PROCEEDS
Except as expressly provided elsewhere in this Security Agreement, all
proceeds of the sale of the Collateral by Secured Party hereunder, and all other
monies received by Secured Party pursuant to the terms of this Security
Agreement (whether through the exercise by Secured Party of its rights of
collection or otherwise), including, but not limited to, any awards or other
amounts payable upon any condemnation or taking by eminent domain, shall
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<PAGE> 43
be applied, as promptly as is practicable after the receipt thereof by Secured
Party as follows:
FIRST: to the payment of all fees and expenses incurred by Secured
Party or any custodian appointed hereunder, if not previously paid by Debtor,
and all expenses incurred by Secured Party in connection with any sale of the
Collateral, including, but not limited to, the expenses of taking, advertising,
processing, preparing and storing the Collateral to be sold, all court costs and
fees and expenses of counsel to Secured Party in connection therewith, to the
payment of all expenses to be paid by Debtor pursuant to Article 16 of this
Security Agreement, and to the payment of all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured Party
hereunder to the account of Debtor and the payment of all costs and expenses
paid or incurred by Secured Party in connection with the exercise of any right
or remedy hereunder, to the extent that such advances, costs and expenses shall
not theretofore have been reimbursed to Secured Party by Debtor;
SECOND: to the payment to Secured Party of the interest then due and
payable on the Note;
THIRD: to the payment to Secured Party of the principal then due and
payable on the Note;
FOURTH: to the payment to Secured Party of any other amount owing to
Secured Party under any other agreement of Debtor with Secured Party; and
FIFTH: only if all of the foregoing have been paid in full, to Debtor.
Notwithstanding the sale or other disposition of any Collateral by
Secured Party hereunder, Debtor shall remain liable for any deficiency.
ARTICLE 8. RIGHTS CUMULATIVE
The rights, privileges, powers and remedies of Secured Party shall be
cumulative and no single or partial exercise of any of them shall preclude the
further or other exercise of the same or any other of them. No delay or failure
of Secured Party in exercising any right, power, privilege or remedy hereunder
shall affect such right, power, privilege or remedy. Nor shall any single or
partial exercise of any right, power, privilege or remedy or any abandonment or
discontinuance of steps to enforce such right, power, privilege or remedy affect
such right, power, privilege or remedy. Any waiver, permit, consent or approval
of any kind by Secured Party of any default hereunder, or any such waiver of any
provisions or conditions hereof, must be in writing and shall be effective only
to the extent set forth in writing and shall not constitute a waiver of any
subsequent or other default. Failure of Secured Party to insist upon strict
performance or compliance by Debtor of any covenants,
- 8 -
<PAGE> 44
warranties or agreements in this Security Agreement shall not constitute a
waiver of any subsequent or other failure to perform or comply with any
covenants, warranties or agreements.
ARTICLE 9. CONTINUING AGREEMENT
This is a continuing agreement and shall remain in full force and
effect and be binding upon Debtor and the successors and assigns of Debtor until
all of the Obligations shall have been fully satisfied and discharged.
ARTICLE 10. REINSTATEMENT OF AGREEMENT
If Secured Party shall have proceeded to enforce its rights under this
Security Agreement and such proceedings shall have been discontinued or
abandoned for any reason prior to the issuance of any judgment or award, then
Debtor and Secured Party shall be restored respectively to their positions and
rights hereunder, and all rights, remedies and powers of Debtor and Secured
Party shall continue as though no such proceeding had been initiated. In the
event of litigation arising under this Security Agreement, the prevailing party
shall be entitled to, in addition to all other damages and remedies, reasonable
attorneys' fees.
ARTICLE 11. ASSIGNMENT
Secured Party may assign and transfer any of the Obligations of Debtor
and may deliver the Collateral, or any part thereof, to the assignee or
transferee of any such obligation, who shall become vested with all the rights,
remedies, powers, security interests and liens herein granted to Secured Party
in respect thereto; and Secured Party shall thereafter be relieved and fully
discharged from any liability or obligation under this Security Agreement.
Debtor shall not have the right to assign this Security Agreement without the
prior written consent of Secured Party.
ARTICLE 12. DUTIES WITH RESPECT TO COLLATERAL
With respect to the Collateral, Secured Party shall be under no duty to
send notices, perform services, pay for insurance, taxes or other charges or
take any action of any kind in connection with the management thereof and its
only duty with respect thereto shall be to use reasonable care in its custody
and preservation while in its possession, which shall not include any steps
necessary to preserve rights against prior parties.
ARTICLE 13. PERFORMANCE OF OBLIGATIONS BY SECURED PARTY
If Debtor shall fail to do any act or thing which it has covenanted to
do hereunder, or if any representation or warranty of Debtor shall be breached,
Secured Party may (but shall not be obligated to) perform such act or thing on
behalf of Debtor or cause it to be done or
- 9 -
<PAGE> 45
remedy any such breach, and there shall be added to the liabilities of Debtor
hereunder the cost or expense incurred by Secured Party in so doing, and any and
all amounts expended by Secured Party in taking any such action shall be
repayable to it upon demand being made to Debtor therefore and shall bear
interest at the rate provided for in the Note, from and including the date
advanced to the date of repayment.
ARTICLE 14. MISCELLANEOUS
After due consideration and consultation with its attorneys, Debtor
voluntarily and knowingly, to the extent permitted by law, agree as follows: (a)
Debtor waives presentment, protest, notice of protest, notice of dishonor and
notice of nonpayment with respect to the Collateral to which Secured Party is
entitled hereunder; (b) Debtor waives any right to direct the application of
payments or security for the Obligations of Debtor hereunder, or the
indebtedness of customers of Debtor, and any right to require proceedings
against others or to require exhaustion of the security; (c) Debtor consents to
the extension or forbearance of the terms of the Obligations or indebtedness of
customers, the release or substitution of security, and the release of
guarantors, if any; and (d) Debtor waives notice or a judicial hearing prior to
the exercise by Secured Party of any right or remedy provided by this Security
Agreement and also waives its rights, if any, to set aside or invalidate any
sale duly consummated in accordance with the provisions of this Security
Agreement on the grounds that the sale was consummated without a prior judicial
hearing.
ARTICLE 15. NOTICES
All notices or demands of any kind which may be required or which
Secured Party desires to serve upon Debtor under the terms of this Security
Agreement shall be served upon Debtor by personal service or by mailing a copy
thereof by first class mail, postage prepaid, addressed to Debtor, at the
address set forth in Article 8 of the Loan Agreement.
ARTICLE 16. EXPENSES
Debtor agrees to pay on demand all fees, costs and expenses of Secured
Party, or of any custodian or agent designated by Secured Party, including the
fees and out-of-pocket expenses of legal counsel, independent public accountants
and other outside experts retained by Secured Party in connection with the
enforcement of this Security Agreement or any other instrument or document
delivered pursuant hereto.
ARTICLE 17. LAW APPLICABLE
This Security Agreement shall be governed by and construed in
accordance with the laws of the State of Florida other than the conflicts of law
provisions thereof.
- 10 -
<PAGE> 46
ARTICLE 18. SEVERABILITY OF PROVISIONS
If any provision of this Security Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of this
Security Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 47
IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be duly executed as of the day and year first written
above.
WORLD TELEVISION OF WASHINGTON,
L.L.C.
By:_______________________________________
Name:
Title:
PAXSON COMMUNICATIONS OF
SEATTLE-24, INC.
By:_______________________________________
Name:
Title
- 12 -
<PAGE> 48
EXHIBIT A
LOCATION OF THE COLLATERAL
<PAGE> 49
EXHIBIT 3
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, made and entered into as of this ___
day of ________, 1996 by and among LARRY ROGOW, GARRY SPIRE AND FRANK
WASHINGTON, (the "Pledgors"), and PAXSON COMMUNICATIONS OF SEATTLE-24, INC., a
Florida corporation (the "Pledgee");
W I T N E S S E T H:
WHEREAS, World Television of Washington, L.L.C., (the
"Company"), and the Pledgee have entered into certain Agreements of even date
herewith (the "Agreements") relating to Television Station KBCB(TV), Bellingham,
Washington;
WHEREAS, the Pledgors are the Members of the Company and
therefore will obtain a material benefit from the agreements of the Company with
Pledgee;
WHEREAS, Pledgee has entered into a Loan Agreement of even
date herewith (the "Loan") with the Pledgors; and
WHEREAS, the Agreement provides for the Pledgors to enter into
this Pledge Agreement as additional security for the Loan;
NOW, THEREFORE, in consideration of loans, credit or other
financial accommodation extended or continued from time to time to the Company
by the Pledgee, the Pledgors do hereby agree as follows:
1. Pledge.
(a) The Pledgors hereby grant to the Pledgee a first
priority security interest in and pledge, assign and deliver the Certificate(s)
described in Exhibit A annexed hereto, constituting all the issued and
outstanding ownership interests of the Company owned by the Pledgors (the
"Certificates"), accompanied by all powers, duly executed in blank.
(b) The Pledgors and the Pledgee agree that the
Certificates shall be held on the terms and conditions hereinafter set forth as
collateral security for the obligations of the Company to the Pledgee under the
Agreement and the promissory note issued pursuant thereto (the "Note").
2. Representations and Warranties. The Pledgors
represent and warrant to the Pledgee as follows:
<PAGE> 50
- 2 -
a) that the Certificates constitute all outstanding
ownership of the Company;
b) that the Certificates are fully paid and
nonassessable and are not subject to any liens, charges or encumbrances
whatsoever;
c) that there are no existing options, warrants or
other rights to purchase any Company interests;
d) that the execution, delivery and performance of
this Pledge Agreement will not conflict with, result in a breach of or
constitute a default under any indenture or agreement to which the Pledgors or
the Company is a party or by which it is bound, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever on any of
its property or assets;
e) this Pledge Agreement constitutes the legal, valid
and binding obligation of the Pledgors, enforceable in accordance with its
terms;
f) the Pledgors have all requisite power and
authority to enter into this Pledge Agreement and to carry out the transactions
contemplated hereby; and
g) no consent or approval of any person or entity,
other than the Federal Communications Commission (the "FCC"), is or will be
required in connection with the execution, delivery and performance of this
Pledge Agreement.
3. Term. The Pledgee shall hold the Certificates as security
for the performance by the Pledgors of their obligations and liabilities under
the Agreement and the Note, and the Certificates shall be held by the Pledgee
until the principal and interest due on the Note are paid in full and the Loan
Agreement shall have terminated, at which time the Pledgee shall deliver the
Certificates to the Pledgors free and clear of this Pledge Agreement, and this
Pledge Agreement shall thereupon terminate.
4. Voting. While the Certificates continue to be held by the
Pledgee, such Certificates shall remain in the name of the Pledgors and the
Pledgors shall have and exercise all rights of ownership. If an Event of
Default, as such term is defined in the Agreement, the provisions of which
Agreement are hereby incorporated by reference herein, shall occur, in addition
to the remedies set forth in Section 6 hereof, the Pledgee shall be entitled,
subject to the prior approval of the FCC, to exercise all of the power of an
owner with respect to the Certificates and receive, on account of the
obligations evidenced by the Note, all sums distributed by the Company with
respect to the Certificates.
<PAGE> 51
- 3 -
5. Certificate Adjustments. The Pledgors agree that in the
event that during the term of this Pledge Agreement any reclassification,
readjustment or other change is declared or made with respect to the
Certificates, or any subscription, warrant or other right is exercisable with
respect to the Certificates, it shall cause all new, substituted or additional
ownership interests issued by reason of any such change to be delivered to the
Pledgee and to be held by the Pledgee under the terms of this Pledge Agreement
in the same manner as the Certificates originally pledged hereunder. There
likewise shall be deposited with the Pledgee, to be added to the pledged
property and subject to the pledge, any and all additional issued interests in
the Company to the Pledgors by way of dividends, new securities or otherwise, to
the end that the Pledgee will at all times hold, subject to the pledge, all
issued and outstanding ownership of the Company owned by the Pledgors.
6. Remedies. If an Event of Default, as such term is defined
in the Agreement, shall occur, the Pledgee may, after fifteen (15) days' prior
notice to the Pledgors, sell, assign and deliver the whole or, from time to
time, any part of the Certificates or any interest or part thereof, at any
private sale or at public auction, for cash, or credit or for other property,
for immediate or future delivery, and for such price or prices and on such terms
as the Pledgee reasonably may determine to be commercially reasonable. The
Pledgee shall give the Pledgors reasonable notice of the time and place of any
public sale of the Certificates or the time after which any private sale or
other intended disposition thereof is to be made. The requirement of reasonable
notice shall be met if notice of such sale or other intended disposition is
mailed, by certified or registered mail, return receipt requested, to the
Pledgors at the address set forth in Section 9 at least fifteen (15) days prior
to the time of such sale or other intended disposition; provided that all
notices of such sale shall specify that transfer of any interest representing
control of the Company must first be approved by the FCC and similar notice
shall be given to all those attending such sale. The Pledgors hereby waive and
release any and all right or equity of redemption whether before or after sale
hereunder. At any such sale the Pledgee may bid for and purchase for its own
account the whole or any part of the Certificates so sold, free from any such
right or equity of redemption. After obtaining all required consents from the
FCC and upon completion of the sale, Pledgee shall deliver the Certificates, or
any portion thereof, to the purchaser or purchasers thereof. The net proceeds of
any such sale shall be applied as follows:
i) First, to the expenses of the sale and enforcement
of this Pledge Agreement, including but not limited to, the expenses of
advertising, preparing and prosecuting any necessary FCC application, and
attorneys' fees and expenses;
ii) Second, to the payment of interest under the
Note;
iii) Third, to the payment of the principal of the
Note; and
<PAGE> 52
- 4 -
iv) Fourth, only after payment in full of the above,
to the payment to the Pledgors of any excess proceeds, subject to the receipt of
notice of and the provisions of any other agreement between the parties with
respect to the disposition of said excess proceeds or unsold shares.
Notwithstanding the sale or other disposition of the Certificate by the Pledgee
hereunder, the Company shall remain liable for any deficiency.
All notices of public or private sale shall specify that the
assignment of the broadcast licenses(s) of the Television Station KBCB(TV),
Bellingham, Washington must first be approved by the FCC and such notice shall
be given to all persons attending a public sale. The Pledgors agree that they
will join and cooperate fully with the Pledgee or with the successful bidder or
bidders at any public or private sale in the filing of an application, and
furnishing any additional information that may be required in connection with
the application with the FCC, requesting the FCC's prior approval of the
assignment of the licenses of the Station to the Pledgee or the successful
bidder or bidders. The Pledgors will take such further actions, or cause such
further actions to be taken that may be necessary or desirable to obtain such
FCC approval and will execute and deliver, or will cause the execution and
delivery of, all applications, certificates, instruments and other documents
that may be necessary or desirable in connection with such approval. The parties
agree that the assets and license(s) shall not be assigned and transferred to
separate parties.
Each purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of the Pledgors, and the
Pledgors hereby waive (to the extent permitted by law) all rights of redemption,
stay and/or appraisal which they now have or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.
The Pledgors and the Pledgee hereby agree to use good faith
efforts to answer FCC inquiries, if any, with respect to obtaining the
aforementioned FCC approvals and shall otherwise seek said approvals diligently,
each taking all steps reasonably necessary or desirable to expedite the
procurement of such approvals. Neither failure nor delay on the part of the
Pledgee to exercise any right, remedy, power or privilege provided for herein or
by statute or at law or in equity shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. Notwithstanding any other provision of this
Pledge Agreement to the contrary, any foreclosure of or disposal of the
Certificates under the terms of this Pledge Agreement upon the occurrence of an
Event of Default under the Agreement shall be made pursuant to Section 310 of
the Communications Act of 1934, as amended, and to the applicable rules and
regulations of the FCC, as amended, and, if and to the extent required, after
prior written approval of the FCC.
<PAGE> 53
- 5 -
7. Encumbrances. During the term of this Pledge Agreement
specified in Section 3, the Pledgors shall not sell, assign, transfer or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber the partnership interests represented by the Certificates
unless said mortgage, pledge or encumbrance is subject to a subordination
agreement satisfactory to the Pledgee.
8. Miscellaneous.
8.1 Transfer taxes, if any, applicable to any
transfer of the Certificates upon the occurrence of an Event of Default or upon
termination of the Pledge Agreement shall be payable by the person or persons to
whom the shares are being transferred, provided, however, that the Pledgors
agree to reimburse the Pledgee promptly for all such transfer taxes which the
Pledgee may be required to pay.
8.2 No single or partial exercise of any power
hereunder shall preclude other or future exercise thereof or the exercise of any
other power. The holder of the Note may proceed against any portion of the
security held therefor in such order and in such manner as the holder may see
fit, without waiver of any rights with respect to any other security.
8.3 The Pledgee may deal in any manner with the Note,
the Agreement or any other agreement required thereby without notice to or the
consent of the Pledgors, including, without limitation, in the following manner:
(a) to modify, supplement or otherwise
change any terms of the Note, the Agreement or any such other agreement; to
grant any extension or renewal of the Note, the Agreement or such other
agreement; to grant any other waiver or indulgence with respect to the Note, the
Agreement or such other agreement and to effect any release, compromise or
settlement with respect to the Note, the Agreement or such other agreement; and
(b) to consent to the substitution, exchange
or release of all or any part of any other security at any time held by the
Pledgee as security or surety for the obligations secured hereby.
<PAGE> 54
- 6 -
9. Notices. All notices required to be sent hereunder shall
be in writing and shall be sent by registered mail, return receipt requested, to
the parties as follows:
To the Pledgors:
Messrs. Larry Rogow, Garry Spire
and Frank Washington
6611 Santa Monica Boulevard
Los Angeles, CA 90038-1311
To the Pledgee:
Paxson Communications of Seattle-24, Inc.
601 Clearwater Park North
West Palm Beach, Florida 33401
Addresses may be changed by notice in writing to the other parties. All such
notices and other communications shall be effective on the date set forth on the
return receipt.
10. Choice of Law, etc. This Pledge Agreement shall be
construed and enforced under and governed by the laws of the State of Florida,
other than the conflicts of law provisions thereof. The parties agree to the
exclusive jurisdiction and venue of the state or federal district court for the
district including Palm Beach, Florida. This Pledge Agreement embodies the
entire agreement and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof, and this
Pledge Agreement may not be modified or amended or any term or provision hereof
waived or discharged except in writing signed by the party against whom such
amendment, modification, waiver or discharge is sought to be enforced. This
Pledge Agreement shall be binding on the successors, assigns, and legal
representatives of the parties hereto and shall inure to the benefit of and be
enforceable by their successors, assigns, and legal representatives; provided,
however, that neither the Certificates nor this Pledge Agreement may be assigned
or transferred in whole or in part, voluntarily or involuntarily, by the
Pledgors without the prior written consent of the Pledgee, and the Pledgee may
assign this Pledge Agreement and all of its rights hereunder without any consent
of the Pledgors. The headings of this Pledge Agreement are for the purpose of
reference only and shall not limit or otherwise affect the meaning hereof. The
Pledgors shall take such further actions as may be reasonably requested by the
Pledgee from time to time in order to perfect the security interest of the
Pledgee hereunder and to assure and confirm onto the Pledgee its rights, powers
and remedies hereunder.
<PAGE> 55
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed on their behalf all as of the day and year first above
mentioned.
WITNESS: LARRY ROGOW
- ---------------------------- -----------------------------------------
WITNESS: GARRY SPIRE
- ---------------------------- -----------------------------------------
WITNESS: FRANK WASHINGTON
- ---------------------------- -----------------------------------------
WITNESS: PAXSON COMMUNICATIONS
OF SEATTLE-24, INC.
By:
- ----------------------------- --------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE> 56
EXHIBIT A
DESCRIPTION OF COMPANY INTERESTS
<PAGE> 57
================================================================================
ESCROW AGREEMENT
BY AND AMONG
PAXSON COMMUNICATIONS OF
SEATTLE-24, INC.
WORLD TELEVISION OF WASHINGTON, L.L.C.
AND
FIRST UNION NATIONAL BANK OF FLORIDA
* * *
AUGUST 19, 1996
================================================================================
<PAGE> 58
ESCROW AGREEMENT
This ESCROW AGREEMENT is made and entered into this 19th day of
August, 1996 by, and among PAXSON COMMUNICATIONS OF SEATTLE-24, INC., a Florida
corporation ("Buyer"), WORLD TELEVISION OF WASHINGTON, L.L.C., a Delaware
limited liability company ("Seller"), and FIRST UNION NATIONAL BANK OF FLORIDA
("Escrow Agent").
WHEREAS, Buyer and Seller have entered into an Option Agreement
providing for the opportunity, if exercised, for the purchase by Buyer of
substantially all of the assets from Seller that are used or useable in the
operation of Television Station KBCB(TV), Bellingham, Washington; and
WHEREAS, the Option Agreement provides that Buyer shall deposit in
escrow with the Escrow Agent the sum of Two Hundred Thousand Dollars ($200,000)
(the "Escrow Fund") to be deposited contemporaneously herewith.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. APPOINTMENT OF ESCROW AGENT
Buyer and Seller each appoint First Union National Bank of Florida as
Escrow Agent to receive, hold, administer and deliver the Escrow Fund in
accordance with this Agreement and the Escrow Agent accepts such appointment,
all subject to and upon the terms and conditions set forth in this Agreement.
The Escrow Agent shall invest and reinvest the Escrow Funds as
directed by Buyer. The Escrow Agent shall invest the Escrow Funds and the
interest thereon only in U.S. government obligations maturing not more than 90
days from the date of purchase or in a money market account investing solely in
U.S. government obligations.
SECTION 2. GENERAL INTENTION
Buyer herewith deposits the Escrow Fund with the Escrow Agent and the
Escrow Agent acknowledges such deposit. The Escrow Agent shall dispose of the
Escrow Fund in accordance with the express provisions of this Agreement and,
except upon the terms and conditions of Section 3 of this Agreement, shall not
make, be required to make or be liable in any manner for its failure to make,
any determination under the Option Agreement or any other agreement, including
without limitation any determination of whether either Buyer or Seller have
complied with the terms of the Option Agreement or is entitled to delivery of
the Escrow Fund or to any other right or remedy thereunder.
<PAGE> 59
SECTION 3. RELEASE OF ESCROW FUND
The Escrow Agent shall hold the Escrow Fund as provided in this
Section 3:
3.1 Seller's Demand. If the Escrow Agent receives a written
notice signed by Seller stating that Seller is entitled to any portion of the
Escrow Fund and certifying that a copy of the notice has been delivered to
Buyer in a manner specified in Section 6, the Escrow Agent shall deliver a copy
thereof to Buyer in a manner specified in Section 6 and, unless the Escrow
Agent receives a written objection from Buyer within ten business days after
the date of delivery of the notice to Buyer as provided in Section 6, the
Escrow Agent shall deliver to Seller the portion of the Escrow Fund claimed by
Seller. If the Escrow Agent receives a written objection from Buyer, the
Escrow Agent shall continue to hold the Escrow Fund until it has received
written instructions signed by Seller and Buyer or a final non-appealable order
of a court of competent jurisdiction, directing delivery of the Escrow Fund, in
which case the Escrow Agent shall deliver the Escrow Fund in accordance with
the instructions or order.
3.2 Buyer's Demand. If the Escrow Agent receives a written
notice signed by Buyer stating that Buyer is entitled to any portion of the
Escrow Fund and certifying that a copy of the notice has been delivered to
Seller in a manner specified in Section 6, the Escrow Agent shall deliver a
copy thereof to Seller in a manner specified in Section 6 and, unless the
Escrow Agent receives a written objection from Seller within ten business
day after the date of delivery of the notice to Seller as provided in Section
10, the Escrow Agent shall deliver to Buyer the portion of the Escrow Fund
claimed by Buyer. If the Escrow Agent receives a written objection from
Seller, the Escrow Agent shall continue to hold the Escrow Fund until it has
received written instructions signed by Seller and Buyer or a final non-
appealable order of a court of competent jurisdiction, directing delivery of
the Escrow Fund, in which case the Escrow Agent shall deliver the Escrow Fund
in accordance with the instructions or order.
3.3 Court Order or Joint Instructions. Notwithstanding anything
to the contrary in this Agreement:
(a) The Escrow Agent may deposit the Escrow Fund with the
Clerk of any Court of competent jurisdiction upon commencement of an action in
the nature of interpleader or in the course of any Court proceedings.
(b) If at any time the Escrow Agent receives a final
non-appealable order of a Court of competent jurisdiction or written
instructions signed by Seller and Buyer, directing delivery of the Escrow Fund,
the Escrow Agent shall comply with the order or instructions. Upon any
delivery or deposit of the entire Escrow Fund as provided in this Section 3,
the Escrow Agent shall and will thereupon be released and discharged from any
and all further obligations arising in connection with this Agreement without
further documents or action by Buyer or Seller.
2
<PAGE> 60
3.4 Partial Release of Escrow Fund. If the Escrow Agent
disburses less than all of the Escrow Amount pursuant to any demand, Court
Order, or joint instructions in accordance with this Agreement, that portion of
the Escrow Fund not disbursed shall continue to be held in escrow by the Escrow
Agent subject to the terms of this Agreement.
SECTION 4. ESCROW AGENT
The Escrow Agent shall not be liable under this Agreement except for
its own gross negligence or willful misconduct. Except with respect to
misconduct claims that are successfully asserted against the Escrow Agent,
Buyer and Seller jointly and severally shall indemnify and hold harmless the
Escrow Agent (and any successor Escrow Agent) from and against any and all
losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursement, arising out of or in connection
with this Agreement.
This Agreement expressly sets forth all of the duties of the Escrow
Agent with respect to any and all matters pertinent to this Agreement. In
performing its duties hereunder, the Escrow Agent shall be entitled to rely
upon any order, judgment, certification, demand, notice instrument or other
writing delivered to it under this Agreement without being required to
determine the authenticity or the correctness of any fact stated therein or the
propriety or validity of the service thereof. The Escrow Agent may act in
reliance upon any instrument or signature reasonably believed by it to be
genuine and may assume that any person signing such instrument or purporting to
give any notice hereunder has been duly authorized to do so.
The Escrow Agent may act in good faith pursuant to the advice of
counsel with respect to any matter relating to this Agreement, including
without limitation, any determination that a Court order is final and
non-appealable.
The Escrow Agent may resign and be discharged from its duties or
obligations hereunder by giving written notice to the parties hereto of such
resignation, specifying a date when such resignation shall take effect. In
such case, Buyer and Seller shall mutually agree to a successor Escrow Agent
hereunder.
SECTION 5. TERMINATION
This Agreement shall be terminated (a) upon the disbursement or
release in accordance with this Agreement of the entire Escrow Fund, including
the deposit of the Escrow Fund with the Clerk of any Court of competent
jurisdiction in accordance with Section 3 or (b) by written consent signed by
all parties. This Agreement shall not otherwise be terminated.
3
<PAGE> 61
SECTION 6. 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 Buyer: Paxson Communications of Seattle-24, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Lowell W. Paxson
Fax No.: (407) 655-9424
Telephone: (407) 659-4122
If to Seller: World Television of Washington, L.L.C.
6611 Santa Monica Boulevard
Los Angeles, CA 90038-1311
Attention: Larry Rogow
Fax No.: (213) 469-2193
Telephone: (213) 469-5696
If to Escrow Agent: First Union National Bank of Florida
Corporate Trust Department FL0122
225 Water Street, Third Floor
Jacksonville, FL 32202
Attention: Richard Hann
Fax No.: (904) 361-7735
Telephone: (904) 361-3160
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
6.
SECTION 7. ESCROW FEES
Buyer and Seller shall share equally and pay any fees due to the
Escrow Agent for the services to be rendered by the Escrow Agent under this
Agreement. Buyer and Seller shall share equally and pay for or reimburse the
Escrow Agent upon request for all reasonable expenses, including reasonable
attorneys' fees, incurred by it in the performance of its duties under this
Agreement.
4
<PAGE> 62
SECTION 8. BENEFIT AND ASSIGNMENT
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Neither party
hereto may voluntarily or involuntarily assign its interests under this
Agreement without the prior written consent of the other parties hereto.
SECTION 9. GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Florida.
SECTION 10. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed an original but all of which together will constitute one
and the same instrument.
SECTION 11. ENTIRE AGREEMENT
This Agreement contains all the terms agreed upon by the parties with
respect to the subject matter hereof.
SECTION 12. AMENDMENTS
Except as provided in Section 5, this Agreement may only be modified
or terminated by a writing signed by all the parties hereto, and no waiver
hereunder shall be effective unless embodied in a writing signed by the party
to be charged.
SECTION 13. TAX REPORTING
For tax reporting purposes, all interest earned on the Escrow Fund
shall be deemed to be for the account of Buyer.
5
<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have duly executed this Escrow
Agreement as of the date first above written.
PAXSON COMMUNICATIONS OF SEATTLE-24, INC.
By: /s/ Anthony L. Morrison
-----------------------------------
Name: Anthony L. Morrison
Title: Vice President
WORLD TELEVISION OF WASHINGTON, L.L.C.
By: /s/ Frank Washington
----------------------------------
Name: Frank Washington
Title: President
FIRST UNION NATIONAL BANK OF FLORIDA
By: /s/ Richard Hann
---------------------------------
Name: Richard Hann
Title: Vice President
6
<PAGE> 64
================================================================================
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
WORLD TELEVISION OF WASHINGTON, L.L.C.
AND
PAXSON COMMUNICATIONS
OF SEATTLE-24, INC.
FOR
TELEVISION STATION KBCB(TV)
BELLINGHAM, WASHINGTON
AUGUST 19, 1996
================================================================================
<PAGE> 65
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. LEASE OF STATION AIR TIME . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date; Term . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Option to Renew . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Permittee Operation of Station . . . . . . . . . . . . . . . . . . . . . 3
1.7 Permittee Representations and Warranties . . . . . . . . . . . . . . . . 3
1.8 Programmer Responsibility . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE . . . . . . . . . . . . . . . 4
2.1 Permittee Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Additional Permittee Obligations . . . . . . . . . . . . . . . . . . . . 4
2.3 Responsibility for Employees and Expenses . . . . . . . . . . . . . . . 5
SECTION 3. STATION PROGRAMMING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Broadcast Station Programming Policy Statement . . . . . . . . . . . . . 5
3.2 Permittee Control of Programming . . . . . . . . . . . . . . . . . . . . 6
3.3 Programmer Compliance with Copyright Act . . . . . . . . . . . . . . . . 6
3.4 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Children's Television Advertising . . . . . . . . . . . . . . . . . . . 6
3.6 Payola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.7 Cooperation on Programming . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Staffing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Programmer's Indemnification . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Permittee's Indemnification . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Time Brokerage Challenge . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE . . . . . . . . . . . . . . 8
5.1 Confidential Review . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Political Advertising . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT . . . . . . . . . . . . . . . . . . . . 9
6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Termination Requirements and Procedures . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 66
<TABLE>
<S> <C>
6.3 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.4 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7. MISCELLANEOUS
7.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.2 Call Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.10 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.11 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.12 Must Carry Election . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
<PAGE> 67
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this 19th day of August 1996, by and
between World Television of Washington, L.L.C., a Delaware limited liability
company (the "Permittee"), and Paxson Communications of Seattle-24, Inc., a
Florida corporation (the "Programmer").
WHEREAS, Permittee is the holder of a construction permit, File Nos.
BMPCT-950821KE; BMPCT-960614KE issued by the Federal Communications Commission
("FCC") for new television station KBCB(TV), Channel 24, Bellingham, Washington
(the "Station");
WHEREAS, Permittee and Programmer have entered into certain agreements
relating to the construction of the Station;
WHEREAS, Permittee and Programmer desire to enter into this Time
Brokerage Agreement, pursuant to which Programmer shall provide programming for
the Station that is in conformity with Station policies and procedures, FCC
policies for time brokerage arrangements, and the provisions hereof;
WHEREAS, Programmer agrees to use the Station to broadcast such
programming of its selection that is in conformity with all rules, regulations
and policies of the FCC, subject to Permittee's full authority to manage and
control the operation of the Station; and
WHEREAS, Programmer and Permittee agree to cooperate to make this Time
Brokerage Agreement work to the benefit of the public and both parties and as
contemplated in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be legally
bound, agree as follows:
SECTION 1. LEASE OF STATION AIR TIME
1.1 Representations. Both Permittee and Programmer represent that
they are legally qualified, empowered and able to enter into this Agreement and
that the execution, delivery, and performance hereof shall not constitute a
breach or violation of any material agreement, contract or other obligation to
which either party is subject or by which it is bound.
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1.2 Effective Date; Term.
(a) The effective date of this Agreement shall be the date
hereof, and this Agreement shall continue in force for an initial term of five
(5) years (the "Initial Term") from that date unless otherwise extended or
terminated as set forth below.
(b) The Parties hereto have entered into an Option Agreement,
under which the Programmer in the future may choose to acquire ownership of the
Station from the Permittee under terms and conditions as stated in an Asset
Purchase Agreement. In the event that the time for the exercise of the Option
arrives, and the Option holder (Programmer) chooses not to exercise its option,
or if the Asset Purchase Agreement shall expire or be terminated, then this
Time Brokerage Agreement shall continue or, at Permittee's sole discretion
shall expire, on the first day of a month that is at least ninety days after
Permittee delivers advance written notice of termination to Programmer.
1.3 Scope. During the term of this Agreement and any renewal
thereof, Permittee shall make available to Programmer broadcast time upon the
Station as set forth in this Agreement. Programmer shall deliver such
programming, at its expense, to the Station's transmitter facilities or other
authorized remote control points as reasonably designated by Permittee.
Subject to Permittee's reasonable approval, as set forth in this Agreement,
Programmer shall provide programming of Programmer's selection complete with
commercial matter, news, public service announcements and other suitable
programming to the Permittee up to one hundred sixty-two hours per week.
Notwithstanding the foregoing, the Permittee may designate such additional time
as it may require without any adjustment of the monthly consideration to be
paid to Permittee under Section 1.5 for the broadcast of programming necessary
for the Station to broadcast news, public affairs, children's, religious and
non-entertainment programming as required by the FCC. All program time not
reserved by or designated for Permittee shall be available for use by
Programmer and no other party. Programmer may, at its option, produce the
programming (including commercial announcements and related production
activities) to be provided pursuant to this Agreement from Programmer's
existing studio and production facilities.
1.4 Option to Renew. Subject to the termination provisions of
Section 6 hereof, this Agreement may be renewed for an additional five (5) year
term at the request of the Programmer.
1.5 Consideration. As consideration for the air time made
available hereunder, Programmer shall make payments to Permittee as set forth
in Attachment I.
<PAGE> 69
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1.6 Permittee Operation of Station. Permittee will have full
authority, power and control over the management and operations of the Station
during the term of this Agreement and during any renewal of such term.
Permittee will bear all responsibility for Station's compliance with all
applicable provisions of the Communications Act of 1934, as amended (the
"Act"), the rules, regulations and policies of the FCC and all other applicable
laws. Permittee shall be solely responsible for and pay in a timely manner all
operating costs of the Station, including but not limited to maintenance of the
studio and transmitting facility and costs of electricity, except that
Programmer shall be responsible for the costs of its programming as provided in
Sections 1.8 and 2.3 hereof. Permittee shall employ at its expense management
level and other employees consisting of a General Manager and such operational
and other personnel as outlined in the budget previously provided to
Programmer, who will direct the day-to-day operations of the Station, and who
will report to and be accountable to the Permittee. Permittee shall be
responsible for the salaries, taxes, insurance and related costs for all
personnel employed by the Station and shall maintain insurance satisfactory to
Programmer covering the Station's transmission facilities. During the term of
the Agreement and any renewal hereof, Programmer agrees to perform, without
charge, routine monitoring of the Station's transmitter performance and tower
lighting by remote control, if and when requested by Permittee.
1.7 Permittee Representations and Warranties. Permittee represents
and warrants as follows:
(a) Permittee owns and holds or will hold all permits and
other authorizations necessary for the construction or operation of the
Station, and such permits and other authorizations are and will be in full
force and effect throughout the term of this Agreement. There is not now
pending, or to Permittee's best knowledge, threatened, any action by the FCC or
by any other party to revoke, cancel, suspend, refuse to renew or modify
adversely any of such licenses, permits or authorizations. Permittee is not in
material violation of any statute, ordinance, rule, regulation, policy, order
or decree of any federal, state or local entity, court or authority having
jurisdiction over it or the Station, which would have an adverse effect upon
the Permittee, the Station or upon Permittee's ability to perform this
Agreement. Permittee shall not take any action or omit to take any action
which would have an adverse impact upon the Permittee, the Station or upon
Permittee's ability to perform this Agreement. All reports and applications
required to be filed with the FCC or any other governmental body have been, and
during the course of the term of this Agreement or any renewal thereof, will be
filed in a timely and complete manner. During the term of this Agreement and
any renewal thereof, Permittee shall not dispose of, transfer, assign or pledge
any of Permittee's assets and properties except with the prior written consent
of the Programmer, if such action would adversely affect Permittee's
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performance hereunder or the business and operations of Permittee or the
Station permitted hereby.
(b) Permittee shall pay, in a timely fashion, all of the
expenses incurred in operating the Station including salaries and benefits of
its employees, lease payments, utilities, taxes, programming expenses, etc., as
set forth in Attachment II (except those for which a good faith dispute has
been raised with the vendor or taxing authority), and shall provide Programmer
with a certificate of such timely payment within thirty (30) days of the end of
each month.
1.8 Programmer Responsibility. Programmer shall be solely
responsible for any expenses incurred in the origination and/or delivery of
programming from any remote location and for any publicity or promotional
expenses incurred by Programmer, including, without limitation, ASCAP and BMI
music license fees for all programming provided by Programmer. Such payments
by Programmer shall be in addition to any other payments to be made by
Programmer under this Agreement.
1.9 Contracts. Programmer will enter into no third-party
contracts, leases or agreements which will bind Permittee in any way except
with Permittee's prior written approval.
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE
2.1 Permittee Authority. Notwithstanding any other provision of
this Agreement, Programmer recognizes that Permittee has certain obligations to
broadcast programming to meet the needs and interests of viewers in Bellingham,
Washington, the Station's service area and the educational and informational
needs of children. From time to time, Permittee shall air specific programming
on issues of importance to the local community and educational and
informational programming for children. Nothing in this Agreement shall
abrogate the unrestricted authority of the Permittee to discharge its
obligations to the public and to comply with the Act and the rules and policies
of the FCC.
2.2 Additional Permittee Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the Station, Permittee
shall also retain the right to interrupt Programmer's programming in case of an
emergency or for programming which, in the good faith judgment of Permittee, is
of greater local or national public importance. Permittee shall also
coordinate with Programmer the Station's hourly station identification and any
other announcements required to be aired by FCC rules. Permittee shall
continue to maintain a main studio, as that term is defined by the FCC, within
the Station's principal community contour, shall maintain its local public
inspection file in
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accordance with FCC rules, regulations and policies, and shall prepare and
place in such inspection file or files in a timely manner all material required
by Section 73.3526 of the FCC's Rules, including without limitation the
Station's quarterly issues and program lists; information concerning the
broadcast of children's educational and informational programming; and
documentation of compliance with commercial limits applicable to certain
children's television programming. Programmer shall, upon request by
Permittee, provide Permittee with such information concerning Programmer's
programs and advertising as is necessary to assist Permittee in the preparation
of such information. Permittee shall also maintain the station logs, receive
and respond to telephone inquiries, and control and oversee any remote control
point which may be established for the Station.
2.3 Responsibility for Employees and Expenses. Programmer shall
employ and be solely responsible for the salaries, taxes, insurance and related
costs for all personnel used in the production of its programming (including,
but not limited to, salespeople, technical staff, traffic personnel, board
operators and programming staff). Permittee will provide and be responsible
for the Station personnel necessary for the broadcast transmission of its own
programs (including, without limitation, the Station's General Manager and such
operational and other personnel as may be necessary or appropriate), and will
be responsible for the salaries, taxes, benefits, insurance and related costs
for all the Permittee's employees used in the broadcast transmission of its
programs and necessary to other aspects of Station operation. Whenever on the
Station's premises, all personnel shall be subject to the overall supervision
of Permittee's General Manager.
SECTION 3. STATION PROGRAMMING POLICIES
3.1 Broadcast Station Programming Policy Statement. Permittee has
adopted and will enforce a Broadcast Station Programming Policy Statement (the
"Policy Statement"), a copy of which appears as Attachment III hereto and which
may be amended in a reasonable manner from time to time by Permittee upon
notice to Programmer. Programmer agrees and covenants to comply in all
material respects with the Policy Statement, to all rules and regulations of
the FCC, and to all changes subsequently made by Permittee or the FCC.
Programmer shall furnish or cause to be furnished the artistic personnel and
material for the programs as provided by this Agreement and all programs shall
be prepared and presented in conformity with the rules, regulations and
policies of the FCC and with the Policy Statement set forth in Attachment III
hereto. All advertising spots and promotional material or announcements shall
comply with applicable federal, state and local regulations and policies and
shall be produced in accordance with quality standards established by
Programmer. If Permittee determines that a program supplied by Programmer is
for any reason, within Permittee's sole discretion, unsatisfactory or
unsuitable or contrary to the public interest, or does not comply with the
Policy Statement it may, upon prior
<PAGE> 72
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written notice to Programmer (to the extent time permits such notice), suspend
or cancel such program without liability to Programmer. Permittee will use
reasonable efforts to provide such written notice to Programmer prior to the
suspension or cancellation of such program.
3.2 Permittee Control of Programming. Programmer recognizes that
the Permittee has full authority to control the operation of the Station. The
parties agree that Permittee's authority includes but is not limited to the
right to reject or refuse such portions of the Programmer's programming which
Permittee believes to be unsatisfactory, unsuitable or contrary to the public
interest. Programmer shall have the right to change the programming supplied
to Permittee and shall give Permittee at least twenty-four (24) hours notice of
substantial and material changes in such programming.
3.3 Programmer Compliance with Copyright Act. Programmer
represents and warrants to Permittee that Programmer has full authority to
broadcast its programming on the Station, and that Programmer shall not
broadcast any material in violation of the Copyright Act. All music supplied
by Programmer shall be: (i) licensed by ASCAP, SESAC or BMI; (ii) in the public
domain; or (iii) cleared at the source by Programmer. Permittee will maintain
ASCAP, BMI and SESAC licenses as necessary. The right to use the programming
and to authorize its use in any manner shall be and remain vested in
Programmer.
3.4 Sales. Programmer shall retain all of the Station's network
compensation revenues, any revenues received from any network or program
supplier with respect to affiliation or use of programming by Programmer, any
retransmission consent revenues and all revenues from the sale of advertising
time within the programming it provides to the Permittee. Programmer shall be
responsible for payment of the commissions due to any national sales
representative engaged by it for the purpose of selling national advertising
which is carried during the programming it provides to Permittee. Unless
otherwise agreed between the parties, Permittee shall retain all revenues from
the sale of Station's advertising during the hours each week in which the
Permittee airs its own programming pursuant to Section 1.3 hereof.
3.5 Children's Television Advertising. Programmer agrees that it
will not broadcast advertising within programs originally designed for children
aged 12 years and under in excess of the amounts permitted under applicable FCC
rules, and will take all steps necessary to pre-screen children's programming
broadcast during the hours it is providing such programming, to establish that
advertising is not being broadcast in excess of the applicable FCC rules.
<PAGE> 73
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3.6 Payola. Programmer agrees that it will not accept any
consideration, compensation, gift or gratuity of any kind whatsoever,
regardless of its value or form, including, but not limited to, a commission,
discount, bonus, material, supplies or other merchandise, services or labor
(collectively "Consideration"), whether or not pursuant to written contracts or
agreements between Programmer and merchants or advertisers, unless the payer is
identified in the program for which Consideration was provided as having paid
for or furnished such Consideration, in accordance with the Act and FCC
requirements. Programmer agrees to annually, or more frequently at the request
of the Permittee, execute and provide Permittee with a Payola Affidavit
from each of its employees involved with the Station substantially in the form
attached hereto as Attachment IV.
3.7 Cooperation on Programming. Programmer and Permittee mutually
acknowledge their interest in ensuring that the Station serves the needs and
interests of viewers in Bellingham and the surrounding service area and agree
to cooperate to provide such service. Permittee shall, on a regular basis,
assess the issues of concern to residents of Bellingham and the surrounding
area and address those issues in its public service programming. Programmer,
in cooperation with Permittee, will endeavor to ensure that programming
responsive to the needs and interests of the community of license and
surrounding area is broadcast, in compliance with applicable FCC requirements.
Permittee will describe those issues and the programming that is broadcast in
response to those issues and place issues/programs lists in the Station's
public inspection file as required by FCC rules. Further, Permittee may
request, and Programmer shall provide, information concerning such of
Programmer's programs as are responsive to community issues so as to assist
Permittee in the satisfaction of its public service programming obligations.
Permittee shall also evaluate the local need for children's educational and
informational programming and shall inform Programmer of its conclusions in
that regard. Permittee, in cooperation with Programmer, will ensure that
educational and informational programming for children is broadcast over the
Station in compliance with applicable FCC requirements. Programmer shall also
provide Permittee upon request such other information necessary to enable
Permittee to prepare records and reports required by the Commission or other
local, state or federal government entities.
3.8 Staffing Requirements. Permittee will be in full compliance
with the main studio staff requirements as specified by the FCC.
SECTION 4. INDEMNIFICATION
4.1 Programmer's Indemnification. Programmer shall indemnify and
hold harmless Permittee from and against any and all claims, losses, costs,
liabilities, damages, forfeitures and expenses (including reasonable legal fees
and other expenses incidental
<PAGE> 74
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thereto) of every kind, nature and description (collectively, "Damages")
resulting from (i) Programmer's breach of any representation, warranty,
covenant or agreement contained in this Agreement, or (ii) any action taken by
Programmer or its employees and agents with respect to the Station, or any
failure by Programmer or its employees and agents to take any action with
respect to the Station, including, without limitation, Damages relating to
violations of the Act or any rule, regulation or policy of the FCC, slander,
defamation or other claims relating to programming provided by Programmer and
Programmer's broadcast and sale of advertising time on the Station.
4.2 Permittee's Indemnification. Permittee shall indemnify and
hold harmless Programmer from and against any and all claims, losses, consents,
liabilities, damages, FCC forfeitures and expenses (including reasonable legal
fees and other expenses incidental thereto) of every kind, nature and
description, arising out of Permittee's operations and broadcasts to the extent
permitted by law and any action taken by the Permittee or its employees and
agents with respect to the Station, or any failure by Permittee or its
employees and agents to take any action with respect to the Station, provided
that Permittee shall not be responsible for Programmer's business losses or
other consequential damages of any kind, arising out of an interruption in
service, unless the interruption is caused by the willful misconduct or gross
negligence of Permittee, its employees or agents.
4.3 Limitation. Neither Permittee nor Programmer shall be entitled
to indemnification pursuant to this section unless such claim for
indemnification is asserted in writing delivered to the other party.
4.4 Time Brokerage Challenge. If this Agreement is challenged at
the FCC, whether or not in connection with the Station's license renewal
application, counsel for the Permittee and counsel for the Programmer shall
jointly defend the Agreement and the parties' performance thereunder throughout
all FCC proceedings at the sole expense of the Programmer. If portions of this
Agreement do not receive the approval of the FCC Staff, then the parties shall
reform the Agreement as necessary to satisfy the FCC Staff's concerns or, at
Programmer's option and expense, seek reversal of the Staff's decision and
approval from the full Commission or a court of law.
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE
5.1 Confidential Review. Prior to the commencement of any
programming by Programmer under this Agreement, Programmer shall acquaint the
Permittee with the nature and type of the programming to be provided.
Permittee shall be entitled to review at its discretion from time to time on a
confidential basis any of Programmer's programming material it may reasonably
request. Programmer shall promptly provide Permittee with
<PAGE> 75
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copies of all correspondence and complaints received from the public (including
any telephone logs of complaints called in), and copies of all program logs and
promotional materials. However, nothing in this section shall entitle
Permittee to review the internal corporate or financial records of the
Programmer.
5.2 Political Advertising. Programmer shall cooperate with
Permittee to assist Permittee in complying with all rules of the FCC regarding
political broadcasting. Permittee shall promptly supply to Programmer, and
Programmer shall promptly supply to Permittee, such information, including all
inquiries concerning the broadcast of political advertising, as may be
necessary to comply with FCC rules and policies, including the lowest unit
rate, equal opportunities, reasonable access, political file and related
requirements of federal law. Permittee, in consultation with Programmer, shall
develop a statement which discloses its political broadcasting policies to
political candidates, and Programmer shall follow those policies and rates in
the sale of political programming and advertising. In the event that
Programmer fails to satisfy the political broadcasting requirements under the
Act and the rules and regulations of the FCC and such failure inhibits
Permittee in its compliance with the political broadcasting requirements of
the FCC, then to the extent reasonably necessary to assure such compliance,
Programmer shall either provide rebates to political advertisers or release
broadcast time and/or advertising availabilities to Permittee at no cost to
Permittee.
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT
6.1 Termination. In addition to such other remedies as may be
available at law or equity, this Agreement may be terminated as set forth below
by either Permittee or Programmer by written notice to the other if the party
seeking to terminate is not then in material default or breach hereof, upon the
occurrence of any of the following:
(a) if, subject to the provisions of Section 7.9, this
Agreement is declared invalid or illegal in whole or substantial part by an
order or decree of an administrative agency or court of competent jurisdiction
and such order or decree has become final and no longer subject to further
administrative or judicial review;
(b) if the other party is in material breach of its
obligations hereunder and has failed to cure such breach within thirty (30)
days of notice from the non-breaching party;
(c) with the mutual consent of both parties;
<PAGE> 76
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(d) if there has been a material change in FCC rules,
policies or precedent that would cause this Agreement to be in violation
thereof and such change is in effect and not the subject of an appeal or
further administrative review and this Agreement cannot be reformed, in a
manner acceptable to Programmer and Permittee, to remove and/or eliminate the
violation; or
(e) by either party upon nine months written notice to the
other party.
6.2 Termination Requirements and Procedures.
(a) Programmer may terminate this Agreement pursuant to
Section 6.1 (e) hereof only if it pays Permittee an amount equal to six times
the monthly compensation due for the month preceding the notice of termination
by Programmer pursuant to Attachment 1.
(b) Permittee may terminate this Agreement pursuant to
Section 6.1 (e) hereof only if it pays Programmer Liquidated Damages, as such
term is defined in Attachment V hereto.
(c) During any period prior to the effective date of any
termination of this Agreement, Programmer and Permittee agree to cooperate in
good faith to ensure that Station operations will continue, to the extent
possible, in accordance with the terms of this Agreement and that the
termination of this Agreement is effected in a manner that will minimize, to
the extent possible, the resulting disruption of the Station's ongoing
operations.
6.3 Force Majeure. Any failure or impairment of the Station's
facilities or any delay or interruption in the broadcast of programs, or
failure at any time to furnish facilities, in whole or in part, for broadcast,
due to Acts of God, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Permittee, or for power reductions necessitated for
maintenance of the Station or for maintenance of other stations located on the
tower from which the Station will be broadcasting, shall not constitute a
breach of this Agreement and Permittee will not be liable to Programmer for
reimbursement or reduction of the consideration owed to Permittee.
6.4 Other Agreements. During the term of this Agreement or any
renewal hereof, Permittee will not enter into any other agreement with any
third party that would conflict with or result in a material breach of this
Agreement by Permittee.
<PAGE> 77
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SECTION 7. MISCELLANEOUS
7.1 Assignment.
(a) Neither this Agreement nor any of the rights, interests
or obligations of either party hereunder shall be assigned, encumbered,
hypothecated or otherwise transferred without the prior written consent of the
other party, such consent not to be unreasonably withheld. Notwithstanding the
foregoing, Programmer shall have the right to assign its rights and interests
hereunder to its lenders as collateral security for Programmer's obligations to
such lenders.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
7.2 Call Letters. Upon request of Programmer, subject to the
consent of the Permittee, Permittee shall apply to the FCC for authority to
change the call letters of the Station (with the consent of the FCC) to such
call letters that Programmer shall reasonably designate. Permittee must
coordinate with Programmer any proposed changes to the call letters of the
Station before taking any action to change such letters.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
7.4 Entire Agreement. This Agreement and the Attachments hereto
embodies the entire agreement and understanding of the parties relating to the
operation of the Station. No amendment, waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement will be
effective unless evidenced by an instrument in writing signed by the parties.
7.5 Taxes. Permittee and Programmer shall each pay its own ad
valorem taxes, if any, which may be assessed on such party's respective
personal property for the periods that such items are owned by such party.
Programmer shall pay all taxes, if any, to which the consideration specified in
Section 1.5 herein is subject, provided that Permittee is responsible for
payment of its own income taxes.
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
<PAGE> 78
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7.7 Governing Law. The obligations of Permittee and Programmer
are subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Act and the Rules and Regulations of the
FCC. The construction and performance of the Agreement will be governed by the
laws of the State of Florida.
7.8 Notices. All notices, demands and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, (ii) sent by telecopy (with receipt personally confirmed by
telephone), delivered by personal delivery, or sent by commercial delivery
service or certified mail, return receipt requested, (iii) deemed to have been
given on the date telecopied with receipt confirmed, the date of personal
delivery, or the date set forth in the records of the delivery service or on
the return receipt, and (iv) addressed as follows:
To Programmer: Paxson Communications of Seattle-24, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Telecopy: (407) 659-4252
Telephone: (407) 659-4122
Attention: Lowell W. Paxson
To Permittee: World Television of Washington, L.L.C.
6611 Santa Monica Boulevard
Los Angeles, CA 90038-1311
Attention: Larry Rogow
Telecopy: (916) 921-2085
Telephone: (916) 921-2290
or to any such other or additional persons and addresses as the parties may
from time to time designate in a writing delivered in accordance with this
Section 7.8.
7.9 Severability. If any provision of this Agreement or
the application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
In the event that the FCC alters or modifies its rules or policies in a fashion
which would raise substantial and material question as to the validity of any
provision of this Agreement, the parties hereto shall negotiate in good faith
to revise any such provision of this Agreement with a view toward assuring
compliance with all then existing FCC rules and policies which may be
applicable, while attempting to preserve, as closely as
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possible, the intent of the parties as embodied in the provision of this
Agreement which is to be so modified.
7.10 Arbitration. Any dispute arising out of or related to this
Agreement that Permittee and Programmer are unable to resolve by themselves
shall be settled by arbitration in Miami, Florida by a panel of three
arbitrators. Permittee and Programmer shall each designate one disinterested
arbitrator and the two arbitrators designed shall select the third arbitrator.
The persons selected as arbitrators need not be professional arbitrators, and
persons such as lawyers, accountants and bankers shall be acceptable. Before
undertaking to resolve a dispute, each arbitrator shall be duly sworn
faithfully and fairly to hear and examine the matters in controversy and to
make a just award according to the best of his or her understanding. The
arbitration hearing shall be conducted in accordance with the commercial
arbitration rules of the American Arbitration Association. The written
decision of a majority of the arbitrators shall be final and binding on
Permittee and Programmer. The costs and expenses of the arbitration proceeding
shall be assessed between Permittee and Programmer in a manner to be decided by
a majority of the arbitrators, and the assessment shall be set forth in the
decision and award of the arbitrators. Judgment on the award, if it is not
paid within thirty days, may be entered in any court having jurisdiction over
the matter. No action at law or in equity based upon any claim arising out of
or related to this Agreement shall be instituted in any court by Permittee or
Programmer against the other except: (i) an action to compel arbitration
pursuant to this Section; or (ii) an action to enforce the award of the
arbitration panel rendered in accordance with this Section.
7.11 No Joint Venture. Nothing in this Agreement shall be deemed
to create a joint venture between the Permittee and the Programmer.
7.12 Must Carry Election. Permittee will consult with Programmer
prior to making any election of mandatory carriage rights or retransmission
consent pursuant to Section 76.64 of the FCC's Rules and the provisions of the
Cable Television Consumer Protection and Competition Act of 1992.
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<PAGE> 80
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IN WITNESS WHEREOF, the parties hereto have executed this Time
Brokerage Agreement the day and year first above written.
PERMITTEE: WORLD TELEVISION OF WASHINGTON,
L.L.C.
By: /s/ Frank Washington
-----------------------------------------
Name: Frank Wasington
Title: President
PROGRAMMER: PAXSON COMMUNICATIONS
OF SEATTLE-24, INC.
By: /s/ Anthony L. Morrison
-----------------------------------------
Name: Anthony L. Morrison
Title: Vice President
<PAGE> 82
ATTACHMENT I
COMPENSATION SCHEDULE
Upon commencement of broadcast operations of the Station, Programmer
shall reimburse Permittee on a monthly basis for Permittee's payment of Station
expenses listed on Attachment II upon receipt from the Permittee of a
certificate (with attached invoices, etc.) documenting payment of those
expenses.
Payments shall be made by delivery of a check to Permittee at an
address to be designated.
<PAGE> 83
ATTACHMENT II
STATION EXPENSES
(1) Lease and Utility Payments
(2) Employee Salaries and Benefits
(3) Property Insurance and Taxes
(4) Professional Fees
(5) Equipment Repair and Maintenance
(6) Debt Service (Accrued and current Interest Only) on
Loan Agreement dated August 19, 1996
(7) Miscellaneous Reasonable and Necessary Station Expenses
<PAGE> 84
ATTACHMENT III
BROADCAST STATION PROGRAMMING POLICY STATEMENT
The following sets forth the policies generally applicable to the
presentation of programming and advertising over Television Station KBCB(TV),
Bellingham, Washington. All programming and advertising broadcast by the
station must conform to these policies and to the provisions of the
Communications Act of 1934, as amended (the "Act"], and the Rules and
Regulations of the Federal Communications Commission ["FCC"].
Station Identification
The station must broadcast a station identification announcement once an hour
as close to the hour as feasible in a natural break in the programming. The
announcement must include (1) the station's call letters (currently, KBCB(TV));
followed immediately by (2) the station's city of license (Bellingham,
Washington).
Broadcast of Telephone Conversations
Before recording a telephone conversation for broadcast or broadcasting such a
conversation simultaneously with its occurrent, any party to the call must be
informed that the call will be broadcast or will be recorded for later
broadcast, and the party's consent to such broadcast must be obtained. This
requirement does not apply to calls initiated by the other party which are made
in a context in which it is customary for the station to broadcast telephone
calls.
Sponsorship Identification
When money, service, or other valuable consideration is either directly or
indirectly paid or promised as part of an arrangement to transmit any
programming, the station at the time of broadcast shall announce (1) that the
matter is sponsored, either whole or in part; and (2) by whom or on whose
behalf the matter is sponsored. Products or services furnished to the station
in consideration for an identification of any person, product, service,
trademark or brand name shall be identified in this manner.
In the case of any political or controversial issue broadcast for which any
material or service is furnished as an inducement for its transmission, an
announcement shall be made at the beginning and conclusion of the broadcast
stating (1) the material or service that has been furnished; and (2) the
person(s) or association(s) on whose behalf the programming is transmitted.
However, if the broadcast is 5 minutes duration or less, the required
announcement need only be made either at its beginning or end.
Prior to any sponsored broadcast involving political matters or controversial
issues, the station shall obtain a list of the chief executive officers,
members of the executive committee
<PAGE> 85
-2-
or board of directors of the sponsoring organization and shall place this list
in the station's public inspection file.
Payola/Plugola
The station, its personnel, or its programmers shall not accept or agree to
accept from any person any money, service, or other valuable consideration for
the broadcast of any matter unless such fact is disclosed to the station so
that all required station identification announcements can be made. All
persons responsible for station programming must, from time to time, execute
such documents as may be required by station management to confirm their
understanding of and compliance with the FCC's sponsorship identification
requirements.
Rebroadcasts
The station shall not rebroadcast the signal of any other broadcast station
without first obtaining such station's prior written consent to such
rebroadcast.
Fairness
Station shall seek to afford coverage to contrasting viewpoints concerning
controversial issues of public importance.
Personal Attacks
The station shall not air attacks upon the honesty, character, integrity or
like personal qualities of any identified person or group. If such an attack
should nonetheless occur during the presentation of views on a controversial
issue of public importance, those responsible for programming shall submit a
tape or transcript of the broadcast to station management and to the person
attacked within 48 hours, and shall offer the person attacked a reasonable
opportunity to respond.
Political Editorials
Unless specifically authorized by station management, the station shall not air
any editorial which either endorses or opposes a legally qualified candidate
for public office.
<PAGE> 86
-3-
Political Broadcasting
All "uses" of the station by legally qualified candidates for elective office
shall be in accordance with the Act and the FCC's Rules and policies, including
without limitation, equal opportunities requirements, reasonable access
requirements, lowest unit charge requirements and similar rules and
regulations.
Obscenity and Indecency
The station shall not broadcast any obscene material. Material is deemed to be
obscene if the average person, applying contemporary community standards in the
local community, would find that the material, taken as a whole, appeals to the
prurient interest; depicts or describes in a patently offensive way sexual
conduct specifically defined by applicable state law; and taken as a whole,
lacks serious literary artistic, political or scientific value.
The station shall not broadcast any indecent material outside of the periods of
time prescribed by the Commission. Material is deemed to be indecent if it
includes language or material that, in context, depicts or describes, in terms
patently offensive as measured by contemporary community standards for the
broadcast medium, sexual or excretory activities or organs.
Billing
No entity which sells advertising for airing on the station shall knowingly
issue any bill, invoice or other document which contains false information
concerning the amount charged or the broadcast of advertising which is the
subject of the bill or invoice. No entity which sells advertising for airing
on the station shall misrepresent the nature or content of aired advertising,
nor the quantity, time of day, or day on which such advertising was broadcast.
Contests
Any contests conducted on the station shall be conducted substantially as
announced or advertised. Advertisements or announcements concerning such
contests shall fully and accurately disclose the contest's material terms. No
contest description shall be false, misleading or deceptive with respect to any
material term.
Hoaxes
The station shall not knowingly broadcast false information concerning a crime
or catastrophe.
<PAGE> 87
-4-
Children's Programming
The station shall broadcast reasonable amounts of educational and informational
programming designed for children aged 16 years and younger.
Children's Advertising
Programming designed for children aged 12 years and younger shall not include
more than 12 minutes of commercial matter per hour, Monday through Friday, and
shall not include more than 10.5 minutes of commercial matter per hour on
weekend programming. There shall be no host selling, as that term is defined
by the FCC, in children's programming on the station.
Emergency Information
Any emergency information which is broadcast by the station shall be
transmitted both aurally and visually or only visually.
Lottery
The station shall not advertise or broadcast any information concerning any
lottery (except the Washington State Lottery and any other state lottery). The
station may advertise and provide information about lotteries conducted by
non-profit groups, governmental entities and in certain situations, by
commercial organizations, if and only if there is no state or local restriction
or ban on such advertising or information and the lottery is legal under state
or local law. Any and all lottery advertising must first be approved by
station management.
Advertising
Station shall comply with all federal, state and local laws concerning
advertising, including without limitation, all laws concerning misleading
advertising, and the advertising of alcoholic beverages.
Programming Prohibitions.
Knowing broadcast of the following types of programs and announcements is
prohibited:
False Claims. False or unwarranted claims for any product or
service.
<PAGE> 88
-5-
Unfair Imitation. Infringements of another advertiser's rights through
plagiarism or unfair imitation of either program idea or copy, or any other
unfair competition.
Commercial Disparagement. Any unfair disparagement of competitors or
competitive goods.
Profanity. Any programs or announcements that are slanderous, obscene,
profane, vulgar, repulsive or offensive, as evaluated by station management.
Violence. Any programs which are excessively violent.
Unauthenticated Testimonials. Any testimonials which cannot be authenticated.
<PAGE> 89
ATTACHMENT IV
FORM OF PAYOLA AFFIDAVIT
City of _______________________________ )
)
County of _____________________________ ) SS:
)
State of ______________________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
__________________________, being first duly sworn, deposes and says as follows:
1. He is ______________________ for _____________________.
Position
2. He has acted in the above capacity since _____________.
3. No matter has been broadcast by Station _________ for which service,
money or other valuable consideration has been directly or indirectly
paid, or promised to, or charged, or accepted, by him from any person,
which matter at the time so broadcast has not been announced or
otherwise indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station ______
for which service, money, or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or accepted
by Station ______ or by any independent contractor engaged by Station
______ in furnishing programs, from any person, which matter at the
time so broadcast has not been announced or otherwise indicated as
paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation of presentation of broadcast
matter on Station ______.
6. Nothing contained herein is intended to, or shall prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
<PAGE> 90
-2-
7. He, his spouse and his immediate family do ____ do not _____ have any
present direct or indirect ownership interest in (other than an
investment in a corporation whose stock is publicly held), serve as
an officer or director of, whether with or without compensation, or
serve as an employee of, any person, firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
3. The exploitation, promotion, or management or persons
rendering artistic, production and/or other services in the
entertainment field;
4. The ownership or operation of one or more radio or television
stations;
5. The wholesale or retail sale of records intended for public
purchase;
6. Advertising on Station ____, or any other station owned by its
Permittee (excluding nominal stockholdings in publicly owned
companies).
8. The facts and circumstances relating to such interest are none ____ as
follows ____:
______________________________________________________________________
______________________________________________________________________
__________________________________________
Affiant
Subscribed and sworn to before me
this_____day of____________, 19__.
________________________________
Notary Public
My Commission expires:___________.
<PAGE> 91
ATTACHMENT V
LIQUIDATED DAMAGES
Permittee acknowledges that Programmer will acquire certain assets
associated uniquely with the Station's operation and will enter into various
long-term agreements with program suppliers and other third parties to produce
programming for the Station at substantial expense and risk; that Programmer
will recruit, hire and maintain a staff of employees dedicated to acquiring and
producing quality programming to be broadcast on the Station; and that
Programmer will make substantial investments in additional hard assets to
produce quality programming for the Station. Permittee also acknowledges that
Programmer will make substantial investments, both in tangible and intangible
terms, to promote the Station under the Time Brokerage Agreement, to create a
unique image for the Station, and to develop a competitive position in the
market for the Station and that such efforts on the part of Programmer will add
substantial value to the Station. Permittee and Programmer acknowledge and
agree that any measure of actual damages cannot compensate Programmer for the
loss of Permittee's performance under this Agreement and that the true measure
of damages to Programmer for termination or material breach of the Time
Brokerage Agreement by Permittee is incapable of accurate estimation with
reasonable certainty. Permittee and Programmer therefore agree that it is a
fair and reasonable forecast of just compensation for the harm caused to be
measured by liquidated damages, as defined in subparagraph (a) of this
Attachment, to be paid to Programmer upon the termination or material breach of
the Time Brokerage Agreement by Permittee.
(a) "Liquidated Damages" shall mean an amount equal to funds
expended and/or committed to be expended by Programmer (except (i) with respect
to items (3) through (8) below, such expenditures and/or commitments shall be
consistent with industry practices and (ii) to the extent not theretofore
recovered by Programmer from the Station's gross revenues prior to the
termination or material breach) in each of the following categories:
(1) the full value of all of Programmer's capital
expenditures incurred in connection with this Agreement, less
any consideration received by Programmer as a consequence of
any sale of such assets;
(2) the full value of all service contracts and
programming agreements assumed and entered into by Programmer
for purposes of providing programming and advertising to be
broadcast on the Station, which Programmer owns at the time of
termination or breach less any consideration received by
Programmer as a consequence of its good faith efforts to sell
or assign such agreements;
<PAGE> 92
-2-
(3) the full value of all severance and employee benefit
packages that Programmer, in its discretion, shall provide to
employees whose services would not be required in the absence
of the Time Brokerage Agreement;
(4) the full value of any contract with third parties,
which could not be performed owing to termination or breach,
for services to be rendered in connection with programming
provided to the Station including, without limitation,
producers, advertising salespeople, technicians, engineers,
and any other independent contractors whose services would not
be required in the absence of the Time Brokerage Agreement;
(5) the full value of all expenses incurred to promote
the Station and position the Station in the marketplace;
(6) all corporate, legal, administrative, professional
and brokerage expenses attributable to Programmer's
negotiation and performance of the Time Brokerage Agreement;
and
(7) the good will and intangible value associated with
Programmer's efforts under this Agreement to create a unique
image and competitive market position for the Station.
(b) Should Permittee terminate or materially breach the Time
Brokerage Agreement, Programmer shall submit its computation of Liquidated
Damages under the categories set forth above to a "Big Six" accounting firm
mutually acceptable to the parties for independent auditing and verification.
Within thirty (30) days of verification, Permittee agrees to tender payment of
all verified amounts to Programmer; provided, however, that if Permittee
objects to any particular enumerated component of the Liquidated Damages, as
verified, it shall notify Programmer of such objection within fifteen (15) days
of verification. If thereafter Programmer and Permittee cannot agree as to the
amount of the objectionable component, either party shall have the right to
elect to arbitrate such dispute pursuant to Section 7.10 of the Time Brokerage
Agreement provided it gives written notice of its election to arbitrate by the
thirtieth (30) day following the date of Permittee's objection to Programmer's
verification. Notwithstanding that Permittee may question a particular
component of the Liquidated Damages and either party may elect arbitration of
the dispute, the reminder of the items comprising the Liquidated Damages shall
be paid by Permittee to Programmer within thirty (30) days of accounting
verification, as specified above. No
<PAGE> 93
-3-
payment shall be required as to any contested component until the earlier of
(i) Programmer and Permittee reaching an agreement on the amount or (ii)
entering of the arbitration award.
(c) If any category of Liquidated Damages is held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remainder of the categories of Liquidated Damages shall not be affected
thereby, and the parties agree to use their best efforts to negotiate a
replacement category that is not invalid, illegal or unenforceable.
<PAGE> 94
================================================================================
OPTION AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
SEATTLE-24, INC.
AND
WORLD TELEVISION OF WASHINGTON, L.L.C.
FOR
TELEVISION STATION KBCB(TV)
BELLINGHAM, WASHINGTON
* * *
AUGUST 19, 1996
================================================================================
<PAGE> 95
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement") is entered into as of
August 19, 1996 by and between PAXSON COMMUNICATIONS OF SEATTLE- 24, INC., a
Florida corporation ("Paxson"), and WORLD TELEVISION OF WASHINGTON, L.L.C., a
Delaware limited liability company ("Grantor").
R E C I T A L S
A. Grantor owns or leases all of the assets (the "Assets") that are
used or useful in the business and operations of Television Station KBCB(TV),
Channel 24, Bellingham, Washington (the "Station"), and holds as part of the
Assets the construction permit and licenses issued by the Federal Communications
Commission ("FCC") for the Station (the "FCC Licenses").
B. Grantor desires to grant to Paxson an exclusive and irrevocable
option to purchase the Assets, including the FCC Licenses, on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Grant of Option. In consideration for One Thousand Dollars ($1,000)
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Grantor hereby grants to Paxson an exclusive and
irrevocable option to acquire the Assets, including the FCC Licenses (the
"Option") for a purchase price of Three Million Nine Hundred Fifty Two Thousand
Five Hundred Dollars ($3,952,500) payable upon the closing of the Asset Purchase
Agreement (as defined in Section 3 below).
2. Effective Date and Notice of Exercise. This Option Agreement shall
become effective upon execution by Paxson and Grantor and may be exercised by
Paxson by delivery to Grantor of written notice of Paxson's intention to
exercise the Option (the "Option Notice"); which Option Notice may be given by
Paxson at any time during the ninety (90) day period following commencement of
the Station's programming pursuant to program test authority.
3. Asset Purchase Agreement. Within five (5) business days following
Grantor's receipt of the Option Notice, Grantor and Paxson shall enter into the
Asset Purchase Agreement in the form of Schedule A hereto (the "Asset Purchase
Agreement"), it being understood that the only changes to such form shall be
immaterial corrections and changes, if
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<PAGE> 96
any, in the information contained in the Schedules thereto and the addition of
Schedules not attached to the Asset Purchase Agreement at the execution of this
Option Agreement to the extent such changes and information or the addition of
Schedules is reasonably required to reflect events occurring after the date
hereof; provided, however, Paxson shall not be required to enter into the Asset
Purchase Agreement if the changes to the Schedules or the addition of Schedules
represent a material adverse change from the Asset Purchase Agreement and
Schedules attached hereto. In the event Paxson concludes such changes or such
additional Schedules represent a material adverse change, Paxson shall notify
Grantor in writing that the changes or additions to the Asset Purchase Agreement
attached hereto are unacceptable whereupon this Option Agreement shall terminate
and be of no further force and effect. In the absence of such written notice by
Paxson to Grantor, the parties shall enter into the Asset Purchase Agreement and
thereafter Grantor and Paxson shall perform their respective obligations under
the Asset Purchase Agreement, including, without limitation, filing and
prosecuting an appropriate application for FCC consent to the assignment of the
FCC Licenses from Grantor to Paxson (the "FCC Consent").
4. [Reserved].
5. Control of the Station. Prior to the closing of the transactions
contemplated by the Asset Purchase Agreement, Paxson shall not, directly or
indirectly, control, supervise, direct, or attempt to control, supervise, or
direct, the operations of the Station; such operations, including complete
control and supervision of all of the Station programs, employees, and policies,
shall be the sole responsibility of Grantor until the closing of the
transactions contemplated by the Asset Purchase Agreement.
6. Representations and Warranties of Grantor. Grantor represents and
warrants to Paxson as follows:
(a) Grantor is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Grantor has full power and authority to execute and deliver this Option
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Option Agreement and the consummation of the transactions
contemplated hereby by Grantor have been duly and validly authorized by all
necessary action on the part of Grantor and its Members. This Option Agreement
has been duly and validly executed and delivered by Grantor and constitutes a
legal, valid and binding agreement of Grantor enforceable against Grantor in
accordance with its terms, except as such enforceability may be affected by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
by judicial discretion in the enforcement of equitable remedies.
- 2 -
<PAGE> 97
(b) Except for the FCC Consent, there is no requirement
applicable to Grantor to obtain any permit, authorization, consent or approval
of, any governmental or regulatory authority or any other third party as a
condition to the consummation by Grantor of the transactions contemplated by
this Option Agreement and the Asset Purchase Agreement, and Grantor is required
to make no filing with the FCC with respect to the transactions herewith except
for filing this Option Agreement, the Asset Purchase Agreement, and the
application for the FCC Consent.
(c) Subject to obtaining the FCC Consent, the execution,
delivery and performance of this Option Agreement and the Option Purchase
Agreement by Grantor will not (i) conflict with Grantor's organizational
documents, (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, agreement, or lease to which Grantor is a party or
by which any of the FCC Licenses or the other Assets are bound, or (iii) violate
any statute, law, rule, regulation, order, writ, injunction or decree applicable
to Grantor, the FCC Licenses or the other Assets.
7. Representations and Warranties of Paxson. Paxson represents and
warrants to Grantor as follows:
(a) Paxson has full corporate power and authority to execute
and deliver this Option Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Option Agreement and the
consummation of the transactions contemplated hereby by Paxson have been duly
and validly authorized by all necessary corporate action on the part of Paxson.
This Option Agreement has been duly and validly executed and delivered by Paxson
and constitutes a legal, valid and binding agreement of Paxson enforceable
against Paxson in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.
(b) Except for the FCC Consent, there is no requirement
applicable to Paxson to obtain any permit, authorization, consent or approval
of, any governmental or regulatory authority or any other third party as a
condition to the consummation by Paxson of the transactions contemplated by this
Option Agreement and the Asset Purchase Agreement, and, Paxson is required to
make no filing with the FCC except for filing the application for the FCC
Consent and notice of consummation of the assignment of license when that takes
place.
(c) Subject to obtaining the FCC Consent, the execution,
delivery and per formance of this Option Agreement and the Option Purchase
Agreement by Paxson will not
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<PAGE> 98
(i) conflict with Paxson's organizational documents, (ii) result in a default
(or give rise to any right of termination, cancellation or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
agreement, or lease to which Paxson is a party or by which any of its assets are
bound, or (iii) violate any statute, law, rule, regulation, order, writ,
injunction or decree applicable to Paxson.
(d) From the date hereof until December 31, 1998, Paxson
agrees to maintain with First Union National Bank of Florida the escrow deposit
referenced in Section 9.3 of the Asset Purchase Agreement. Disposition of the
escrow deposit prior to or on that date shall be governed by the provisions of
the Asset Purchase Agreement and the Escrow Agreement except that upon the
Closing Date of the Loan Agreement between Paxson and Grantor, the escrow
deposit shall be released to Paxson.
8. Covenants of Grantor. So long as this Option Agreement is in force,
Grantor will not (i) commit any act that is inconsistent with the grant of the
Option to Paxson or the transactions contemplated by this Option Agreement and
the Asset Purchase Agreement or (ii) violate any of the covenants, by any act or
failure to act, set forth in Section 5 of the Asset Purchase Agreement.
9. Cooperation. Grantor and Paxson shall cooperate fully with each
other and their respective counsel and accountants in connection with any steps
required to be taken as part of their respective obligations under this Option
Agreement and the Asset Purchase Agreement and will each use their respective
best efforts to perform or fulfill all conditions and obligations to be
performed or fulfilled by them under this Option Agreement and the Asset
Purchase Agreement so that the transactions contemplated hereby shall be
consummated.
10. Specific Performance. The parties recognize that if Grantor
breaches this Option Agreement and refuses to perform under the provisions of
this Option Agreement, monetary damages alone would not be adequate to
compensate Paxson for its injury. Paxson shall therefore be entitled, in
addition to any other remedies that may be available, including money damages,
to obtain specific performance of the terms of this Option Agreement. If any
action is brought by Paxson to enforce this Option Agreement, Grantor shall
waive the defense that there is an adequate remedy at law.
11. Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Option Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed to
have been given on the date of personal delivery or
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<PAGE> 99
the date set forth in the records of the delivery service or on the return
receipt, and (d) addressed as follows:
If to Grantor: World Television of Washington, L.L.C.
6611 Santa Monica Boulevard
Los Angeles, CA 90038-1311
Attention: Larry Rogow
With a copy to: Michael Couzens, Esq.
5337 College Avenue
Suite 610
Oakland, CA 94618
If to Paxson: Paxson Communications of Seattle-24, Inc.
601 Clearwater Park North
W. Palm Beach, FL 33401
Attention: Mr. Lowell W. Paxson
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson
A Professional Limited Liability Company
Suite 800
1200 New Hampshire Ave., N.W.
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.
12. Integration; Amendment. This Option Agreement and the Asset
Purchase Agreement supersede all prior agreements and understandings of the
parties, oral and written, with respect to its subject matter. This Option
Agreement and the Asset Purchase Agreement may be modified only by an agreement
in writing executed by all of the parties hereto. No waiver of compliance with
any provision of this Option Agreement or the Asset Purchase Agreement will be
effective unless evidenced by an instrument in writing and signed by the parties
hereto.
12A. Entire Agreement. The Parties understand and agree that the
exercise or non- exercise of the Option herein, including the execution of and
performance under the Asset Purchase Agreement, will or may create or extinguish
certain rights or obligations as fully
- 5 -
<PAGE> 100
set forth in the related Construction Agreement, Lease Agreement, Time Brokerage
Agreement and Loan Agreement. This and the other documents referred to by their
titles in this paragraph constitute the entire agreement between the parties.
13. Further Assurances. From time to time after the date of execution
hereof, the parties shall take such further action and execute such further
documents, assurances and certificates as either party reasonably may request of
the other to effectuate the purposes of this Option Agreement.
14. Counterparts. This Option Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and shall become
effective when each of the parties hereto shall have received this Option
Agreement duly executed by the other parties hereto.
15. Headings. The headings in this Option Agreement are for the sole
purpose of convenience of reference and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Option
Agreement.
16. Governing Law. This Option Agreement shall be construed under and
in accordance with the laws of the State of Florida without giving effect to the
principles of conflicts of law.
16A. Attorneys' Fees. In the event of default by either party which
results in a lawsuit or other proceeding for any remedy under this Option
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
17. Benefit and Binding Effect; Assignability. This Option Agreement
shall inure to the benefit of and be binding upon Grantor, Paxson and their
respective successors and permitted assigns. No party hereto may assign this
Option Agreement without the prior written consent of the other parties hereto,
except that Paxson at any time prior to the consummation of the transactions
contemplated by this Option Agreement may assign its rights and obligations
under this Option Agreement without Grantor's consent to any entity controlled
by or under common control with Paxson. Upon any permitted assignment by a party
in accordance with this Section 17, all references to "Paxson" herein shall be
deemed to be references to Paxson's assignee and all references to "Grantor"
herein shall be deemed to be references to Grantor's assignee, as the case may
be. Notwithstanding the foregoing, Paxson may assign its rights, benefits,
duties or obligations hereunder to its lenders as collateral security for the
obligations of Paxson to such lenders.
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<PAGE> 101
18. Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Option Agreement, and except as and to the
extent required by law, each party will keep confidential any information
obtained from the other party in connection with the transactions contemplated
by this Option Agreement. If this Option Agreement is terminated, each party
will return to the other party all information obtained by the such party from
the other party in connection with the transactions contemplated by this Option
Agreement.
19. Press Release. No party shall publish any press release, make any
other public announcement or otherwise communicate with any news media
concerning this Option Agreement or the transactions contemplated hereby without
the prior written consent of the other party.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 102
IN WITNESS WHEREOF the parties hereto have executed this Option
Agreement as of the date first above written.
PAXSON COMMUNICATIONS OF
SEATTLE-24, INC.
By: /s/ Anthony L. Morrison
----------------------------------------
Name: Anthony L. Morrison
Title: Vice President
WORLD TELEVISION OF WASHINGTON,
L.L.C.
By: /s/ Lawrence Rogow
----------------------------------------
Name: Lawrence Rogow
Title: Vice President
<PAGE> 103
SCHEDULE A
ASSET PURCHASE AGREEMENT
<PAGE> 104
================================================================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
SEATTLE-24, INC.
AND
WORLD TELEVISION OF WASHINGTON, L.L.C.
* * *
AUGUST 19, 1996
================================================================================
<PAGE> 105
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
RECITALS..........................................................................................................1
AGREEMENTS........................................................................................................1
SECTION 1. DEFINITIONS...........................................................................................1
"Accounts Receivable"....................................................................................1
"Assets".................................................................................................1
"Assumed Contracts"......................................................................................1
"Business Day"...........................................................................................1
"Closing"................................................................................................2
"Closing Date"...........................................................................................2
"Consents"...............................................................................................2
"Contracts"..............................................................................................2
"FCC"....................................................................................................2
"FCC Consent"............................................................................................2
"FCC Licenses"...........................................................................................2
"Final Order"............................................................................................2
"Intangibles"............................................................................................2
"Leasehold Interests"....................................................................................3
"Licenses"...............................................................................................3
"Permitted Liens"........................................................................................3
"Person".................................................................................................3
"Purchase Price".........................................................................................3
"Station"................................................................................................3
"Tangible Personal Property".............................................................................3
"Time Brokerage Agreement"...............................................................................3
SECTION 2. PURCHASE AND SALE OF ASSETS...........................................................................3
2.1 Agreement to Sell and Buy.......................................................................3
2.2 Excluded Assets.................................................................................4
2.3 Purchase Price..................................................................................5
2.4 Payment of Purchase Price.......................................................................5
2.5 Assumption of Liabilities and Obligations.......................................................5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER..............................................................6
3.1 Standing........................................................................................6
3.2 Authorization and Binding Obligation............................................................6
3.3 Absence of Conflicting Agreements...............................................................6
3.4 Licenses........................................................................................6
3.5 Title to and Condition of Leasehold Interests...................................................7
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3.6 Title to and Condition of Tangible Personal Property............................................7
3.7 Contracts.......................................................................................7
3.8 Insurance.......................................................................................8
3.9 Reports.........................................................................................8
3.10 Taxes...........................................................................................8
3.11 Claims and Legal Actions........................................................................8
3.12 Environmental; Hazardous Materials..............................................................8
3.13 Compliance with Laws............................................................................8
3.14 Full Disclosure.................................................................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................9
4.1 Organization, Standing and Authority............................................................9
4.2 Authorization and Binding Obligation............................................................9
4.3 Absence of Conflicting Agreements...............................................................9
4.4 Full Disclosure.................................................................................9
4.5 Buyer Qualifications...........................................................................10
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING...........................................................10
5.1 Generally......................................................................................10
5.2 Contracts......................................................................................10
5.3 Disposition of Assets..........................................................................10
5.4 Encumbrances...................................................................................10
5.5 Licenses.......................................................................................10
5.6 Rights.........................................................................................10
5.7 Access to Information..........................................................................11
5.8 Maintenance of Assets..........................................................................11
5.9 Insurance......................................................................................11
5.10 Consents.......................................................................................11
5.11 Books and Records..............................................................................11
5.12 Notification...................................................................................11
5.13 Compliance with Laws...........................................................................11
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS.....................................................................11
6.1 FCC Consent....................................................................................11
6.2 Control of the Station.........................................................................12
6.3 Risk of Loss...................................................................................12
6.4 Confidentiality................................................................................12
6.5 Cooperation....................................................................................13
6.6 Access to Books and Records....................................................................13
6.7 Broker.........................................................................................13
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SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING.....................................................................................13
7.1 Conditions to Obligations of Buyer.............................................................13
(a) Representations and Warranties........................................................13
(b) Covenants and Conditions..............................................................14
(c) Consents..............................................................................14
(d) FCC Consent...........................................................................14
(e) Governmental Authorizations...........................................................14
(g) Deliveries............................................................................14
(h) Release of Liens......................................................................14
7.2 Conditions to Obligations of Seller............................................................14
(a) Representations and Warranties........................................................14
(b) Covenants and Conditions..............................................................14
(c) Deliveries............................................................................15
(d) FCC Consent...........................................................................15
SECTION 8. CLOSING AND CLOSING DELIVERIES.......................................................................15
8.1 Closing........................................................................................15
(a) Closing Date..........................................................................15
(b) Closing Place.........................................................................15
8.2 Deliveries by Seller...........................................................................15
(a) Transfer Documents....................................................................15
(b) Consents..............................................................................15
(c) Certificates..........................................................................15
(d) Licenses, Contracts, Business Records, Etc............................................16
(e) Opinion of Counsel....................................................................16
8.3 Deliveries by Buyer............................................................................16
(a) Purchase Price........................................................................16
(b) Assumption Agreements.................................................................16
(c) Certificate...........................................................................16
(d) Opinion of Counsel....................................................................16
(f) Loans.................................................................................16
(g) Other Instruments.....................................................................17
SECTION 9. TERMINATION..........................................................................................17
9.1 Termination by Seller..........................................................................17
(a) Conditions............................................................................17
(b) Judgments.............................................................................17
(c) Upset Date............................................................................17
9.2 Termination by Buyer...........................................................................17
(a) Conditions............................................................................17
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(b) Judgments.............................................................................17
(c) Upset Date............................................................................17
9.3 Escrow Deposit.................................................................................17
9.4 Rights on Termination..........................................................................18
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES............................................................19
10.1 Representations and Warranties.................................................................19
10.2 Indemnification by Seller......................................................................19
10.3 Indemnification by Buyer.......................................................................19
10.4 Procedure for Indemnification..................................................................20
10.5 Certain Limitations............................................................................21
SECTION 11. MISCELLANEOUS.......................................................................................21
11.1 Attorneys' Fees................................................................................21
11.2 Fees and Expenses..............................................................................21
11.3 Arbitration....................................................................................21
11.4 Notices........................................................................................22
11.5 Benefit and Binding Effect.....................................................................23
11.6 Further Assurances.............................................................................23
11.7 GOVERNING LAW..................................................................................23
11.8 Headings.......................................................................................23
11.9 Gender and Number..............................................................................23
11.10 Entire Agreement...............................................................................23
11.11 Waiver of Compliance; Consents.................................................................23
11.12 Counterparts...................................................................................24
11.13 Press Releases.................................................................................24
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LIST OF SCHEDULES
Schedule 3.3 - Consents
Schedule 3.4 - Licenses
Schedule 3.5 - Leasehold Interests
Schedule 3.6 - Personal Property
Schedule 3.7 - Contracts
Schedule 3.8 - Insurance
Schedule 8.2(e) - Opinion of Seller's Counsel
Schedule 8.3(d) - Opinion of Buyer's Counsel
Schedule 9.3 - Escrow Agreement
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of ________, 199_, by and
between PAXSON COMMUNICATIONS OF SEATTLE-24, INC., a Florida corporation
("Buyer"), and WORLD TELEVISION OF WASHINGTON, L.L.C., a Delaware limited
liability company ("Seller").
RECITALS
A. Seller is the licensee or permittee of television station KBCB(TV),
Channel 24, Bellingham, Washington (the "Station"), pursuant to authorizations
issued by the Federal Communications Commission (the "FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all
the assets that are owned by Seller or in which Seller have a transferable
interest and which are used or useful in the business or operations of the
Station, for the price and on the terms and conditions set forth in this
Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Seller, intending to be bound
legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means the right of Seller to payment for the sale
of advertising and/or programming time on the Station prior to the Closing Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under the Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) all Contracts that Buyer has marked with
an asterisk (*) on Schedule 3.7 to indicate that such Contract will be assumed
by Buyer upon its purchase of the Station, and (ii) any other Contracts entered
into by Seller between the date of this Agreement and the Closing Date that
Buyer agrees in writing to assume.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday.
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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 Station, and
(i) which are in effect on the date of this Agreement or (ii) which are entered
into by Seller between the date of this Agreement and the Closing Date.
"FCC" shall have the meaning set forth in the Recitals to this
Agreement.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by Seller
or under which Seller is licensed or franchised and which are used or useful in
the business and operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date.
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"Leasehold Interests" means Seller's interests in leaseholds and
subleaseholds, easements, licenses, rights to access, and rights of way, and
other improvements thereon, which are used or useful in the business or
operations of the Station, together with any additions thereto between the date
of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations issued
by the FCC, the Federal Aviation Administration, or any other federal, state, or
local government authorities to Seller in connection with the conduct of the
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date.
"Permitted Liens" means liens for taxes not yet due and payable and
liens created by the operation of the Leasehold Interests.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, or any
governmental entity.
"Purchase Price" shall have the meaning set forth in Section 2.3
hereof.
"Station" shall have the meaning set forth in the Recital to this
Agreement.
"Tangible Personal Property" means all machinery, equipment, tools,
furniture, leasehold improvements, office equipment, plant, inventory, spare
parts, and other tangible personal property which is owned by Seller or in which
Seller has an interest and which is used or useful in the conduct of the
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date, but excluding any
Tangible Personal Property consumed in the ordinary course of business between
the date hereof and the Closing Date.
"Time Brokerage Agreement" means the Time Brokerage Agreement dated as
of August 19, 1996 between Seller and Buyer.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to sell, transfer, assign and/or
deliver to Buyer on the Closing Date, and Buyer agrees to purchase and accept,
all of the assets and property interests owned by Seller or in which Seller has
a property interest which are used or useful in connection with the conduct of
the business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date, but excluding the
assets described in Section 2.2 hereof, free and clear of any claims,
liabilities, security
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interests, mortgages, liens, pledges, conditions, charges, or encumbrances of
any nature whatsoever (except for Permitted Liens), including the following:
(a) The Tangible Personal Property;
(b) The Leasehold Interests;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles, including the goodwill and call signs of
the Station, if any;
(f) All choses in action of Seller relating to the Station
that are assignable to Buyer as provided herein; and
(g) All records required by the FCC to be kept by the Station
and copies of all other books and records which belong to Seller and are within
its possession and control relating to the business or operations of the Station
(exclusive of corporate, financial and accounting records) including executed
copies of the Assumed Contracts.
2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Cash or cash equivalents on hand as of the Closing Date;
any insurance policies, letters of credit, or other similar items and cash
surrender value in regard thereto; and any stocks, bonds, certificates of
deposit and similar securities or other investments;
(b) Any pension, profit sharing or employee benefit plans and
all contracts related thereto, and any collective bargaining agreements;
(c) All books and records relating to Seller's internal
corporate organization or internal financial matters;
(d) The Accounts Receivable;
(e) Any Contracts not included in the Assumed Contracts,
including, without limitation, all affiliation agreements relating to the
Station; and
(f) Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees for periods
prior to the Closing Date.
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2.3 Purchase Price. The purchase price for the Assets shall be Three
Million Nine Hundred Fifty Two Thousand Five Hundred Dollars ($3,952,500) (the
"Purchase Price"). Not included, and remitted separately , was a commission of
$200,000 to Communications Equity Associates, Inc. The Purchase Price is
adjusted as provided below:
(a) Prorations. The Parties understand and agree that Buyer
has ongoing responsibility for expenses, pursuant to the Parties' Time Brokerage
Agreement, and Attachment B thereto. The Parties further understand and agree
that the Time Brokerage Agreement shall expire upon the closing of this Asset
Purchase Agreement. Accordingly, no proration of expenses is provided herein, as
between Seller and Buyer.
(b) Taxes. Liability for personal income taxes, corporate
income taxes, or capital gain taxes, as the result of this Asset sale, shall be
the sole responsibility of Seller. State, county and local sales taxes on the
sale shall be paid equally by Seller and by Buyer, with Buyer remitting at the
closing, in addition to the Purchase Price, a sum equal to one-half of such
State or local sales taxes, if any.
(c) Loan Forgiveness. In addition to the payment of the
Purchase Price, Buyer shall forgive at the Closing all of the outstanding
principle and interest due on the Promissory Note pursuant to the Loan Agreement
with Seller dated August 19, 1996. At the closing, Buyer shall deliver with
respect to the Promissory Note, a Release, in form reasonably satisfactory to
Seller, as well as all instruments evidencing or constituting security for the
Note repayment.
2.4 Payment of Purchase Price.
At the Closing, Buyer shall pay to Seller the Purchase Price
adjusted pursuant to Section 2.3(b) hereof by federal wire transfer of
immediately available funds pursuant to wire instructions delivered by Seller at
least two (2) Business Days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall assume and undertake to pay, discharge, and perform all obligations
and liabilities of Seller under the Licenses and the Assumed Contracts. Buyer
shall not assume any other obligations or liabilities of Seller, including (i)
any obligations or liabilities under any Contract not included in the Assumed
Contracts, (ii) any obligations or liabilities under the Assumed Contracts
relating to the period prior to the Closing Date, (iii) any claims or pending
litigation or proceedings relating to the operation of the Station prior to the
Closing, (iv) any obligations or liabilities of Seller under any employee
pension, retirement, or other benefit plans or with respect to commissions,
wages, bonuses, incentive payments, vacation pay, sick leave, severance
benefits, or other benefits of employees or former employees of Seller or their
beneficiaries, (v) any obligations or liabilities of Seller with respect to any
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Excluded Assets, or (vi) 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 Standing. Seller is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
Seller 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 Seller hereunder and thereunder.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary actions on the part of Seller. This Agreement has been duly executed
and delivered by Seller and constitutes the legal, valid, and binding obligation
of Seller, enforceable against Seller 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 the performance of
this Agreement and the documents contemplated hereby (with or without the giving
of notice, the lapse of time, or both): (i) will not conflict with the
Certificate of Incorporation or Bylaws of Seller; (ii) 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; (iii) will not conflict with, constitute grounds
for termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Seller is a party or
by which Seller may be bound; and (iv) will not create any claim, liability,
mortgage, lien, pledge, condition, charge, or encumbrance of any nature
whatsoever upon any of the Assets.
3.4 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 and all amendments and other modifications thereto) listed on
Schedule 3.4. The Licenses listed on Schedule 3.4 have been validly issued and
the Seller is the authorized legal holder thereof. The FCC Licenses comprise all
of the licenses, permits and other authorizations required from the FCC for the
conduct of the business or operations of the Station in accordance with
applicable laws and in the manner and to the extent they are now conducted. None
of the Licenses listed on Schedule 3.4 is subject to any station-specific or
adjudicatory condition
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(not including laws or rules of general applicability) which would limit the
full operation of the Station as presently operated. The Licenses listed on
Schedule 3.4 are in full force and effect. The business and operations of the
Station are being conducted in accordance with the Licenses listed on Schedule
3.4. Seller has no reason to believe that the Licenses issued by the FCC will
not be renewed by the FCC in the ordinary course.
3.5 Title to and Condition of Leasehold Interests. Excluding the Lease
Agreement between Seller and Buyer, Schedule 3.5 contains a complete and
accurate description of all leasehold interests necessary to conduct the
business and operations of the Station as now conducted. With respect to each
leasehold or subleasehold interest included in the Leasehold Interests being
conveyed under this Agreement, so long as Seller fulfills its obligations under
the lease therefor, except for landlord's mortgagee, if any, Seller has
enforceable rights to nondisturbance and quiet enjoyment, and no third party
holds any interest in the leased premises with the right to foreclose upon such
Seller's leasehold or subleasehold interest. Seller has full legal and practical
access to the Leasehold Interests.
3.6 Title to and Condition of Tangible Personal Property. Excluding the
Lease Agreement between Seller and Buyer, Schedule 3.6 contains descriptions of
all material items of the Personal Property which comprise all material personal
property necessary to conduct the business or operations of the Station as now
conducted. Except as described in Schedule 3.6, Seller owns and has good title
to all Personal Property, free and clear of any security interest, mortgage,
pledge, conditional sales agreement, or other lien or encumbrance, except for
Permitted Liens. Each item of material Personal Property is in good operating
condition and repair (ordinary wear and tear excepted), and is available for
immediate use in the business or operations of the Station.
3.7 Contracts. Schedule 3.7 contains descriptions of all the Contracts.
Seller has delivered to Buyer true and complete copies of all written Contracts
and true and complete memoranda of all oral Contracts. Other than the Contracts,
Seller require no contract or agreement to enable it to carry on its business as
presently conducted. All of the Assumed Contracts are in full force and effect
and are valid, binding and enforceable in accordance with their terms except as
the enforceability thereof may be affected by bankruptcy, insolvency, or similar
laws affecting creditors' rights generally, or by court-applied equitable
remedies. Seller is not in breach, nor to Seller's knowledge is any other party
in breach, of the terms of any such Assumed Contracts. Except as expressly set
forth in Schedule 3.7, 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 same upon expiration of its term, or (iii) to renew the
same upon expiration only on terms and conditions which are substantially more
onerous than those pertaining to such existing contract. Subject to obtaining
the Consents, Seller has full legal power and authority to assign its rights
under the Assumed Contracts to Buyer in accordance with this Agreement, and such
assignment will not affect the validity, enforceability and continuation of any
of the Assumed Contracts.
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3.8 Insurance. Schedule 3.8 comprises a true and complete list of all
insurance policies of Seller which insure any part of the Assets. All policies
of insurance listed in Schedule 3.8 are in full force and effect. During the
three-year period ending on the date hereof, no insurance policy of Seller on
the Assets or the Station have been canceled by the insurer and no application
of Seller for insurance has been rejected by any insurer.
3.9 Reports. All returns, reports and statements which the Station is
currently required to file with the FCC and any other governmental agency have
been filed. All of such reports, returns and statements are complete and correct
as filed.
3.10 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 said returns or on any tax assessment received by them to the
extent that such taxes have become due, or has set aside on its books reserves
(segregated to the extent required by sound accounting practice) deemed by them
to be adequate with respect thereto. No events have occurred which could impose
on Buyer any transferee liability for any taxes, penalties, or interest due or
to become due from Seller.
3.11 Claims and Legal Actions. Seller has a legal obligation to repay
loans advanced by one-time stockholders of a predecessor company, in the amount
of $66,933.35 with this exception, 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, the Assets, or the business or operations of the Station, nor does
Seller know or have reason to be aware of any basis for the same.
3.12 Environmental; Hazardous Materials. There are no claims, notices,
suits, proceedings or investigations pending or, to Seller's knowledge,
threatened, and there are no judgments against Seller or the Station by or
before any governmental authority concerning environmental compliance. To
Seller's knowledge, after due inquiry, (i) no toxic materials, hazardous waste,
or hazardous substances, including any asbestos or asbestos-related products,
any oils, petroleum-derived compounds or pesticides (hereinafter collectively
referred to as the "Hazardous Materials") have been or are located on or about
the Leasehold Interests; (ii) the Leasehold Interests has not been previously
used for the storage, manufacture or disposal of Hazardous Materials; and (iii)
no underground storage tank or related equipment ("UST") is located at the
Leasehold Interests.
3.13 Compliance with Laws. Seller has complied in all material respects
with the Licenses and all federal, state, and local laws, rules, regulations,
and ordinances applicable or relating to the ownership and operation of the
Station. Neither the ownership or use of
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the properties of the Station nor the conduct of the business or operations of
the Station conflicts with the rights of any other person or entity.
3.14 Full Disclosure. No representation or warranty made by Seller in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Seller pursuant hereto contains or will knowingly contain any
untrue statement of a material fact, 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 corporation duly
organized, validly existing, and in good standing under the laws of Florida.
Buyer has all requisite corporate power and authority to execute and deliver
this Agreement and the documents contemplated hereby, and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Buyer have been duly authorized by all
necessary actions on the part of Buyer. This Agreement has been duly executed
and delivered by Buyer and constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the FCC
Consent, 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) will not conflict with the Certificate of
Incorporation or Bylaws of Buyer; (ii) 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; (iii) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license, or permit to which Buyer is a party or by which
Buyer may be bound, such that Buyer could not acquire the Assets or operate the
Station.
4.4 Full Disclosure. No representation or warranty made by Buyer in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Buyer pursuant hereto contains or will knowingly contain any
untrue statement of a
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material fact, or omits or will omit to state any material fact required to make
any statement made herein or therein not misleading.
4.5 Buyer Qualifications. Buyer is legally, financially and otherwise
qualified to be the licensee of and acquire, own and operate the Station under
the Communications Act of 1934, as amended, and the rules, regulations and
policies of the FCC. Buyer knows of no fact that would, under existing law and
the existing rules, regulations, policies and procedures of the FCC disqualify
Buyer as assignee of the FCC Licenses or as the owner and operator of the
Station.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this Agreement
and the Closing Date, Seller shall operate the Station in the ordinary course of
business in accordance with their past practices (except where such conduct
would conflict with the following covenants or the terms of the Time Brokerage
Agreement between Seller and Buyer), and in accordance with the other covenants
in this Section 5.
5.2 Contracts. Seller will not enter into any contract or commitment
relating to the Station or the Assets, or amend or terminate any Contract (or
waive any material right thereunder), or incur any obligation (including
obligations relating to the borrowing of money or the guaranteeing of
indebtedness) that will be binding on Buyer after Closing without Buyer's
written consent.
5.3 Disposition of Assets. Seller shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except in connection with
the acquisition of replacement property of equivalent kind and value.
5.4 Encumbrances. Seller shall not create, assume or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets, except for (i) liens which shall be
removed prior to the Closing Date and, (ii) liens for current taxes not yet due
and payable.
5.5 Licenses. Seller shall not cause or permit, by any act or failure
to act, any of the Licenses issued by the FCC to expire or to be revoked,
suspended, or modified, or take any action that could cause the FCC or any other
governmental authority to institute proceedings for the suspension, revocation,
or adverse modification of any of the Licenses. Seller shall not fail to
prosecute with due diligence any applications to any governmental authority in
connection with the operation of the Station.
5.6 Rights. Seller shall not knowingly waive any material right
relating to the Station or any of the Assets.
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5.7 Access to Information. Seller shall give Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
during normal business hours to the Assets and to all other properties,
equipment, books, records, Contracts, and documents relating to the Station for
the purpose of audit and inspection and will furnish or cause to be furnished to
Buyer or its authorized representatives all material information with respect to
the affairs and business of the Station that Buyer may reasonably request
(including any operations reports produced with respect to the affairs and
business of the Station).
5.8 Maintenance of Assets. Seller shall maintain all of the Assets in
good condition (ordinary wear and tear excepted) with inventories of spare parts
and expendable supplies being maintained at levels consistent with past
practices.
5.9 Insurance. Seller shall maintain substantially the same insurance
coverage provided by the existing insurance policies on the Station and the
Assets until the Closing Date.
5.10 Consents. Subject to the provisions of Section 6.5 hereof, Seller
shall use its best efforts to obtain the Consents without any change in the
terms or conditions of any Assumed Contract or License as in effect on the date
of this Agreement. Seller shall advise Buyer of any communications it receives
concerning the Consents and of any conditions proposed, considered, or requested
for any of the Consents. Upon Buyer's request, Seller shall cooperate with Buyer
and use its best efforts to obtain from the Lessors under the Leasehold
Interests such estoppel certificates and consents to the collateral assignment
of the lessee's interest under each such lease as Buyer's lenders may request.
5.11 Books and Records. Seller shall maintain its books and records
relating to the Station in accordance with past practices.
5.12 Notification. Seller shall promptly notify Buyer in writing of any
material change in any of the information contained in Seller's representations
and warranties contained in Section 3 of this Agreement.
5.13 Compliance with Laws. Seller shall comply in all material respects
with all laws, rules, and regulations applicable or relating to the ownership
and operation of the Station.
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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 the appropriate
application for the FCC Consent and shall file the application with the FCC
within five (5) days of 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, provided, however, that the parties shall continue to
have all rights available to them pursuant to Section 9 hereof. If the Closing
shall not have occurred for any reason within the original effective period of
the FCC Consent, and neither party shall have terminated this Agreement under
Section 9, the parties shall jointly request an extension of the effective
period of the FCC Consent. No extension of the FCC Consent shall limit the
exercise by either party of its rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not, directly
or indirectly, control, supervise, direct, or attempt to control, supervise, or
direct, the operations of the Station; such operations, including complete
control and supervision of all of the Station's programs, employees, and
policies, shall be the sole responsibility of Seller until the Closing
consistent with the provisions of the Time Brokerage Agreement.
6.3 Risk of Loss. The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing.
6.4 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and rules and regulations of securities markets, each party will
keep confidential any information of a confidential nature obtained from the
other party in connection with the transactions contemplated by this Agreement.
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Except as provided in this Paragraph each party will refrain from disclosing any
such information to any third party. If this Agreement is terminated, each party
will return to the other party all copies of all documents and other all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Cooperation. Buyer and Seller shall cooperate fully with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their reasonable commercial efforts to consummate
the transaction contemplated hereby and to fulfill their obligations under this
Agreement. Notwithstanding the foregoing, neither Buyer nor Seller shall have
any obligation (i) to expend funds to obtain any of the Consents or (ii) to
agree to any material adverse change in any License or Assumed Contract to
obtain a Consent required with respect thereto; provided, however, that Seller
shall be required to expend funds, if necessary, to cure any defaults in order
to obtain Consents and either party shall be required to expend funds in respect
of normal and usual filing fees and the fees of professional advisors.
6.6 Access to Books and Records. Seller shall provide Buyer access and
the right to copy for a period of ninety (90) days 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 ninety (90)
days from the Closing Date any books and records relating to the Assets that are
included in the Assets.
6.7 Broker. Each of Buyer and Seller represents and warrants that
neither they nor any person or entity acting on their behalf have incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transactions contemplated by this Agreement.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing are subject at Buyer's option to the fulfillment or waiver by Buyer
prior to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All 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.
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(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 material adverse change in the terms or
conditions of any agreement or any governmental license, permit, or other
authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any material 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 holder of
all FCC Licenses and there shall not have been any adjudicatory modification of
any FCC License that could have a material adverse effect on the Station or the
conduct of its business and operations. No adjudicatory proceeding shall be
pending the effect of which could be to revoke, cancel, fail to renew, suspend,
or modify adversely any FCC License.
(f) Material Adverse Change. There shall not have been a
material adverse change in the Assets since the date of this Agreement,
including, without limitation, any damage, destruction or loss affecting any
material assets used in the conduct or the business of the Station, except
normal wear and tear to the Assets.
(g) Deliveries. Seller shall have made or stand willing to
make all the deliveries to Buyer set forth in Section 8.2.
(h) Release of Liens. Seller shall have delivered to Buyer
evidence reasonably satisfactory to Buyer that all security interests,
mortgages, encumbrances, and liens on the Assets that are not Permitted Liens
have been released and removed.
7.2 Conditions to Obligations of Seller All obligations of Seller at
the Closing are subject at Seller's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
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(c) Deliveries. Buyer shall have made or stand willing to make
all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any material conditions that need not be
complied with by Seller under Section 6.1 hereof and Buyer shall have complied
with any conditions imposed on it by the FCC Consent.
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 (5) business 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 (10) business days following the
date upon which the FCC Consent has become a Final Order. If Buyer fails to
specify the date for Closing pursuant to the preceding sentence prior to the
fifth Business Day after the date upon which the FCC Consent becomes a Final
Order, the Closing shall take place on the tenth Business Day after the date
upon which the FCC Consent becomes a Final Order.
(b) Closing Place. The Closing shall be held by the exchange
of signed documents delivered by mail to the offices of Dow, Lohnes & Albertson,
1200 New Hampshire Avenue, N.W., Suite 800, Washington D.C. 20036.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Subject to the provisions of this
Agreement, duly executed bills of sale, general warranty deeds, assignments, and
other transfer documents which shall be sufficient to vest good and marketable
title to the Assets in the name of Buyer, free and clear of all mortgages,
liens, restrictions, encumbrances, claims, and obligations except for Permitted
Liens;
(b) Consents. An executed copy of any instrument evidencing
receipt of any Consent;
(c) Certificates. A certificate, dated as of the Closing Date,
executed by Seller certifying (1) that the representations and warranties of
such 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 such Seller has in all material respects performed and complied with all of
its obligations, covenants, and agreements set forth in this
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Agreement to be performed and complied with on or prior to the Closing Date and
such estoppel certificates and consents to the collateral assignment of the
lessee's interest under each such lease as Buyer's lenders may request;
(d) Licenses, Contracts, Business Records, Etc. Copies of all
documents described in Section 2.1(g) hereof;
(e) Opinion of Counsel. An opinion of Seller's counsel dated
as of the Closing Date, substantially in the form of Schedule 8.2(e) hereto;
(f) Resolutions. Certified copy of resolutions of the Board of
Directors of Seller authorizing the execution, delivery and performance of this
Agreement;
(g) Other Instruments. Such other instruments and certificates
or other documentation as Seller are 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;
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations under the Licenses and Assumed Contracts arising on or after the
Closing Date;
(c) Certificate. A certificate, dated as of the Closing Date,
executed by 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) hereto;
(e) Resolutions. Certified copy of resolutions of Buyer's
Board of Directors authorizing the execution, delivery and performance of this
Agreement;
(f) Loans. The Promissory Note marked paid in full and all
documents constituting or evidencing security interests for the loan; and
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(g) 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.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by Seller
and the purchase and sale of the Assets abandoned, if Seller is not then in
material default, upon written notice to Buyer, upon the occurrence of any of
the following:
(a) Conditions. If, on the date that would otherwise be the
Closing Date, any of the conditions precedent to the obligations of Seller set
forth in this Agreement have not been satisfied or waived in writing by Seller.
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order, not caused
by Seller, that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
December 31, 1998.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer and
the purchase and sale of the Station abandoned, if Buyer is not then in material
default, upon written notice to Seller, upon the occurrence of any of the
following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Buyer set
forth in this Agreement have not been satisfied or waived in writing by Buyer.
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order, not caused
by Buyer, that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
December 31, 1998.
9.3 Escrow Deposit. Previously, Buyer has deposited with First Union
National Bank (the "Escrow Agent") Two Hundred Thousand Dollars ($200,000). All
funds and documents deposited with the Escrow Agent shall be held and disbursed
in accordance with the terms of the Escrow Agreement executed on the date hereof
in the form of Schedule 9.3 (the "Escrow Agreement") and the following
provisions:
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(a) At the Closing, Buyer shall be entitled to receive 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.
(b) If this Agreement is terminated by Seller pursuant to
Section 9.1 hereof due to Buyer's material breach of this Agreement, and Seller
is not in material breach of any provision of this Agreement, Seller shall be
entitled to receive 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.
(c) If this Agreement is terminated and all of the conditions
for the disbursement of the escrow fund to Seller under Section 9.3(b) are not
satisfied, Buyer shall be entitled to receive 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.
9.4 Rights on Termination. (a) If this Agreement is terminated pursuant
to Section 9.1 or 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 is not in material breach of any provision of this
Agreement, then the forgiveness of any obligation by Seller to pay any principal
or interest under the Loan Agreement between Buyer and Seller 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 in accordance with
Section 9.3 hereof, together with any interest or other proceeds from the
investment of that amount, is a fair and equitable amount to reimburse Seller
for damages sustained due to Buyer's material breach of this Agreement. If this
Agreement is terminated by Buyer due to Seller's material breach of any
provision of this Agreement, and Buyer is not in material breach of any
provision of this Agreement, Buyer shall have all rights and remedies available
at law or equity, including the right to seek specific performance of this
Agreement.
(b) Seller agrees that the Assets include unique property that
cannot be readily obtained on the open market and that Buyer would be
irreparably injured if this Agreement is not specifically enforced after breach
if Seller shall have committed a material breach. Therefore, Buyer shall have
the right to specifically enforce Seller's performance under this Agreement and
Seller agrees to waive the defense in any such suit that Buyer has an adequate
remedy at law and to interpose no opposition, legal or otherwise, as to the
propriety of specific performance as a remedy.
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SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the closing for a period of eighteen (18) months.
10.2 Indemnification by Seller. Seller hereby agrees to indemnify and
hold Buyer harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or omission or nonfulfillment of
any covenant by Seller contained in this Agreement or in any certificate,
document, or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting from
the operation or ownership of the Station and/or the Assets prior to the Closing
Date, including any liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring prior to the Closing Date.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.3 Indemnification by Buyer. Buyer hereby agrees to indemnify and
hold Seller harmless against and with respect to, and shall reimburse Seller
for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or omission or nonfulfillment of
any covenant by Buyer contained in this Agreement or in any certificate,
Schedule, document, or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting from
the operation or ownership of the Station and/or the Assets by Buyer on and
after the Closing.
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(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant as soon as practicable
after written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration provisions
of this Agreement, as applicable.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party subject to reimbursement for reasonable actual
out-of-pocket expenses incurred by the Claimant as the result of a request by
the Indemnifying Party. If the Indemnifying Party elects to assume control of
the defense of any third-party claim, the Claimant shall have the right to
participate in the defense of such claim at its own expense. If the Indemnifying
Party does not elect to assume control or otherwise participate int he defense
of any third party claim, it shall be bound by the results obtained by the
Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
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(e) The indemnification rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Certain Limitations. Notwithstanding anything in this Agreement to
the contrary, neither party shall indemnify or otherwise be liable to the other
party with respect to any claim for any breach of a representation or warranty,
or for the breach of any covenant contained in this Agreement, except to the
extent the losses, obligations, liabilities, costs and expenses of such parties
arising therefrom exceed Five Thousand Dollars ($5,000).
SECTION 11. MISCELLANEOUS
11.1 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.
11.2 Fees and Expenses. Buyer shall pay the fee payable to the FCC in
connection with the filing of the application for FCC Consent. Except as
otherwise provided in this Agreement, each party shall pay its own expenses
incurred in connection with the authorization, preparation, execution, and
performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and representatives, and each party shall be responsible
for all fees or commissions payable to any finder, broker, advisor, or similar
person retained by or on behalf of such party.
11.3 Arbitration. Except as otherwise provided to the contrary below,
any dispute arising out of or related to this Agreement that Seller and Buyer
are unable to resolve by themselves shall be settled by arbitration in
Washington, D.C. by a panel of three (3) arbitrators. Seller and Buyer shall
each designate one (1) disinterested arbitrator, and the two (2) 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 (30) 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
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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 under Section 9.4(b) of this Agreement.
11.4 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (a) in writing, (b)
sent by telecopy (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by commercial delivery service or registered or
certified mail, return receipt requested, (c) deemed to have been given on the
date of personal delivery or the date set forth in the records of the delivery
service or on the return receipt, and (d) addressed as follows:
If to Buyer: Paxson Communications of Seattle-24, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Mr. Lowell W. Paxson
Telecopy: (407) 655-9424
Telephone: (407) 659-4122
With 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
Telecopy: (202) 776-2222
Telephone: (202) 776-2786
If to Seller: World Television of Washington, L.L.C.
6611 Santa Monica Boulevard
Los Angeles, CA 90038-1311
Attention: Larry Rogow
Telecopy: (213) 469-2193
Telephone: (213) 469-5696
With copy to: Michael Couzens, Esq.
5337 College Avenue
Oakland, CA 94616
Telecopy: (510) 654-6741
Telephone: (510) 658-7654
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 11.4.
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11.5 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto; provided,
however, that Buyer may assign its rights and obligations under this Agreement
to a wholly-owned subsidiary or commonly controlled affiliate satisfying the
requirements of Section 4.5 hereof without seeking or obtaining Seller's prior
approval. Upon any permitted assignment by Buyer or Seller in accordance with
this Section 11.5, all references to "Buyer" herein shall be deemed to be
references to Buyer's assignee and all references to "Seller" herein shall be
deemed to be references to Seller's assignee. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.6 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.
11.7 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).
11.8 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.
11.9 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.
11.10 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.11 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
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<PAGE> 133
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, representation, warranty, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth in this
Section 11.11.
11.12 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
11.13 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
and, if required, press releases with governmental authorities as may, in its
judgment, be required or advisable in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby,
in which case the other party shall be first notified in writing.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 134
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
SEATTLE-24, INC.
By:
--------------------------------------
Name: William L. Watson
Title: Secretary
WORLD TELEVISION OF WASHINGTON, L.L.C.
By:
---------------------------------------
Name:
Title:
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<PAGE> 135
SCHEDULE 3.3
Consents
<PAGE> 136
SCHEDULE 3.4
Licenses
<PAGE> 137
SCHEDULE 3.5
Leasehold Interests
<PAGE> 138
SCHEDULE 3.6
Personal Property
<PAGE> 139
SCHEDULE 3.7
Contracts
<PAGE> 140
SCHEDULE 3.8
Insurance
<PAGE> 141
SCHEDULE 8.2(E)
Opinion of Seller's Counsel
<PAGE> 142
SCHEDULE 8.2(G)
Noncompetition Agreement
<PAGE> 143
SCHEDULE 8.3(D)
Opinion of Buyer's Counsel
<PAGE> 144
SCHEDULE 9.3
Escrow Agreement
<PAGE> 145
================================================================================
LEASE AGREEMENT
BY AND BETWEEN
WORLD TELEVISION OF WASHINGTON, L.L.C.
AND
PAXSON COMMUNICATIONS
OF SEATTLE-24, INC.
FOR
TELEVISION STATION KBCB(TV)
BELLINGHAM, WASHINGTON
* * *
AUGUST 19, 1996
================================================================================
<PAGE> 146
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. TERM..................................................................................................1
(a) Initial and Renewal Term............................................................................1
(b) Holding Over........................................................................................1
SECTION 2. RENT AND TAXES........................................................................................2
(a) Rent for Initial and Renewal Terms..................................................................2
(b) Security Deposit....................................................................................3
(c) Taxes...............................................................................................3
(d) Payment.............................................................................................3
SECTION 3. USE OF ASSETS.........................................................................................3
SECTION 4. ALTERATIONS...........................................................................................4
SECTION 5. MAINTENANCE AND REPAIRS...............................................................................4
SECTION 6. INDEMNITY AND INDEMNITY INSURANCE.....................................................................5
SECTION 7. ASSIGNMENT............................................................................................6
SECTION 8. CONDEMNATION..........................................................................................6
SECTION 9. INTERFERENCE AND RF RADIATION.........................................................................7
(a) General.............................................................................................7
(b) RF Radiation........................................................................................7
SECTION 10. FORCE MAJEURE........................................................................................7
SECTION 11. MECHANICS' LIENS.....................................................................................7
SECTION 12. LESSOR'S LIEN........................................................................................8
SECTION 13. QUIET ENJOYMENT......................................................................................8
SECTION 14. DEFAULT..............................................................................................8
SECTION 15. SURRENDER OF LEASED ASSETS...........................................................................8
SECTION 16. NOTICES..............................................................................................9
</TABLE>
(i)
<PAGE> 147
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 17. PROPERTY INSURANCE...................................................................................9
SECTION 18. TAXES...............................................................................................10
SECTION 19. CAPTIONS............................................................................................10
SECTION 20. COVENANTS TO BIND AND BENEFIT RESPECTIVE PARTIES....................................................10
SECTION 21. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS...........................................................................................10
SECTION 22. COUNTERPARTS........................................................................................10
SECTION 23. ATTORNEYS FEES......................................................................................10
SECTION 24. MISCELLANEOUS.......................................................................................10
SECTION 25. ENTIRE AGREEMENT....................................................................................11
SECTION 26. WAIVER OF JURY TRIAL................................................................................11
</TABLE>
(ii)
<PAGE> 148
LEASE AGREEMENT
THIS LEASE is made and entered into as of this 19th day of August,
1996, by and between PAXSON COMMUNICATIONS OF SEATTLE-24, INC., a Florida
corporation (hereinafter referred to as "Lessor"), and WORLD TELEVISION OF
WASHINGTON, L.L.C., a Delaware limited liability company (hereinafter referred
to as "Lessee").
STATEMENT OF FACTS
A. Lessor and Lessee desire to enter into this Agreement pursuant to
which Lessor shall lease to Lessee certain assets used or useful in the
operation of new television station KBCB(TV), Channel 24, Bellingham, Washington
(the "Station").
B. Concurrently, Lessor and Lessee have entered into a Construction
Agreement, whereby Lessor as Contractor and Lessee as Permittee are arranging on
terms as fully set forth therein, for the construction of a facility for the
Station. By this Lease Agreement the Parties desire to set forth the terms and
conditions of leasing for that Station facility.
NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Lease, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1. TERM.
(a) Initial and Renewal Term. Lessee shall have the right to
use the assets described in Exhibit A hereto (the "Leased Assets") for an
Initial Term commencing on the same day that, pursuant to the Construction
Agreement, Section 3(B), the Contractor notifies the Permittee that the contract
work is "substantially complete." (the "Commencement Date"). The Initial Term
shall expire at 12:00 midnight on the fifth anniversary of the date of this
Lease Agreement (the "Initial Term"), unless this Lease is sooner terminated as
hereinafter provided. This Lease may be renewed for additional one-year terms
(the "Renewal Term"), unless at least 90 days prior to the expiration of the
Initial Term Lessor or Lessee shall have provided written notice to the other
stating that it does not intend to renew this Lease for a Renewal Term. The
Initial Term and Renewal Term shall be subject to all of the terms and
conditions set forth in this Lease.
(b) Holding Over. If Lessee or anyone claiming under Lessee
shall remain in possession of the Leased Assets or any part thereof after the
expiration of the Initial Term or the Renewal Term without any agreement in
writing between the Lessor and Lessee with respect thereto, prior to acceptance
of rent by Lessor, the person remaining in possession shall be deemed a holdover
lessee, and, after acceptance of rent by Lessor, the party
<PAGE> 149
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remaining in possession of the Leased Assets shall be deemed a lessee from
month-to-month, subject to the provisions of this Lease. The rental during any
such period shall equal one hundred twenty-five percent (125%) of the rental in
effect immediately preceding such expiration.
(c) Contract Successor. The Parties hereto have entered into
an Option Agreement, under which the Lessor in the future may choose to acquire
ownership of the Station from the Lessee under the terms and conditions as
stated in an Asset Purchase Agreement. This Lease shall expire automatically, in
the event and at the time that there is a Closing under the Asset Purchase
Agreement.
(d) Purchase Option. In the event that the time for the
exercise of the Option arrives, and the Option holder (Lessor) chooses not to
exercise its option, or if the Asset Purchase Agreement shall expire or be
terminated, then Lessee shall have the option within 90 days to acquire all of
the leased facilities by tendering to Lessor cash consideration at their then
fair market value as determined by an experienced broadcast equipment appraiser
mutually acceptable to Lessor and Lessee.
SECTION 2. RENT AND TAXES.
(a) Rent for Initial and Renewal Terms. Lessee covenants and
agrees to pay Lessor for the use of the Leased Assets during the Initial Term
and the Renewal Term the amounts set forth below (the "Rent"):
(1) On or before the last day of the month in which
the Commencement Date falls, Lessee shall pay as Rent for each day of the period
beginning on the Commencement Date and ending on the last day of such month the
sum of _________ Dollars ($________).
(2) Lessee shall pay to Lessor annual Rent in the
amount of ___________ Dollars ($________) (the "Base Rent") for the period
beginning with the month first following the Commencement Date and continuing
until ____________, which amount shall be payable in equal monthly installments.
(3) In the event that this Lease is renewed, the Rent
to be paid by Lessee to Lessor during the Renewal Term shall be equal to the sum
of the Base Rent plus the amount determined by multiplying the Base Rent by the
percentage increase, if any, in the U.S. Department of Labor, Bureau of Labor
Statistics, Revised All-Cities Consumer Price Index for the Bellingham,
Washington metropolitan area (the "CPI") published immediately prior to the last
day of the Initial Term over the CPI published immediately
<PAGE> 150
- 3 -
prior to the Commencement Date. In no event shall the Rent to be paid by Lessee
during the Renewal Term be less than the Base Rent.
(4) If the CPI ceases to exist or is substantially
changed, Lessor shall substitute a similar index. Except as otherwise
specifically provided herein, installments of Rent during the Initial Term and
the Renewal Term shall be paid in advance in United States Dollars (without
prior notice or invoice by Lessor) on or before the first of the month and any
amounts which are payable when invoiced hereunder shall be due within twenty
(20) days after Lessee's receipt of such invoice.
(b) Security Deposit. As security for the timely performance
of Lessee's obligations hereunder, Lessee shall pay to Lessor on the
Commencement Date the amount of __________ Dollars ($_______) which shall be
held by Lessor as a security deposit for the Initial Term and the Renewal Term.
Lessor shall be permitted to apply the security deposit to satisfy Lessee's
obligations hereunder.
(c) Taxes. Lessee shall pay to Lessor, when invoiced, any and
all taxes and assessments levied or assessed on or against the use of the Leased
Assets and/or the rental payments due hereunder.
(d) Payment. All monthly payments of rent or other sums due
Lessor hereunder shall be sent to or made at the offices of Lessor designated in
Section 16 hereof, or such other place as may be designated by Lessor from time
to time.
SECTION 3. USE OF ASSETS.
(a) Lessee shall have the right to use the Leased Assets only
for the purpose of constructing and operating the Station and for the
construction and operation of transmit and receive towers, satellite receivers
and associated equipment related to Lessee's operation of the Station.
(b) Lessee accepts the Leased Assets in their present
condition ("as is") and agrees that it will take good care of the Leased Assets,
subject to reasonable wear and tear, and that Lessee will return the Leased
Assets to Lessor in the same condition as said Leased Assets were in at the time
control was turned over to Lessee, subject to reasonable wear and tear, and
damage done by Lessor, if any. Furthermore, at Lessor's option, Lessee at its
sole cost and expense shall remove or change all alterations made pursuant to
Section 4(a) hereof so as to return said Leased Assets to Lessor in said same
condition, subject to this subsection 3(b). Lessee agrees that it will comply
with all laws, ordinances, orders, rules, regulations
<PAGE> 151
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or requirements of all governmental authorities which are applicable to its use
of the Leased Assets.
(c) Lessee, at its own cost and expense, shall obtain and
maintain in effect any and all permits, licenses and approvals that are or may
be required with respect to the construction or operation of the Station by each
governmental authority having jurisdiction over such construction or operation.
SECTION 4. ALTERATIONS.
(a) Subject to Lessor's approval, which approval shall not be
unreasonably withheld, Lessee, at its own expense and subject to the provisions
of Subsection 4(b) hereof, may make such alterations, additions, changes and
improvements (herein called "Alterations") to the Leased Assets as Lessee may
deem necessary or desirable, subject to Lessor's approval, which approval shall
not be unreasonably withheld; provided that said Alterations shall not lessen
the value of the Leased Assets.
(b) Before Lessee may make any Alterations to the Leased
Assets in accordance with the rights granted by Subsection 4(a) hereof, Lessee
shall submit to Lessor written specifications for such Alterations that are
proposed for Lessor's approval. Lessor, within thirty (30) days after receipt by
it of the written specifications, shall notify Lessee whether it approves such
Alterations. If Lessor fails to notify Lessee in writing within such thirty (30)
day period that it disapproves of such Alterations, Lessee may proceed to cause
the Alterations to be made.
SECTION 5. MAINTENANCE AND REPAIRS.
(a) Lessor shall be responsible for the repair and maintenance
of the Leased Assets. In the event that Lessee reasonably determines that a
repair or replacement is needed and Lessor after written notice does not make
said repair or replacement within a reasonable period of time, Lessee shall
notify Lessor in writing that it considers said repair or replacement necessary
and that it is contemplating making said repair. Lessee may then, at its option,
make such repair or replacement and charge the reasonable cost incurred to
Lessor. It is agreed that nothing in the foregoing shall relieve Lessor from
full performance of its obligations and that the remedy referred to above is in
addition to any other remedy available to Lessee.
(b) If the Leased Assets shall be partially damaged by fire or
other cause without the fault or neglect of Lessee or its employees, agents,
visitors or licensees, the Lessor shall proceed forthwith to replace or to
repair the Leased Assets with reasonable
<PAGE> 152
- 5 -
diligence at the expense of Lessor; provided, if the Leased Assets are to be
replaced or repaired and are unusable in whole or in part following such damage,
the rent payable hereunder during the period in which they are unusable shall be
adjusted equitably; provided further, however, if the Leased Assets are totally
damaged or rendered wholly unusable by fire or other cause, including, but not
limited to, condemnation, and Lessor shall decide not to replace the same, then,
within ninety (90) days after such fire, casualty or condemnation, Lessor may
give Lessee notice in writing of the decision not to replace, whereupon the
Initial Term or Renewal Term of this Lease shall terminate, Lessee shall
surrender the Leased Assets to Lessor, and rent shall be abated for the
unexpired portion of this Lease, effective as of the date of said written notice
from Lessor, and Lessor shall have no further obligation or liability to Lessee.
It is agreed that nothing in this Subsection 5(b) shall require Lessor to
replace or to repair any or all Alterations.
(c) Lessor will maintain the Leased Assets so as to comply
with existing rules and regulation imposed by any governmental authority having
jurisdiction over the construction or operation of the Station, and make any
repairs and modifications reasonably necessary to maintain the Leased Assets in
good condition and in compliance with good broadcast engineering practices. In
performance of its obligation to maintain and repair the Leased Assets, it may
be necessary from time to time for Lessor to request that Lessee temporarily
cease its broadcast operation, turn off electrical power and/or make other
adjustments to its equipment and operations. Lessor agrees to schedule such
work, as far as reasonably possible, from 1:00 A.M. to 5:00 A.M., and Lessor
will not cause any temporary interruption of Lessee's broadcast operation under
this provision unless such interruption is required by and consistent with good
engineering practices. Lessee agrees to cooperate with Lessor and to comply with
and honor Lessor's reasonable requests for temporary cessation of its broadcast
operation, to turn off electrical power and/or to make other adjustments to its
equipment or operation, as necessary, to allow Lessor to perform such work in an
orderly and timely manner.
SECTION 6. INDEMNITY AND INDEMNITY INSURANCE.
(a) Lessee shall indemnify and hold harmless Lessor from any
and all claims, expenses or liabilities, including reasonable attorneys' fees
and court costs, for injuries to or death of persons, or damage to property
arising out of or in connection with Lessee's use of the Leased Assets. Lessee
further agrees to defend on behalf of Lessor all legal actions, if any, arising
out of any such claim for such damages. Lessor shall not be liable for loss or
damage sustained by Lessee by reason of business interruption resulting from any
or all acts or omissions of Lessor or violations by Lessor of any or all terms,
covenants or conditions of this Lease.
<PAGE> 153
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(b) Lessee agrees that it will, at its expense, obtain and
maintain during the Initial Term or Renewal Term public liability insurance
against claims of injury to or death of persons, or damage to property arising
out of or in connection with Lessee's use of the Leased Assets, naming Lessee
and Lessor as insured persons. Such public liability insurance shall be with an
insurer that Lessor finds reasonably satisfactory and shall have limits of not
less than One Million Dollars ($1,000,000) with respect to claims of injury to
or death of any number of persons in any one occurrence and not less than Two
Hundred Thousand Dollars ($200,000) for property damage in any one occurrence.
Lessee agrees to name Lessor as a co-insured party on any and all such public
liability insurance policies. Satisfactory evidence of such coverage shall be
submitted by Lessee to Lessor.
SECTION 7. ASSIGNMENT.
(a) Lessee's Right to Assign. Neither this Lease nor any of
the rights, interests or obligations of Lessee hereunder shall be assigned,
encumbered, hypothecated, subleased or otherwise transferred without the prior
written consent of Lessor.
(b) This Lease shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
SECTION 8. CONDEMNATION.
(a) If during the Initial Term or Renewal Term of this Lease
the Leased Assets or any portion thereof shall be appropriated by any
corporation or authority having the right of eminent domain, or if access to the
Leased Assets is restricted by action of any such corporation or authority and
reasonably comparable access is not made available to the Leased Assets, this
Lease and all obligations of Lessor and Lessee hereunder shall cease and
terminate as of the date the appropriating corporation or authority takes
possession thereof or materially restricts access to the Leased Assets. All
obligations of Lessee to pay any rents or other charges whatsoever under the
terms of this Lease shall be apportioned as of such date in the same manner as
if the Lease had expired on such date according to its terms.
(b) Whenever used herein, the terms "appropriated" or
"appropriation" shall include any voluntary transfer of the Leased Assets or any
part thereof to any corporation or authority having the right of eminent domain
as a result of a settlement of a threatened or pending appropriation action.
(c) In the event of the appropriation of the whole or any part
of the Leased Assets, the amount received as compensation for the appropriation
(including in the case of an appropriation of part of the Leased Assets, any
amount allowed as damages to the
<PAGE> 154
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remainder) shall be paid in full to Lessor, subject, however, to any right of
Lessee to receive any additional or specific award from the appropriating
corporation or authority to which it might be entitled.
(d) In any appropriation of the Leased Assets, Lessee shall
have the right to prove in the proceeding and to receive any award which may be
for damages to or condemnation of Lessee's movable trade fixtures, equipment,
furniture and furnishings and for moving and relocation expenses.
SECTION 9. INTERFERENCE AND RF RADIATION.
(a) General. Lessee will conduct its activities in accordance
with applicable requirements of the FCC and sound electronic and engineering
practice.
(b) RF Radiation. Lessee shall, at Lessee's expense, take all
actions required to ensure that Lessee's broadcast operation does not expose
workers or the general public to levels of radio frequency radiation in excess
of the "Radio Frequency Protection Guides" recommended in the American National
Standard Safety Levels with Respect to Human Exposure to Radio Frequency
Electromagnetic Fields, 300 kHz to 100 GHz (ANSI C95.1-1982) issued by the
American National Standards Institute.
SECTION 10. FORCE MAJEURE. Neither Lessor nor Lessee shall be required
to perform any term, condition or covenant in this Lease so long as such
performance is delayed or prevented by force majeure, which shall mean Acts of
God, strikes, lockouts, material or labor restrictions by any governmental
authority, civil riots, floods, and any other cause not reasonably within the
control of Lessor or Lessee and which by the exercise of due diligence Lessor or
Lessee is unable, wholly or in part, to prevent or to overcome; provided,
however, force majeure shall not excuse Lessee from its obligation to pay rent
or other sums hereunder and Lessee shall be required to pay any and all rent and
such other sums as provided by this Lease.
SECTION 11. MECHANICS' LIENS. Lessee shall not suffer or permit any
mechanics' liens to be filed against the Leased Assets by reason of work, labor
or materials supplied or claimed to have been supplied to Lessee that are not
removed or for which adequate bond has not been provided within thirty (30) days
of such filing. Furthermore, if any such lien at any time shall be filed against
the Leased Assets, Lessee shall proceed with due diligence to cause the same to
be discharged of record by payment, deposit, bond, order of court or otherwise.
<PAGE> 155
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SECTION 12. LESSOR'S LIEN. Lessor shall have a first lien upon every
right and interest of Lessee to and in the Leased Assets for the payment of rent
and all other sums payable by Lessee hereunder and as security for the
performance and observance of the agreements, conditions, and obligations of
this Lease by and between Lessor and Lessee, dated the date hereof, which
agreements, conditions, and obligations are to be performed and observed by
Lessee.
SECTION 13. QUIET ENJOYMENT. Lessor covenants that, upon payment by
Lessee of all rents and the performance by Lessee of all obligations pursuant to
this Lease, Lessee shall and may peaceably and quietly have and enjoy the Leased
Assets for and during the Initial Term and any Renewal Term of this Lease,
pursuant to the terms hereof, free from any hindrance from any person or persons
whomsoever claiming by, through or under Lessor.
SECTION 14. DEFAULT. If the Lessee defaults in fulfilling any of its
material covenants or obligations hereunder, or if the Lessee does not fully
make all payments of rent when due under this Lease, Lessor at its option may
terminate and end this Lease and recover the Leased Assets provided that Lessee
has been given written notice by Lessor and that Lessee has not made full
payment of the rent and cured all other such defaults, if any, within fifteen
(15) days following such notice. Furthermore, if Lessee fails to make a payment
of Rent hereunder when due, Lessee shall be liable for and pay to Lessor a late
payment charge at the rate of eighteen percent (18%) per annum, computed from
the date said payment was due until the date said payment is actually made. In
the event of a default hereunder, other than the nonpayment of rent or other
monetary obligation, the Lessor shall have the right to terminate this Lease if
Lessee does not cure such default within thirty (30) days of written notice from
Lessor. In the event of said defaults, in addition to said termination rights,
Lessor shall have all other rights and remedies to which it may be entitled. A
waiver by the Lessor of any breach of this Lease or any terms, conditions or
promises herein contained must be in writing to be effective and shall not be or
construed to be a waiver of any subsequent breach of the same or any other term,
condition or promise herein and the payment by the Lessee and acceptance by the
Lessor of rent hereunder shall not be construed to be a waiver of any breach of
terms or conditions herein except as to the particular installment of rent so
paid and accepted.
SECTION 15. SURRENDER OF LEASED ASSETS. Subject to the expiration and
termination provisions of Section 1 hereof, and in accordance with Subsection
3(b) hereof, Lessee, upon the expiration of the Initial Term or Renewal Term of
this Lease or the earlier termination of this Lease, shall surrender to Lessor
the Leased Assets.
<PAGE> 156
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SECTION 16. NOTICES. All notices, demands and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, delivered by personal delivery, or sent by commercial delivery service
or certified mail, return receipt requested, (ii) deemed to have been given the
date of personal delivery, or the date set forth in the records of the delivery
service or on the return receipt, and (iii) addressed as follows:
If to Lessor: Paxson Communications of Seattle-24, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Lowell W. Paxson
with a copy Dow, Lohnes & Albertson
(which shall A Professional Limited Liability Company
not constitute 1200 New Hampshire Avenue, N.W.,
notice) to: Suite 800
Washington, D.C. 20036-6802
Attention: John R. Feore, Jr., Esq.
If to Lessee: World Television of Washington, L.L.C.
6611 Santa Monica Boulevard
Los Angeles, CA 90038-1311
Attention: Larry Rogow
with a copy Michael Couzens, Esq.
(which shall 5337 College Avenue
not constitute Suite 610
notice) to: Oakland, CA 94618
or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
16.
SECTION 17. PROPERTY INSURANCE.
(a) Lessor shall, at its expense, obtain and maintain during
the Initial Term and Renewal Term of this Lease, "All Risk", hazard insurance on
the Leased Assets. Such insurance shall cover at least all risks customarily
insured against in the broadcasting industry, subject to standard deductibles.
<PAGE> 157
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(b) Lessee hereby releases Lessor from and holds Lessor
harmless against any and all claims that Lessee may hereafter have for loss,
theft, disappearance, damage or destruction of the Leased Assets, regardless of
the cause thereof. Notwithstanding the generality of the foregoing, this release
shall not apply to any grossly negligent, willful or wanton act of the Lessor,
its employees, agents or representatives. In the event that insurance on the
Leased Assets was in force at the time of such loss, theft, disappearance,
damage or destruction, Lessee agrees to take all necessary action to make this
release effective and binding upon its insurance carriers so that such carriers
specifically waive all right of subrogation, if any, that such carriers might
otherwise have against Lessor and its employees, agents or contractors.
SECTION 18. TAXES. During the term hereof, Lessor agrees to pay all
personal property taxes assessed against the Leased Assets within thirty (30)
days of its receipt of a true and correct statement.
SECTION 19. CAPTIONS. The captions or headings of sections in this
Lease are inserted for convenience only and shall not be considered in
construing the provisions hereof.
SECTION 20. COVENANTS TO BIND AND BENEFIT RESPECTIVE PARTIES. This
Lease shall inure to the benefit of and be binding upon the successors and
assigns of Lessor and Lessee.
SECTION 21. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Any
and all representations, warranties and covenants contained in this Lease shall
survive the execution of the Lease and shall continue in full force and effect
during the Initial Term and any Renewal Term hereof.
SECTION 22. COUNTERPARTS. More than one counterpart of this Lease may
be executed by the parties hereto and each duly executed counterpart shall be
deemed an original.
SECTION 23. ATTORNEYS FEES. In the event an action is brought to
enforce or construe any of the terms or conditions of this Lease, the prevailing
party shall be entitled to reasonable attorneys' fees and costs.
SECTION 24. MISCELLANEOUS.
(a) This Lease shall be governed by the laws of the State of
Florida and may be modified or amended only by a writing, signed by the party
against whom the amendment or modification is sought to be enforced.
<PAGE> 158
- 11 -
(b) Failure of either party to exercise its rights hereunder
shall not operate as a waiver of the future exercise of such right.
SECTION 25. ENTIRE AGREEMENT. This Lease, including the exhibits
hereto, sets forth the entire understanding of the parties hereto at the time of
execution and delivery hereof with respect to the subject matter hereof.
SECTION 26. WAIVER OF JURY TRIAL. To the extent they may lawfully do
so, the parties hereto irrevocably waive all rights to a trial by jury in any
proceeding hereinafter instituted by or against either party in respect of this
Lease.
<PAGE> 159
- 12 -
IN WITNESS WHEREOF, the parties have executed this Lease Agreement as
of the date first set forth above.
WORLD TELEVISION OF WASHINGTON, L.L.C.
By: /s/ Frank Washington
---------------------------------------------------
Name: Frank Washington
Title: President
PAXSON COMMUNICATIONS OF SEATTLE-24, INC.
By: /s/ Anthony L. Morrison
---------------------------------------------------
Name: Anthony L. Morrison
Title: Vice President
<PAGE> 160
EXHIBIT A
Leased Assets
<PAGE> 161
================================================================================
CONSTRUCTION AGREEMENT
BY AND BETWEEN
WORLD TELEVISION OF WASHINGTON, L.L.C.
AND
PAXSON COMMUNICATIONS OF
SEATTLE-24, INC.
FOR
TELEVISION STATION KBCB(TV)
BELLINGHAM, WASHINGTON
* * *
AUGUST 19, 1996
================================================================================
<PAGE> 162
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1. DEFINITIONS.................................................................................1
SECTION 2. THE WORK....................................................................................2
SECTION 3. COMPLETION OF THE WORK......................................................................3
SECTION 4. COST OF THE WORK............................................................................3
SECTION 5. BUDGET......................................................................................3
SECTION 6. CONTRACTOR'S CONSTRUCTION OBLIGATIONS.......................................................4
SECTION 7. SUBCONTRACTORS..............................................................................5
SECTION 8. PROTECTION OF PERSONS AND PROPERTY..........................................................5
SECTION 9. INSURANCE...................................................................................5
SECTION 10. DAMAGES.....................................................................................6
SECTION 11. TERMINATION.................................................................................6
SECTION 12. MISCELLANEOUS PROVISIONS....................................................................6
SECTION 13. COUNTERPARTS................................................................................8
</TABLE>
<PAGE> 163
CONSTRUCTION AGREEMENT
THIS CONSTRUCTION AGREEMENT (the "Agreement") is entered into as of
this 19th day of August, 1996, by and between PAXSON COMMUNICATIONS OF SEATTLE-
24, INC., a Florida corporation ("Contractor"), and WORLD TELEVISION OF
WASHINGTON, L.L.C., a Delaware limited liability company ("Permittee").
W I T N E S S E T H
WHEREAS, Permittee holds a construction permit issued by the Federal
Communications Commission ("FCC") for new television station KBCB(TV), Channel
24, Bellingham, Washington, FCC File Nos. BMPCT-950821KE; BMPCT-960614KE (as
subsequently modified through the date hereof, the "Construction Permit");
WHEREAS, Permittee and Contractor have entered into various agreements
relating to the Station including an Option Agreement dated as of the date
hereof; and
WHEREAS, this Agreement provides that Contractor and Permittee shall
permit Contractor to specify the materials and equipment required to construct
the facilities proposed in the Construction Permit for new television station
KBCB(TV), Channel 24, Bellingham, Washington (the "Station"), and to undertake,
following consultation with Permittee, such construction.
NOW THEREFORE, in consideration of the above and of the mutual promises
covenants contained herein and for other good and valuable consideration the
receipt and sufficiency of which are acknowledged hereby, the parties, intending
to be legally bound, agree as follows:
SECTION 1. DEFINITIONS. In addition to the terms which are
elsewhere defined in this Agreement, the following terms shall have the
respective meanings hereinafter set forth:
A. "Budget" shall mean the preliminary budget as agreed to by
Permittee and Contractor, as described in Exhibit A attached hereto, as such
Budget may be amended in accordance with Section 6 of this Agreement.
B. "Contract Documents" shall mean this Agreement, all
authorizations issued to the Permittee for the Station's operation and
construction, the Plans and Specifications and the Budget.
<PAGE> 164
- 2 -
C. "Plans and Specifications" shall mean the plans and
specifications described in Exhibit B attached hereto, and as supplemented from
time to time with the agreement of Contractor and Permittee.
D. "Work" shall mean all labor, materials and equipment
necessary or appropriate for the construction of the facilities described in the
Plans and Specifications as authorized in the Construction Permit.
SECTION 2. THE WORK.
A. Contractor agrees to do the following at Contractor's
expense:
(i) Within 30 days of the execution of this
Construction Agreement, to recruit, qualify and appoint a principal officer who
shall be ultimately responsible for all aspects of the construction project,
including oversight and control of employees, agents and subcontractors, and
communication with and receipt of ultimate direction from Permittee, and
delegated directions from Contractor. Together with any firm or organization in
which the principal officer may be an executive, this person shall be referred
to as the Contract Officer.
(ii) In consultation with Permittee, specify for the
purchase or lease by Contractor of the equipment, supplies and materials
necessary or appropriate for the construction and installation of the facilities
described in the Plans and Specifications and as authorized in the Construction
Permit; and
(iii) With the concurrence of the Permittee and under
the overall direction of the Contract Officer, construct and/or install the
facilities described in the Plans and Specifications in accordance with the
Construction Permit and all applicable zoning, building or other governmental
laws, ordinances or regulations.
B. Permittee has done or agrees to do the following:
(i) Maintain in effect the Construction Permit, as it
may be modified, including the filing, if necessary, of an application to extend
the expiration date of the Construction Permit;
(ii) File with the FCC or any other governmental
agency and prosecute to the full extent any amendments to the Construction
Permit and any other applications which may be necessary for the implementation
of the Construction Permit, the
<PAGE> 165
- 3 -
construction of the Station, and the commencement and continuation of the
Station's operations as proposed in the Construction Permit;
(iii) Prepare and timely file with the FCC
applications for Program Test Authority and for license for the constructed
facilities in accordance with the rules and regulations of the FCC; and
(iv) Cooperate with Contractor in timely filing and
obtaining any zoning, building and other permits that are required in connection
with the Plans and Specifications and the Work and execute the necessary
documents and agreements provided by Contractor in accordance with his
obligations hereunder.
SECTION 3. COMPLETION OF THE WORK.
A. The Work shall be commenced upon the execution of this
Agreement and shall be completed or substantially completed no later than
September 1, 1998; provided, however, that the parties agree that such date
shall be extended by reason of strikes, labor troubles, inability to procure
material, failure of power, governmental actions or inactions, riots,
insurrection, war or other reasons beyond the control of the parties. Time is of
the essence of this Construction Agreement.
B. The Work shall be deemed to be substantially complete when
(i) construction is sufficiently complete, in accordance with the Contract
Documents, so that the Station may begin operating pursuant to Program Test
Authority under FCC rules using the facilities proposed in the Construction
Permit and (ii) all permits, modifications of permits, authorizations and
licenses necessary to operate such facilities have been obtained. Any Work
required by the Contract Documents which remains to be completed after the date
of substantial completion shall, if reasonably feasible, be completed by
Contractor within ninety (90) days after the date of substantial completion.
SECTION 4. COST OF THE WORK. Contractor shall be responsible for the
entire cost of the Work.
SECTION 5. BUDGET. Permittee and Contractor acknowledge and agree that
the Budget represents the estimated cost of the Work. Promptly after the date
hereof, Contractor shall obtain firm bids from responsible manufacturers,
suppliers, and contractors approved by Permittee for the performance of the Work
or portions thereof, and shall supply copies of all bids to Permittee. Upon
receipt of the bids and upon the agreement by Permittee and Contractor to accept
those bids, Contractor shall accept the bids and the Budget shall be adjusted to
conform to the bids.
<PAGE> 166
- 4 -
SECTION 6. CONTRACTOR'S CONSTRUCTION OBLIGATIONS.
A. Contractor shall supervise and direct the Work, using its
best skill and attention and, subject to the concurrence of Permittee, shall be
responsible for all construction means, methods, techniques, sequences and
procedures and for coordinating all portions of the Work under this Agreement.
B. Contractor shall be responsible to the Permittee for the
acts and omissions of Contractor's employees, contractors, subcontractors and
other persons providing or performing any of the Work.
C. Unless otherwise provided in the Contract Documents,
Contractor shall provide all labor, materials, equipment, tools, construction,
equipment and machinery, water, heat, utilities, transportation and other
facilities and services necessary for the proper execution and completion of the
Work, whether temporary or permanent and whether or not incorporated or to be
incorporated in the Work.
D. Contractor shall at all times enforce strict discipline and
good order among any person working at the construction site.
E. Contractor warrants to Permittee that all materials and
equipment furnished under this Contract will be new, unless otherwise specified
in Exhibit A, and that all Work will be of good quality, free from faults and
defects and in conformance with the Contract Documents.
F. Contractor shall comply with all laws, ordinances, rules,
regulations and lawful orders of any public authority bearing on the performance
of the Work.
G. Contractor shall prepare and submit to Permittee an
estimated progress schedule for the Work. The progress schedule shall be related
to the entire project to the extent required by the Contract Documents and shall
provide for expeditious and practicable completion of the Work.
H. Contractor at all times shall keep the construction site
free from accumulation of waste material or rubbish caused by the Work. At the
completion of the Work, Contractor shall remove or cause to be removed all waste
materials and rubbish from and about the construction site and tools,
construction equipment, machinery and surplus materials.
<PAGE> 167
- 5 -
SECTION 7. SUBCONTRACTORS. By an appropriate written agreement,
Contractor shall require each subcontractor retained by Contractor to be bound
by the terms of the Contract Documents, and to assume all the obligations and
responsibilities which Contractor, by those documents, assumes toward Permittee.
SECTION 8. PROTECTION OF PERSONS AND PROPERTY.
A. Contractor shall take all reasonable precautions for the
safety of, and shall provide all reasonable protection to prevent damage, injury
or loss to:
(i) all individuals employed to perform the Work;
(ii) all materials and equipment to be used in the
Work, whether in storage, on or off the site, under the care, custody or control
of Contractor or any of its subcontractors; and
(iii) other property at the site or adjacent thereto.
B. Contractor shall give all notices and comply with all
applicable laws, ordinances, rules, regulations and lawful orders of any public
authority bearing on the safety of persons or property or their protection from
damage, injury or loss.
SECTION 9. INSURANCE.
A. Contractor shall purchase and maintain or cause to be
purchased and maintained such insurance as will protect Contractor and Permittee
from claims set forth below which may arise out of or result from the Work,
whether such operations be by Contractor or by any subcontractor or by anyone
directly or indirectly employed by any of them, or by anyone for whose acts any
of them may be liable:
(i) claims under workmen's compensation, disability
benefit and other similar employee benefit acts;
(ii) claims for damages because of bodily injury,
occupational sickness or disease, or death;
(iii) claims for damages insured by usual personal
injury liability coverage which are sustained (1) by any person as a result of
an offense directly or indirectly related to the employment of such person by
Contractor, or (2) by any other person;
<PAGE> 168
- 6 -
(iv) claims for damages, other than to the Work
itself, because of injury to or destruction of tangible property; and
(v) claims for damages because of bodily injury or
death or any property damage arising out of the ownership, maintenance or use of
any motor vehicle in respect of the Work.
B. The insurance required by this Section shall be written for
not less than the limits of liability agreed to by Contractor and Permittee or
required by law, whichever is greater.
C. Certificates of Insurance naming Permittee as an additional
insured and otherwise acceptable to Permittee and Contractor shall be delivered
to Permittee prior to commencement of the Work. These Certificates shall contain
a provision that coverage afforded under the policies will not be canceled until
at least thirty (30) days' prior written notice has been given to the Permittee.
D. Contractor shall also purchase and maintain property
insurance upon the entire Work to the full insurable value thereof. This
insurance shall insure against the perils of fire and extended coverage, shall
include "all risk" insurance for physical loss or damage including, without
duplication of coverage, theft, vandalism and malicious mischief and shall
provide that all proceeds from such insurance shall go to Contractor.
SECTION 10. DAMAGES. In the event of a default by Contractor of its
obligations under this Agreement or the failure of Contractor to complete the
Work, Contractor shall not be liable to Permittee for any consequential damages
as a result of such failure or delay. The sole liability of Contractor to
Permittee shall be for the full cost and expense of completing the Work in
accordance with the Contract Documents and the Plans and Specifications.
SECTION 11. TERMINATION. This Agreement shall terminate, and neither
party shall have any further obligation hereunder, upon the earlier to occur of
(a) the completion of the Work or (b) the Closing (as defined in the Asset
Purchase Agreement).
SECTION 12. MISCELLANEOUS PROVISIONS.
A. The Contract shall be governed by the laws of the State of
Florida applicable to contracts made and to be performed there, without
reference to the principles of the conflicts of law.
<PAGE> 169
- 7 -
B. Permittee and Contractor each binds itself and its
successors, assigns and legal representatives to the other party hereto and to
the successors, assigns and legal representatives of such other party with
respect to all covenants, agreements and obligations contained in the Contract
Documents.
C. The parties hereto agree to cooperate fully with each other
in preparing, filing, prosecuting, advocating grant, and taking any other
actions necessary with respect to any applications or actions which are or may
be necessary to obtain the consent of the FCC or of any other governmental
instrumentality, or any third party to, or are or may be necessary or helpful in
order to accomplish the transactions contemplated by this Agreement.
D. All notices, demands and requests required or permitted to
be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery or sent by commercial delivery service or
certified mail, return receipt requested, (iii) deemed to have been given on the
date of personal delivery, the date set forth in the records of the delivery
service or on the return receipt, and (iv) addressed as follows::
If to Permittee: World Television of Washington, L.L.C.
6611 Santa Monica Boulevard
Los Angeles, CA 90038-1311
Attention: Larry Rogow
If to Contractor: Paxson Communications of Seattle-24, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell Paxson
or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
12.D.
E. No action or failure to act by Permittee or Contractor
shall constitute a waiver of any right or duty afforded any of them under this
Agreement, nor shall any such action or failure to act constitute an approval of
or acquiescence in any breach thereunder, except as may be specifically agreed
in writing.
F. If the Contract Documents, laws, ordinances, rules,
regulations or orders or any public authority having jurisdiction require any
portion of the Work to be inspected, tested or approved, Contractor shall give
Permittee timely notice of its readiness so Permittee may observe such
inspection, testing or approval.
<PAGE> 170
- 8 -
G. Permittee's and Contractor's respective obligations
hereunder are unique and valuable and not readily subject to compensation by
money damages alone. Accordingly, in the event either party should breach its
obligations under this Agreement, the other party shall be entitled to an order
directing specific performance from a court of competent jurisdiction, in
addition to all other remedies at law or in equity.
H. In the event of a default by either party which results in
a lawsuit or other proceeding for any remedy under this Construction Agreement,
the prevailing party shall be entitled to reimbursement from the other party of
its reasonable legal fees and expenses.
SECTION 13. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures on all counterparts were
upon the same instrument.
<PAGE> 171
- 9 -
IN WITNESS WHEREOF, Permittee and Contractor have executed this
Construction Agreement as of the date first above written.
PAXSON COMMUNICATIONS OF
SEATTLE-24, INC.
By: /s/ Anthony L. Morrison
--------------------------------------
Name: Anthony L. Morrison
Title: Vice President
WORLD TELEVISION OF WASHINGTON,
L.L.C.
By:
--------------------------------------
Name:
Title:
<PAGE> 172
EXHIBIT A
BUDGET
<PAGE> 173
EXHIBIT B
PLANS AND SPECIFICATIONS
CONSTRUCTION PERMIT
<PAGE> 1
EXHIBIT 10.130
===============================================================================
PAXSON COMMUNICATIONS OF
LITTLE ROCK-42, INC.,
LEININGER-GEDDES PARTNERSHIP
AND
CHANNEL 42 OF LITTLE ROCK, INC.
* * *
TELEVISION STATION KVUT(TV)
LITTLE ROCK, ARKANSAS
* * *
STOCK PURCHASE AND
RELATED TRANSACTIONS
* * *
AUGUST 21, 1996
===============================================================================
<PAGE> 2
TELEVISION STATION KVUT(TV)
LITTLE ROCK, ARKANSAS
* * *
STOCK PURCHASE AND
RELATED TRANSACTIONS
* * *
AUGUST 21, 1996
* * *
INDEX
TAB
---
<TABLE>
<S> <C>
Stock Purchase Agreement (with Exhibits) by and among Paxson
Communications of Little Rock-42, Inc. ("Paxson-42"), Leininger-
Geddes Partnership ("Leininger-Geddes") and Channel 42 of Little
Rock, Inc. ("Channel 42"), dated as of August 21, 1996 . . . . . . . . . . . A
Escrow Agreement (with Exhibit) by and among Paxson-42,
Leininger-Geddes, Channel 42 and First Union National Bank of
Florida, dated as of August 21, 1996 . . . . . . . . . . . . . . . . . . . . B
Time Brokerage Agreement (with Attachments) by and between
Channel 42 and Paxson-42, dated as of August 21, 1996 . . . . . . . . . . . . C
Construction Agreement (with Exhibits) by and between Paxson-42
and Channel 42, dated as of August 21, 1996 . . . . . . . . . . . . . . . . . D
</TABLE>
<PAGE> 3
================================================================================
STOCK PURCHASE AGREEMENT
BY AND AMONG
CHANNEL 42 OF LITTLE ROCK, INC.,
PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
AND
LEININGER-GEDDES PARTNERSHIP
FOR
TELEVISION STATION KVUT(TV)
LITTLE ROCK, ARKANSAS
AUGUST 21, 1996
================================================================================
<PAGE> 4
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. CERTAIN DEFINITIONS............................................ 2
Section 1.1 Terms Defined in this Section ......................... 2
Section 1.2 Clarifications ........................................ 5
ARTICLE 2. THE INITIAL CLOSING............................................ 5
Section 2.1 The Initial Closing ................................... 5
Section 2.2 Sale of Initial Shares ................................ 6
Section 2.3 Purchase Price ........................................ 6
ARTICLE 3. ACTIONS TO BE TAKEN PRIOR TO THE INITIAL CLOSING............... 6
Section 3.1 Organization of the Company ........................... 6
Section 3.2 Pro Forma FCC Consent ................................. 6
Section 3.3 Assignment of Construction Permit ..................... 6
Section 3.4 Conduct Pending the Initial Closing ................... 7
Section 3.5 Extension Application ................................. 7
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER
REGARDING THE INITIAL CLOSING.................................. 7
Section 4.1 Organization and Standing ............................. 7
Section 4.2 Power and Authority ................................... 7
Section 4.3 Conflicts ............................................. 8
Section 4.4 Investment ............................................ 8
Section 4.5 Qualifications ........................................ 8
Section 4.6 Broker ................................................ 8
Section 4.7 Disclosure ............................................ 8
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE
COMPANY REGARDING THE INITIAL CLOSING.......................... 9
Section 5.1 Organization and Standing ............................. 9
Section 5.2 Power and Authority ................................... 9
Section 5.3 Conflicts ............................................. 9
Section 5.4 Exchange Act; investment Company Act .................. 10
Section 5.5 Capitalization ........................................ 10
Section 5.6 Assets and Liabilities of the Company ................. 10
Section 5.7 Broker ................................................ 10
Section 5.8 Expenses .............................................. 10
Section 5.9 Disclosure ............................................ 11
</TABLE>
- i -
<PAGE> 5
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE 6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
AT THE INITIAL CLOSING......................................... 11
Section 6.1 Representations and Warranties ........................ 11
Section 6.2 Covenants and Conditions .............................. 11
Section 6.3 Contribution .......................................... 11
Section 6.4 Deliveries ............................................ 11
Section 6.5 No Event of Default ................................... 12
Section 6.6 Adverse Proceedings ................................... 12
Section 6.7 Extension Application ................................. 12
ARTICLE 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
AND THE COMPANY AT THE INITIAL CLOSING ........................ 13
Section 7.1 Representations and Warranties ........................ 13
Section 7.2 Covenants and Conditions .............................. 13
Section 7.3 Deliveries ............................................ 13
Section 7.4 Adverse Proceedings ................................... 14
ARTICLE 8. CONSTRUCTION AND OPERATION OF THE STATION...................... 14
Section 8.1 General ............................................... 14
Section 8.2 FCC Consent ........................................... 14
Section 8.3 Employee Benefit Plans ................................ 15
Section 8.4 Labor Relations ....................................... 15
Section 8.5 Licenses .............................................. 15
Section 8.6 Compliance with Laws .................................. 15
Section 8.7 Construction of the Station ........................... 15
Section 8.8 Notification .......................................... 15
Section 8.9 Preservation of Business .............................. 16
Section 8.10 Performance of Agreements ............................. 16
Section 8.11 Cable Carriage ........................................ 16
Section 8.12 Execution of Tower Lease .............................. 16
Section 8.13 Modification Application .............................. 16
ARTICLE 9. THE OPTIONS AND THE SECOND CLOSING............................. 16
Section 9.1 Call Option ........................................... 16
Section 9.2 Put Option ............................................ 17
Section 9.3 The Second Closing .................................... 17
Section 9.4 Sale of Option Shares ................................. 18
Section 9.5 Purchase Price for Option Shares ...................... 18
</TABLE>
- ii -
<PAGE> 6
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE 10. REPRESENTATIONS AND WARRANTIES OF BUYER
REGARDING THE SECOND CLOSING................................. 18
ARTICLE 11. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY AND SELLER REGARDING THE SECOND CLOSING.............. 18
Section 11.1 Contracts ............................................. 19
Section 11.2 Copyrights, Trademarks and Similar Rights ............. 19
Section 11.3 Governmental Authorizations ........................... 19
Section 11.4 Title to and Condition of Real Property ............... 19
Section 11.5 Title to and Condition of Tangible Personal Property .. 19
Section 11.6 Compliance With Laws .................................. 20
Section 11.7 Reports ............................................... 20
Section 11.8 Public Inspection File ................................ 20
Section 11.9 Taxes ................................................. 20
Section 11.10 Dividends and Redemptions ............................. 20
Section 11.11 Notices; Condemnation ................................. 20
Section 11.12 Liabilities of the Company ............................ 21
Section 11.13 Disclosure ............................................ 21
ARTICLE 12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
AT THE SECOND CLOSING........................................ 21
Section 12.1 Representations and Warranties ........................ 21
Section 12.2 Covenants and Conditions .............................. 21
Section 12.3 FCC Consent ........................................... 21
Section 12.4 Consents .............................................. 22
Section 12.5 Deliveries ............................................ 22
Section 12.6 Adverse Proceedings ................................... 23
Section 12.7 Time Brokerage Agreement .............................. 23
Section 12.8 No Event of Default ................................... 23
Section 12.9 Adverse Change ........................................ 23
ARTICLE 13. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER AND THE COMPANY
AT THE SECOND CLOSING ........................................ 23
Section 13.1 Representations and Warranties ........................ 23
Section 13.2 Covenants and Conditions .............................. 23
Section 13.3 FCC Consent ........................................... 23
Section 13.4 Consents .............................................. 24
Section 13.5 Deliveries ............................................ 24
Section 13.6 Time Brokerage Agreement .............................. 24
</TABLE>
- iii -
<PAGE> 7
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 13.7 Adverse Proceedings.................................... 24
ARTICLE 14. JOINT COVENANTS.............................................. 24
Section 14.1 Confidentiality ....................................... 24
Section 14.2 Cooperation ........................................... 25
Section 14.3 Governmental Consents ................................. 25
Section 14.4 Station Operation ..................................... 25
ARTICLE 15. TRANSFER TAXES; FEES AND EXPENSES............................ 25
Section 15.1 Transfer Taxes ........................................ 25
Section 15.2 Filing Fees ........................................... 26
Section 15.3 Expenses .............................................. 26
ARTICLE 16. ESCROW DEPOSIT............................................... 26
Section 16.1 Escrow Deposit ........................................ 26
ARTICLE 17. RISK OF LOSS................................................. 27
Section 17.1 Risk of Loss .......................................... 27
Section 17.2 Postponement of the Second Closing Date ............... 27
Section 17.3 Option to Terminate ................................... 27
ARTICLE 18. TERMINATION RIGHTS........................................... 27
Section 18.1 Termination by the Parties ............................ 27
Section 18.2 Termination by Buyer .................................. 28
Section 18.3 Effect of Termination ................................. 28
ARTICLE 19 SPECIFIC PERFORMANCE ........................................ 29
ARTICLE 20. INDEMNIFICATION.............................................. 29
Section 20.1 Seller's and the Company's Indemnification ............ 29
Section 20.2 Buyer's Indemnification ............................... 29
Section 20.3 Notice of Claim ....................................... 29
Section 20.4 Assumption and Defense of Third-Party Action .......... 30
Section 20.5 Limitation Period ..................................... 30
ARTICLE 21. OTHER PROVISIONS............................................. 30
Section 21.1 Survival of Representations, Warranties and Covenants . 30
Section 21.2 Press Releases ........................................ 30
Section 21.3 Further Assurances .................................... 31
Section 21.4 Benefit and Assignment ................................ 31
</TABLE>
- iv -
<PAGE> 8
<TABLE>
<CAPTION>
Page
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<S> <C>
Section 21.5 Entire Agreement ...................................... 31
Section 21.6 Headings .............................................. 31
Section 21.7 Governing Law ......................................... 31
Section 21.8 Notices ............................................... 31
Section 21.9 Counterparts .......................................... 32
Section 21.10 Defined Terms ......................................... 32
</TABLE>
- v -
<PAGE> 9
EXHIBITS AND SCHEDULES TO
STOCK PURCHASE AGREEMENT
EXHIBITS
EXHIBIT A - Loan Agreement
EXHIBIT B - Shareholders Agreement
SCHEDULES
Schedule 5.6 - Assets
Schedule 5.8 - Financial Statement
Schedule 6.4(f) - Opinion of FCC Counsel to Seller and the Company
(Initial Closing)
Schedule 12.5(h) - Opinion of FCC Counsel to Seller and the Company
(Second Closing)
- vi -
<PAGE> 10
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is dated as of the 21st
day of August, 1996, by and among CHANNEL 42 OF LITTLE ROCK, INC., a Delaware
corporation (the "Company"); PAXSON COMMUNICATIONS OF LITTLE ROCK-42, INC., a
Florida corporation ("Buyer"); and LEININGER-GEDDES PARTNERSHIP, a general
partnership formed under the laws of the State of Alabama ("Seller").
WITNESSETH
WHEREAS, Seller is the holder of a construction permit, File No.
BPCT-850607KO (as subsequently modified through the date hereof, the
"Construction Permit'), issued by the Federal Communications Commission ("FCC")
for new television station KVUT(TV), Channel 42, Little Rock, Arkansas (the
"Station");
WHEREAS, Seller has filed an application with the FCC, File No. BMPCT-
950111KM, requesting the modification of the Construction Permit (the
"Modification Application");
WHEREAS, subject to FCC approval of the pro forma assignment of the
Construction Permit from Seller to the Company, Seller intends to convey the
Construction Permit to the Company in exchange for all of the outstanding common
stock of the Company;
WHEREAS, Buyer desires to purchase from Seller, following the
acquisition of the Construction Permit by the Company, forty-nine percent (49%)
of the outstanding common stock of the Company, subject to the terms and
conditions set forth herein;
WHEREAS, Buyer desires to grant to Seller an option to require Buyer to
purchase the remaining fifty-one percent (51%) of the outstanding common stock
of the Company, and Seller desires to grant to Buyer an option to purchase such
stock, subject to the terms and conditions set forth herein;
WHEREAS, in connection with the foregoing transactions, (a) Buyer and
the Company have entered into a Construction Agreement dated as of the date
hereof, pursuant to which Buyer agrees to provide certain services in connection
with the construction of the Station, and (b) Buyer and the Company have entered
into a Time Brokerage Agreement dated as of the date hereof, pursuant to which,
upon completion of construction of the Station and commencement of broadcast
operations, Buyer shall provide programming for broadcast on the Station,
subject to the rules, regulations and policies of the FCC;
<PAGE> 11
WHEREAS, upon the acquisition by Buyer of forty-nine percent (49%) of
the outstanding common stock of the Company, (a) Buyer, Seller and the Company
desire to enter into a Shareholders Agreement setting forth, among other things,
certain restrictions relating to the issuance and sale of the capital stock of
the Company, and (b) Buyer, Seller and the Company desire to enter into a Loan
Agreement, pursuant to which Buyer agrees to lend the Company funds for the
payment of expenses incurred by Seller in obtaining the Construction Permit and
maintaining and operating the Station; and
WHEREAS, upon completion of construction of the Station, Buyer and the
Company desire to enter into a Lease Agreement, pursuant to which Buyer agrees
to lease to the Company certain assets used or useful in the business and
operations of the Station.
NOW, THEREFORE, in consideration of these premises and the mutual
covenants, conditions and promises contained herein, and for valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
ARTICLE 1. CERTAIN DEFINITIONS
Section 1.1 Terms Defined in this Section. The following terms, as
used in this Agreement, have the meanings set forth in this Section:
"Closings" means the collective reference to the Initial Closing and
the Second Closing.
"Common Stock" means all of the issued and outstanding shares of
capital stock of the Company, consisting of 1,000 shares of voting common stock,
par value $.01 per share.
"Communications Act" means the Communications Act of 1934, as amended,
the Telecommunications Act of 1996 and the rules and regulations promulgated
thereunder.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Construction
Permit to the Company and to transfer the Common Stock to Buyer or otherwise to
consummate the transactions contemplated by this Agreement.
"Construction Agreement" means the Construction Agreement dated as of
the date hereof, by and between Buyer and the Company.
"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 the Company is a party or that are binding upon the Company
and that relate to or affect the assets or the business or operations of the
Station, and (a) that are in effect on the date of
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<PAGE> 12
this Agreement or (b) that are entered into by the Company between the date of
this Agreement and the Second Closing Date.
"Escrow Agent" means First Union National Bank of Florida.
"Escrow Agreement" means the Escrow Agreement dated as of the date here
of, by and among Buyer, Seller, the Company and the Escrow Agent.
"Escrow Deposit" means the sum of One Hundred Thousand Dollars
($100,000) in cash deposited by Buyer with the Escrow Agent pursuant to the
Escrow Agreement.
" FCC Consent" means action by the FCC granting its consent to the
transfer of control of the Company as contemplated by Article 9 of this
Agreement.
"FCC Licenses" means those licenses, permits, and authorizations issued
by the FCC in connection with the business and operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Initial Closing" means the consummation of the purchase and sale of
the Initial Shares pursuant to this Agreement in accordance with the provisions
of Article 2.
"Initial Closing Date" means the date on which the Initial Closing
occurs, as determined pursuant to Section 2.1.
"Initial Shares" means 490 shares of the voting common stock, par value
$.01 per share, of the Company.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by the
Company or under which the Company is licensed or franchised and that are used
or useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Second Closing
Date.
"Lease Agreement" means the Lease Agreement to be entered into upon
completion of construction of the Station, by and between Buyer and the Company,
substantially in the form of Exhibit C to the Construction Agreement.
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<PAGE> 13
"Licenses" means all licenses, permits, construction permits, and other
authorizations issued as of the date hereof by the FCC, the Federal Aviation
Administration, or any other federal, state, or local governmental authorities
for the construction or operation of the Station, together with any additions
thereto between the date of this Agreement and the Second Closing Date.
"Loan Agreement" means the Loan Agreement to be entered into by Buyer,
Seller and the Company, substantially in the form of Exhibit A.
"Loan Documents" means the Loan Agreement and the promissory notes,
security agreement, pledge agreements, leasehold mortgage and other documents
executed and delivered in connection with the Loan Agreement.
"Option Shares" means 510 shares of the voting common stock, par value
$.01 per share, of the Company.
"Pro Forma FCC Consent" means the action by the FCC granting its
consent to the proforma assignment of the Construction Permit from Seller to the
Company.
"Promissory Note" means the promissory note to be issued by Seller in
connection with the Loan Agreement.
"Real Property" means all real property, and all buildings and other
improvements thereon, whether or not owned or held by Seller or the Company,
used or useful in the business or operations of the Station.
"Real Property Interests" means all interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings and
other improvements thereon, owned or held by Seller or the Company that are used
or useful in the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Second Closing
Date.
"Second Closing" means the consummation of the purchase and sale of the
Option Shares pursuant to this Agreement in accordance with the provision of
Article 9.
"Second Closing Date" means the date on which the Second Closing
occurs, as determined pursuant to Section 9.3.
"Shareholders Agreement" means the Shareholders Agreement to be entered
into upon the Initial Closing by and among Buyer, Seller and the Company,
substantially in the form of Exhibit B.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts, and other
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<PAGE> 14
tangible personal property owned or held by Seller or the Company that is used
or useful in the conduct of the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Second
Closing Date.
"Taxes" (and, with correlative meaning, "Taxes" and "Taxable") means
all federal, state, local or foreign income, gross receipts, windfall profits,
severance, property, production, sales, use, license, excise, franchise,
capital, transfer, employment, withholding and other taxes and assessments,
together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties, and "Tax" means any one of
such Taxes.
"Tax Returns" means all federal, state, local and foreign income,
franchise, sales, use, occupation, property, excise, alternative or add-on
minimum, social security, employees' withholding, unemployment, disability,
transfer, capital stock and other tax returns and tax reports, and "Tax Return"
means any one of such Tax Returns.
"Time Brokerage Agreement" means the Time Brokerage Agreement dated as
of the date hereof, by and between Buyer and the Company.
"Tower Lease" means a commercially reasonable lease or option to lease,
in form and substance acceptable to Buyer, to be entered into by the Company for
the construction, operation and maintenance of the Station's transmission
facilities at the transmitter site specified in the Modification Application or
at an alternate site acceptable to Buyer.
"Transaction Documents" means the Lease Agreement, Loan Documents,
Construction Agreement, Time Brokerage Agreement and Shareholders Agreement.
Section 1.2 Clarifications. Words used herein, regardless of the gender
and number specifically used, shall be deemed and construed to include any other
gender and any other number as the context requires. Use of the word "including'
herein shall be deemed and construed to mean "including but not limited to."
Except as specifically otherwise provided in this Agreement in a particular
instance, a reference to a Section, Exhibit or Schedule is a reference to a
Section of this Agreement or a Schedule or an Exhibit hereto, and the terms
"hereof," "herein" and other like terms refer to this Agreement as a whole,
including the Schedules and Exhibits hereto, and not solely to any particular
part hereof.
ARTICLE 2. THE INITIAL CLOSING
Section 2.1 The Initial Closing. The Initial Closing shall take place
at 10:00 a.m., Washington, D.C. time, on a date to be set by Buyer on no less
than five (5) days' written notice to Seller, which date shall not be sooner
than the first business day after the date on which the Pro Forma FCC Consent
has become a Final Order and shall not be later than the tenth business day
after the date on which the Pro Forma FCC Consent has become a Final Order,
subject to the satisfaction of all other conditions precedent to the holding of
the Initial
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<PAGE> 15
Closing. The Initial Closing shall take place at the offices of Dow, Lohnes &
Albertson, 1200 New Hampshire Avenue, N.W., Suite 800, Washington, D.C. 20036,
or such other place as the parties shall mutually agree. If Buyer fails to
specify the date for Initial Closing prior to the fifth business day after the
date upon which the Pro Forma FCC Consent has become a Final Order, the Initial
Closing shall take place on the tenth business day after the date upon which the
Pro Forma FCC Consent has become a Final Order. In the event that all other
conditions precedent to the holding of the Initial Closing shall not have been
satisfied on or before the date on which the Pro Forma FCC Consent has become a
Final Order, the Initial Closing shall take place at 10:00 a.m. Washington, D.C.
time, on a date to be set by Buyer on no less than five (5) days' written notice
to Seller, which date shall not be sooner than the first business day after the
date on which such other conditions shall have been satisfied, and shall not be
later than the tenth business day after the date on which such other conditions
shall have been satisfied.
Section 2.2 Sale of Initial Shares. Subject to the terms and conditions
set forth in this Agreement, Seller hereby agrees to sell, transfer and deliver
to Buyer on the Initial Closing Date, and Buyer agrees to purchase, the Initial
Shares, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges or encumbrances of any nature
whatsoever, except as may be created or imposed by this Agreement or the
Transaction Documents.
Section 2.3 Purchase Price. The purchase price for the Initial Shares
(the "Purchase Price") shall be One Hundred Twenty-Seven Thousand Three Hundred
and Five Dollars ($127,305). The Purchase Price shall be paid at the Initial
Closing by Buyer to Seller, in accordance with written instructions provided by
Seller to Buyer no less than two (2) business days prior to the Initial Closing
Date, by wire transfer of immediately available federal funds or other means
mutually satisfactory to Buyer and Seller.
ARTICLE 3. ACTIONS TO BE TAKEN PRIOR TO THE INITIAL CLOSING
Section 3.1 Organization of the Company. Seller shall cause the
Company to be duly qualified to conduct business in the State of Arkansas.
Section 3.2 Pro Forma FCC Consent. Seller and the Company shall
prosecute the application for the Pro Forma FCC Consent with all diligence and
otherwise use its best efforts to obtain a grant of the application for the Pro
Forma FCC Consent as expeditiously as possible.
Section 3.3 Assignment of Construction Permit. Upon the grant of the
Pro Forma FCC Consent, Seller shall contribute the Construction Permit to the
Company in exchange for all of the shares of Common Stock not then owned by
Seller, pursuant to conveyancing documents in form and substance acceptable to
Buyer.
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<PAGE> 16
Section 3.4 Conduct Pending the Initial Closing. Between the date
hereof and the Initial Closing Date, unless Buyer shall otherwise consent in
writing, Seller and the Company covenant and agree:
(a) to perform all acts necessary to carry out the transactions
contemplated by this Agreement and to not: (i) create, incur, assume or
guarantee any indebtedness, obligation or liability or make any payments in
respect thereto except in the ordinary course of business and consistent with
past practices; (ii) encumber the Common Stock; or (iii) perform or suffer any
acts within its control that are inconsistent with its representations,
warranties, covenants and agreements set forth herein; and
(b) to notify Buyer promptly of (i) any adverse development with
respect to the Modification Application or Pro Forma FCC Consent or (ii) the
commencement or threat of any claim; suit; action; arbitration; legal,
administrative or other proceeding; governmental investigation; or tax audit
against Seller or the Company or affecting the Station; and
(c) to cooperate fully with Buyer in taking any and all actions
necessary or desirable for the consummation of the transactions contemplated by
this Agreement.
Section 3.5 Extension Application. If the Initial Closing shall not
have occurred on or before September 22, 1996, Seller shall file with the FCC an
application requesting a further extension of the Construction Permit (the
"Extension Application") any shall use its best efforts to cause the FCC to
grant the Extension Application as expeditiously as possible.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER
REGARDING THE INITIAL CLOSING
As an inducement to Seller and the Company to enter into this Agreement
and consummate the transactions contemplated to occur upon the Initial Closing,
Buyer represents and warrants to Seller and the Company as follows:
Section 4.1 Organization and Standing. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida and shall be, on or before the Initial Closing Date, duly qualified
to conduct business as a foreign corporation in the State of Arkansas.
Section 4.2 Power and Authority. Buyer has full corporate power and
authority to enter into this Agreement and the other agreements and instruments
contemplated hereby, and to perform and comply with the terms, covenants and
conditions to be performed or complied with by Buyer hereunder and thereunder.
This Agreement and each other agreement or instrument contemplated hereby
constitutes the legal, valid and binding obligations of Buyer, enforceable in
accordance with their terms, except as such
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<PAGE> 17
enforceability may be affected by bankruptcy, insolvency or similar laws and by
court-applied equitable principles.
Section 4.3 Conflicts. The execution and delivery of this Agreement and
the other agreements and instruments delivered or to be delivered by Buyer
pursuant to this Agreement, the consummation of the transactions contemplated by
this Agreement and such other agreements and instruments at the Initial Closing,
and compliance with the terms, conditions and provisions of this Agreement and
such other agreements and instruments at the Initial Closing by Buyer, with or
without the giving of notice or the passage of time, or both, do not and will
not: (i) contravene any provision of Buyer's Articles of Incorporation or
Bylaws; (ii) conflict with or result in a breach of or constitute a default
under any of the terms, conditions or provisions of any indenture, mortgage,
loan or credit agreement or any other agreement or instrument to which Buyer is
a party or by which it or its assets may be bound or affected, or any decree,
judgment or order of any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign, or any applicable law,
ordinance, rule or regulation, including but not limited to the Communications
Act; or (iii) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of Buyer's assets or give to
others any interests or rights therein.
Section 4.4 Investment. Buyer will acquire the Initial Shares for its
own account for investment and not with a present view to distribute or resell
the same.
Section 4.5 Qualifications. Buyer knows of no fact that, under existing
rules and regulations of the FCC, could reasonably be expected to cause the FCC
to determine that Buyer is not qualified to be the transferee of the Initial
Shares.
Section 4.6 Broker Neither Buyer nor any person acting on its behalf
has incurred any liability for any finder's or broker's fees or commissions in
connection with the transactions contemplated by this Agreement, except for such
fees and commissions owed by Buyer to Montcalm, which fees and commissions shall
be the sole responsibility of Buyer.
Section 4.7 Disclosure. No representation or warranty by Buyer in this
Agreement or the Transaction Documents, and no schedule, document, statement,
certificate furnished or to be furnished by Buyer to Seller or the Company
pursuant hereto or thereto, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to make
the statements or facts contained herein or therein not misleading
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<PAGE> 18
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE
COMPANY REGARDING THE INITIAL CLOSING
As an inducement to Buyer to enter into this Agreement and consummate
the transactions contemplated to occur upon the Initial Closing, Seller and the
Company represent and warrant to Buyer as follows:
Section 5.1 Organization and Standing. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and shall be, on or before the Initial Closing, duly qualified
to conduct business in the State of Arkansas. Seller is a general partnership
formed under the laws of the State of Alabama. Neither the conduct by Seller of
its business nor the ownership by Seller of its assets requires Seller to
qualify to conduct business in the State of Arkansas. Seller has delivered to
Buyer true and complete copies of (a) the Partnership Agreement of Seller and
(b) the Certificate of Incorporation and Bylaws of the Company.
Section 5.2 Power and Authority. Seller and the Company each has full
partnership or corporate power and authority, respectively, to enter into this
Agreement and the other agreements and instruments contemplated hereby, and to
perform and comply with the terms, covenants and conditions to be performed or
complied with by Seller or the Company hereunder or thereunder. This Agreement
and each other agreement or instrument contemplated hereby constitutes the
legal, valid and binding obligations of Seller and the Company, as the case may
be, enforceable in accordance with their terms, except as such enforceability
may be affected by bankruptcy, insolvency or similar laws and by court-applied
equitable principles.
Section 5.3 Conflicts. The execution and delivery of this Agreement and
the other agreements and instruments delivered or to be delivered by Seller or
the Company pursuant to this Agreement, the consummation of the transactions
contemplated by this Agreement and such other agreements and instruments at the
Initial Closing, and compliance with the terms, conditions and provisions of
this Agreement and such other agreements and instruments at the Initial Closing
by Seller and the Company, with or without the giving of notice or the passage
of time, or both, assuming that Buyer's representations and warranties are true
and correct and that Buyer complies with all of its obligations and agreements
hereunder and under the other agreements and instruments delivered or to be
delivered by Buyer pursuant hereto, do not and will not: (i) contravene any
provision of the Partnership Agreement of Seller or the Certificate of
Incorporation or Bylaws of the Company, (ii) conflict with or result in a breach
of or constitute a default under any of the terms, conditions or provisions of
any indenture, mortgage, loan or credit agreement or any other agreement or
instrument to which Seller or the Company is a party or by which Seller or the
Company or any of their respective assets may be bound or affected, or any
decree, judgment or order of any court or governmental department, commission,
board, agency or instrumentality, domestic or foreign, or any applicable law,
ordinance, rule or regulation, including but not limited to the Communications
Act; or (iii) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the assets of Seller or the
Company or the Initial Shares or give to others any interests or rights therein.
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<PAGE> 19
Section 5.4 Exchange Act; Investment Company Act. To the best of
Seller's knowledge, no securities of the Company are required to be registered
under Section 12 of the Securities and Exchange Act of 1934, as amended. To the
best of Seller's knowledge, neither Seller nor the Company is an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
Section 5.5 Capitalization. The Company's capital stock consists solely
of One Thousand (1,000) shares of duly authorized voting common stock, with a
par value of $.01 per share, of which One Hundred (100) shares are issued and
outstanding (the "Outstanding Stock"). The Outstanding Stock is and, as of the
Initial Closing, the remaining shares of Common Stock will be, validly issued
and outstanding, fully paid and nonassessable. The Outstanding Stock constitutes
all of the issued and outstanding capital stock of the Company. There are no
outstanding securities convertible into or exchangeable for, and no outstanding
options, warrants or other rights to purchase or to subscribe for, any shares of
capital stock or other securities of the Company, other than as set forth
herein. There are no outstanding agreements, arrangements, commitments or
understandings of any kind affecting or relating to the voting, issuance,
purchase, redemption, repurchase or transfer of any of the capital stock of the
Company, other than as set forth herein or in the Shareholders Agreement or the
Loan Agreement. Except as provided herein, there are no options, warrants,
rights or any other agreement or instrument giving any person any right under
any circumstances to acquire any shares of capital stock of the Company. Seller
has good and valid marketable title to the Outstanding Stock and the sole right
to vote, sell, transfer and deliver the Outstanding Stock. Except as
contemplated by this Agreement, neither the Company nor Seller has agreed with
any person to sell, transfer or deliver the Outstanding Stock or other capital
stock of the Company. Upon the sale of the Initial Shares to Buyer hereunder,
Buyer shall have good and valid marketable title thereto, free and clear of all
liens, encumbrances, security interests and restrictions of any kind.
Section 5.6 Assets and Liabilities of the Company. As of the Initial
Closing Date, the Company shall own and have good and marketable title to the
assets and properties listed on Schedule 5.6, and shall have no debts,
obligations or liabilities of any kind whatsoever, whether accrued, contingent
or otherwise, except those arising under the Transaction Documents and the
Communications Act.
Section 5.7 Broker Neither Seller, the Company nor any person acting on
their behalf has incurred any liability from any finder's or broker's fees or
commissions in connection with the transactions contemplated by this Agreement.
Section 5.8 Expenses. Schedule 5.8 hereto contains a true and complete
list of all expenses incurred by Seller in obtaining and maintaining the
Construction Permit and in preparing and filing the Modification Application and
all other incidental costs associated therewith.
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<PAGE> 20
Section 5.9 Disclosure. No representation or warranty by Seller or the
Company in this Agreement or the Transaction Documents, and no schedule,
document, statement, certificate furnished or to be furnished by Seller or the
Company to Buyer pursuant hereto or thereto, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements or facts contained herein or therein not
misleading.
ARTICLE 6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
AT THE INITIAL CLOSING
The obligations of Buyer at the Initial Closing are subject to the
fulfillment prior to or at the Initial Closing of the following conditions (any
one or more of which may be waived in whole or in part by Buyer at Buyer's
option):
Section 6. 1 Representations and Warranties. The representations and
warranties of Seller and the Company contained in this Agreement relating to the
Initial Closing shall be true and correct in all material respects on and as of
the Initial Closing Date, with the same force and effect as though made on and
as of such date.
Section 6.2 Covenants and Conditions. Seller and the Company shall have
performed in all material respects all of their respective obligations and
agreements and complied with all of their respective covenants and conditions
contained in this Agreement to performed. or complied with by Seller and the
Company on or before the Initial Closing.
Section 6.3 Contribution. The Pro Forma FCC Consent shall have become a
Final Order, and Seller shall have contributed the Construction Permit to the
Company in accordance with Section 3.3.
Section 6.4 Deliveries. Seller and the Company shall have delivered to
Buyer the following, in form and substance reasonably satisfactory to Buyer and
Buyer's Counsel:
(a) Initial Shares. Certificates representing the Initial Shares,
which shall be either duly endorsed or accompanied by stock powers duly executed
in favor of Buyer.
(b) Certificate of Incorporation. A copy of the Certificate of
Incorporation of the Company, certified as of a date not earlier than ten (10)
days prior to the Initial Closing Date by the Secretary of State of Delaware.
(c) Bylaws. A copy of the Bylaws of the Company, certified as of
the Initial Closing Date by the Secretary or an Assistant Secretary of the
Company.
(d) Resolutions. Copies of written actions or resolutions adopted
by the general partners of Seller and the Board of Directors of the Company,
authorizing and
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<PAGE> 21
approving the execution and delivery of this Agreement and the Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby, certified by a general partner of Seller and the Secretary or an
Assistant Secretary of the Company, respectively, as being true and complete on
the Initial Closing Date.
(e) Officer's Certificates. Certificates, dated as of the Initial
Closing Date, executed on behalf of Seller by a general partner of Seller and on
behalf of the Company by an officer of the Company, each certifying: (1) that
the representations and warranties of Seller and the Company contained in this
Agreement are true and complete in all material respects as of the Initial
Closing Date as though made on and as of that date; and (2) that Seller and the
Company have performed in all material respects all of their respective.
obligations and agreements in this Agreement to be performed and complied with
all of their respective covenants and conditions contained in this Agreement to
be complied with by Seller and the Company on or before the Initial Closing
Date.
(f) Opinions of Counsel. An opinion of Seller's and the Company's
communications counsel dated as of the Initial Closing Date, substantially in
the form of Schedule 6.4(f) hereto.
(g) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent.
(h) Transaction Documents. Copies of the Shareholders Agreement
and Loan Documents duly executed by Seller and the Company.
(i) Additional Instruments. Such additional instruments and
documents as may be required to consummate the transactions contemplated hereby.
Section 6.5 No Event of Default. As of the Initial Closing Date, the
conditions precedent to Buyer's obligation to make the Loan (as defined in the
Loan Agreement) shall have been satisfied and there shall exist no Event of
Default (as defined in the Loan Agreement).
Section 6.6 Adverse Proceedings. Except for proceedings relating to the
television broadcast industry generally, there shall not be any order, decree or
judgment in effect or any lawsuit, claim, legal action, proceeding or
investigation pending or threatened before any court, administrative agency or
arbitrator which is reasonably likely to result in any material adverse effect
upon the construction, business, property, assets or condition (financial or
otherwise) of the Station or which seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken pursuant to or in
connection with this Agreement.
Section 6.7 Extension Application. If the Initial Closing shall not
have occurred on or before September 22, 1996, the FCC shall have granted the
Extension Application without the imposition on Seller or the Station of any
conditions that could reasonably be expected to
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<PAGE> 22
have a material adverse effect on the construction or operation of the Station,
and such grant shall have become a Final Order.
ARTICLE 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
AND THE COMPANY AT THE INITIAL CLOSING
The obligations of Seller and the Company at the Initial Closing are
subject to the fulfillment prior to or at the Initial Closing of the following
conditions (any one or more of which may be waived in whole or in part by Seller
and the Company at their option):
Section 7.1 Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement relating to the Initial Closing
shall be true and correct in all material respects on and as of the Initial
Closing Date, with the same force and effect as though made on and as of such
date.
Section 7.2 Covenants and Conditions. Buyer shall have performed in all
material respects all of its obligations and agreements and complied with all of
its covenants and conditions contained in this Agreement to be performed or
complied with by Buyer on or before the Initial Closing Date.
Section 7.3 Deliveries. Buyer shall have delivered to Seller and the
Company the following in form and substance reasonably satisfactory to Seller,
the Company and their Counsel:
(a) Purchase Price. The Purchase Price described in Section 2.3.
(b) Resolutions. Copies of resolutions adopted by the Board of
Directors of Buyer, authorizing and approving the execution of this Agreement
and the Transaction Documents and the consummation of the transactions
contemplated hereby and thereby, certified by its Secretary as being true and
correct on the Initial Closing Date.
(c) Officer's Certificate. A certificate, dated as of the Initial
Closing Date, executed on behalf of Buyer by an officer 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 Initial Closing Date as
though made on and as of that date, and (2) that Buyer has performed in all
material respects all of its obligations and agreements in this Agreement to be
performed and complied with all of the covenants and conditions contained in the
Agreement to be complied with by Buyer on or before the Initial Closing Date.
(d) Transaction Documents. Copies of the Shareholders Agreement
and Loan Documents duly executed by Buyer.
(e) Additional Instruments. Such additional instruments and
documents as may be required to consummate the transactions contemplated hereby.
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Section 7.4 Adverse Proceedings. There shall not be any order, decree
or judgment in effect or any lawsuit, claim, legal action, proceeding or
investigation pending or threatened before any court, administrative agency or
arbitrator which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection with
this Agreement.
ARTICLE 8. CONSTRUCTION AND OPERATION OF THE STATION
Section 8.1 General. Following the date hereof and prior to the Second
Closing Date: (i) neither the Company nor Seller shall enter into any contracts
or agreements creating any security interests, mortgages, liens or encumbrances
on the assets of the Company or the Station except pursuant to the Loan
Agreement; (ii) Seller shall not enter into any contract or agreement creating
any liens or security interests in any shares of capital stock of the Company,
except pursuant to the Loan Agreement; (iii) the Company shall be operated in a
prudent and businesslike manner and in accordance with the other covenants in
this Article 8; (iv) the Company shall not amend its Certificate of
Incorporation or Bylaws; and (v) neither Seller nor the Company shall take or
permit, or agree to take or permit, any action within Seller's or the Company's
control that is inconsistent with the proper performance of their obligations
under this Agreement, including but not limited to, the issuance or sale of any
capital stock of the Company or the granting to any person or entity, other than
Buyer, an option or similar right to purchase any of the Company's capital
stock.
Section 8.2 FCC Consent.
(a) The conveyance of the Option Shares by Seller to Buyer as
contemplated in Article 9 of this Agreement is subject to the prior consent and
approval of the FCC.
(b) Seller and Buyer shall prepare and, within five (5) business
days after the first to occur of Buyer's receipt of the Put Notice (as defined
below) or Seller's receipt of the Call Notice (as defined below), shall file
with the FCC an appropriate application for the FCC Consent. Seller and Buyer
shall thereafter prosecute the application for the FCC Consent with all
diligence and otherwise use their respective best efforts to obtain a grant of
the application for the FCC Consent as expeditiously as possible. 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 (i) the condition
was imposed on it as the result of a circumstance the existence of which does
not constitute a breach by that party of any of its representations, warranties,
or covenants hereunder, and (ii) compliance with the condition would have a
material adverse effect upon it. Buyer and Seller shall oppose any petitions to
deny or other objections filed with respect to the application for the FCC
Consent and any requests for reconsideration or judicial review of the FCC
Consent.
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(c) If the Second 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 Article 18, the parties shall jointly
request one or more extensions of the effective period of the FCC Consent. No
extension of the effective period of the FCC Consent shall limit the exercise by
either party of its right to terminate the Agreement under Article 18.
Section 8.3 Employee Benefit Plans. Prior to adopting any employee
benefit plans or arrangements applicable to the employees of the Company,
including, without limitation, pension or thrift plans, individual or
supplemental pension or accrued compensation arrangements, incentive plans, or
bonus and termination arrangements, the Company shall consult with Buyer
concerning the proposed terms and conditions of such plans or arrangements.
Section 8.4 Labor Relations. Prior to entering into any written or oral
contracts of employment or incurring any fixed or contingent liabilities or
obligations with respect to any person employed at the Station, the Company will
consult with Buyer concerning the terms and conditions of such contracts and the
nature of such liabilities or obligations. Neither the Seller nor the Company
will fail to comply in any material respect with applicable laws, rules and
regulations relating to the employment of labor including, without limitation,
those related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payroll related
taxes.
Section 8.5 Licenses. Neither the Seller nor the Company shall cause,
or fail to take any action within its reasonable control necessary to prevent,
(i) any License to expire, be surrendered or modified; (ii) any governmental
authority to institute proceedings for the suspension, revocation, or adverse
modification of any License; (iii) any governmental authority to dismiss or deny
any pending application concerning the construction or operation of the Station.
Section 8.6 Cornpliance with Laws. The Seller and the Company shall
construct and operate the Station in all material respects in accordance with
all applicable laws, rules and regulations and the terms of all Licenses.
Section 8.7 Construction of the Station. The Seller, the Company and
Buyer shall not take any action that interferes with or delays the construction
of the Station in accordance with the terms of the Modification Application or
any License issued pursuant thereto.
Section 8.8 Notification. Seller and the Company shall give Buyer, and
Buyer shall give Seller and the Company, prompt written notice of any material
change in any of the information contained in the representations and warranties
of Seller and the Company, or of Buyer, as the case may be, set forth in this
Agreement or in the Schedules hereto.
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Section 8.9 Preservation of Business. Upon completion of construction
of the Station, Seller and the Company shall preserve the business and
organization of the Station intact and use their best efforts to keep available
to the Station its employees and to preserve the Station's relationships with
suppliers, advertisers and others having business relations with it, to the end
that the business, operations, and prospects of the Station shall be unimpaired
at the Second Closing.
Section 8.10 Performance of Agreements. The Company, Seller and Buyer
shall perform their respective obligations under this Agreement, the Loan
Documents, Shareholders Agreement, Time Brokerage Agreement, Construction
Agreement and Lease Agreement, in each case in accordance with the terms
thereof.
Section 8. 11 Cable Carriage. Consistent with the rules and regulations
of the FCC, the Company shall notify the cable operators within the Little Rock,
Arkansas Area of Dominant Influence of the Station's election to be carried on a
"must-carry" basis on such cable operators' cable television systems. The
Company shall use its best efforts to provide such notices on the date that is
sixty (60) days prior to commencing operations pursuant to program test
authority as defined by FCC rules and regulations, but in no event shall such
notices be provided later than thirty (30) days after the commencement of such
operations.
Section 8.12 Execution of Tower Lease. Following the Initial Closing,
the Company shall use its reasonable best efforts to enter into the Tower Lease
as expeditiously as possible. Upon execution of the Tower Lease, the Company
shall prepare and file with the FCC and any other federal, state or local
government authorities such applications, notices or other documents as may be
necessary or advisable to permit the construction and operation of the Station's
transmission facilities at the site specified in the Tower Lease.
Section 8.13 Modification Application. Seller shall make such
additional filings with the FCC in respect of the Modification Application that
are requested in writing by the FCC or are prepared by the Buyer at Buyer's sole
expense, and Seller shall continue to use its reasonable best efforts to cause
the FCC to grant the Modification Application as expeditiously as possible.
ARTICLE 9. THE OPTIONS AND THE SECOND CLOSING
Section 9. 1 Call Option.
(a) In consideration of Buyer's undertakings herein and in the
Transaction Documents, the receipt and sufficiency of which are hereby
acknowledged by Seller, Seller hereby grants to Buyer an exclusive and
irrevocable option to purchase from Seller the Option Shares (the "Call
Option"), free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges or encumbrances of any nature
whatsoever, except for any of the foregoing arising under the Loan Agreement or
the other Loan Documents.
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(b) Buyer may give written notice to Seller of Buyer's intention
to exercise the Call Option (the "Call Notice") at any time during the thirty
(30) day period beginning on the first anniversary of the date the Station
commences operations pursuant to program test authority (the "Option Period").
In the event that Buyer fails to give Seller the Call Notice prior to the end of
the Option Period, then the Call Option shall expire.
(c) Within five (5) business days of Seller's receipt of the Call
Notice, Seller and Buyer shall file with the FCC the application for the FCC
Consent and shall file such notices with, and obtain such approvals of, any
other govermnental authorities that are required for the acquisition by Buyer of
the Option Shares and shall diligently and expeditiously prosecute such filings.
Section 9.2 Put Option.
(a) In consideration of Sellers' and the Company's undertakings
herein and in the Transaction Documents, the receipt and sufficiency of which
are hereby acknowledged by Buyer, Buyer hereby grants to Seller an exclusive and
irrevocable option to require Buyer to purchase from Seller the Option Shares
(the "Put Option"), free and clear of any claims, liabilities, security
interests, mortgages, liens, pledges, conditions, charges or encumbrances of any
nature whatsoever, except for any of the foregoing arising under the Loan
Agreement or the other Loan Documents.
(b) Seller may give written notice to Buyer of Seller's intention
to exercise the Put Option (the "Put Notice") at any time during the Option
Period. In the event that Seller fails to give Buyer the Put Notice prior to the
end of the Option Period, then the Put Option shall expire.
(c) Within five (5) business days of Buyer's receipt of the Put
Notice, Buyer and Seller shall file with the FCC the application for the FCC
Consent and shall file such notices with, and obtain such approvals of, any
other governmental authorities that are required for the acquisition by Seller
of the Option Shares and shall diligently and expeditiously prosecute such
filings.
Section 9.3 The Second Closing. The Second Closing shall take place at
10:00 a.m., Washington, D.C. time, on a date to be set by Buyer on no less than
five (5) days' written notice to Seller, which date shall not be sooner than the
first business day after the date on which the FCC Consent is granted and shall
not be later than the tenth business day after the date on which the FCC Consent
has become a Final Order, subject to the satisfaction of all other conditions
precedent to the holding of the Second Closing. The Second Closing shall take
place at the offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue,
N.W., Suite 800, Washington, D.C. 20036, or such other place as the parties
shall mutually agree. If Buyer fails to specify the date for Second Closing
prior to the fifth business day after the date upon which the FCC Consent has
become a Final Order,
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the Second Closing shall take place on the tenth business day after the date
upon which the FCC Consent has become a Final Order.
Section 9.4 Sale of Option Shares. Subject to the terms and conditions
set forth in this Agreement, Seller hereby agrees to sell, transfer and deliver
to Buyer on the Second Closing Date, and Buyer agrees to purchase, the Option
Shares, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges or encumbrances of any nature
whatsoever, except for any of the foregoing arising under the Loan Agreement or
other Loan Documents.
Section 9.5 Purchase Price for Option Shares. The purchase price for
the Option Shares (the "Option Price") shall be One Million Two Hundred Fifty
Thousand Dollars ($1,250,000) plus the forgiveness by Buyer of the total
indebtedness outstanding as of the Second Closing Date under the Loan Agreement.
The cash portion of the Option Price shall be paid at the Second Closing by
Buyer to Seller by wire transfer of immediately available federal funds or other
means mutually satisfactory to Buyer and Seller in accordance with written
instructions provided by Seller to Buyer no less than two (2) business days
prior to the Second Closing Date.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES OF BUYER
REGARDING THE SECOND CLOSING
All of the representations and warranties of Buyer set forth in Article
4 hereof shall be true and correct in all material respects as of the Second
Closing Date, with the same force and effect as though made on and as of the
Second Closing Date, except as otherwise contemplated by the express terms of
this Agreement. For the purpose of this Article 10, each reference in Article 4
hereof to the "Initial Closing," "Initial Shares" and the "Initial Closing Date"
shall be deemed to be a reference to the Second Closing, Option Shares and the
Second Closing Date, respectively.
ARTICLE 11. REPRESENTATIONS. WARRANTIES AND COVENANTS OF THE
COMPANY AND SELLER REGARDING THE SECOND CLOSING
All of the representations and warranties of the Company and Seller set
forth in Article 5 hereof shall be true and correct in all material respects as
of the Second Closing Date, with the same force and effect as though made on and
as of the Second Closing Date, except as otherwise contemplated by the express
terms of this Agreement. For the purpose of this Article 11, each reference in
Article 5 hereof to the "Initial Closing" and the "Initial Closing Date" shall
be deemed to be a reference to the Second Closing and the Second Closing Date,
respectively, and each reference to the "Initial Shares" shall be deemed to be a
reference to the Option Shares. Seller and the Company further represent,
warrant and covenant to Buyer as follows:
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Section 11.1 Contracts. Within ten (10) business days after Seller
receives the Call Notice or Buyer receives the Put Notice, Seller shall deliver
to Buyer a true and complete list and copies of the Contracts. The Contracts
shall be valid and binding agreements of the Company enforceable in accordance
with their terms. The Company shall have complied with the Contracts in all
material respects, and the Company shall not be in default under any of the
Contracts.
Section 11.2 Copyrights, Trademarks and Similar Rights. Within ten (10)
business days after Seller receives the Call Notice or Buyer receives the Put
Notice, Seller shall deliver to Buyer a true and complete list and copies of all
Intangibles.
Section 11.3 Governmental Authorizations. Within ten (10) business days
after Seller receives the Call Notice or Buyer receives the Put Notice, Seller
shall deliver to Buyer a true and complete list and copies of the Licenses. The
Company shall be the authorized legal holder of the Licenses. The Licenses shall
comprise all of the licenses, permits and other authorizations required from
governmental and regulatory authorities for the lawful conduct of the business
and operations of the Station in the manner and to the full extent they are
conducted on the Second Closing Date, and none of the Licenses shall be subject
to any restriction or condition which would limit the full operation of the
Station. The Licenses shall be in full force and effect, and the operation of
the Station shall be in accordance therewith. Seller has no knowledge of any
events or conditions relating to Seller or Seller's ownership and control of the
Company that could prevent the FCC from approving the transfer of control of the
Company to Buyer.
Section 11.4 "Title to and Condition of Real Property. Within ten (10)
business days after Seller receives the Call Notice or Buyer receives the Put
Notice, Seller shall deliver to Buyer a true and complete description of all the
Real Property and the Company's interests therein. The Real Property shall
comprise all real property interests necessary to conduct the business and
operations of the Station as then conducted. The Company shall have good and
marketable fee simple title, insurable at standard rates, to all fee estates
(including the improvements thereon) included in the Real Property, if any, free
and clear of all liens, mortgages, pledges, covenants, easements, restrictions,
encroachments, leases, charges, and other claims and encumbrances of any nature
whatsoever, and without reservation or exclusion of any mineral, timber, or
other rights or interests, except for liens for real estate taxes not yet due
and payable and liens arising under the Loan Documents. All Real Property
(including the improvements thereon) (i) shall be in good condition and repair
consistent with its present use, (ii) shall be available for immediate use in
the conduct of the business and operations of the Station, and (iii) shall
comply with all applicable building or zoning codes and the regulations of any
governmental authority having jurisdiction.
Section 11.5 Title to and Condition of Tangible Personal Property.
Within ten (10) business days after Seller receives the Call Notice or Buyer
receives the Put Notice, Seller shall deliver to Buyer a true and complete list
of all material items of Tangible Personal Property. To the extent that the
Company owns Tangible Personal Property as of the Second
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Closing Date, the Company shall have good title to each item of Tangible
Personal Property, and none of the Tangible Personal Property shall be 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 and liens arising under the Loan Documents. All items of transmitting
and studio equipment included in the Tangible Personal Property (i) shall have
been maintained in a manner consistent with generally accepted standards of good
engineering practice, and (ii) shall permit the Station to operate in accordance
with the terms of the FCC Licenses and the rules and regulations of the FCC, and
with all other applicable federal, state, and local statutes, ordinances, rules,
and regulations.
Section 11.6 Compliance With Laws. As of the Second Closing Date, the
Company shall be in compliance in all material respects with all laws,
regulations and governmental orders applicable to the ownership or use of its
assets and the conduct of the business and operations of the Station.
Section 11.7 Reports. As of the Second Closing Date, all returns,
reports and statements which the Station is required to file with the FCC or
with any other governmental agency, as of the Second Closing Date, shall have
been filed and shall be complete and correct in all material respects.
Section 11.8 Public Inspection File. As of the Second Closing Date, the
Station's public inspection file shall be located at the Station's main studio
and shall contain, in all material respects, the original or copies of all
applications, reports and other documents and records relating to the operation
of the Station that are required to be in such file under the rules and
regulations of the FCC.
Section 11.9 Taxes. As of the Second Closing Date, (a) the Company
shall have filed all Tax Returns and shall have paid all Taxes shown on such Tax
Returns on any assessment received by the Company, provided that the Company
shall not be required to pay any Tax the validity of which is being contested by
the Company in good faith and pursuant to appropriate proceedings, (b) such
reports and Tax Returns shall have been prepared in accordance with applicable
provisions of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder and with applicable provisions of state laws, rules and
regulations concerning taxation, and (c) the Company shall not have waived any
statute of limitations with respect to the payment of any taxes.
Section 11.10 Dividends and Redemptions. The Company shall not have
made at any time any declaration, set aside or payment of any dividend or other
distribution in respect of any shares of capital stock of the Company, or any
direct or indirect redemption, purchase or other acquisition of such stock.
Section 11.11 Notices; Condemnation. As of the Second Closing Date:
(i) neither the Company nor Seller shall have received any written notice or
order by any governmental or other public authority, any insurance company that
has issued a policy of insurance with
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respect to the Station's assets or business, or any board of fire underwriters
or other body exercising similar functions that relates to material violations
of building, safety, fire or other ordinances or regulations by the Station or
requests the performance of any significant repairs, alterations or other work
to the assets of the Station, unless, as of the Closing Date, such violations
shall have been remedied, and such repairs, alterations or other work shall have
been performed, to the reasonable satisfaction of Buyer; and (ii) there will not
be any pending or threatened condemnation, expropriation, eminent domain, zoning
or similar proceeding materially affecting all or any portion of the assets of
the Station.
Section 11.12 Liabilities of the Company. As of the Second Closing
Date, the Company shall have no liabilities or obligations of any sort
whatsoever, except those arising under the Licenses, those arising under the
Transaction Documents, those consented to in writing by Buyer, those that are
reimbursable under-the terms of the Time Brokerage Agreement and those incurred
in the ordinary course of business that, in the aggregate, do not exceed Five
Thousand Dollars ($5,000).
Section 11.13 Disclosure. As of the Second Closing Date, no
representation or warranty by Seller or the Company in this Agreement, and no
schedule, document, statement, certificate furnished or to be furnished to Buyer
pursuant hereto, contains or will contain any untrue statement of a material
fact, or omits or will omit to state a material fact necessary to make the
statements or facts contained herein or therein not misleading.
ARTICLE 12. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
AT THE SECOND CLOSING
The obligations of Buyer under this Agreement at the Second Closing are
subject to the fulfillment prior to or at the Second Closing of the following
conditions (any one or more of which may be waived in whole or in part by Buyer
at Buyer's option):
Section 12.1 Representations and Warranties. The representations and
warranties of Seller and the Company contained in this Agreement relating to the
Second Closing shall be true and correct in all material respects on and as of
the Second Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of such date.
Section 12.2 Covenants and Conditions. Seller and the Company shall
have performed in all material respects all of their respective obligations and
agreements and complied with all of their respective covenants and conditions
contained in this Agreement to be performed or complied with by Seller and the
Company on or before the Second Closing Date.
Section 12.3 FCC Consent. The FCC Consent shall have become a Final
Order.
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Section 12.4 Consents. All material consents and approvals of all other
governmental authorities, bodies or agencies necessary for the consummation of
the transactions contemplated by this Agreement to occur at the Second Closing,
shall have been obtained, all without any conditions which would be unduly
burdensome on, or have a material adverse effect upon Buyer or the Company.
Section 12.5 Deliveries. Seller and the Company shall have delivered to
Buyer the following, in form and substance reasonably satisfactory to Buyer and
Buyer's Counsel:
(a) Option Shares. Certificates representing the Option Shares,
which shall be either duly endorsed or accompanied by stock powers duly
executed in favor of Buyer.
(b) Certificate of Incorporation. A certificate, dated as of the
Closing Date, executed by an officer of the Company, certifying that the
Certificate of Incorporation of the Company has not been amended since the
Initial Closing Date.
(c) Bylaws. A certificate, dated as of the Closing Date, executed
by an officer of the Company, certifying that the Bylaws of the Company have not
been amended since the Initial Closing Date.
(d) Resolutions. Copies of resolutions adopted by the Board of
Directors of the Company; authorizing and approving the consummation of the
transactions contemplated by this Agreement to occur at the Second Closing,
certified by the Secretary or Assistant Secretary of the Company as being true
and complete on the Second Closing Date.
(e) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent.
(f) Estoppel Certificates. Estoppel Certificates of the lessors of
all leasehold and subleasehold interests included in the Real Property
Interests.
(g) Officer's Certificates. Certificates, dated as of the Second
Closing Date, executed on behalf of Seller by a general partner of Seller and on
behalf of the Company by the President of the Company, each certifying: (1) that
the representations and warranties of Seller and the Company each contained in
this Agreement are true and complete in all material respects as of the Second
Closing Date as though made on and as of that date; and (2) that Seller and the
Company have performed in all material respects all of their respective
obligations and agreements in this Agreement to be performed and complied with
all of their respective covenants and conditions contained in this Agreement to
be complied with by Seller and the Company on or before the Second Closing Date.
(h) Opinions of Counsel. An opinion of Seller's and the Company's
communications counsel dated as of the Second Closing Date, substantially in the
form of Schedule 12.5(h) hereto.
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(i) Additional Instruments. Such additional instruments and
documents as may be required to consummate the transactions contemplated
hereby.
Section 12.6 Adverse Proceedings. Except for proceedings relating to the
television broadcast industry generally, there shall not be any order, decree or
judgment in effect or any lawsuit, claim, legal action, proceeding or
investigation pending or threatened before any court, administrative agency or
arbitrator which is reasonably likely to result in any material adverse effect
upon the construction, business, property, assets or condition (financial or
otherwise) of the Station or which seeks to enjoin or prohibit, or otherwise
questions the validity of, any action taken or to be taken pursuant to or in
connection with this Agreement.
Section 12.7 Time Brokerge Agreement. The Time Brokerage Agreement
shall be in full force and effect, and the Company shall have complied in all
material respects with its obligations thereunder.
Section 12.8 No Event of Default. As of the Second Closing Date, there
shall exist no Event of Default (as defined in the Loan Agreement).
Section 12.9 Adverse Change. Between the Initial Closing Date and the
Second Closing Date, there shall have been no material adverse change in the
business, assets, properties, financial condition, or business prospects of the
Station, including any unrestored damage, destruction, or loss affecting any
assets that are material to the conduct of the business of the Station.
ARTICLE 13. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER AND THE COMPANY
AT THE SECOND CLOSING
The obligations of Seller and the Company at the Second Closing under
this Agreement are subject to the fulfillment prior to or at the Second Closing
of the following conditions (any one or more of which may be waived in whole or
in part by Seller or the Company at their option):
Section 13.1 Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement relating to the Second Closing
shall be true and correct in all material respects on and as of the Second
Closing Date, with the same force and effect as though such representations and
warranties had been made on and as of such date.
Section 13.2 Covenants and Conditions. Buyer shall have performed in
all material respects all of its obligations and agreements and complied with
all of its covenants and conditions contained in the Agreement to be performed
or complied with by Buyer on or before the Second Closing Date.
Section 13.3 FCC Consent. The FCC shall have granted the FCC Consent.
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Section 13.4 Consents. All material consents and approvals of all other
governmental authorities, bodies or agencies necessary for the consummation of
the transactions contemplated by this Agreement to occur at the Second Closing,
shall have' been obtained, all without any conditions which would be unduly
burdensome on, or have a material adverse effect upon Seller.
Section 13.5 Deliveries. Buyer shall have delivered the following, in
form and substance reasonably satisfactory to Seller, the Company and their
Counsel:
(a) Option Price. The cash portion of Option Price described in
Section 9.5 and the Note (as defined in the Loan Agreement) marked "cancelled."
(b) Resolutions. Copies of resolutions adopted by the Board of
Directors of Buyer, authorizing and approving the consummation of the
transactions contemplated by this Agreement to occur at the Second Closing,
certified by its Secretary as being true and correct on the Second Closing Date.
(c) Officer's Certificate. A certificate, dated as of the Second
Closing Date, executed on behalf of Buyer by the Chairman or President 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 Second
Closing Date as though made on and as of that date, and (2) that Buyer has
performed in all material respects all of its obligations and, agreements in
this Agreement to be performed and complied with all of the covenants and
conditions in this Agreement to be complied with by Buyer on or prior to the
Second Closing Date.
Section 13.6 Time Brokerage Agreement. The Time Brokerage Agreement
shall be in full force and effect, and Buyer shall have complied in all material
respects with its obligations thereunder.
Section 13.7 Adverse Proceedings. There shall not be any order, decree
or judgment in effect or any lawsuit, claim, legal action, proceeding or
investigation pending or threatened before any court, administrative agency or
arbitrator which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken pursuant to or in connection with
this Agreement.
ARTICLE 14. JOINT COVENANTS
Section 14.1 Confidentiality. Buyer, on the one hand, and Seller and
the Company, on the other hand, shall each keep confidential all information
obtained by it with respect to the other in connection with this Agreement
(except for such disclosure to attorneys, bankers, underwriters, and investors,
as may be appropriate in the furtherance of the transactions contemplated by
this Agreement), and if the transactions contemplated hereby are not
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consummated for any reason, each shall, to the extent reasonably possible,
return to the other, without retaining a copy thereof, any and all schedules,
documents or other written information obtained from the other in connection
with this Agreement and the transactions contemplated hereby.
Section 14.2 Cooperation. Buyer, Seller and the Company shall cooperate
fully with each other and their respective counsels and accountants in
connection with any actions required to be taken as part of their obligations
under this Agreement, and the parties will use their best efforts to consummate
the transactions contemplated hereby and to fulfill their obligations hereunder.
No party shall take any action that is inconsistent with its obligations under
this Agreement, that would render any of its representations or warranties
herein untrue or incomplete or that could hinder or delay the consummation of
the transactions contemplated by this Agreement. Notwithstanding the foregoing,
and except as otherwise expressed in this Agreement, Buyer shall have no
obligation (a) to expend funds to obtain any of the Consents (other than the
payment of filing fees imposed by the FCC and any other governmental authority
in connection with the transactions contemplated hereby) or (b) to agree to any
adverse change in any License or Contract in order to obtain a Consent required
with respect thereto.
Section 14.3 Governmental Consents. If any governmental consent
required for the consummation of the transactions contemplated hereby or the
satisfaction of any condition contained herein includes any condition, the party
upon which such condition is imposed shall use its best efforts to comply
therewith before the respective Closing to which such consent relates; provided,
however, that no party hereto shall be required to comply with any condition
that would be unduly burdensome or would have a material adverse effect upon
such party.
Section 14.4 Station Operation. Buyer and Seller specifically
acknowledge that, as of the Initial Closing Date, the Station will not have
commenced broadcast operations. Buyer, Seller and the Company shall cooperate
and use their respective best efforts to complete construction of the Station in
accordance with the terms of the Modification Application and to commence
broadcast operations at the Station as expeditiously as possible. Seller and the
Company shall file such applications with the FCC and other governmental
authorities as are necessary to enable the Station to operate in compliance with
FCC and other applicable governmental rules and regulations.
ARTICLE 15. TRANSFER TAXES: FEES AND EXPENSES
Section 15.1 Transfer Taxes. Buyer and Seller shall each pay one-half
of all transfer and documentary taxes or fees incurred in connection with the
transfer of the Initial Shares and Option Shares; provided, however, that Seller
shall be responsible for the payment of any federal, state or local income tax
applicable to Seller or the Company in connection with the transaction
contemplated by this Agreement.
- 25 -
<PAGE> 35
Section 15.2 Filing Fees. Buyer and Seller shall each pay one-half of
all FCC filing fees and any other filing fee imposed by any other governmental
authority in connection with the transactions contemplated hereby.
Section 15.3 Expenses. Seller and the Company shall be solely
responsible for all costs and expenses incurred by them in connection with the
negotiation, preparation and performance of and compliance with this Agreement,
and Buyer shall be solely responsible for all costs and expenses incurred by it
in connection with the negotiation, preparation and performance of and
compliance with this Agreement. In connection with the FCC application for the
transfer of the Option Shares to Buyer at the Second Closing, Seller shall be
responsible for the payment of any costs or expenses that are incurred as a
result of the filing of an objection to such FCC application based upon the
qualifications of Seller or the Company, or the acts or omissions of Seller or
the Company with respect to the acquisition or construction of the Station, and
Buyer shall be responsible for the payment of any costs or expenses that are
incurred as a result of the filing of an objection to such FCC application based
upon the qualifications of Buyer or the acts or omissions of Buyer with respect
to the acquisition or construction of the Station. Buyer shall have paid
Montcalm on or before the Second Closing Date the broker's fees and commissions
payable by Buyer in connection with the transactions contemplated by this
Agreement.
ARTICLE 16. ESCROW DEPOSIT
Section 16.1 Escrow Deposit. Simultaneously with the execution and
delivery of this Agreement, Buyer has deposited the Escrow Deposit with the
Escrow Agent in accordance with an Escrow Agreement. All funds and documents
deposited with or otherwise held by the Escrow Agent shall be held and disbursed
in accordance with the terms of the Escrow Agreement and the following
provisions:
(a) At the Second Closing, Buyer, Seller and the Company shall
jointly instruct the Escrow Agent to disburse all funds held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, to or at the direction of
Buyer.
(b) If this Agreement is terminated pursuant to Section 17.3 or
Article 18 and Buyer is not in material breach of this Agreement, Buyer, Seller
and the Company shall jointly instruct the Escrow Agent to disburse all funds
held by the Escrow Agent pursuant to the Escrow Agreement, including any
interest or other proceeds from the investment of funds held by the Escrow
Agent, to or at the direction of Buyer.
(c) If this Agreement is terminated by Seller due to Buyer's
material breach of this Agreement, then the Escrow Deposit, including any
interest or other proceeds from the investment of funds held by the Escrow
Agent, shall be retained by the Escrow Agent to pay any final judgment obtained
by Seller or the Company as a result of Buyer's material breach of this
Agreement; provided, however, that Buyer shall be liable for any
- 26 -
<PAGE> 36
difference between the amount of the Escrow Deposit, including any interest or
other proceeds from the investment of funds held by the Escrow Agent, and any
such judgment.
ARTICLE 17. RISK OF LOSS
Section 17.1 Risk of Loss. The risk of any loss, damage or impairment,
confiscation or condemnation of any of the assets of the Company from any cause
whatsoever shall be borne by Seller and the Company. In the event of any such
loss, damage or impairment, confiscation or condemnation, the proceeds of, or
any claim for any loss payable under, any insurance policy, judgment or award
with respect thereto shall be applied to repair, replace or restore such assets
to their prior condition as soon as possible after such loss, impairment,
condemnation or confiscation.
Section 17.2 Postponement of the Second Closing Date. If any damage or
destruction of the Company's assets occurs and such assets cannot be restored or
replaced on or before the Second Closing Date, the Second Closing Date shall be
postponed, the exact date and time of such postponed closing date to be such
date and time within the effective period of the FCC Consent as shall be as
agreed to by Seller, Buyer and the Company. If such assets cannot be restored or
replaced within the effective period of the FCC Consent, the parties shall join
in requesting an extension of the effective period of such consent for a period
not to exceed an additional one hundred twenty (120) days from the date of FCC
Consent.
Section 17.3 Option to Terminate. In the event of any damage or
destruction of the assets, if such assets have not been restored or replaced
within the effective period of the FCC Consent as extended, Buyer may terminate
this Agreement forthwith without any further obligation hereunder by written
notice to Seller and the Company. Alternatively, Buyer may, at its option,
proceed to close this Agreement and complete the restoration and replacement of
such damaged assets after the Second Closing Date, in which event Seller and the
Company shall deliver to Buyer all insurance proceeds payable to the Company and
received in connection with such damage or destruction of the assets without
limitation as to the costs and expenses arising in connection with such
restoration and replacement.
ARTICLE 18. TERMINATION RIGHTS
Section 18.1 Termination by the Parties. This Agreement may be
terminated by either Buyer, on the one hand, or Seller and the Company, on the
other hand, if the terminating party or parties is not then in material default,
upon written notice to the other upon the occurrence of any of the following:
(a) If the purchase of the Initial Shares and Option Shares by
Buyer pursuant to this Agreement shall not have occurred on or prior to the date
that is 180 days following the first anniversary of the day the Station begins
operating under Program Test
- 27 -
<PAGE> 37
Authority pursuant to Section 73.1620 of the FCC's Rules, or any mutually
agreed to extension thereof;
(b) If the other party defaults in the observance or in the due
and timely performance of any of its material covenants or agreements contained
herein and such default has not been cured within ten (10) business days after
receipt of notice of default from that party not in default;
(c) If on the date of either of the Closings, any of the
conditions precedent to the obligations of a party set forth in this Agreement
as to that Closing have not been satisfied or waived by the other party and such
condition shall remain unsatisfied ten (10) business days after receipt of
notice thereof from the other party; or
(d) If there shall be in effect on the date of either of the
Closings any final judgment, decree or order that would prevent or make unlawful
the actions to be taken at such Closing.
Section 18.2 Termination by Buyer. This Agreement may be terminated by
Buyer, if not then in material default, upon written notice to Seller and the
Company, if the FCC denies the Extension Application or the application for the
Pro Fomia FCC Consent.
Section I 8.3 Effect of Termination. If, at any time following the
Initial Closing but prior to the Second Closing' this Agreement is terminated by
Buyer pursuant to Section 17.3 or Article 18 hereof, or by Seller and the
Company pursuant to Section 18.1 hereof, then the purchase and sale of the
Option Shares shall be abandoned and:
(a) if neither Buyer, Seller nor the Company is in material breach
of this Agreement, Buyer shall retain the Initial Shares, Seller shall retain
the Purchase Price for the Initial Shares and any and all amounts due under the
Promissory Note shall be forgiven as of the effective date of such termination
(and the Promissory Note returned to Seller marked "cancelled"); or
(b) if Seller or the Company is in material breach of this
Agreement, Buyer shall retain the Initial Shares, Seller shall retain the
Purchase Price for the Initial Shares and Seller shall repay the loan evidenced
by the Promissory Note as provided in Section 1.5(b)(ii) of the Loan Agreement;
or
(c) if Buyer is in material breach of this Agreement, Buyer shall
retain the Initial Shares, any and all amounts due under the Promissory Note
shall be forgiven as of the effective date of such termination (and the
Promissory Note returned to Seller marked "cancelled") and Seller shall be
entitled to such damages as may be available to Seller as a result of Buyer's
material breach of this Agreement.
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<PAGE> 38
ARTICLE 19. SPECIFIC PERFORMANCE
Seller and the Company agree that the Initial Shares and the Option
Shares are unique and valuable properties such that Buyer shall be entitled to
sue for specific performance of the terms of this Agreement in the event of a
breach by Seller or the Company with respect to either the Initial Closing or
the Second Closing, in which case Seller and the Company shall waive the defense
that there is an adequate remedy at law.
ARTICLE 20. INDEMNIFICATION
Section 20.1 Seller's and the Company's Indemnification. Seller and the
Company shall jointly indemnify, defend and hold Buyer harmless from and against
any and all loss, cost, liability, damage and expense (including legal and other
expenses incident thereto) of every kind, nature or description, arising out of:
(a) the breach of any representation or warranty of Seller or the Company set
forth in this Agreement or in any schedule or certificate delivered to Buyer
pursuant hereto; (b) the breach of any of their covenants or other agreements
contained in or arising out of this Agreement or the transactions contemplated
hereby; or (c) the ownership of the Initial Shares prior to the Initial Closing,
and the conduct of the business and operations of the Station and the ownership
of the Option Shares prior to the Second Closing, including, but not limited to,
any liability, judgment or damages against the Company or Seller, their
officers, directors, employees or agents, as a result of litigation involving
the Company, Seller or the operation of the Station prior to each of the
Closings.
Section 20.2 Boer's Indemnification. Buyer shall indemnify, defend and
hold Seller and the Company harmless from and against any and all loss, cost,
liability, damage and expense (including legal and other expenses incident
thereto) of every kind, nature or description, arising out of: (i) the breach of
any representation or warranty of Buyer set forth in this Agreement or in any
schedule or certificate delivered to Seller and the Company pursuant hereto;
(ii) the ownership of the Initial Shares prior to the Second Closing and the
ownership or operation of the Company and the Station after the Second Closing,
or (iii) the breach of any of its covenants or other agreements contained in or
arising out of this Agreement or the transactions contemplated hereby.
Section 20.3 Notice of Claim. Buyer, on the one hand, and Seller and
the Company, on the other hand, upon discovery of the breach of any of the
representations, warranties and covenants of the other under this Agreement,
shall give to the other prompt written notice of the discovery of such breach.
If any action, suit or proceeding shall be commenced against, or any claim or
demand be asserted against Buyer, Seller or the Company, as the case may be, in
respect of which such party proposes to seek indemnification from the other
under this Article 20, then such party (hereinafter the "Claimant") shall notify
the party from whom indemnification is sought (hereinafter the "Indemnifying
Party") to that effect in writing with reasonable promptness and in any event,
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<PAGE> 39
if such claim arises out of a claim by a person or entity other than the
Claimant, then within fifteen (15) days after written notice of such claim was
given to the Claimant.
Section 20.4 Assumption and Defense of Third-Party Action. If any claim
hereunder arises of out a claim against the Claimant by a third party, 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 fully
cooperate with the Indemnifying Party subject to reimbursement for actual
out-of-pocket expenses incurred 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 a claim requires immediate action,
the parties will make every effort to reach a decision with respect thereto as
expeditiously as possible. If the Indemnifying Party does not elect to assume
control or otherwise participate in the defense of any third-parry claim, it
shall be bound by the results obtained by the Claimant with respect to such
claim.
Section 20.5 Limitation Period. No party shall be entitled to
indemnification hereunder with respect to the breach of any representation,
warranty or covenant contained herein unless such claim for indemnification is
asserted in writing to the party from whom indemnification is sought within six
(6) months after the Second Closing, except that any claim for indemnification
related to a claim by a third party, including claims by the Internal Revenue
Service' against the Company or Seller, shall be made within the statute of
limitations period applicable to such third-party claim.
ARTICLE 21. OTHER PROVISIONS
Section 21.1 Survival of Representations. Warranties and Covenants. The
representations, warranties, covenants, indemnities and agreements contained
herein are and will be deemed and construed to be continuing representations,
warranties, covenants, indemnities and agreements and will survive the
respective Closings as to which breach or claim is asserted until the
termination of the limitation period set forth in Section 20.5 hereof. Any
investigations by or on behalf of any party hereto prior to or after the
Closings shall not constitute a waiver as to enforcement of any representation,
warranty, covenant or agreement contained herein.
Section 21.2 Press Releases. Buyer, Seller and the Company shall
jointly prepare, and determine the timing of, any press release or other
announcement relating to the transactions contemplated by the Agreement. No
party will issue any press release or make any other public announcement
relating to the transactions contemplated by the Agreement without the prior
consent of the other parties, except that any party may make any disclosure
required to be made by it under applicable law (including the federal securities
laws) or by this Agreement if it determines in good faith that it is appropriate
to do so and provided further that it gives prior notice of any such disclosure
to the other party hereto.
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<PAGE> 40
Section 21.3 Further Assurances. At and after each of the Closings,
Buyer, Seller and the Company will, without further consideration, execute and
deliver such further instruments and documents and do such other acts and things
as the other parties may reasonably request in order to effect or confirm the
transactions contemplated by this Agreement.
Section 21.4 Benefit and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. No party hereto may assign, transfer, encumber or
otherwise convey its interest under this Agreement without the prior written
consent of the other parties hereto; provided, however, that Buyer may, upon
written notice to Seller and the Company, assign its rights and interests under
this Agreement to its lenders as collateral security for Buyer's obligations to
such lenders, and Buyer may assign its rights and obligations under this
Agreement without seeking or obtaining the prior approval of Seller or the
Company to any entity designated by Buyer, so long as Buyer determines, in the
exercise of reasonable business judgment, that such entity possesses the
requisite qualifications under the Communications Act of 1934, as amended, and
the rules and regulations promulgated thereunder, to consummate the transactions
contemplated by this Agreement; provided, however, that any such assignment by
Buyer shall not relieve Buyer of liability for performance of its obligations
hereunder in the event that Buyer's assignee fails to perform such obligations.
Section 21.5 Entire Agreement. This Agreement, the schedules attached
hereto, the Transaction Documents and the Escrow Agreement embody the entire
agreement and understanding of the parties and supersede any and all prior
agreements, arrangements and understandings relating to matters provided for
herein. No amendment, waiver of compliance with any provision or condition
hereof, or consent pursuant to this Agreement will be effective unless evidenced
by an instrument in writing signed by all parties hereto.
Section 21.6 Headings. The headings are for convenience only and will
not control or affect the meaning or construction of the provisions of this
Agreement.
Section 21.7 Governing Law. The construction and performance of this
Agreement will be governed by the laws of the State of Florida (except for the
choice of law provisions thereof).
Section 21.8 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:
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<PAGE> 41
To Buyer: Paxson Communications
of Little Rock-42, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Lowell W. Paxson
With a copy (which shall John R. Feore, Jr., Esq.
not constitute notice) to: Dow, Lohnes, & Albertson,
A Professional Limited Liability Company
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
To Company and Seller: Channel 42 of Little Rock, Inc.
102 Fairmont Circle
Daphne, AL 36526
Attention: Dale Leininger
and
Leininger-Geddes Partnership
102 Fairmont Circle
Daphne, AL 36526
Attention: Dale Leininger
With a copy (which shall Loretta K. Tobin, Esq.
not constitute notice) to: Brown Nietert & Kaufman, Chartered
1920 N Street, N.W., Suite 660
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 21.8.
Section 21.9 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
Section 21.10 Defined Terms. The following terms shall have the
meanings specified in the sections of this Agreement set forth opposite such
terms:
"Agreement" ........................................ Preamble
"Buyer" ............................................ Preamble
"Call Notice" ...................................... Section 9.1
"Call Option" ...................................... Section 9.1
"Claimant" ......................................... Section 20.3
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<PAGE> 42
<TABLE>
<S> <C>
"Closings" .............................................. Section 1.1
"Common Stock" .......................................... Section 1.1
"Communications Act" .................................... Section 1.1
"Company" ............................................... Preamble
"Consents" .............................................. Section 1.1
"Construction Agreement" ................................ Section 1.1
"Construction Permit" ................................... Recitals
"Contracts" ............................................. Section 1.1
"Escrow Agent" .......................................... Section 1.1
"Escrow Agreement" ...................................... Section 1.1
"Escrow Deposit" ........................................ Section 1.1
"Extension Application" ................................. Section 3.7
"FCC" ................................................... Recitals
"FCC Consent" ........................................... Section 1.1
"FCC Licenses" .......................................... Section 1.1
"Final Order" ........................................... Section 1.1
"Financial Statement" ................................... Section 5.8
"Indemnifying Party" .................................... Section 20.3
"Initial Closing" ....................................... Section 1.1
"Initial Closing Date" .................................. Section 1.1
"Initial Shares" ........................................ Section 1.1
"Intangibles" ........................................... Section 1.1
"Lease Agreement" ....................................... Section 1.1
"Licenses" .............................................. Section 1.1
"Loan Agreement" ........................................ Section 1.1
"Loan Documents" ........................................ Section 1.1
"Modification Application" .............................. Recitals
"Option Period" ......................................... Section 9.1
"Option Price" .......................................... Section 9.5
"Option Shares" ......................................... Section 1.1
"Outstanding Stock" ..................................... Section 5.5
"Pro Forma FCC Consent" ................................. Section 1.1
"Promissory Note" ....................................... Section 1.1
"Purchase Price" ........................................ Section 2.3
"Put Notice" ............................................ Section 9.2
"Put Option" ............................................ Section 9.2
"Real Property" ......................................... Section 1.1
"Real Property Interests" ............................... Section 1.1
"Second Closing" ........................................ Section 1.1
"Second Closing Date" ................................... Section 1.1
"Seller" ................................................ Preamble
"Shareholders Agreement" ................................ Section 1.1
"Station" ............................................... Recitals
"Tangible Personal Property" ............................ Section 1.1
</TABLE>
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<PAGE> 43
<TABLE>
<S> <C>
"Taxes" ................................................ Section 1.1
"Tax Returns" .......................................... Section 1.1
"Time Brokerage Agreement" ............................. Section 1.1
"Tower Lease" .......................................... Section 1.1
"Transaction Documents" ................................ Section 1.1
</TABLE>
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have duly executed this Stock Purchase
Agreement as of the date first above written.
LEININGER-GEDDES PARTNERSHIP
By: /s/ Dale Leininger
-----------------------------------
Dale Leininger
General Partner
By: /s/ Lark Hadley
-----------------------------------
Lark Hadley
General Partner
CHANNEL 42 OF LITTLE ROCK, INC.
By /s/ Dale Leininger
-----------------------------------
Dale Leininger
President
PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
By: /s/ James B. Bocock
-----------------------------------
Name: James B. Bocock
Title: President
- 35 -
<PAGE> 45
EXHIBITS
<PAGE> 46
EXHIBIT A
Loan Agreement
<PAGE> 47
EXHIBIT A
LOCATION OF THE COLLATERAL
102 Fairmont Circle
Daphne, Alabama 36526
<PAGE> 48
EXHIBIT 3
PARTNERS PLEDGE AGREEMENT
THIS PARTNERS PLEDGE AGREEMENT is dated as of this ________ day of
__________, 1996, by and between PAXSON COMMUNICATIONS OF LITTLE ROCK-42, INC.,
a Florida corporation (the "Pledgee"), and DALE LEININGER and LARK HADLEY
(collectively, the "Pledgors").
W I T N E S S E T H:
WHEREAS, Leininger-Geddes Partnership, a general partnership formed
under the laws of the State of Alabama ("LGP"), Pledgee and Channel 42 of
Little Rock, Inc., a Delaware corporation (the "Company"), have entered into a
Stock Purchase Agreement dated as of the date hereof (the "Purchase
Agreement");
WHEREAS, pursuant to the Purchase Agreement, LGP and Pledgee have
entered into a Loan Agreement dated as of the date hereof (the "Loan
Agreement"), pursuant to which Pledgee agrees to make a loan to LGP in the
amount of One Million One Hundred Twenty-Two Thousand Six Hundred and
Ninety-Five Dollars ($1,122,695) (the "Loan"), which Loan is evidenced by a
Promissory Note of even date herewith executed by LGP (as amended, renewed,
restated, increased, consolidated or substituted from time to time, the
"Note");
WHEREAS, Pledgors, as the partners of LGP, will obtain a material
benefit from the extension of credit to LGP pursuant to the Loan Agreement; and
WHEREAS, the Loan Agreement provides for LGP to enter into this Pledge
Agreement as security for the Loan.
NOW, THEREFORE, in consideration of the Loan, credit or other
financial accommodation extended or continued from time to time to LGP by the
Pledgee, the Pledgors do hereby agree as follows:
ARTICLE 1. PLEDGE
Section 1.1 The Pledgors hereby grant to the Pledgee a first priority
security interest in and pledge, assign and deliver to the Pledgee the
partnership interests described in Exhibit A annexed hereto, which are owned by
the Pledgors (the "Interests") and constitute all of the partnership interests
of LGP.
<PAGE> 49
Section 1.2 The Pledgors and the Pledgee agree that the Interests
shall be held by Pledgee on the terms and conditions hereinafter set forth as
collateral security for the obligations of LGP to the Pledgee under the Loan
Agreement and the Note.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
The Pledgors represent and warrant to the Pledgee as follows:
(a) that the Interests constitute all of the partnership interests
of LGP;
(b) that the Interests are not subject to any liens, charges or
encumbrances whatsoever, except those granted to Pledgee pursuant to the Loan
Agreement;
(c) that there are no existing options, warrants or other rights
to purchase the Interests;
(d) that the execution, delivery and performance of this Pledge
Agreement will not conflict with, result in a breach of or constitute a default
under any indenture or agreement to which the Pledgors or LGP is a party or by
which the Pledgors or LGP is bound, or result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever on any of the property
or assets of LGP;
(e) this Pledge Agreement constitutes the legal, valid and binding
obligation of the Pledgors, enforceable in accordance with its terms;
(f) the Pledgors have all requisite power and authority to enter
into this Pledge Agreement and to carry out the transactions contemplated
hereby;
(g) to the best of their knowledge, no consent or approval of any
person or entity, other than the Federal Communications Commission ("FCC"), is
or will be required in connection with the execution, delivery and performance
of this Pledge Agreement; and
(h) the Pledgors have delivered to the Pledgee accurate and
complete copies of the Partnership Agreement of LGP and all other documents
concerning the organization, capitalization and governance of LGP.
ARTICLE 3. TERM
The Pledgee shall hold the Interests as security for the performance
by LGP of its obligations and liabilities under the Loan Agreement and the
Note, and the Interests shall be held by the Pledgee until the principal and
interest due on the Note are paid in full or forgiven pursuant to the terms of
the Loan Agreement, at which time the Pledgee shall deliver the Interests to
the Pledgors free and clear of all liens and encumbrances whatsoever,
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<PAGE> 50
including, without limitation, this Pledge Agreement, and this Pledge Agreement
shall thereupon terminate.
ARTICLE 4. VOTING
While the Interests continue to be held by the Pledgee, such Interests
shall remain in the name of the Pledgors and the Pledgors shall have and
exercise all rights of ownership, including the right to vote the Interests.
Upon the occurrence of an Event of Default, as such term is defined in the Loan
Agreement, the Pledgee shall be entitled to the remedies set forth in Article 6
hereof.
ARTICLE 5. ADJUSTMENTS
The Pledgors agree that in the event that during the term of this
Pledge Agreement any reclassification, readjustment or other change is declared
or made with respect to the Interests, or any subscription, warrant or other
option is exercisable with respect to the Interests, it shall cause all new,
substituted or additional partnership interests or other securities issued by
reason of any such change or option to be delivered to the Pledgee and to be
held by the Pledgee under the terms of this Pledge Agreement in the same manner
as the Interests originally pledged hereunder. There likewise shall be
deposited with the Pledgee, to be added to the pledged property and subject to
the pledge, any and all additional partnership interests issued to the Pledgors
in respect of the Interests.
ARTICLE 6. REMEDIES
Section 6.1 If an Event of Default, as such term is defined in the
Loan Agreement, shall occur, the Pledgee may, after fifteen (15) days' prior
notice to the Pledgors, sell, assign and deliver the whole or, from time to
time, any part of the Interests or any interest or part thereof, at any private
sale or at public auction, for cash, or credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms as
the Pledgee reasonably may determine to be commercially reasonable. The
Pledgee shall give the Pledgors reasonable notice of the time and place of any
public sale of the Interests or the time after which any private sale or other
intended disposition thereof is to be made. The requirement of reasonable
notice shall be met if notice of such sale or other intended disposition is
mailed, by certified or registered mail, return receipt requested, to the
Pledgors at the address set forth in Article 9 at least fifteen (15) days prior
to the time of such sale or other intended disposition; provided that all
notices of such sale shall specify that transfer of any interest representing
control of LGP may require the approval of the FCC and similar notice shall be
given to all those attending such sale. The Pledgors hereby waive and release
any and all right or equity of redemption whether before or after sale
hereunder. At any such sale the Pledgee may bid for and purchase for its own
account the whole or any part of the Interests so sold, free from any such
right or equity of redemption. After obtaining all required consents from the
FCC and upon completion of the sale, Pledgee shall deliver the
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<PAGE> 51
Interests, or any portion thereof, to the purchaser or purchasers thereof. The
net proceeds of any such sale shall be applied as follows:
(i) First, to the expenses of the sale and enforcement of this
Pledge Agreement, including but not limited to, the expenses of advertising,
preparing and prosecuting any necessary FCC application, and attorneys' fees
and expenses, including attorneys' fees out of court, in trial, on appeal, in
bankruptcy proceedings, or otherwise;
(ii) Second, to the payment of LGP's obligations under the Loan
Agreement, including, without limitation, the payment of interest and principal
under the Note; and
(ii) Third, only after payment in full of the above, to the payment
to the Pledgors of any excess proceeds, subject to the receipt of notice of and
the provisions of any other agreement between the parties with respect to the
disposition of said excess proceeds. Notwithstanding the sale or other
disposition of the Interests by the Pledgee hereunder, LGP shall remain liable
for any deficiency.
Section 6.2 The Pledgors and the Pledgee hereby agree to use good
faith efforts to answer FCC inquiries, if any, with respect to obtaining the
aforementioned FCC approvals, if required, and shall otherwise seek said
approvals diligently, each taking all steps reasonably necessary or desirable
to expedite the procurement of such approvals. Neither failure nor delay on
the part of the Pledgee to exercise any right, remedy, power or privilege
provided for herein or by statute or at law or in equity shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
remedy, power or privilege preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. Any other
provision of this Pledge Agreement notwithstanding, any foreclosure of or
disposal of the Interests under the terms of this Pledge Agreement upon the
occurrence of an Event of Default shall be made pursuant to Section 310 of the
Communications Act of 1934, as amended, and to the applicable rules and
regulations of the FCC, as amended, and, if and to the extent required, after
prior written approval of the FCC.
ARTICLE 7. ENCUMBRANCES
During the term of this Pledge Agreement specified in Article 3, the
Pledgors shall not sell, assign, transfer or otherwise dispose of, grant any
option with respect to, or mortgage, pledge or otherwise encumber, the
Interests.
ARTICLE 8. MISCELLANEOUS
Section 8.1 Transfer Taxes. Transfer taxes, if any, applicable to any
transfer of shares of Interests upon the occurrence of an Event of Default or
upon termination of this Pledge Agreement shall be payable by the person or
persons to whom the Interests are being
-4-
<PAGE> 52
transferred, provided, however, that the Pledgors agree to reimburse the
Pledgee promptly for all such transfer taxes which the Pledgee may be required
to pay.
Section 8.2 Exercise. No single or partial exercise of any power
hereunder shall preclude future exercise thereof or the exercise of any other
power. The holder of the Note may proceed against any portion of the security
held therefor in such order and in such manner as the holder may see fit,
without waiver of any rights with respect to any other security.
Section 8.3 Manner of Dealing. The Pledgee may deal in any manner
with the Note, including, without limitation, in the following manner: to
modify, supplement or otherwise change any terms of the Note, subject to the
consent in writing of LGP to any modification of or supplement or change to any
such terms; and by written notice to Pledgors, to grant any extension or
renewal of the Note or to grant any other waiver or indulgence with respect to
the Note, and to effect any release, compromise or settlement with respect to
the Note.
ARTICLE 9. 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 in the return receipt, and (d) addressed as follows:
To the Pledgors: c/o Leininger-Geddes Partnership
102 Fairmont Circle
Daphne, AL 36526
Attention: Dale Leininger
To the Pledgee: Paxson Communications of Little Rock-42, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Lowell W. Paxson
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
Article 9.
ARTICLE 10. CHOICE OF LAW, ETC.
This Pledge Agreement shall be construed and enforced under and
governed by the laws of the State of Florida, other than the conflicts of law
provisions thereof. This Pledge Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, and
-5-
<PAGE> 53
this Pledge Agreement may not be modified or amended or any term or provision
hereof waived or discharged except by a written instrument signed by Pledgors
and Pledgee. This Pledge Agreement shall be binding on the successors,
assigns, and legal representatives of the parties hereto and shall inure to the
benefit of and be enforceable by their successors, assigns, and legal
representatives; provided, however, that neither the Interests nor this Pledge
Agreement may be assigned or transferred in whole or in part, voluntarily or
involuntarily, by the Pledgors without the prior written consent of the
Pledgee, and the Pledgee may assign this Pledge Agreement and all of its rights
hereunder to any holder of the Note without any consent of the Pledgors, but
upon notice to Pledgors. The headings of this Pledge Agreement are for the
purpose of reference only and shall not limit or otherwise affect the meaning
hereof. The Pledgors shall take such further actions as may be reasonably
requested by the Pledgee from time to time in order to perfect the security
interest of the Pledgee hereunder and to assure and confirm onto the Pledgee
its rights, powers and remedies hereunder.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-6-
<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be executed on their behalf all as of the day and year first above
mentioned.
PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
By:
-------------------------------
Name:
Title:
----------------------------------
DALE LEININGER
----------------------------------
LARK HADLEY
<PAGE> 55
EXHIBIT A
Description of Interests
<TABLE>
<CAPTION>
Name Partnership Interest
---- --------------------
<S> <C>
Dale Leininger 51%
Lark Hadley 49%
</TABLE>
<PAGE> 56
EXHIBIT 4
BORROWER PLEDGE AGREEMENT
THIS BORROWER PLEDGE AGREEMENT is dated as of this ______ day of
_________, 1996, by and between PAXSON COMMUNICATIONS OF LITTLE ROCK-42, INC.,
a Florida corporation (the "Pledgee"), and LEININGER-GEDDES PARTNERSHIP, a
general partnership formed under the laws of the State of Alabama (the
"Pledgor").
W I T N E S S E T H:
WHEREAS, Pledgor, Pledgee and Channel 42 of Little Rock, Inc., a
Delaware corporation (the "Company"), have entered into a Stock Purchase
Agreement dated as of the date hereof (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, Pledgor and Pledgee have
entered into a Loan Agreement dated as of the date hereof (the "Loan
Agreement"), pursuant to which Pledgee agrees to make a loan to Pledgor in the
amount of One Million One Hundred Twenty-Two Thousand Six Hundred and
Ninety-Five Dollars ($1,122,695) (the "Loan"), which Loan is evidenced by a
Promissory Note of even date herewith executed by the Pledgor (as amended,
renewed, restated, increased, consolidated or substituted from time to time,
the "Note"); and
WHEREAS, the Loan Agreement provides for Pledgor to enter into this
Pledge Agreement as security for the Loan.
NOW, THEREFORE, in consideration of the Loan, credit or other
financial accommodation extended or continued from time to time to the Pledgor
by the Pledgee, the Pledgor does hereby agree as follows:
ARTICLE 1. PLEDGE
Section 1.1 The Pledgor hereby grants to the Pledgee a first priority
security interest in and pledges, assigns and delivers to the Pledgee the stock
certificates described in Exhibit A annexed hereto, evidencing the shares of
stock of the Company owned by the Pledgor (the "Stock") and constituting all of
the issued and outstanding shares of stock of the Company, accompanied by a
stock power, duly executed in blank.
Section 1.2 The Pledgor and the Pledgee agree that the Stock shall be
held by Pledgee on the terms and conditions hereinafter set forth, as
collateral security for the obligations of the Pledgor to the Pledgee under the
Loan Agreement and the Note.
<PAGE> 57
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
The Pledgor represents and warrants to the Pledgee as follows:
(a) that the Stock constitutes all of the issued and
outstanding capital stock of the Company;
(b) that the Stock is validly issued, fully paid and
nonassessable and is not subject to any liens, charges or encumbrances
whatsoever, except those granted to Pledgee pursuant to the Loan Agreement;
(c) that there are no existing options, warrants or other
rights to purchase the capital stock of the Company, except such options or
other rights to acquire the stock of the Company that are held by Pledgee;
(d) that the execution, delivery and performance of this
Pledge Agreement will not conflict with, result in a breach of or constitute a
default under any indenture or agreement to which the Pledgor or the Company is
a party or by which the Pledgor or the Company is bound, or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever on any of the property or assets of the Company;
(e) this Pledge Agreement constitutes the legal, valid
and binding obligation of the Pledgor, enforceable in accordance with its
terms;
(f) the Pledgor has all requisite power and authority to
enter into this Pledge Agreement and to carry out the transactions contemplated
hereby;
(g) to the best of Pledgor's knowledge, no consent or
approval of any person or entity, other than the Federal Communications
Commission ("FCC"), is or will be required in connection with the execution,
delivery and performance of this Pledge Agreement; and
(h) the Pledgor has delivered to the Pledgee accurate and
complete copies of the Partnership Agreement of Pledgor and the Certificate of
Incorporation and By-laws of the Company and all other documents concerning the
organization, capitalization and governance of the Pledgor and the Company.
ARTICLE 3. TERM
The Pledgee shall hold the Stock as security for the performance by
the Pledgor of its obligations and liabilities under the Loan Agreement and the
Note, and the Stock shall be held by the Pledgee until the principal and
interest due on the Note are paid in full or forgiven pursuant to the terms of
the Loan Agreement, at which time the Pledgee shall deliver the Stock to the
Pledgor free and clear of all liens and encumbrances whatsoever,
-2-
<PAGE> 58
including, without limitation, the stock certificate, the stock powers and this
Pledge Agreement, and this Pledge Agreement shall thereupon terminate.
ARTICLE 4. VOTING
While the certificates representing the Stock continue to be held by
the Pledgee, such certificates shall remain in the name of the Pledgor and the
Pledgor shall have and exercise all rights of ownership, including the right to
vote the Stock. Upon the occurrence of an Event of Default, as such term is
defined in the Loan Agreement, the Pledgee shall be entitled to the remedies
set forth in Article 6 hereof.
ARTICLE 5. STOCK ADJUSTMENTS
The Pledgor agrees that in the event that during the term of this
Pledge Agreement any stock dividend, reclassification, readjustment or other
change is declared or made with respect to the Stock, or any subscription,
warrant or other option is exercisable with respect to the Stock, it shall
cause all new, substituted or additional shares or other securities issued by
reason of any such change or option to be delivered to the Pledgee and to be
held by the Pledgee under the terms of this Pledge Agreement in the same manner
as the shares of Stock originally pledged hereunder. There likewise shall be
deposited with the Pledgee, to be added to the pledged property and subject to
the pledge, any and all additional shares of stock of the Company issued to the
Pledgor in respect of the Stock by way of stock dividend, stock splits, stock
rights, new securities or otherwise.
ARTICLE 6. REMEDIES
Section 6.1 If an Event of Default, as such term is defined in the
Loan Agreement, shall occur, the Pledgee may, after fifteen (15) days' prior
notice to the Pledgor, sell, assign and deliver the whole or, from time to
time, all or any portion of the Stock, at any private sale or at public
auction, for cash, or credit or for other property, for immediate or future
delivery, and for such price or prices and on such terms as the Pledgee
reasonably may determine to be commercially reasonable. The Pledgee shall give
the Pledgor reasonable notice of the time and place of any public sale of the
Stock or the time after which any private sale or other intended disposition
thereof is to be made. The requirement of reasonable notice shall be met if
notice of such sale or other intended disposition is mailed, by certified or
registered mail, return receipt requested, to the Pledgor at the address set
forth in Article 8 at least fifteen (15) days prior to the time of such sale or
other intended disposition; provided that all notices of such sale shall
specify that transfer of any stock interest representing control of the Company
may require the approval of the FCC and similar notice shall be given to all
those attending such sale. The Pledgor hereby waives and releases any and all
right or equity of redemption whether before or after sale hereunder. At any
such sale the Pledgee may bid for and purchase for its own account the whole or
any part of the Stock so sold, free from any such right or equity of
redemption. After obtaining all required consents from the FCC and upon
completion of the sale, Pledgee shall deliver
-3-
<PAGE> 59
the Stock, or any portion thereof, to the purchaser or purchasers thereof. The
net proceeds of any such sale shall be applied as follows:
(i) First, to the expenses of the sale and enforcement of this
Pledge Agreement, including but not limited to, the expenses of advertising,
preparing and prosecuting any necessary FCC application, and attorneys' fees
and expenses, including attorneys' fees out of court, in trial, on appeal, in
bankruptcy proceedings, or otherwise;
(ii) Second, to the payment of Pledgor's obligations under the Loan
Agreement, including, without limitation, the payment of interest and principal
under the Note; and
(iii) Third, only after payment in full of the above, to the payment
to the Pledgor of any excess proceeds, along with any shares of the Stock
remaining unsold, subject to the receipt of notice of and the provisions of any
other agreement between the parties with respect to the disposition of said
excess proceeds or unsold shares. Notwithstanding the sale or other
disposition of the Stock by the Pledgee hereunder, Pledgor shall remain liable
for any deficiency.
Section 6.2 The Pledgor and the Pledgee hereby agree to use good faith
efforts to answer FCC inquiries, if any, with respect to obtaining the
aforementioned FCC approvals, if required, and shall otherwise seek said
approvals diligently, each taking all steps reasonably necessary or desirable
to expedite the procurement of such approvals. Neither failure nor delay on
the part of the Pledgee to exercise any right, remedy, power or privilege
provided for herein or by statute or at law or in equity shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
remedy, power or privilege preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. Any other
provision of this Pledge Agreement notwithstanding, any foreclosure of or
disposal of the Stock under the terms of this Pledge Agreement upon the
occurrence of an Event of Default shall be made pursuant to Section 310 of the
Communications Act of 1934, as amended, and to the applicable rules and
regulations of the FCC, as amended, and, if and to the extent required, after
prior written approval of the FCC.
ARTICLE 7. ENCUMBRANCES
During the term of this Pledge Agreement specified in Article 3, the
Pledgor shall not sell, assign, transfer or otherwise dispose of, grant any
option, other than the option granted to Pledgee pursuant to the Purchase
Agreement, with respect to, or mortgage, pledge or otherwise encumber, the
Stock.
-4-
<PAGE> 60
ARTICLE 8. MISCELLANEOUS
Section 8.1 Transfer Taxes. Transfer taxes, if any, applicable to any
transfer of shares of Stock upon the occurrence of an Event of Default or upon
termination of this Pledge Agreement shall be payable by the person or persons
to whom the shares are being transferred, provided, however, that the Pledgor
agrees to reimburse the Pledgee promptly for all such transfer taxes which the
Pledgee may be required to pay.
Section 8.2 Exercise. No single or partial exercise of any power
hereunder shall include future exercise thereof or the exercise of any other
power. The holder of the Note may proceed against any portion of the security
held therefor in such order and in such manner as the holder may see fit,
without waiver of any rights with respect to any other security.
Section 8.3 Manner of Dealing. The Pledgee may deal in any manner
with the Note, including, without limitation, in the following manner: to
modify, supplement or otherwise change any terms of the Note, subject to the
consent in writing of the Pledgor to any modification of or supplement or
change to any such terms; and by written notice to Pledgor, to grant any
extension or renewal of the Note, to grant any other waiver or indulgence with
respect to the Note, and to effect any release, compromise or settlement with
respect to the Note.
ARTICLE 9. 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:
To the Pledgor: Leininger-Geddes Partnership
102 Fairmont Circle
Daphne, AL 36526
Attention: Dale Leininger
To the Pledgee: Paxson Communications of Little Rock-42, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Lowell W. Paxson
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
Article 9.
-5-
<PAGE> 61
ARTICLE 10. CHOICE OF LAW, ETC.
This Pledge Agreement shall be construed and enforced under and
governed by the laws of the State of Florida, other than the conflicts of law
provisions thereof. This Pledge Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, and this Pledge Agreement
may not be modified or amended or any term or provision hereof waived or
discharged except by a written instrument signed by Pledgor and Pledgee. This
Pledge Agreement shall be binding on the successors, assigns, and legal
representatives of the parties hereto and shall inure to the benefit of and be
enforceable by their successors, assigns, and legal representatives; provided,
however, that neither the Stock nor this Pledge Agreement may be assigned or
transferred in whole or in part, voluntarily or involuntarily, by the Pledgor
without the prior written consent of the Pledgee, and the Pledgee may assign
this Pledge Agreement and all of its rights hereunder to any holder of the Note
without any consent of the Pledgor, but upon notice to Pledgor. The headings
of this Pledge Agreement are for the purpose of reference only and shall not
limit or otherwise affect the meaning hereof. The Pledgor shall take such
further actions as may be reasonably requested by the Pledgee from time to time
in order to perfect the security interest of the Pledgee hereunder and to
assure and confirm onto the Pledgee its rights, powers and remedies hereunder.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-6-
<PAGE> 62
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be executed on their behalf all as of the day and year first above
mentioned.
PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
By:
----------------------------
Name:
Title:
LEININGER-GEDDES PARTNERSHIP
By:
---------------------------
Dale Leininger
General Partner
By:
----------------------------
Lark Hadley
General Partner
<PAGE> 63
EXHIBIT A
Description of Stock
<TABLE>
<CAPTION>
Stockholder Name Certificate No. No. of Shares
---------------- -------------- -------------
<S> <C> <C>
Leininger-Geddes Partnership 1 100
</TABLE>
<PAGE> 64
EXHIBIT B
Shareholders Agreement
<PAGE> 65
EXHIBIT A
LOAN AGREEMENT
BY AND BETWEEN
LEININGER-GEDDES PARTNERSHIP
AND
PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
FOR
TELEVISION STATION KVUT(TV)
LITTLE ROCK, ARKANSAS
AUGUST ___, 1996
<PAGE> 66
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. AMOUNT AND TERMS OF THE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 The Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 The Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.5 Repayment or Forgiveness of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.6 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section l.7 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.8 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.9 Payment on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.1 Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.2 Pledge Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.3 Leasehold Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.4 Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.1 Conditions Precedent to Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.2 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.1 Existence and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.2 Authorizations, Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.4 No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.5 Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.10 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.11 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.12 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.13 Material Misstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
- i -
<PAGE> 67
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VI. COVENANTS OF BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.1 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.3 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VII. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.2 Effect of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.1 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.3 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.4 Address for Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 8.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.6 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.8 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.10 Rights Affected by Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.11 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.12 FCC Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.13 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 8.14 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 8.15 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 8.16 Maximum Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
LIST OF EXHIBITS
Exhibit 1 - Promissory Note
Exhibit 2 - Security Agreement
Exhibit 3 - Partners Pledge Agreement
Exhibit 4 - Borrower Pledge Agreement
- ii -
<PAGE> 68
EXHIBIT A
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this ____ day of August, 1996, is by and
between PAXSON COMMUNICATIONS OF LITTLE ROCK-42, INC., a Florida corporation
having its principal offices at 601 Clearwater Park Road, West Palm Beach,
Florida 33401 ("Lender"), and LEININGER-GEDDES PARTNERSHIP, a general
partnership formed under the laws of the State of Alabama having its principal
offices at 102 Fairmont Circle, Daphne, Alabama 36526 ("Borrower").
WITNESSETH:
WHEREAS, Channel 42 of Little Rock, Inc., a Delaware corporation (the
"Company"), holds a construction permit, Federal Communications Commission
("FCC") File Number BPCT-850607KO (as modified through the date hereof, the
"Construction Permit"), for new television station KVUT(TV), Channel 42, Little
Rock, Arkansas (the "Station");
WHEREAS, the Company, Lender, and Borrower, the majority shareholder of
the Company, have entered into a Stock Purchase Agreement dated as of
August 21, 1996 (the "Purchase Agreement"), pursuant to which, among other
things, Borrower has conveyed to Lender on the date hereof 49% of the issued
and outstanding shares of voting common stock of the Company and has granted to
Lender an option to acquire the remaining issued and outstanding shares of the
Company, subject to the prior approval of the FCC and the terms and conditions
set forth in the Purchase Agreement;
WHEREAS, Lender has agreed to make a loan to Borrower in the total
principal amount of One Million One Hundred Twenty-Two Thousand Six Hundred and
Ninety-Five Dollars ($1,122,695) to provide funds for the construction and
operation of the Station;
WHEREAS, such loan shall be evidenced by a promissory note in the same
amount, which shall be issued by Borrower and dated as of the date hereof;
WHEREAS, in consideration for the material economic benefit that the
general partners of Borrower (the "Partners") will obtain from such loan to the
Borrower, the Partners have agreed to secure such loan by granting Lender a
security interest in all of the partnership interests of Borrower owned by the
Partners;
WHEREAS, the Company and Lender have entered into a Construction
Agreement, dated as of August 21, 1996 (the "Construction Agreement"), pursuant
to which Lender
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agrees to provide certain services in connection with the construction of the
Station subject to the Company's supervision and control;
WHEREAS, the Company and Lender have entered into a Time Brokerage
Agreement, dated as of August 21, 1996 (the "Time Brokerage Agreement"),
pursuant to which Lender agrees to provide programming for broadcast on the
Station;
WHEREAS, Lender, Borrower and the Company have entered into a
Shareholders Agreement, dated as of the date hereof (the "Shareholders
Agreement"), pursuant to which Lender and Borrower agree, among other things,
to restrict the issuance and sale of the capital stock of the Company; and
WHEREAS, Borrower and Lender have agreed to enter into a Lease Agreement
upon completion of construction of the Station (the "Lease Agreement" and,
together with the Purchase Agreement, Construction Agreement, Time Brokerage
Agreement and Shareholders Agreement, the "Transaction Documents"), pursuant to
which Lender shall lease to the Company certain assets used or useful in the
construction and operation of the Station.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, Lender and Borrower agree as follows:
ARTICLE 1. AMOUNT AND TERMS OF THE LOAN
Section 1.1 The Loan. Lender agrees, upon the terms and conditions
hereinafter set forth, to make a loan to Borrower in the principal amount of
One Million One Hundred Twenty-Two Thousand Six Hundred and Ninety-Five Dollars
($1,122,695) (the "Loan").
Section 1.2 The Promissory Note. The outstanding principal amount of
the Loan shall be evidenced by and subject to the terms of a promissory note,
dated of even date herewith, substantially in the form set forth as Exhibit 1
hereto (as amended, renewed, restated, increased, consolidated or substituted
from time to time, the "Note"), payable to the order of Lender and representing
the obligation of Borrower to pay Lender the amount of the Loan, with interest
thereon, as prescribed in Section 1.3. All references to the "Note" in this
Loan Agreement, the Security Agreement, the Pledge Agreements, each Leasehold
Mortgage or Mortgage (each as defined in this Loan Agreement) and in such other
agreements and documents executed and delivered in connection with this Loan
Agreement shall be deemed to be references to the Note referred to in this
Section.
Section 1.3 Interest. The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum at all times equal to the sum of
the interest rate publicly
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announced by Union Bank, a California banking corporation, as its prime rate of
interest, as such rate may be adjusted from time to time, plus two percent.
Interest shall be calculated on the basis of a year of three-hundred and sixty
(360) days and the actual number of days elapsed during the period for which
such interest is payable. Interest shall begin to accrue on the outstanding
principal amount of the Loan on the date of disbursement but shall not be due
and payable, subject to Section 1.5 below, until the date that is 180 days
following the first anniversary of the day the Station begins operating under
Program Test Authority pursuant to Section 73.1620 of the FCC's Rules (the
"Maturity Date").
Section 1.4 Principal. Subject to Section 1.5 below, the outstanding
principal balance of the Loan plus any interest accrued thereon shall be due
and payable on the Maturity Date.
Section 1.5 Repayment or Forgiveness of Loan.
(a) Closing of Purchase Agreement. Upon the consummation
of the transactions contemplated to occur at the Second Closing (as defined in
the Purchase Agreement), the entire outstanding principal balance of the Loan
and all accrued interest thereon shall be forgiven, and Borrower's obligation
to make any further payments to Lender shall terminate.
(b) Termination of Purchase Agreement. If, at any time
following the Initial Closing but prior to the Second Closing (as those terms
are defined in the Purchase Agreement), the Purchase Agreement is terminated by
Buyer pursuant to Section 17.3 or Article 18 thereof, or by Seller and the
Company pursuant to Section 18.1 thereof, then:
(i) if neither Buyer, Seller nor the Company is
in material breach of the Purchase Agreement, the outstanding principal balance
of the Loan plus all accrued interest thereon shall be forgiven as of the
effective date of such termination; or
(ii) if Seller or the Company is in material
breach of the Purchase Agreement, Borrower shall repay the outstanding balance
of the Loan (i.e., principal plus interest accrued since the date of the Loan,
hereinafter "Adjusted Balance") plus all accrued interest on such Adjusted
Balance in consecutive, equal monthly installments commencing on the first day
of the month following the effective date of such termination (the
"Amortization Commencement Date") and ending on the first day of the
thirty-fifth month following the Amortization Commencement Date; or
<PAGE> 71
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(iii) if Buyer is in material breach of the
Purchase Agreement, the outstanding principal balance of the Loan plus all
accrued interest thereon shall be forgiven as of the effective date of such
termination.
Section 1.6 Use of Proceeds. The proceeds of the Loan are to be used
by Borrower exclusively for legitimate and prudent expenses incurred by Borrower
in connection with obtaining the Construction Permit, filing and prosecuting
the Modification Application and maintaining and operating the Station.
Section 1.7 Information. Borrower agrees to furnish to Lender such
information as Lender may reasonably request in connection with the Loan or the
Station, including, without limitation, copies of invoices or other evidence of
the expenses incurred by Borrower in connection with the Construction Permit,
Modification Application or the maintenance or operation of the Station.
Section 1.8 Prepayment. Borrower may prepay the Note in whole at any
time, or from time to time in part, with accrued interest to the date of
prepayment on the amount prepaid, without penalty, provided that each payment,
other than that for the full amount of the outstanding balance, shall be in the
amount of Ten Thousand Dollars ($10,000) or an integral multiple thereof,
provided, however, that Borrower shall reimburse Lender for any prepayment
penalty imposed on Lender or its affiliates under their debt agreements or
instruments as a result of Borrower's prepayment. Each prepayment on the Note
shall be applied to installments of principal payable on the Note in the
inverse order of maturity.
Section 1.9 Payment on Non-Business Days. Whenever any payment to be
made hereunder or under the Note shall be due on a Saturday, Sunday or public
holiday, such payment may be made on the next succeeding business day, and such
extension of time in such case shall be included in the computation of interest
hereunder and under the Note.
ARTICLE II. CLOSING
Section 2.1 Closing Date. Closing of the transactions contemplated
by this Agreement shall occur, subject to the satisfaction of all of the
conditions set forth in Article IV, on the date hereof (the "Closing Date").
ARTICLE III. SECURITY
Section 3.1 Security Interest. As partial security for the Loan, the
Company shall execute and deliver to Lender, on or before the Closing Date, a
security agreement in the form of Exhibit 2 hereto (the "Security Agreement").
<PAGE> 72
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Section 3.2 Pledge Agreements. As further security for the Loan, on
or before the Closing Date, (a) the Partners shall execute and deliver to
Lender a pledge agreement in the form of Exhibit 3 hereto (the "Partners Pledge
Agreement"), pursuant to which the Partners shall pledge to Lender their rights
and interests in all of the partnership interests of Borrower as collateral
security for the Borrower's obligations under this Agreement and the Note; and
(b) Borrower shall execute and deliver to Lender a pledge agreement in the form
of Exhibit 4 hereto (the "Borrower Pledge Agreement" and, collectively with the
Partners Pledge Agreement, the "Pledge Agreements"), pursuant to which the
Borrower shall pledge to Lender all of its rights and interests in the capital
stock of the Company owned by the Borrower as collateral security for the
Borrower's obligations under this Agreement and the Note.
Section 3.3 Leasehold Mortgages. As further security for the Loan, on
or before the Closing Date, the Company shall execute and deliver to Lender a
leasehold mortgage in form and substance reasonably acceptable to Lender (the
"Leasehold Mortgage") for each real property lease entered into by the Company,
if any, as of the Closing Date. In the event that, following the Closing Date,
the Company enters into or assumes the lessee's interest under one or more
additional leases, it shall execute such documents as may be required to grant
Lender a lien on its leasehold interest under such lease or leases. If
requested by Lender, the Company shall also deliver to Lender with respect to
any lease to which the Company becomes a party one or more of the following
documents, each of which shall be in form and substance satisfactory to Lender:
(i) evidence of the filing of the lease or a memorandum of lease, (ii) an
estoppel certificate executed by the landlord under such lease or any
sublessee, (iii) an executed landlord's consent and waiver, (iv) fixture filing
UCC-1 financing statements, (v) copies of such lease and any sublease, (vi)
executed tenant subordination agreements, (vii) a title encumbrance report with
respect to the real property subject to such lease, and (viii) any other
document required by applicable law to create or perfect a mortgage lien with
respect to such lease or reasonably required by Lender.
Section 3.4 Mortgages. At such time as the Company acquires any
parcel of real estate, the Company shall execute a first mortgage or deed of
trust in favor of Lender on such parcel, in form and substance acceptable to
Lender (a "Mortgage"). If requested by Lender, the Company shall also deliver
to Lender with respect to such property one or more of the following documents,
each of which shall be in form and substance satisfactory to Lender: (i) fixture
filing UCC-1 financing statements, (ii) copies of any lease relating to such
property, if any, (iii) executed tenant subordination agreements and estoppel
certificates, if applicable, (iv) a survey of such real property, (v) a
mortgagee title insurance policy, with such coverage and with such endorsements,
including, without limitation, usury, first loss, last dollar, revolving credit,
variable rate, doing business, zoning comprehensive, contiguity
<PAGE> 73
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(as applicable) and survey, to the extent available in the state where the
property is located, as Lender may require, and (vi) any other document
required by applicable law to create or perfect a mortgage lien with respect to
such property or reasonably required by Lender.
ARTICLE IV. CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to Loan. The obligation of Lender to
disburse the Loan hereunder is subject to the following conditions precedent:
(a) The Purchase Agreement shall be in full force and
effect and all of the conditions precedent to the obligations of Lender at the
Initial Closing set forth in Article 6 of the Purchase Agreement shall have
been satisfied; and
(b) Lender shall have received all of the following, on
or before the Closing Date, in form and substance satisfactory to Lender:
(i) The Note, duly executed and delivered by
Borrower;
(ii) The Security Agreement, together with
appropriate UCC-1 forms duly executed and delivered by the Company;
(iii) The Partners Pledge Agreement, duly executed
and delivered by the Partners, and the Borrower Pledge Agreement, duly executed
and delivered by the Borrower, together with stock certificates and blank stock
powers;
(iv) Certified copies of the resolutions of the
Partners evidencing approval of the execution, delivery and performance of this
Agreement, the Note and the Partners Pledge Agreement and other matters
contemplated hereby;
(v) Certified copies of the resolutions of the
Board of Directors of the Company evidencing approval of the execution,
delivery and performance of the Security Agreement and the other matters
contemplated hereby;
(vi) Certificates of Good Standing for the Company
from the State of Delaware and the State of Arkansas issued no more than ten
(10) days prior to the Closing Date;
(vii) With respect to leased real property, if any,
the documents required by Section 3.3, and with respect to owned real property,
if any, the documents required by Section 3.4;
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(viii) Copies of the certificates evidencing the
insurance required to be maintained by Borrower pursuant to Section 6.1(e);
and
(ix) Such other agreements, certificates, opinions
of counsel and documents that Lender may reasonably require.
Section 4.2 Compliance. All of the representations and warranties
of Borrower in this Loan Agreement shall be true and accurate in all material
respects on and as of the Closing Date. Borrower shall be in compliance with
all of the applicable terms and provisions of this Agreement and no Event of
Default or any event which with the lapse of any applicable grace period or the
giving of notice or both would constitute an Event of Default shall have
occurred and be continuing. Borrower shall have performed all obligations and
taken all actions to be performed or taken by it hereunder on or prior to such
date. On the Closing Date, Borrower shall deliver to Lender a certificate,
dated as of such date and signed by a Partner, certifying compliance with the
conditions of this Section 4.2. The disbursement of the Loan to Borrower shall
in and of itself, constitute a representation and warranty that Borrower as of
the date of such Loan, is in compliance with this Section and if Borrower is
not in compliance with this Section, Lender shall not be required to disburse
such Loan to Borrower.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and make the
Loan, Borrower represents and warrants as follows:
Section 5.1 Existence and Standing. Borrower is a general
partnership formed under the laws of the State of Alabama, and the Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and each is qualified to do business in, and is
in good standing under, the laws of any other jurisdiction in which it conducts
its business, and each has all requisite power and authority, corporate,
partnership or otherwise, to conduct its business, to own its properties, and to
execute, deliver, and perform all of its obligations under this Agreement, the
Note, any Mortgage or Leasehold Mortgage, the Security Agreement, the Borrower
Pledge Agreement and all other documents that have been or will be executed and
delivered by Borrower or the Company pursuant to this Agreement (the foregoing
documents, together with the Partners Pledge Agreement, are collectively, the
"Loan Documents").
<PAGE> 75
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Section 5.2 Authorizations, Compliance with Laws. The execution,
delivery and performance by Borrower and the Company of this Agreement, the
Note, any Mortgage or Leasehold Mortgage, the Borrower Pledge Agreement, the
Security Agreement, and all other documents required to be executed and
delivered by Borrower and the Company pursuant to this Agreement, and the
execution, delivery and performance by the Partners of the Partners Pledge
Agreement, have been duly authorized by all necessary corporate or partnership
action and do not and will not (i) violate (A) any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to Borrower, the Partners, the Company
or the Station or (B) any provision of the Partnership Agreement of Borrower or
the Certificate of Incorporation or By-laws of the Company; or (ii) result in a
breach of or constitute a default under any agreement or instrument to which
Borrower, the Partners or the Company is a party or by which their properties
may be affected; or (iii) result in the creation of a lien, charge or
encumbrance of any nature upon Borrower's or the Company's properties or assets
other than as contemplated by this Agreement.
Section 5.3 Capitalization. Borrower owns beneficially and of
record 510 shares of the capital stock of the Company. All of the issued and
outstanding capital stock of the Company has been duly and validly issued, is
fully paid and nonassessable and is free and clear of any liens, security
interests or other claims or encumbrances, except those granted to Lender
pursuant to the terms,of this Loan Agreement and the other Loan Documents.
Except as provided in the Purchase Agreement, neither Borrower nor the Company
has any commitment or obligation, either firm or conditional, to issue,
deliver, purchase or sell, under any offer, option agreement, bonus agreement,
purchase plan, incentive plan, compensation plan, warrant, conversion rights,
contingent share agreement, stockholders agreement, partnership agreement or
otherwise, any capital stock or other equity securities or securities
convertible into shares of capital stock or other equity securities.
Section 5.4 No Consent. Except for such filings with and approvals
of the FCC that may be required in connection with the exercise by Lender of its
rights under the Loan Documents upon an Event of Default, no authorization,
consent, approval, license, exemption of or filing or registration with any
court or governmental department or agency, is or will be necessary for the
valid execution, delivery and performance by Borrower, the Partners or the
Company of this Agreement, the Note, any Mortgage or Leasehold Mortgage, the
Pledge Agreements, the Security Agreement, or any other document required to be
executed and delivered by Borrower, the Partners or the Company pursuant to
this Agreement.
Section 5.5 Binding Obligations. This Agreement, the Note, any
Leasehold Mortgage or Mortgage, the Security Agreement, the Pledge Agreements
and all other
<PAGE> 76
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documents required to be executed and delivered by Borrower, the Partners or
the Company pursuant to this Agreement have been executed and delivered by
Borrower, the Partners or the Company, as the case may be, and constitute
legal, valid and binding obligations of Borrower, the Partners and the Company
enforceable in accordance with their respective terms.
Section 5.6 Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of Borrower, threatened against or affecting
Borrower, the Company or their properties before any court or governmental
department or agency which materially adversely affects the transactions
contemplated by this Agreement or which would have a material adverse effect on
the business, properties, prospects, operation or condition (financial or
otherwise) of the Station, Borrower or the Company.
Section 5.7 No Default. Borrower is not in default in the
performance, observance or fulfillment of any of the obligations or conditions
contained in any material agreement or instrument to which it is a party, nor
with respect to any order, judgment, writ, injunction or decree of any court,
governmental authority or arbitration board.
Section 5.8 Compliance with Laws. Borrower and the Company have
complied with all applicable federal, state and local laws. Borrower and the
Company have obtained all necessary licenses and permits required for the
conduct of their business and operations or such licenses and permits have been
applied for and are now being diligently pursued.
Section 5.9 Taxes. Borrower and the Company have filed all tax
returns and reports (federal, state and local) required to be filed by them and
have paid all taxes shown thereon, including interest and penalties, and all
assessments received by them (except to the extent that the same are being
contested in good faith by appropriate proceedings diligently prosecuted and as
to which adequate reserves have been set aside on the books of Borrower or the
Company in conformity with generally accepted accounting principles).
Section 5.10 Title to Properties. Borrower and the Company have good
and marketable title to all of their property and assets and valid and
enforceable leasehold interests in the property which they hold under lease,
all such property, assets and leasehold interests being free and clear of any
and all mortgages, deeds of trust, assignments, liens, security interests,
charges or encumbrances of any nature whatsoever, except for those created
hereby, and no mortgages, deeds of trust, financing statements or other
evidences of security interests covering all or any of the aforesaid property
are on file among the records of any public office, except those evidencing a
security interest in favor of Lender.
<PAGE> 77
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Section 5.11 Absence of Undisclosed Liabilities. Except for
(i) obligations arising under the Construction Permit and the rules and
regulations of the FCC, (ii) obligations under the Loan Documents,
(iii) liabilities and obligations incurred pursuant to the terms of the
Transaction Documents, and (iv) liabilities incurred in the ordinary course of
business (other than for borrowed money), neither Borrower nor the Company has
on the date hereof any material liabilities or obligations relating to the
Station or otherwise of any nature, whether accrued, absolute, contingent or
otherwise.
Section 5.12 Solvency. Borrower has received, or has the right to
receive, consideration which is the reasonable equivalent value of the
obligations and liabilities that Borrower has incurred to Lender. Borrower is
not insolvent as defined in Section 101 of Title 11 of the United States Code
or any applicable state insolvency statute, nor, after giving effect to the
consummation of the transactions contemplated herein, will Borrower be rendered
insolvent by the execution and delivery of this Agreement, the Note or the
other Loan Documents to Lender. Borrower is not engaged, and Borrower is not
about to engage, in any business or transaction for which the assets retained
by it shall be an unreasonably small capital, taking into consideration the
obligations to Lender incurred hereunder and under the Loan Documents.
Borrower does not intend to, and Borrower does not believe that it will, incur
debts beyond its ability to pay them as they mature.
Section 5.13 Material Misstatement. No statement made herein or
information, exhibit or report furnished by Borrower to Lender in connection
with this Agreement or its negotiation, contains any material misstatement of
fact or omits to state a material fact or any fact necessary to make the
foregoing not misleading.
ARTICLE VI. COVENANTS OF BORROWER
Section 6.1 Affirmative Covenants. So long as the Note shall remain
unpaid, Borrower hereby covenants and agrees that it will, and will cause the
Company to, unless Lender shall otherwise consent in writing:
(a) Payment of Obligations. Pay punctually and discharge
when due: all indebtedness heretofore or hereafter incurred; (ii) all taxes,
assessments and governmental charges or levies imposed upon it or its income or
profits, or upon any properties belonging to it; (iii) claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like
persons which, if unpaid might become a lien or charge upon the property of
Borrower or the Company; provided that this covenant shall not require the
payment of any of the matters set forth in (i), (ii) and (iii) above if the
same shall be contested in good faith and by proper proceedings diligently
pursued and as to which
<PAGE> 78
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adequate reserves have been set aside on the books of Borrower or the Company
in accordance with generally accepted accounting principles.
(b) Preservation of Existence. Preserve and maintain its
existence, rights, franchises and privileges in the jurisdiction of its
formation or incorporation.
(c) Maintenance of Properties. Maintain and preserve all
of its properties necessary or useful in the proper conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(d) Compliance with Laws. Comply in all material
respects with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority.
(e) Maintenance of Insurance. Maintain with responsible
and reputable insurance companies policies on all of its properties and
covering such risks, including public liability and workers' compensation, in
such amounts as are usually carried by companies engaged in similar businesses
and owning similar properties as Borrower and the Company, and promptly upon
execution thereof provide to Lender copies of all such policies and any riders
or amendments thereto. The policies of insurance required hereunder shall name
Lender as an additional loss payee or additional insured, as applicable, and
shall provide that Lender shall receive at least thirty (30) days' written
notice prior to the cancellation, termination or alteration of any such policy.
(f) Operations in Ordinary Course. Continue to operate
its business in the ordinary course.
(g) Perfection of Liens. Do all things requested by
Lender to preserve and perfect as first liens and security interests the liens
and security interests of Lender arising pursuant to the Security Agreement,
the Pledge Agreements, any Leasehold Mortgage, any Mortgage or any other
agreement required hereunder.
(h) FCC Approval. If counsel to Lender reasonably
determines that the consent of the FCC is required in connection with the
execution, delivery and performance of this Agreement, the Pledge Agreements,
the Security Agreement, any Mortgage or Leasehold Mortgage or any other
document delivered to Lender in connection herewith or therewith or as a result
of any action which may be taken pursuant hereto or thereto, then Borrower, at
its sole cost and expense, agrees to use its best efforts to secure such
consent and to cooperate with Lender in any action commenced by Lender to
secure such consent.
<PAGE> 79
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(i) Agreements. Comply with its obligations under the
Transaction Documents.
(j) Information and Inspection. Borrower shall furnish
to Lender from time to time, upon request, full information pertaining to any
covenant, provision or condition hereof, or to any matter connected with its
books, records, operations, financial condition, properties, activities or
business. At all reasonable times, Borrower shall permit any authorized
representatives designated by Lender to visit and inspect any of the properties
of Borrower and its books and records, and to take extracts therefrom and make
copies thereof, and to discuss Borrower's affairs, finances and accounts with
the management and independent accountants of Borrower.
Section 6.2 Negative Covenants. So long as the Note shall remain
unpaid and the Agreement shall not have been terminated, Borrower hereby
covenants that it will not, and it will not permit the Company to, without
Lender's prior written approval:
(a) Indebtedness. Create or incur, assume or suffer to
exist any indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, except for:
(i) indebtedness evidenced by the Note; (ii) indebtedness (other than for
borrowed money) incurred in the ordinary course of business not to exceed Fifty
Thousand Dollars ($50,000) in the aggregate at any one time; (iii) obligations
or liabilities arising under the indemnification provisions of the Purchase
Agreement.
(b) Liens. Create, assume or suffer to exist, directly
or indirectly, any security interest, mortgage, deed of trust, pledge, lien,
charge or other encumbrance, of any nature whatsoever upon any of its
properties or assets, now owned or hereafter as acquired, excluding, however,
from the operation of this covenant:
(i) any security interest or lien created
pursuant to or in connection with this Agreement or securing the Loan, the
Security Agreement, the Pledge Agreements, any Leasehold Mortgage or any
Mortgage;
(ii) liens for taxes or assessments either not
delinquent or the validity of which are being contested in good faith by
appropriate legal or administrative proceedings and as to which adequate
reserves shall have been set aside on its books, in conformity with generally
accepted accounting principles;
(iii) materialmen's, mechanics', carriers',
workmen's, repairmen's, warehousemen's or other like liens arising in the
ordinary course of business and either not
<PAGE> 80
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yet due and payable or being contested in good faith by appropriate legal
proceedings and as to which adequate reserves shall have been set aside on its
books, in conformity with generally accepted accounting principles;
(iv) deposits or pledges to secure payment of workers'
compensation, unemployment insurance or other social security benefits or
obligations; or
(v) any judgment lien, singly or aggregated with
other judgment liens, in an amount less than Fifty Thousand Dollars ($50,000),
unless the judgment it secures shall not, within thirty (30) days after the
entry thereof, have been discharged, vacated, reversed, or execution thereof
stayed pending appeal, or shall not have been discharged, vacated or reversed
within thirty (30) days after the expiration of any such stay.
(c) Disposition of Assets. Except pursuant to the terms
of the Purchase Agreement, sell, transfer, lease or otherwise dispose of any of
its assets or properties other than sales of assets in the ordinary course of
business (which sales in the ordinary course of business shall expressly not
include any transfer or assignment of any FCC License).
(d) Merger. Enter into any consolidation or merger with,
or into any acquisition of all or substantially all of the properties or assets
of any person or entity.
(e) Transfer or Issuance of Equity. Issue or permit the
transfer of any partnership interests of Borrower or any shares of the capital
stock of the Company, or any options, warrants, convertible securities or other
rights to purchase Borrower's partnership interests or the Company's stock.
The preceding sentence shall not apply to issuances or transfers to Lender.
(f) Remove Assets. Remove any of the assets included in
the collateral described in the Security Agreement, or any replacements for
such assets, to a jurisdiction in which no financing statement on Form UCC-1
has been filed by Lender with respect to such assets.
(g) Distributions or Dividends. Declare or make,
directly or indirectly, in respect of the Company's capital stock, any payment
or distribution to Borrower, or incur any liability for the purchase,
acquisition, redemption or retirement of any capital stock of the Company or as
a dividend, return of capital or other payment or distribution of any kind to
Borrower or any affiliate of Borrower (other than any stock dividend or stock
split or similar distribution payable only in capital stock of the Company).
<PAGE> 81
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(h) Transactions with Affiliates. Enter into any
transaction or agreement, other than the Transaction Documents, with any
affiliate of Borrower.
(i) Contracts. Enter into any contract or commitment
relating to its stock or assets except for contracts involving aggregate
payments of less than Twenty-Five Thousand Dollars ($25,000) and contracts
which can be terminated without penalty on thirty (30) days' notice or less, or
amend or terminate any material contract (or waive any substantial right
thereunder), or incur any obligation (including obligations relating to the
borrowing of money or guarantee of indebtedness).
(j) Adverse Change. Cause any material adverse change in
the business, assets, properties, prospects or condition (financial or
otherwise) of the Company or the Station.
(k) Cancellation of Debts. Cancel any debts owed to or
claims held by Borrower or the Company.
(l) Write-Down. Suffer any significant write-down of the
value of any assets or any significant write-off as uncollectible of any
accounts receivable without the prior written consent of Lender except and as
required by generally accepted accounting principles as required to present
accurate financial information on Borrower or the Company.
(m) Rights. Transfer or grant any right under, or enter
into any settlement regarding the breach or infringement of, any license,
patent, copyright, trademark, service mark, trade name, franchise, or similar
right, or modify any existing right relating to the Company or Borrower.
(n) Agreements. Terminate, amend or commit any material
breach or default under the Transaction Documents.
(o) Subsidiaries. Create or acquire any subsidiary of
Borrower or the Company unless Lender shall have approved such action in
advance and Borrower or the Company shall have taken all actions required by
Lender to grant Lender a first priority security interest in all of the issued
and outstanding stock or other equity interests of such subsidiary. Borrower
acknowledges and agrees that until such time as such security interest is
granted and perfected, Lender shall have an equitable lien in the stock of any
subsidiary created or acquired by Borrower or the Company.
(p) Programming. After the Station's commencement of
operations pursuant to Program Test Authority, except as permitted by the terms
of the Time Brokerage
<PAGE> 82
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Agreement, make any changes in the Station's programming except for changes in
the Station's non-entertainment or public affairs programming so long as such
changes do not increase by more than ten percent the aggregate amount of non-
entertainment and public affairs programming broadcast each week by the Station
between the hours of 6:00 a.m. and midnight.
Section 6.3 Reporting Requirements. So long as the Note shall remain
unpaid and the Agreement shall not have been terminated, Borrower shall, unless
Lender shall otherwise consent in writing, furnish to Lender:
(a) Default Certificate. As soon as possible and in any
event within five (5) business days after the occurrence of each Event of
Default (as defined in Section 7.1) of which Borrower has knowledge, the
statement of Borrower setting forth details of such Event of Default and the
action which Borrower proposes to take with respect thereto.
(b) Employee Compensation. Reasonable prior notice of
any contemplated material increase in compensation, including any bonus
payments, insurance coverage and other benefits, payable or to become payable
to any employees of the Company.
(c) Notice of Litigation. Promptly give written notice
of all actions, suits and proceedings before any court or governmental agency,
domestic or foreign, which may be commenced or threatened against Borrower in
which the claim involved is Five Thousand Dollars ($5,000) or more and of any
other matter of the type described in Section 5.6.
(d) Budget. An annual budget within thirty (30) days of
the beginning of each fiscal year of the Company.
(e) Other Information. Such other information respecting
the business, properties, operations or the condition, financial or otherwise,
of Borrower or the Station as Lender may from time to time reasonably request.
ARTICLE VII. EVENTS OF DEFAULT
Section 7.1 Events of Default. Under this Agreement, an Event of
Default shall be any of the following:
(a) Borrower shall fail to pay principal or interest on
the Note when due whether at the due date thereof or by acceleration or
otherwise, and such default shall remain unremedied for a period of five (5)
days after receipt by Borrower of notice of default; or
<PAGE> 83
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(b) The security interest or lien of Lender in any
material portion of the collateral covered by the Security Agreement, Pledge
Agreements or any Leasehold Mortgage or Mortgage shall at any time not
constitute a legal, valid and enforceable security interest or lien; or
(c) Any representation or warranty made by Borrower (or
any of its Partners) herein, or by the Company in the Security Agreement or any
Leasehold Mortgage or Mortgage, or by Borrower or the Partners in the Pledge
Agreements or in any certificate, agreement, instrument or statement
contemplated by or made or delivered pursuant to or in connection with this
Agreement, the Note, any Leasehold Mortgage or Mortgage, the Security Agreement
or the Pledge Agreements, shall prove to have been incorrect in any material
respect when made; or
(d) Borrower or the Company shall fail to perform or
observe any other term, covenant or agreement contained in this Agreement, the
Note, the Security Agreement, any Leasehold Mortgage or Mortgage, or Borrower
or the Partners shall fail to perform or observe any term, covenant or
agreement contained in the Pledge Agreements, and any such failure
remains, unremedied for thirty (30) days after written notice thereof shall have
been given to Borrower by Lender; or
(e) Borrower or the Company shall fail to pay any
indebtedness for borrowed money owing by Borrower or the Company or any
interest or premium thereon, when due, whether such indebtedness shall become
due by scheduled maturity, by required prepayment, by acceleration, by demand
or otherwise, or Borrower or the Company shall fail to perform any term,
covenant or agreement under any agreement or instrument evidencing or securing
or relating to any such indebtedness owing by Borrower or the Company if the
effect of such failure is to accelerate, or to permit the holder of such
indebtedness to accelerate the maturity of such indebtedness; or
(f) Either (i) Borrower or the Company shall fail to pay
its debts as they mature in the ordinary course of business; or (ii) Borrower
or the Company shall file a petition commencing a voluntary case concerning it
under any Chapter of Title 11 of the United States Code entitled "Bankruptcy";
or (iii) Borrower or the Company shall apply for or consent to the appointment
of any receiver, trustee, custodian or similar officer for it or for all or any
substantial part of its property; or (iv) such receiver, trustee, custodian or
similar officer shall be appointed without the application or consent of
Borrower or the Company and such appointment shall continue undischarged for a
period of thirty (30) days; or (v) an involuntary case is commenced against
Borrower or the Company under any Chapter of the aforementioned Title 11 and an
order for relief under such Title 11 is entered or the petition commencing the
case is controverted but is not dismissed within thirty (30)
<PAGE> 84
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days after the commencement of the case; or (vi) Borrower or the Company shall
institute (by petition, application, answer, consent or otherwise) any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation or similar proceeding relating to it under the laws of
any jurisdiction; or (vii) any such proceeding shall be instituted against
Borrower or the Company and shall remain undismissed for a period of thirty
(30) days; or (viii) Borrower or the Company shall take any action for the
purpose of effectuating the foregoing; or
(g) Any court, government, or government agency shall
condemn, seize or otherwise appropriate or take custody or control of all or a
substantial portion of the property or assets of Borrower or the Company; or
(h) There shall be a cancellation, denial or revocation
of any material FCC License for the Station (including the Construction
Permit), Borrower shall be denied renewal of any such FCC License, or any such
FCC License shall be renewed on terms that materially adversely affect the
economic or commercial value or usefulness thereof and any such action of the
FCC described in this Section 7.1(h) shall have become a final, nonappealable
order; or
(i) Any money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an amount in excess of
Fifty Thousand Dollars ($50,000), or (ii) in the aggregate at any time an
amount in excess of Fifty Thousand Dollars ($50,000), and in either case not
adequately covered by insurance as to which the insurance company has
acknowledged coverage, shall be entered or filed against Borrower, the Company
or their assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of 30 days or in any event later than five days prior to the date
of any proposed sale thereunder; or
(j) Any material adverse effect upon or change in (a) the
properties, assets, business, operations, financial condition, prospects,
liabilities or capitalization of Borrower or the Company or on the ability of
Borrower or the Company to conduct its business, (b) the ability of Borrower,
the Company or any other party to a Loan Document (other than Lender) to
perform its obligations hereunder, under the Pledge Agreements or under any
other Loan Document to which it is a party, (c) the validity or enforceability
of this Agreement, the Note, any other Loan Document or the Pledge Agreements,
(d) the rights or remedies of Lender under this Agreement, the Note, any other
Loan Document, the Pledge Agreements or at law or in equity or (e) the value of
any material collateral granted to Lender pursuant to any Loan Document or the
Pledge Agreements shall occur.
Section 7.2 Effect of Event of Default. Should any Event of Default
occur, Lender may at its option by written notice to Borrower declare the
entire unpaid principal amount of
<PAGE> 85
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the Note, together with all unpaid interest and all other amounts payable under
this Agreement and every other obligation of Borrower to Lender, immediately
due and payable, whereupon the Note and all such obligations shall become and
be forthwith due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by Borrower,
anything contained herein or in the Note or in such other note or evidence of
indebtedness to the contrary notwithstanding; provided, however, that in case
of an Event of Default under Section 7.1(f), all the obligations of Borrower
under this Agreement and the Note shall become immediately due and payable as
of the date of any such Event of Default regardless of the cause of such Event
of Default and without any notice to Borrower required from Lender. Lender
shall have, in addition to all other rights and remedies allowed by law, the
rights and remedies of a secured party under the Uniform Commercial Code and,
without limiting the generality of the foregoing, the rights and remedies
provided for in the Security Agreement, Pledge Agreements, and any Mortgage or
Leasehold Mortgage, which provisions are hereby incorporated by reference.
ARTICLE VIII. MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies. No failure or delay on
the part of Lender in exercising any right, power or remedy hereunder shall
operate as a waiver, nor shall any single or partial exercise of any such
right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
Section 8.2 Amendments. No amendment, modification, termination or
waiver of any provision of this Agreement, the Note, the Security Agreement, or
the Pledge Agreements, nor consent to any departure by Borrower therefrom,
shall in any event be effective unless in writing, signed by Lender and then
only in the specific instance and for the specific purpose for which given. No
notice to or demand on Borrower in any case shall entitle it to any other or
farther notice or demand in similar or other circumstances.
Section 8.3 Conflicts. In the event of any conflict or inconsistency
between any provision of this Agreement and a provision of the Note, the
Security Agreement, or the Pledge Agreements, the provisions of this Agreement
shall control.
Section 8.4 Address for Notices. All notices and other
communications under this Agreement shall be in writing and shall be served by
personal service or by mailing a copy thereof by registered or certified mail,
return receipt requested, to the applicable party at the addresses indicated
below:
<PAGE> 86
- 19 -
If to Borrower: Leininger-Geddes Partnership
102 Fairmont Circle
Daphne, Alabama 36526
Attention: Dale Leininger
If to Lender: Paxson Communications of Little Rock-42, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson
or at such other address as may be designated by either party in a written
notice to the other complying as to delivery with the terms of this Section.
All such notices and other communications shall be effective when deposited in
the mails.
Section 8.5 Expenses. Borrower agrees to pay on demand all costs and
expenses incurred by Lender directly in the enforcement of this Agreement, the
Note, the Security Agreement, any, Mortgage or Leasehold Mortgage, the Pledge
Agreements and other instruments and documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of any attorney
to whom the Note is referred for collection (whether or not litigation is
commenced) or for representation out of court, in trial, on appeal or in
proceedings under any bankruptcy or insolvency law or otherwise. In addition,
Borrower shall pay any and all taxes and fees payable or determined to be
payable in connection with the execution, delivery or recordation of any
instruments and documents to be delivered hereunder. In addition, Borrower
agrees to pay all the costs of furnishing all opinions by counsel for Borrower,
and of Borrower's performance of and compliance with all agreements and
conditions contained herein and in the other Loan Documents on its part to be
performed or complied with including, without limitation, confirming compliance
with environmental and insurance requirements.
Section 8.6 Binding Effect; Assignment. This Agreement shall become
effective when executed and thereafter shall be binding upon and inure to the
benefit of Borrower, Lender and their respective successors and assigns, except
that Borrower shall not have the right to assign any rights or obligations
hereunder without the prior written consent of Lender. Lender shall be
permitted to assign, without Borrower's consent but upon notice to Borrower,
all or any portion of Lender's rights and interests hereunder and under each
other document executed in connection with this Loan Agreement (x) to one or
more other affiliates of Lender, and, upon any such assignment, each reference
herein or in such other document to "Lender" shall be deemed to be and include
a reference to such other affiliate and (y) to creditors of Lender or its
affiliates as security for indebtedness of Lender or such affiliates. For
purposes of this section, the term affiliate shall mean, as applied to any
entity
<PAGE> 87
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or individual, any other entity or individual directly or indirectly
controlling, controlled by, or under common control with, that entity or
individual. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and under
"common control with"), as applied to any entity or individual, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that entity or individual, whether
through the ownership of voting securities, partnership interests or otherwise
by contract.
Section 8.7 Governing Law. This Agreement, the Note, the Security
Agreement, the Pledge Agreements and related documents shall be governed by,
and construed in accordance with, the laws of the State of Florida with the
exception of its conflicts of laws provisions; provided that the effect of any
recordation shall be determined by the State thereof.
Section 8.8 Severability of Provisions. Any provision of this
Agreement, the Note, the Pledge Agreements, the Security Agreement, or any
Mortgage or Leasehold Mortgage that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions or affecting the validity or enforceability of any provisions in any
other jurisdiction.
Section 8.9 Headings. Article and Section headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
Section 8.10 Rights Affected by Extensions. The rights of Lender and
its assigns shall not be impaired by any indulgence, release, renewal,
extension or modification which Lender may grant with respect to the
indebtedness or any part thereof, or with respect to the collateral or with
respect to any endorser, guarantor, or surety without notice or consent of
Borrower or any endorser, guarantee, or surety.
Section 8.11 Survival of Representations and Warranties. All
representations and warranties made in this Agreement and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Agreement and the Note and the making of the Loan
hereunder and continue in full force and effect, as of the respective dates as
of which they were made, until all of the obligations of Borrower to Lender
hereunder have been paid in full.
Section 8.12 FCC Compliance. Notwithstanding anything herein or in
any of the other Loan Documents to the contrary, but without limiting or
waiving Borrower's
<PAGE> 88
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obligations hereunder or under any of the other Loan Documents, Lender's
remedies hereunder and under the other Loan Documents are subject to compliance
with the Communications Act of 1934, as amended, and all applicable rules,
regulations and policies of the FCC, and Lender will not take any action
pursuant to this Agreement or any of the other Loan Documents that would
constitute or result in any assignment of any FCC authorization held by the
Company or any change of control of the Station if such assignment or change of
control would require under then existing law (including the written rules and
regulations promulgated by the FCC), the prior approval of the FCC, without
first obtaining such approval of the FCC. This Agreement, the other Loan
Documents and the transactions contemplated hereby and thereby do not and will
not constitute, create, or have the effect of constituting or creating,
directly or indirectly, actual or practical ownership of Borrower or the
Company by Lender or control, affirmative or negative, direct or indirect, of
Borrower or the Company by Lender, over the programming, management or any
other aspect of the operation of Borrower or the Company, which ownership and
control remain exclusively and at all times in Borrower and the Company until
such time as Lender has complied with such law, rules, regulations and
policies.
Section 8.13 Further Assurances. From time to time, Borrower shall
execute and deliver to Lender such additional documents as Lender may
reasonably require to carry out the purposes of this Agreement or any of the
documents entered into in connection herewith, or to preserve and protect the
rights of Lender hereunder or thereunder.
Section 8.14 Indemnification. Borrower hereby indemnities and holds
harmless Lender and its directors, officers, shareholders, employees, agents,
counsel, subsidiaries and affiliates (the "Indemnified Persons") from and
against any and all losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against any
Indemnified Person in any way relating to or arising out of this Agreement, the
documents entered into in connection herewith, or any of them or any of the
transactions contemplated hereby or thereby; provided, however, that Borrower
shall not be liable to any Indemnified Person, if there is a judicial
determination that such losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the gross negligence or willful misconduct of such Indemnified Person.
Section 8.15 Waiver. EACH OF LENDER AND BORROWER HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS
IRREVOCABLE,
<PAGE> 89
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MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, REPLACEMENTS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN.
Section 8.16 Maximum Interest. Lender and Borrower intend that this
Agreement and the other Loan Documents conform to all applicable usury laws.
Accordingly, no provisions of the Loan Documents shall require the payment or
permit the collection of interest in excess of the maximum rate permitted by
applicable law ("Maximum Rate"), or obligate Borrower to pay any taxes,
assessments, charges, insurance premiums or other amounts which are held to
constitute interest to the extent that such payments, when added to the other
obligations under the Loan Documents, would be held to constitute contracting
for, or the payment by Borrower of, interest at a rate greater than the Maximum
Rate. Lender and Borrower further agree that:
(i) if any excess of interest in such respect is
herein or in any such other instrument provided for, or shall be adjudicated to
be so provided for herein or in any such instrument, the provisions of this
subsection 8.16 shall govern, and neither Borrower nor its successors or
assigns shall be obligated to pay the amount of such interest to the extent it
is in excess of the Maximum Rate;
(ii) if at any time the amount of interest under
any of the Loan Documents for a calendar year exceeds the Maximum Rate had the
Maximum Rate at all times been in effect, the interest chargeable under any
such Loan Document shall be limited to the amount of interest that could have
been charged if the Maximum Rate had at all times been in effect, but any
subsequent reductions in the interest due shall not reduce the rate of interest
chargeable under any such Loan Document below the Maximum Rate until the total
amount of interest accrued under any such Loan Document equals the amount of
interest that would have accrued if the interest provided for in any such Loan
Document had at all times been in effect and collectible;
(iii) if the maturity of any Loan Document is
accelerated for any reason, or in the event of any prepayment by Borrower, or
in any other event, earned interest may never include more than the Maximum
Rate, computed from the date of disbursement of the funds evidenced by such
Loan Document until payment, and any interest otherwise payable under such Loan
Document that is in excess of the Maximum Rate shall be canceled automatically
as of such acceleration or such other event and (if theretofore paid) shall be
credited against principal;
<PAGE> 90
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(iv) if it should be held that any interest
payable or chargeable under any Loan Document is in excess of the Maximum Rate,
the interest payable or chargeable under such Loan Document shall be reduced to
the maximum amount permitted by applicable federal or state law, whichever
shall permit the higher lawful interest, as construed by courts having
jurisdiction thereof; and
(v) the spreading, prorating and amortizing of
interest over the Maturity Date of the Loan Documents shall be allowed to the
fullest extent permitted by applicable law.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 91
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be executed by their respective duly authorized officers as of the
date first above written.
PAXSON COMMUNICATIONS OF
LITTLE ROCK-42, INC.
By:
-----------------------------
Name:
Title:
LEININGER-GEDDES PARTNERSHIP
By:
-----------------------------
Dale Leininger
General Partner
By:
----------------------------
Lark Hadley
General Partner
<PAGE> 92
EXHIBIT 1
PROMISSORY NOTE
$1,122,695 August __, 1996
FOR VALUE RECEIVED, the undersigned, Leininger-Geddes Partnership, a
general partnership formed under the laws of the State of Alabama with its
address at 102 Fairmont Circle, Daphne, Alabama 36526 (the "Maker"), promises
to pay to the order of PAXSON COMMUNICATIONS OF LITTLE ROCK-42, INC., a Florida
corporation with its address at 601 Clearwater Park Road, West Palm Beach,
Florida, 33401 (the "Payee"), or its designee, in the manner set forth below,
the principal sum of One Million One Hundred Twenty-Two Thousand Six Hundred
and Ninety-Five Dollars ($1,122,695), together with interest thereon as
provided herein. All capitalized terms not otherwise defined herein shall have
the meanings ascribed to such terms in the Loan Agreement (as defined below).
1. The holder of this Note is authorized to endorse
the date and amount of the loan evidenced hereby and the payment of principal
and/or interest with respect thereto on Schedule A annexed hereto and made a
part hereof, but the failure of the holder of this Note to make such
endorsement shall not affect the rights of the Payee or the obligations of the
Maker under this Note, the Loan Agreement dated as of August 21, 1996, between
Maker and Payee (the "Loan Agreement") and any documents executed in connection
therewith or under applicable law.
2. The principal balance of and all interest on the Loan
evidenced hereby shall be due and payable or forgiven, as the case may be, as
provided in Article I of the Loan Agreement.
3. This Note evidences indebtedness of the Maker to the
Payee arising under the Loan Agreement, to which reference is hereby made for a
statement of the rights of the Payee and the duties and obligations of the
Maker in relation thereto. Neither this reference to the Loan Agreement nor
any provision thereof shall affect or impair the absolute and unconditional
obligation of the Maker to pay the principal of or interest on this Note when
due.
<PAGE> 93
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4. In the event any installment of principal or interest
on this Note is not paid when due, whether such installment comes due by
acceleration or otherwise.
5. The payment of this Note is secured by a Security
Agreement, Partners Pledge Agreement, and Borrower Pledge Agreement, all as
more fully identified in the Loan Agreement.
6. Payment upon this Note shall be made by check payable
to the Payee at 601 Clearwater Park Road, West Palm Beach, Florida, 33401, or
such other place as the Payee or a subsequent holder of this Note shall
designate to the Maker in writing, in lawful money of the United States of
America.
7. This Note may be prepaid by the Maker, in whole or in
part in integral multiples of Ten Thousand Dollars ($10,000), at any time
without premium or penalty. Each prepayment on this Note shall be applied to
installments of principal payable on this Note in the inverse order of
maturity.
8. The Maker hereby waives any defenses based upon, and
specifically assents to, any and all extensions and postponements of the time
of payment and all other indulgences or forbearances which may be granted to
any party liable hereon by the Payee or any subsequent holder of this Note.
9. The Maker hereby waives presentment, demand for
payment, notice of protest, notice of non-payment, protest, and all other
demands and notices in connection with the delivery, acceptance, performance,
default or enforcement of this Note.
10. No delay or omission on the part of the Payee or any
subsequent holder of this Note in exercising any right hereunder shall operate
as a waiver of such right or of any other right of the Payee or such holder,
nor shall any delay, omission or waiver on any one occasion be deemed a bar to
or waiver of the same or any other right on any other occasion.
11. No single or partial exercise by the Payee or any
subsequent holder hereof of any power hereunder shall preclude any other or
future exercise thereof or the exercise of any other power.
12. If any Event of Default shall occur, the Payee may at
its option by written notice to the Maker declare the entire unpaid principal
amount of this Note, together with all unpaid interest and all other amounts
payable under the Loan
<PAGE> 94
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[Missing Page]
<PAGE> 95
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16. The provisions of this Note are hereby declared to be
severable and if any such provision or the application of any such provision to
any person or in any circumstances shall be held to be invalid or
unconstitutional, such invalidity or unconstitutionality shall not be construed
to affect the validity or constitutionality of any of the remaining provisions
as applied to such person, or in circumstances other than those as to which it
is held invalid.
[SEAL] LEININGER-GEDDES PARTNERSHIP
By:
---------------------------------
Dale Leininger
General Partner
By:
--------------------------------
Lark Hadley
General Partner
<PAGE> 96
SCHEDULE A
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date Amount of Loan Amount Repaid Unpaid Balance Notation Made By
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
- ------ -------------- ------------- -------------- ----------------
</TABLE>
<PAGE> 97
EXHIBIT 2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is dated as of this ____ day of
__________, 1996, by and between CHANNEL 42 OF LITTLE ROCK, INC., a Delaware
corporation (the "Company"), and PAXSON COMMUNICATIONS OF LITTLE ROCK-42, INC.,
a Florida corporation (the "Secured Party").
W I T N E S S E T H:
WHEREAS, the Company, Secured Party, and Leininger-Geddes Partnership, a
general partnership formed under the laws of the State of Alabama (the
"Borrower"), are parties to a Stock Purchase Agreement dated as of August 21,
1996 (the "Purchase Agreement");
WHEREAS, pursuant to the Purchase Agreement, Borrower and Secured Party
have entered into a Loan Agreement dated as of the date hereof (the "Loan
Agreement"), pursuant to which Secured Party agrees to make a loan (the "Loan")
to Borrower in the amount of One Million One Hundred Twenty-Two Thousand Six
Hundred and Ninety-Five Dollars ($1,122,695);
WHEREAS, the Borrower has executed a promissory note of even date
herewith (as amended, renewed, restated, increased, consolidated or substituted
from time to time, the "Note"), evidencing the Borrower's indebtedness to the
Secured Party under the Loan Agreement; and
WHEREAS, the Loan Agreement requires the Company, a subsidiary of
Borrower, to execute and deliver to Lender this Security Agreement to secure
the Borrower's obligations under the Loan Agreement and the Note by granting
Secured Party a security interest in substantially all of the Company's
personal property.
NOW, THEREFORE, in consideration of the promises and agreements
contained herein and the Secured Party's extension of the Loan pursuant to the
Note and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Secured Party and the Company agree as follows:
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ARTICLE 1. GRANT OF SECURITY MEREST
In order to secure the payment of the amount loaned by Secured Party
to Borrower pursuant to the Loan Agreement and the Note, plus interest accrued
thereon and all other obligations of the Borrower to Secured Party (being
hereinafter collectively referred to as the "Obligations"), the Company hereby
grants to Secured Party a first priority security interest in all of the
Company's right, title and interest in and to all of its personal property,
both tangible.and intangible and of every kind and description, whether now or
hereafter existing, or now owned or hereafter acquired, and wherever located,
and all proceeds, products, replacements, additions, accessions and/or
substitutes therefor, including, without limitation, all goods, machinery,
equipment, furniture, furnishings, fixtures, inventory, accounts, chattel
paper, instruments and general intangibles, as such terms may be defined in the
Uniform Commercial Code in the jurisdiction in which such assets are located,
including, without limitation, all properties and assets of the Company used or
utilized in the construction and operation of the Station, and the proceeds and
products of any and all of the foregoing assets and properties described in
this Article 1, including proceeds of insurance policies relating to any and
all of the foregoing assets and properties; provided, however, that such
security interest does not include any permits or licenses granted by the FCC
to the extent that the Company is prohibited from granting a security interest
therein pursuant to the Communications Act of 1934, as amended, and the
regulations promulgated thereunder, and any other licenses to the extent the
transfer or pledging thereof is prohibited by the granting authority.
All of the foregoing shall be hereinafter referred to as the "Collateral."
ARTICLE 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY
The Company represents, warrants and covenants that:
(a) the Collateral (and all records pertaining thereto)
will at all times be kept at the locations specified on Exhibit A hereto and
the Company will not change the location at which any of the Collateral is
usually kept or the location of its chief executive office or principal place
of business without giving fifteen (15) days' prior written notice to Secured
Party;
(b) the Company owns and has possession of the Collateral
except that portion to be hereafter acquired;
(c) to the best of the Company's knowledge, all the
Collateral is genuine and enforceable and free from liens, adverse claims,
charges, encumbrances, taxes or assessments, other than the liens created
hereby and by the Lease Agreement (as defined in the Loan Agreement), and the
Company shall defend the same against all claims and
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demands of all persons at any time claiming against the same or any interests
therein adverse to Secured Party;
(d) to the best of the Company's knowledge, all items of
the Collateral comply with applicable laws;
(e) to the best of the Company's knowledge, no financing
statement covering any of the Collateral, and naming any secured party other
than Secured Party, is on file in any public office;
(f) the Company will maintain, replace, repair, service
and take other action as may be necessary from time to time to keep and
preserve its inventory, machinery and equipment in general repair and good
working order and any inventory, machinery or equipment which wears out or is
destroyed will be replaced or restored if necessary for the operation of the
business of the Company in the ordinary course. The Company will within 10
days notify Secured Party of any event comprising loss of or decrease in the
value of the Collateral in excess of $20,000;
(g) The Company will comply with all laws, rules and
regulations relating to, and shall pay prior to delinquency, all license fees,
registration fees, taxes and assessments and all other charges, which may be
levied upon or assessed against, or which may become security interests, liens
or other encumbrances upon the ownership, operation, possession or maintenance
of the Collateral; provided that the Company shall not be required to comply
with any such law, rule or regulation or to pay any such tax or assessment or
other such charge, the validity of which is being contested by the Company in
good faith by appropriate proceedings commenced and prosecuted with due
diligence and with respect to which adequate reserves have been established and
are being maintained in accordance with generally accepted accounting
principles;
(h) The Company will execute and file and refile such
financing statements, continuation statements and other documents in such
offices as Secured Party may deem necessary or appropriate in order to protect
or preserve Secured Party's security interest in the Collateral;
(i) The Company will not sell, offer to sell, hypothecate
or otherwise dispose of any material part of the Collateral (including
proceeds) subject hereto, or any part thereof or interest therein at any time
other than in the ordinary course of business or in exchange for Collateral of
like value in which Secured Party shall have a security interest;
(j) The Company will at all times keep accurate records
with respect to the Collateral, which are as complete and comprehensive as
those which are customarily maintained by those engaged in similar businesses,
and Secured Party will have the right to inspect such records at such times and
from time to time during normal business hours as Secured Party may reasonably
request;
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(k) The Company will provide any service and do any other
acts or things necessary to keep the Collateral free and clear of all defenses,
rights of offset and counterclaims. Secured Party may, at any time prior to
termination hereof and within the bounds of reasonableness, require the Company
from time to time to deliver to Secured Party (i) schedules describing all the
Collateral subject hereto, and (ii) instruments and chattel paper included in
the Collateral, appropriately assigned and endorsed to Secured Party;
(l) The Company will maintain such insurance on the
Collateral as may be reasonably required by Secured Party. In the event of
failure to provide and maintain insurance as herein provided, Secured Party
may, at its option, provide such insurance and the Company hereby promises to
pay Secured Party on demand the amount of any disbursements made by Secured
Party for such purpose. Risk of loss or damage shall accrue to the Company to
the extent of any deficiency in any effective insurance. The Company shall
furnish to Secured Party certificates or other evidence satisfactory to Secured
Party of compliance with the foregoing insurance provisions. The Company shall
give immediate written notice to Secured Party and to the insurers of any loss
or damage to the Collateral or any part thereof in excess of $20,000 and shall
promptly file all necessary or appropriate proof of loss with the insurers.
Any amounts collected or received under any such insurance policies may be
applied by the Company either to the replacement or restoration of the
Collateral or to any of the Obligations secured hereby in the manner provided
in Article 7 hereof; and
(m) The Company shall not change its name, identity or
corporate structure, voluntarily or involuntarily, without giving 30 days'
prior written notice to Secured Party.
ARTICLE 3. AUTHORITY TO COLLECT
Except as otherwise hereinafter set forth, unless and until the
occurrence of an event which constitutes an Event of Default under the Loan
Agreement, the Company shall continue to collect, and upon the occurrence of
such an event, the Company may, at the direction of Secured Party, continue to
collect, at its own expense, all amounts due and to become due under any
accounts, chattel paper, instruments or general intangibles and in connection
therewith may take such action as it may deem necessary, advisable, convenient
or proper for the enforcement, collection, adjustment, settlement or
compromise thereof.
ARTICLE 4. REMEDIES
Section 4.1 Upon the occurrence of an Event of Default, as defined in
the Loan Agreement, Secured Party shall have the right to declare immediately
due and payable all of the Obligations, without other notice or demand, and to
terminate any commitments to make loans or otherwise extend credit to Borrower.
Secured Party shall have all the rights and remedies of a secured party under
the Uniform Commercial Code and all other rights, privileges, powers and
remedies provided by law or equity.
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Section 4.2 Without limiting the generality of the foregoing, after
the occurrence of an Event of Default:
(a) (i) Secured Party shall have the power to notify the
account debtor or debtors obligated under any accounts, chattel paper,
instruments and general intangibles of the assignment of such accounts, chattel
paper, and general intangibles to Secured Party and of its security interest
therein and to direct such account debtor or debtors to make payment of all
amounts due or to become due to the Company thereunder directly to Secured
Party and, upon such notification to the account debtor or debtors, to enforce
collection of any thereof in the same manner and to the same extent as the
Company might have done. The funds so collected shall be held as security for
the payment of the Obligations secured hereby and applied in the manner
provided in Article 7 hereof.
(ii) The Company hereby constitutes and appoints Secured
Party as its true and lawful attorney, in the place and stead of the Company
and with full power of substitution, either in Secured Party's own name or in
the name of the Company, to ask for, demand, collect, receive and give
acquittance for any and all monies due or to become due under and by virtue of
any account, chattel paper, instruments and general intangibles, to endorse
checks, drafts, orders and other instruments for the repayment of monies
payable to the Company on account thereof, and to settle, compromise, prosecute
or defend any action, claim or proceeding with respect thereto and to sell,
assign, pledge, transfer and, make any agreement respecting, or otherwise deal
with, the same; provided, however that nothing herein contained shall be
construed as requiring or obligating Secured Party to make any demand, or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or to present or file any claim or notice or to take any action with respect to
any account, chattel paper, instruments or general intangible or the monies due
or to become due thereunder or the property covered thereby, and no action
taken or omitted to be taken by Secured Party with respect to any account,
chattel paper, instruments or general intangible shall give rise to any
defense, counterclaim or set off in favor of the Company or to any claim or
action against Secured Party;
(b) The Company will collect, assemble and deliver all of the
Collateral and books and records pertaining thereto, to Secured Party at a
reasonably convenient place designated by Secured Party; and
(c) (i) Secured Party may, to the extent permitted by law,
enter onto the Company's premises and take possession of the Collateral, and
assign, sell, lease or otherwise dispose of the Company's interest in the
Collateral for the account of the Company and the Company shall then be liable
for the difference between the payments and other amounts due under the Note
and amounts received pursuant to such assignment or contract of sale or lease
or other disposition of the Company's interest in the Collateral and the amount
of such difference shall then be immediately due and payable. Secured Party
may, in its sole discretion, designate a custodian or agent to take physical
possession of the Collateral.
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Secured Party shall give the Company reasonable notice of the time and place of
any public sale of the Collateral or the time after which any private sale or
other intended disposition thereof is to be made. The requirement of
reasonable notice shall be met if notice of the sale or other intended
disposition is mailed, by first class mail, postage prepaid, to the Company at
its address set forth in Article 15 hereof or such other address as the Company
may by notice have furnished Secured Party in writing for such purpose, at
least fifteen (15) days prior to the time of such sale or other intended
disposition.
(ii) All notices of public or private sale shall specify
that the assignment of any FCC permit or license for the Station must first be
approved by the FCC and such notice shall be given to all persons attending a
public sale. The Company agrees that it will join and cooperate fully with
Secured Party or with the successful bidder or bidders at any public or private
sale in the filing of an application, and furnishing any additional information
that may be required in connection with such application, requesting the FCC's
prior approval of the assignment of such license or permit for the Station to
Secured Party or the successful bidder or bidders. The Company will take such
further actions, or cause such farther actions to be taken that may be
necessary or desirable to obtain such FCC approval and will execute and
deliver, or will cause the execution and delivery of, all applications,
certificates, instruments and other documents that may be necessary or
desirable in connection with such approval. The parties hereto agree that the
Collateral and the permit or license shall not be assigned and transferred to
separate persons or entities.
(iii) Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of the
Company, and the Company hereby waives (to the extent permitted by law) all
rights of redemption, stay and/or appraisal which it now has or may at any time
in the future have under any rule of law or statute now existing or hereafter
enacted.
ARTICLE 5. POWERS OF SECURED PARTY
The Company appoints Secured Party as its true attorney in fact to
perform any of the following powers, which are coupled with an interest, and
are irrevocable until termination of this Security Agreement, and may be
exercised by Secured Party's officers and employees, or any of them, only upon
the occurrence of an Event of Default under the Loan Agreement:
(a) to perform any obligation of the Company hereunder in the
Company's name or otherwise;
(b) to give notice of Secured Party's rights in the Collateral, to
enforce the same, and make extension agreements with respect thereto;
(c) to release persons liable on the Collateral and to give
receipts and acquittance and compromise disputes in connection therewith;
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(d) to release security;
(e) to resort to security in any order;
(f) to prepare, execute, file, record or deliver notes,
assignments, schedules, designation statements, financing statements,
continuation statements, termination statements, statements of assignment, and
applications or registration or like papers to perfect, preserve or release
Secured Party's interest in the Collateral;
(g) to verify facts concerning the Collateral by inquiry of
obligors thereon, or otherwise;
(h) to endorse, collect, deliver and receive payment under
instruments for the payment of money constituting or relating to Collateral;
(i) to prepare, adjust, execute, deliver and receive payment under
insurance claims;
(j) to exercise all rights, powers and remedies which the Company
would have, but for this Security Agreement, under all of the Collateral
subject to this Security Agreement; and
(k) to do all acts and things and execute all documents in the
name of the Company or otherwise deemed by Secured Party as necessary, proper
and convenient in connection with the preservation, perfection or enforcement
of its rights hereunder.
ARTICLE 6. REMITTANCES
The Company agrees that upon the occurrence and during the continuance
of an event which constitutes an Event of Default under the Loan Agreement, all
cash or proceeds received by the Company as a result of the sale, lease or
other disposition of any Collateral, whether received by the Company in the
exercise of its collection rights hereunder or otherwise, shall be, at Secured
Party's discretion, remitted to Secured Party or deposited to an account for
the benefit of Secured Party (according to its instructions) in the form
received (properly endorsed to the order of Secured Party or for collection in
accordance with Secured Party's instructions) not later than the banking
business day following the day of receipt, to be held as security for the
payment of the Obligations secured hereby and applied by Secured Party as
provided in Article 7 hereof. The Company agrees not to commingle any such
collections or proceeds with any of its other funds or property and agrees to
hold the same upon an express trust for Secured Party until remitted to Secured
Party.
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ARTICLE 7. APPLICATION OF PROCEEDS
Section 7.1 Except as expressly provided elsewhere in this Security
Agreement, all proceeds of the sale of the Collateral by Secured Party
hereunder, and all other monies received by Secured Party pursuant to the terms
of this Security Agreement (whether through the exercise by Secured Party of
its rights of collection or otherwise), including, but not limited to, any
awards or other amounts payable upon any condemnation or taking by eminent
domain, shall be applied, as promptly as is practicable after the receipt
thereof by Secured Party as follows:
(a) FIRST: to the payment of all fees and expenses incurred by
Secured Party or any custodian appointed hereunder, if not previously paid by
the Company, and all expenses incurred by Secured Party in connection with any
sale of the Collateral, including, but not limited to, the expenses of taking,
advertising, processing, preparing and storing the Collateral to be sold, all
court costs and fees and expenses of counsel to Secured Party in connection
therewith, to the payment of all expenses to be paid by the Company pursuant to
Article 16 of this Security Agreement, and to the payment of all amounts for
which Secured Party is entitled to indemnification hereunder and all advances
made by Secured Party hereunder to the account of the Company and the payment
of all costs and expenses paid or incurred by Secured Party in connection with
the exercise of any right or remedy hereunder, to the extent that such
advances, costs and expenses shall not theretofore have been reimbursed to
Secured Party by the Company;
(b) SECOND: to the payment to Secured Party of the interest then
due and payable on the Note;
(c) THIRD: to the payment to Secured Party of the principal then
due and payable on the Note;
(d) FOURTH: to the payment to Secured Party of any other amount
owing to Secured Party under any other agreement of the Company with Secured
Party; and
(e) FIFTH: only if all of the foregoing have been paid in full, to
the Company.
Section 7.2 Notwithstanding the sale or other disposition of any
Collateral by Secured Party hereunder, the Company shall remain liable for any
deficiency.
ARTICLE 8. RIGHTS CUMULATIVE
The rights, privileges, powers and remedies of Secured Party shall be
cumulative and no single or partial exercise of any of them shall preclude the
further or other exercise of the same or any other of them. No delay or
failure of Secured Party in exercising any right,
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power, privilege or remedy hereunder shall affect such right, power, privilege
or remedy. Nor shall any single or partial exercise of any right, power,
privilege or remedy or any abandonment or discontinuance of steps to enforce
such right, power, privilege or remedy affect such right, power, privilege or
remedy. Any waiver, permit, consent or approval of any kind by Secured Party
of any default hereunder, or any such waiver of any provisions or conditions
hereof, must be in writing and shall be effective only to the extent set forth
in writing and shall not constitute a waiver of any subsequent or other
default. Failure of Secured Party to insist upon strict performance or
compliance by the Company of any covenants, warranties or agreements in this
Security Agreement shall not constitute a waiver of any subsequent or other
failure to perform or comply with any covenants, warranties or agreements.
ARTICLE 9. CONTINUING AGREEMENT
This is a continuing agreement and shall remain in full force and
effect and be binding upon the Company and the successors and assigns of the
Company until all of the Obligations shall have been fully satisfied and
discharged or forgiven.
ARTICLE 10. REINSTATEMENT OF AGREEMENT
If Secured Party shall have proceeded to enforce its rights under this
Agreement and such proceedings shall have been discontinued or abandoned for
any reason prior to the issuance of any judgment or award, then the Company and
Secured Party shall be restored respectively to their positions and rights
hereunder, and all rights, remedies and powers of the Company and Secured Party
shall continue as though no such proceeding had been initiated. In the event
of litigation arising under this Agreement, the prevailing party shall be
entitled to, in addition to all other damages and remedies, reasonable
attorneys' fees.
ARTICLE 11. ASSIGNMENT
Secured Party may, upon written notice to the Company, assign and
transfer any of its rights and obligations hereunder and may deliver the
Collateral, or any part thereof, to the assignee or transferee of such rights
and obligations, which assignee or transferee shall become vested with all the
rights, remedies, powers, security interests and liens herein granted to
Secured Party in respect thereto; and Secured Party shall thereafter be
relieved and fully discharged from any liability or obligation under this
Agreement. The Company shall not have the right to assign this Agreement
without the prior written consent of Secured Party.
ARTICLE 12. DUTIES WITH RESPECT TO COLLATERAL
With respect to the Collateral, Secured Party shall be under no duty
to send notices, perform services, pay for insurance, taxes or other charges or
take any action of any kind in connection with the management thereof and its
only duty with respect thereto shall be to use
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reasonable care in its custody and preservation while in its possession, which
shall not include any steps necessary to preserve rights against prior parties.
ARTICLE 13. PERFORMANCE OF OBLIGATIONS BY SECURED PARTY
If the Company shall fail to do any act or thing which it has
covenanted to do hereunder, or if any representation or warranty of the Company
shall be breached, Secured Party may (but shall not be obligated to) perform
such act or thing on behalf of the Company or cause it to be done or remedy any
such breach, and there shall be added to the liabilities of the Company
hereunder the cost or expense incurred by Secured Party in so doing, and any
and all amounts expended by Secured Party in taking any such action shall be
repayable to it upon demand being made to the Company therefore and shall bear
interest at the rate provided for in the Note, from and including the date
advanced to the date of repayment.
ARTICLE 14. MISCELLANEOUS
After due consideration and consultation with its attorneys, the
Company voluntarily and knowingly, to the extent permitted by law, agree as
follows: (a) the Company waives presentment, protest, notice of protest, notice
of dishonor and notice of nonpayment with respect to the Collateral to which
Secured Party is entitled hereunder; (b) the Company waives any right to direct
the application of payments or security for the Obligations of the Company
hereunder, or the indebtedness of customers of the Company, and any right to
require proceedings against others or to require exhaustion of the security;
(c) the Company consents to the extension or forbearance of the terms of the
Obligations or indebtedness of customers, the release or substitution of
security, and the release of guarantors, if any; and (d) the Company waives
notice or a judicial hearing prior to the exercise by Secured Party of any
right or remedy provided by this Security Agreement and also waives its rights,
if any, to set aside or invalidate any sale duly consummated in accordance with
the provisions of this Security Agreement on the grounds that the sale was
consummated without a prior judicial hearing.
ARTICLE 15. NOTICES
All notices or demands of any kind which may be required or which
Secured Party desires to serve upon the Company under the terms of this
Security Agreement shall be served upon the Company by personal service or by
mailing a copy thereof by first class mail, postage prepaid, addressed to the
Company, at the address set forth in Article 10 of the Pledge Agreements.
ARTICLE 16. EXPENSES
The Company agrees to pay on demand all fees, costs and expenses of
Secured Party, or of any custodian or agent designated by Secured Party,
including the fees and out-of-pocket expenses of legal counsel, independent
public accountants and other outside experts
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retained by Secured Party in connection with the enforcement of this Security
Agreement or any other instrument or document delivered pursuant hereto upon an
Event of Default.
ARTICLE 17. LAW APPLICABLE
This Security Agreement shall be governed by and construed in
accordance with the laws of the State of Florida other than the conflicts of
law provisions thereof.
ARTICLE 18. SEVERABILITY OF PROVISIONS
If any provision of this Security Agreement shall be held to be
prohibited by or invalid under applicable law, including the Communications Act
of 1934, as amended, and all rules and regulations promulgated thereunder, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or any
remaining provisions of this Security Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed as of the day and year first written above.
CHANNEL 42 OF LITTLE ROCK, INC.
By:
--------------------------
Dale Leininger
President
PAXSON COMMUNICATIONS OF
LITTLE ROCK-42, INC.
By:
-------------------------
Name:
Title:
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EXHIBIT B
SHAREHOLDERS AGREEMENT
BY AND AMONG
LEININGER-GEDDES PARTNERSHIP,
PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
AND
CHANNEL 42 OF LITTLE ROCK, INC.
DATED
AUGUST __, 1996
<PAGE> 110
EXHIBIT B
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (the "Agreement") is made as of the day
of August, 1996, by and among PAXSON COMMUNICATIONS OF LITTLE ROCK-42, INC., a
Florida corporation ("Paxson"), CHANNEL 42 OF LITTLE ROCK, INC., a Delaware
corporation (the "Company"), and LEININGER-GEDDES PARTNERSHIP, a general
partnership formed under the laws of the State of Alabama ("LGP"). LGP and
Paxson are sometimes referred to herein individually as "Shareholder" and
collectively as "Shareholders.
R E C I T A L S
A. The Company holds a construction permit issued by the Federal
Communications Commission ("FCC") for new television station KVUT(TV), Channel
42, Little Rock, Arkansas (the "Station").
B. The Company's authorized capital stock consists of one
thousand (1,000) shares of voting common stock, all of which shares are issued
and outstanding (the "Common Stock").
C. LGP holds 510 shares of Common Stock (the "LGP Stock") and, on
the date hereof, LGP has conveyed to Paxson 490 shares of Common Stock (the
"Paxson Stock"), pursuant to that certain Stock Purchase Agreement dated as of
August 21, 1996 (the "Purchase Agreement").
D. The parties hereto desire to set forth certain understandings
and agreements relating to, among other things, the issuance and transfer of
the capital stock of the Company.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
undertakings contained herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, LGP, Paxson and
the Company, intending to be legally bound, agree as follows:
ARTICLE I. RESTRICTIONS
Section 1.1 Scope of Agreement. This Agreement shall apply to (i) any
transfer of shares of Common Stock (now owned or hereafter acquired) and any
other shares of capital stock of the Company, whether or not outstanding on the
date hereof, by either Shareholder or any transferee or successor of either
Shareholder, whether by sale, exchange, assignment,
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disposition, bequest, gift, pledge, mortgage, hypothecation or otherwise,
whether voluntary, involuntary or by operation of law, whether resulting from
death, bankruptcy, insolvency or otherwise; and (ii) the issuance or transfer by
the Company of any shares of capital stock of the Company, whether or not
authorized or outstanding on the date hereof, or any options, warrants or any
form of debt or equity presently or hereinafter convertible into shares of
capital stock of the Company (any and all such transfers in clauses (i) or (ii)
are referred to hereinafter as a "Transfer").
Section 1.2 Transfer Restrictions.
(a) Neither LGP, Paxson nor the Company shall agree to,
cause or permit any Transfer, unless the Transfer complies with the
requirements of Section 1.3 hereof.
(b) The restriction in Section 1.2(a) above shall not
apply to (i) any sale, transfer, assignment or disposition to a person or
entity that controls, is controlled by or is under common control with LGP or
Paxson, as the case may be, or (ii) any sale, transfer, assignment or
disposition of the Paxson Stock resulting from the sale or transfer of all of
the issued and outstanding stock of Paxson or any entity that owns or controls
Paxson, or (iii) the pledge of the LGP Stock to Paxson pursuant to the
Borrower Pledge Agreement dated as of August , 1996, between LGP and Paxson
(the "Pledge Agreement"), or (iv) any sale or transfer of the LGP Stock to
Paxson pursuant to the terms of the Pledge Agreement or the Purchase Agreement.
(c) No Transfer shall be effective unless a Transfer is
made pursuant to the terms of this Agreement, and the successors or assigns of
LGP or Paxson as a result of any Transfer permitted by the terms of this
Agreement shall have duly executed a document evidencing their agreement to be
bound by and comply with the terms of this Agreement.
Section 1.3 Right of First Refusal.
(a) In the event either Shareholder (the "Sale
Shareholder") enters into a bona fide agreement (including a letter of intent)
contemplating a sale of all or a portion of its Common Stock (a "Sale"), the
Sale Shareholder will deliver a written notice (the "Sale Notice") to the other
Shareholder (the "Other Shareholder"). The Sale Notice will disclose in
reasonable detail the identity of the prospective transferee(s) and the terms
and conditions of the proposed Sale and will be accompanied by the agreement(s)
relating thereto. No Sale shall be consummated until 30 days after the Sale
Notice has been delivered to the Other Shareholder, unless prior thereto the
Other Shareholder shall have waived in writing its rights under this Section
1.3 (the date of the first to occur of such events is referred to herein as the
"Sale Authorization Date").
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<PAGE> 112
(b) The Other Shareholder may elect to purchase all (but
not less than all) of the Sale Shareholder's Common Stock upon the same terms
and conditions as those set forth in the Sale Notice by delivering written
notice (the "Purchase Notice") of such election to the Sale Shareholder within
thirty (30) days after the receipt of the Sale Notice by the Other Shareholder.
If the Other Shareholder exercises its right of first refusal set forth in this
subsection (b), the closing of such purchase and sale shall be in accordance
with Section 1.4. If the Other Shareholder does not exercise its right of first
refusal set forth in this Section 3.1, (i) the Sale may be consummated at a
price and on terms no more favorable to the named transferee(s) of the Common
Stock than specified in the Sale Notice during the 90-day period immediately
following the Sale Authorization Date, (ii) the Other Shareholder will consent
to and raise no objections against the Sale, and (iii) the Other Shareholder
will take all necessary and desirable actions in connection with the
consummation of the Sale. Any Sale which is not consummated within such 90-day
period following the Sale Authorization Date will again be subject to the
provisions of this Section 1.3.
(c) In the event the Other Shareholder exercises its
rights under this Section 1.3, no Sale to the prospective transferee(s) shall
be consummated and all agreements relating thereto shall be terminated.
Section 1.4 Closing.
(a) The closing of the purchase and sale of any Common
Stock pursuant to the right of first refusal set forth in Section 1.3 above
shall take place at Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W.,
Suite 800, Washington, D.C. 20036, on the date of closing set forth in the Sale
Notice or, if the Sale Notice does not specify a closing date, on the 90th day
after the Sale Shareholder's receipt of the Purchase Notice, subject to
obtaining any consent of the FCC that may be required for a Sale.
(b) At the closing, the Sale Shareholder shall deliver to
the Other Shareholder (i) certificates representing the shares of the Common
Stock being transferred, duly endorsed or accompanied by duly executed stock
powers, (ii) a certificate, reasonably acceptable to the Other Shareholder,
representing that the Common Stock being sold is free and clear of all liens,
charges, security interests, rights of first refusal, restrictions and other
encumbrances and that the Sale Shareholder has the absolute right to transfer
such Common Stock, and (iii) such other documentation as reasonably requested
by the Other Shareholder.
(c) At the closing, the Other Shareholder shall wire
transfer immediately available funds to a U.S. bank account designated by the
Sale Shareholder in an amount equal to the price for the shares being sold.
- 3 -
<PAGE> 113
Section 1.5 Legends or Certificates. In order to effectuate this
Agreement, and to avoid any transfer of shares in violation of the Securities
Act of 1933 or of the securities laws of any state, each certificate
representing any share of capital stock of the Company shall bear legends in
substantially the following form:
The Shares represented by this Certificate are subject to a
Shareholders' Agreement dated , 199_ (the "Agreement"), entered into
in order, inter alia, to restrict the transferability of such Shares.
Said Agreement is automatically binding upon any person who acquires
the Shares. Any transfer or acquisition in violation of such Agreement
is null and void. A copy of the Agreement is available for inspection
at the principal office of the Company.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE TRANSFERRED OR SOLD UNLESS SO REGISTERED OR UNLESS AN EXEMPTION
IS AVAILABLE.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of LGP. LGP hereby
represents, warrants and agrees as follows:
(a) LGP is a general partnership formed under the laws of
the State of Alabama.
(b) LGP has the partnership power and authority to enter
into this Agreement and carry out its obligations hereunder. The consummation
of the transactions contemplated hereby, and all previous actions taken by LGP
with respect to such transactions, have been duly and validly authorized by
LGP's partners. No other acts or proceedings on the part of LGP are necessary
to authorize this Agreement or the consummation of the transactions
contemplated hereby, or any previous actions taken by LGP with respect to such
transactions, and when duly executed and delivered by the parties hereto, this
Agreement will constitute a valid and legally binding obligation of LGP,
enforceable against LGP in accordance with its terms.
(c) Neither the execution and delivery by LGP of this
Agreement, the consummation by LGP of the transactions contemplated hereby, any
previous actions taken by LGP with respect to such transactions, nor compliance
by LGP with any provision hereof, will violate or conflict with, or result in a
breach of any provision or any of the terms,
- 4 -
<PAGE> 114
conditions or provisions of, the Partnership Agreement of LGP or any contracts,
agreements or obligations of LGP or by which LGP is bound.
Section 2.2 Representations and Warranties of the Company. The Company
hereby represents, warrants and agrees as follows:
(a) The Company is duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) The Company has the corporate power and authority to
enter into this Agreement and carry out its obligations hereunder. The
consummation of the transactions contemplated hereby, and all previous actions
taken by the Company with respect to such transactions, have been duly and
validly authorized by the Company's Board of Directors. No other corporate acts
or proceedings on the part of the Company are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby, or any
previous actions taken by the Company with respect to such transactions, and
when duly executed and delivered by the parties hereto, this Agreement will
constitute a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms.
(c) Neither the execution and delivery by the Company of
this Agreement, the consummation by the Company of the transactions
contemplated hereby, any previous actions taken by the Company with respect to
such transactions, nor compliance by the Company with any provision hereof,
will violate or conflict with, or result in a breach of any provision or any of
the terms, conditions or provisions of, the Articles of Incorporation or the
Bylaws of the Company or any other contracts, agreements or obligations of the
Company or by which the Company is bound.
Section 2.3 Representations and Warranties of Paxson. Paxson hereby
represents, warrants and agrees as follows:
(a) Paxson is a corporation duly organized, validly
existing and in good standing under the laws of the State of Florida.
(b) Paxson has the corporate power and authority to enter
into this Agreement and carry out its obligations hereunder. The consummation
of the transactions contemplated hereby, and all previous actions taken by
Paxson with respect to such transactions, have been duly and validly authorized
by Paxson's Board of Directors. No other corporate acts or proceedings on the
part of Paxson are necessary to authorize this Agreement or the consummation of
the transactions contemplated hereby, or any previous actions taken by Paxson
with respect to such transactions, and when duly executed and
- 5 -
<PAGE> 115
delivered by the parties hereto, this Agreement will constitute a valid and
legally binding obligation of Paxson, enforceable against Paxson in accordance
with its terms.
(c) Neither the execution and delivery by Paxson of this
Agreement, the consummation by Paxson of the transactions contemplated hereby,
any previous actions taken by Paxson with respect to such transactions, nor
compliance by Paxson with any provision hereof, will violate or conflict with,
or result in a breach of any of the terms, conditions, or provisions of, the
Articles of Incorporation or Bylaws of Paxson or any contracts, agreements or
obligations of Paxson or by which Paxson is bound.
ARTICLE III. BOARD OF DIRECTORS.
(a) The Board of Directors of the Company (the "Board")
shall have full discretion and authority with respect to the management,
business and affairs of the Company. The Board shall have full right, power and
authority in the management of the business and affairs of the Company and to
do or cause to be done any and all acts deemed by the Board to be necessary or
appropriate to effectuate the purposes of the Company.
(b) Until such time as LGP no longer holds the LGP Stock,
the Board shall have three members, and LGP shall be entitled to designate two
members of the Board and their replacements or successors, if any, and Paxson
shall be entitled to designate one member of the Board and his replacements or
successors, if any. At such time as Paxson acquires the LGP Stock pursuant to
the Purchase Agreement, the Board shall have one member and Paxson shall be
entitled to designate such member of the Board and his replacements or
successors, if any. Each member of the Board shall have one vote. A quorum of
the Board shall be deemed present for the purpose of taking any action required
to be taken by the Board if there are present, in person, or by video or audio
conferencing, one member of the Board designated by LGP and the member of the
Board designated by Paxson. Any action taken by the Board shall be valid if
approved by a majority of the Board members present at any meeting of the Board
at which a quorum is present.
(c) LGP hereby designates Dale Leininger and Lark Hadley
as its initial representatives on the Board, and Paxson hereby designates
Lowell W. Paxson as its initial representative on the Board. Each Shareholder
may, at its sole discretion, change its respective designee(s) to the Board by
giving written notice of such change to the other Shareholder.
ARTICLE IV. OPERATIONAL PROVISIONS. While this Agreement is in effect, the
following actions may be taken with respect to the Company only with the
consent of each Shareholder:
(a) any fundamental change in the nature of the business
conducted by it;
- 6 -
<PAGE> 116
(b) a reorganization of its capital, a reclassification
of its interests or the consolidation or merger of it with another entity;
(c) any sale of all or a substantial portion of its
assets;
(d) any transaction with an affiliate (as defined in the
rules under the Securities Act of 1933) of either Shareholder on terms less
favorable to it than the terms available from an unrelated third party;
(e) entering into any contract or agreement that involves
over the term of the contract or agreement an aggregate expenditure by it of
$25,000 or more;
(f) any individual capital expenditure in excess of
$25,000 or any series of related capital expenditures in excess of $50,000;
(g) incurring any indebtedness for money borrowed in
excess of $25,000;
(h) settling any litigation that requires solely a cash
payment by the Company in excess of $25,000 or settling any litigation that
requires a remedy other than solely a cash payment if that remedy could have a
material adverse effect on the Company or the Station;
(i) guaranteeing any obligation of any person in excess
of $25,000;
(j) doing any act in contravention of this Agreement, the
Delaware Corporation Law or the Certificate of Incorporation or By-laws of the
Company;
(k) doing any act that would make it impossible to carry
on its business except upon its dissolution and liquidation;
(l) confessing a judgement against it if the result
thereof could have a material adverse effect on it, the Station or any
Shareholder; or
(m) using any assets of the Station other than for its
benefit.
ARTICLE V. TERMINATION. This Agreement shall terminate and all rights and
obligations hereunder shall cease upon the occurrence of any of the following
events:
(a) The consummation of the sale of the LGP Stock to
Paxson pursuant to the Purchase Agreement;
- 7 -
<PAGE> 117
(b) The agreement in writing to terminate this Agreement
executed by each Shareholder;
(c) The voluntary or involuntary dissolution of the
Company; or
(d) This Agreement shall terminate with respect to any
Shareholder upon the disposition by such Shareholder of its Common Stock in
accordance with the terms of this Agreement; provided, however, that this
Agreement shall survive such termination and continue to be binding upon every
Shareholder which is or will become a party hereto.
ARTICLE VI. MISCELLANEOUS
Section 6.1 Binding Effect. This Agreement shall be binding upon the
parties hereto and their successors and assigns. Each of the parties to this
Agreement shall execute and deliver or cause to be executed and delivered any
and all documents or legal instruments necessary to carry out the provisions
hereof.
Section 6.2 Enforceability; Severability.
(a) In the event any provision of this Agreement is found
to be unenforceable or invalid, such provisions shall be severable from this
Agreement to the extent that it is a provision which is not essential and the
absence of which would not have prevented the parties from entering into this
Agreement. The unenforceability or invalidity of a provision which has been
performed shall not be grounds for invalidation of this Agreement under
circumstances in which the true controversy between the parties does not
involve such provision.
(b) If any provision of this Agreement is found to be
contrary to, prohibited by or deemed invalid under any applicable section of
the Communications Act of 1934, as amended, or rule or regulation of the FCC,
such provision shall be deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder of this Agreement shall not be invalidated and shall
be given effect to the extent possible.
Section 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
Section 6.4 Modifications. This Agreement may not be modified, amended,
altered or supplemented except by a written agreement or other instrument
signed by the parties hereto.
Section 6.5 Headings. Headings in this Agreement are for convenience or
reference only and shall not affect the construction or interpretation of this
Agreement.
- 8 -
<PAGE> 118
Section 6.6 Entire Agreement. This Agreement represents the only
agreements and understandings between the parties hereto with respect to the
subject matter hereof.
Section 6.7 Attorneys' Fees. In the event any legal action is
required by a party to this Agreement to enforce the provisions hereof against
one of the other parties hereto, the prevailing party shall be entitled to
recover its costs of legal action, including reasonable attorneys' fees, from
the other party involved in such action.
Section 6.8 Specific Performance. Each party hereto acknowledges that
there will be no adequate remedy at law if any other party hereto fails to
perform any of its obligations hereunder and that each party will be
irreparably harmed by any such failure. Accordingly, each party hereto agrees
that each party, in addition to any other remedy to which it may be entitled at
law or in equity, shall be entitled to compel specific performance of the
obligations of the other party or parties under this Agreement.
Section 6.9 Counterparts. This Agreement may be executed
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same document.
Section 6.10 Notices. All notices provided by this Agreement shall
be in writing and shall be given by certified mail (return receipt requested),
by overnight delivery, shipment prepaid, or by personal delivery, by one party
to another, addressed to such other party or parties at the applicable address
set forth below:
To LGP at:
Leininger-Geddes Partnership
102 Fairmont Circle
Daphne, Alabama 36526
Attention: Dale Leininger
with copy to:
Lorretta K. Tobin, Esq.
Brown Nietert & Kaufman, Chartered
1920 N Street, N.W., Suite 660
Washington, D.C. 20036
- 9 -
<PAGE> 119
The Company or Paxson, at:
Paxson Communications of Little Rock-42, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson
with copy to:
John R. Feore, Jr.
Dow, Lohnes & Albertson,
A Professional Limited Liability Company
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
or any replacement address of which LGP, the Company or Paxson gives the other
parties notice under this section.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 10 -
<PAGE> 120
IN WITNESS WHEREOF, LGP, Paxson and the Company have each caused this
Agreement to be executed by a duly authorized officer thereof, as of the date
first above written.
The Company:
CHANNEL 42 OF LITTLE ROCK, INC.
By:
------------------------------------
Dale Leininger
President
LEININGER-GEDDES PARTNERSHIP
By:
------------------------------------
Dale Leininger
General Partner
By:
------------------------------------
Lark Hadley
General Partner
PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
By:
------------------------------------
Name:
Title:
<PAGE> 121
SCHEDULES
<PAGE> 122
SCHEDULE 5.6
ASSETS OF COMPANY
Upon the consummation of the Pro Forma FCC Consent, the Company shall
hold the Construction Permit.
<PAGE> 123
SCHEDULE 5.8
LIST OF EXPENSES
See Attached
<PAGE> 124
EXPENSES OF LEININGER-GEDDES PARTNERSHIP
Legitimate and prudent expenses incurred by Leininger-Geddes, Partnership in
obtaining and maintaining the Construction Permit and preparing and filing the
Modification Application, including incidental costs associated therewith:
<TABLE>
<S> <C>
1996
Legal (BN&K 5/94 thru 7/31/96) $ 43,904.00
FCC Regulatory Fee 3,957.00
Engineering 3,500.00
FCC Filing Fees* 505.00
Misc. Expenses 6,000.00
1995
FCC Regulatory Fee $ 3,975.00
FCC Filing Fees* 505.00
Misc. Expenses 5,000.00
1994
FCC Regulatory Fee $ 3,200.00
FCC Filing Fees* 505.00
Consultant (200 hrs./$50 per hr.) 10,000.00
Misc. Expenses 4,000.00
1993
Consultant (200 hrs./$50 per hr.) $ 10,000.00
FCC Filing Fees* 505.00
1992
Consultant (200 hrs./$50 per hr.) $ 10,000.00
1991
Consultant (300 hrs./$50 per hr. $ 15,000.00
Engineering 500.00
</TABLE>
- -------------------------
* Such as requests for extensions, ownership reports, etc.
<PAGE> 125
Expenses, Page 2
<TABLE>
<S> <C>
1990
Consultant (200 hrs./$50 per hr.) $ 10,000.00
1989
Consultant (150 hrs./$50 per hr.) $ 7,500.00
1988
Consultant (150 hrs./$50 per hr.) $ 7,500.00
1987
Consultant (150 hrs./$50 per hr.) $ 7,500.00
1986
Consultant (250 hrs./$25 per hr.) $ 6,250.00
1984-1985
Estimate of all legal fees and $100,000.00
expenses associated with filing ===========
and prosecuting the original
application (including prehearing,
discovery, hearing, appeal to the
Review Board and appeal to the
Commission)
TOTAL $259,806.00
===========
</TABLE>
<PAGE> 126
SCHEDULE 6.4(f)
OPINION OF FCC COUNSEL TO SELLER AND THE COMPANY
(INITIAL CLOSING)
<PAGE> 127
DRAFT 8/23/96
SCHEDULE 6.4(f)
FORM OF OPINION OF
BROWN, NIETERT & KAUFMAN
[Closing Date]
Paxson Communications of Little Rock-42, Inc.
601 Clearwater Road
West Palm Beach, FL 33401
Re: Stock Purchase Agreement dated as of August
21, 1996, by and among Leininger-Geddes
Partnership, Channel 42 of Little Rock. Inc.
and Paxson Communications of Little Rock - 42,
Inc.
Gentlemen:
We have acted as communications counsel for Leininger-Geddes
Partnership, a general partnership as to which the partnership agreement calls
for construction thereof under Alabama law (the "Seller"), and Channel 42 of
Little Rock, Inc., a Delaware corporation (the "Company"), in connection with
the transactions contemplated by the above-referenced Stock Purchase Agreement
(the "Purchase Agreement"). This opinion is being delivered to you pursuant to
Section 6.4(f) of the Purchase Agreement. All capitalized terms used herein and
not otherwise defined herein shall have the same meanings assigned to them in
the Purchase Agreement.
In preparing this opinion, we have examined such documents and made such
investigations of law as we have considered necessary or proper to render the
opinions expressed below. We have assumed without any investigation, unless we
have knowledge to the contrary, (a) the genuineness of all signatures of all
persons executing agreements, instruments or documents examined or relied upon
by us; (b) the legal capacity of all parties executing such agreements,
instruments or documents; (c) the authenticity of all documents submitted to us
as originals, and the conformance to the originals of all documents submitted
to us as copies; (d) the authenticity of all such originals; (e) the due
execution and delivery, pursuant to due authorization, of all such agreements,
instruments or documents by all parties thereto; and (f) the legal capacity of
natural persons.
<PAGE> 128
Paxson Communications of
Little Rock - 42, Inc.
[Closing Date]
Page 2
In connection with this opinion, we have examined the following
documents (collectively, the "Transactions Documents"):
(a) the Purchase Agreement;
(b) the Loan Agreement and the Promissory Note, Security Agreement,
Borrower Pledge Agreement and Partners Pledge Agreement executed
and delivered pursuant to the Loan Agreement;
(c) the Time Brokerage Agreement;
(d) the Lease Agreement;
(e) the Construction Agreement;
(f) the Shareholders Agreement; and
(g) [list document(s) pursuant to which Seller conveys the
Construction Permit to the Company].
With respect to questions of fact material to the opinions expressed
herein, except as otherwise noted, we have relied upon (a) written and oral
statements of the officers of Seller and the Company, (b) the representations
and warranties of Buyer, Seller and the Company in the Purchase Agreement and
in the other Transaction Documents, and (C) certificates of public officials,
in each case without any independent inquiry, verification or examination by
us. We have assumed the authenticity and accuracy of the certifications on
which we are relying and have made no independent investigations thereof.
We have not conducted a field investigation of the assets or business
of Seller or the Company and have relied on Seller's and the Company's
description of their businesses. Accordingly, we express no opinion regarding
matters that we would not know about without physically inspecting the assets
and business operations of Seller and the Company.
This opinion is limited to the Communications Act of 1934, as amended,
and the rules, regulations and policies of the FCC, insofar as such laws apply
(collectively, "Applicable Law"). We express no opinion as to any other federal
law, conflicts of law rules, or the laws of any states or jurisdictions, other
than as specifically indicated herein.
Whenever a statement herein is qualified by "to the best of our
knowledge," it is intended to indicate that during the course of our
representation of Seller and the
<PAGE> 129
Paxson Communications of
Little Rock - 42, Inc.
[Closing Date]
Page 3
Company and based solely on upon our conversations with officers and agents of
Seller and the Company in connection with (i) preparation of Schedules and
Exhibits to the Transaction Documents, (ii) certificates of Seller or the
Company being delivered to Buyer concurrently herewith, and (iii) reviews
conducted of then publicly-available FCC files relating to the matters
addressed herein, nothing has come to the attention of the attorneys in this
firm who have been involved in the preparation of this opinion that would give
them actual, current knowledge of the inaccuracy or incompleteness of such
statement. We have not undertaken any independent investigation to determine
the accuracy or completeness of such statement. No inference as to our current
actual knowledge of any matters bearing on the accuracy or completeness of any
such statement should be drawn from the fact of our representation of Seller or
the Company. We are not responsible for any mistakes or misfiled documents in
FCC files which result in any document that was supposed to be publicly
available on the day of our review not in fact having been in the appropriate
file. We are not aware of any mistakes or misfiled documents.
Based upon and subject to the foregoing, and any other qualifications
stated herein, we are of the opinion that:
1. The Seller holds a permit issued by the FCC, File No.
BPCT-850607KO (the "Permit"), authorizing the construction of new television
station KVUT(TV), Channel 42, at Little Rock, Arkansas (the "Station"). The
Permit is in full force and effect and shall expire on September 22, 1996.
2. To the best of our knowledge based on a review of the FCC's
files and records and our internal files and records, there are no notices,
orders or decisions issued, or complaints, investigations, petitions,
objections or proceedings, pending or threatened, by or before the FCC against
Seller or the Company, other than notices, orders, decisions proceedings or
investigations which affect the television broadcast industry generally.
3. The FCC has granted its consent to the assignment of the
Permit from Seller to the Company (the "FCC Consent"). To the best of our
knowledge based on a review of the FCC's files and records and our internal
files and records, the FCC Consent has not been reversed, stayed, enjoined, set
aside, annulled or suspended and no requests have been filed for administrative
or judicial review, reconsideration, appeal or stay of the FCC Consent.
<PAGE> 130
Paxson Communications of
Little Rock - 42, Inc.
[Closing Date]
Page 4
This opinion is given as of the date hereof and we disclaim any
undertaking or obligation to advise Paxson Communications of Little Rock - 42,
Inc. of changes which may hereafter be brought to our attention. This opinion
is rendered only to you and is solely for your benefit. Except in connection
with the above transactions, this opinion may not be relied upon by you, or
quoted to, relied upon by or furnished to any other person, firm, corporation
or entity, including any governmental entity, or be used for any other purpose.
Very truly yours,
BROWN NIETERT & KAUFMAN,
CHARTERED
By:
------------------------------
David J. Kaufman
DJK:yk
<PAGE> 131
SCHEDULE 12.5(h)
OPINION OF FCC COUNSEL TO SELLER AND THE COMPANY
(SECOND CLOSING)
<PAGE> 132
DRAFT 8/23/96
SCHEDULE 12.5(h)
FORM OF OPINION OF
BROWN, NIETERT & KAUFMAN
[Closing Date]
Paxson Communications of Little Rock-42, Inc.
601 Clearwater Road
West Palm Beach, FL 33401
Re: Stock Purchase Agreement dated as of August 21,
1996, by and among Leininger-Geddes
Partnership, Channel 42 of Little Rock, Inc.
and Paxson Communications of Little Rock - 42,
Inc.
Gentlemen:
We have acted as communications counsel for Leininger-Geddes
Partnership, a general partnership as to which the partnership agreement calls
for construction thereof under Alabama law (the "Seller"), and Channel 42 of
Little Rock, Inc., a Delaware corporation (the "Company"), in connection with
the transactions contemplated by the above-referenced Stock Purchase Agreement
(the "Purchase Agreement"). This opinion is being delivered to you pursuant
to Section 12.5(h) of the Purchase Agreement. All capitalized terms used herein
and not otherwise defined herein shall have the same meanings assigned to them
in the Purchase Agreement.
In preparing this opinion, we have examined such documents and made
such investigations of law as we have considered necessary or proper to render
the opinions expressed below. We have assumed without any investigation, unless
we have knowledge to the contrary, (a) the genuineness of all signatures of all
persons executing agreements, instruments or documents examined or relied upon
by us; (b) the legal capacity of all parties executing such agreements,
instruments or documents; (c) the authenticity of all documents submitted to
us as originals, and the conformance to the originals of all documents
submitted to us as copies; (d) the authenticity of all such originals; (e) the
due execution and delivery, pursuant to due authorization, of all such
agreements, instruments or documents by all parties thereto; and (f) the legal
capacity of natural persons.
In connection with this opinion, we have examined the following
documents (collectively, the "Transactions Documents"): (a) the Purchase
Agreement; and (b) [list document(s) pursuant to which Seller conveys the
Option Shares to Buyer].
<PAGE> 133
Paxson Communications of
Little Rock - 42, Inc.
[Closing Date]
Page 2
With respect to questions of fact material to the opinions expressed
herein, except as otherwise noted, we have relied upon (a) written and oral
statements of the officers of Seller and the Company, (b) the representations
and warranties of Buyer, Seller and the Company in the Purchase Agreement and
in the other Transaction Documents, and (c) certificates of public officials,
in each case without any independent inquiry, verification or examination by
us. We have assumed the authenticity and accuracy of the certifications on
which we are relying and have made no independent investigations thereof.
We have not conducted a field investigation of the assets or business of
Seller or the Company and have relied on Seller's and the Company's description
of their businesses. Accordingly, we express no opinion regarding matters that
we would not know about without physically inspecting the assets and business
operations of Seller and the Company.
This opinion is limited to the Communications Act of 1934, as amended,
and the rules, regulations and policies of the FCC, insofar as such laws apply
(collectively, "Applicable Law"). We express no opinion as to any other federal
law, conflicts of law rules, or the laws of any states or jurisdictions, other
than as specifically indicated herein.
Whenever a statement herein is qualified by "to the best of our
knowledge," it is intended to indicate that during the course of our
representation of Seller and the Company and based solely on upon our
conversations with officers and agents of Seller and the Company in connection
with (i) preparation of Schedules and Exhibits to the Transaction Documents,
(ii) certificates of Seller or the Company being delivered to Buyer concurrently
herewith, and (iii) reviews conducted of then publicly-available FCC files
relating to the matters addressed herein, nothing has come to the attention of
the attorneys in this firm who have been involved in the preparation of this
opinion that would give them actual, current knowledge of the inaccuracy or
incompleteness of such statement. We have not undertaken any independent
investigation to determine the accuracy or completeness of such statement. No
inference as to our current actual knowledge of any matters bearing on the
accuracy or completeness of any such statement should be drawn from the fact of
our representation of Seller or the Company. We are not responsible for any
mistakes or misfiled documents in FCC files which result in any document that
was supposed to be publicly available on the day of our review not in fact
having been in the appropriate file. We are not aware of any mistakes or
misfiled documents.
<PAGE> 134
Paxson Communications of
Little Rock - 42, Inc.
[Closing Date)
Page 3
Based upon and subject to the foregoing, and any other qualifications
stated herein, we are of the opinion that:
1. The Company holds a license issued by the FCC, File No.________
(the "License"), authorizing the operation of television station KVUT(TV),
Channel 42, at Little Rock, Arkansas (the "Station"). The License is in full
force and effect and shall expire on______________________.
2. To the best of our knowledge based on a review of the FCC's
files and records and our internal files and records, there are no notices,
orders or decisions issued, or complaints, investigations, petitions,
objections or proceedings, pending or threatened, by or before the FCC against
Seller or the Company, other than notices, orders, decisions proceedings or
investigations which affect the television broadcast industry generally.
3. The FCC has granted its consent to the transfer of control of
the License from the Company to Buyer (the "FCC Consent"). To the best of our
knowledge based on a review of the FCC's files and records and our internal
files and records, the FCC Consent has become a Final Order.
This opinion is given as of the date hereof and we disclaim any
undertaking or obligation to advise Paxson Communications of Little Rock - 42,
Inc. of changes which may hereafter be brought to our attention. This opinion
is rendered only to you and is solely for your benefit. Except in connection
with the above transactions, this opinion may not be relied upon by you, or
quoted to, relied upon by or furnished to any other person, firm, corporation
or entity, including any governmental entity, or be used for any other purpose.
Very truly yours,
BROWN NIETERT & KAUFMAN,
CHARTERED
By:
----------------------------
David J. Kaufman
DJK:yk
<PAGE> 135
ESCROW AGREEMENT
BY AND AMONG
LEININGER-GEDDES PARTNERSHIP,
CHANNEL 42 OF LITTLE ROCK, INC.,
PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
AND
FIRST UNION NATIONAL BANK OF FLORIDA
FOR
TELEVISION STATION KVUT(TV)
LITTLE ROCK, ARKANSAS
AUGUST 21, 1996
<PAGE> 136
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made and entered into this 21st day of August,
1996, by and among LEININGER-GEDDES PARTNERSHIP, a general partnership formed
under the laws of the State of Alabama ("Seller"); CHANNEL 42 OF LITTLE ROCK,
INC., a Delaware corporation ("Company"); PAXSON COMMUNICATIONS OF LITTLE
ROCK-42, INC., a Florida corporation ("Buyer"), and FIRST UNION NATIONAL BANK
OF FLORIDA (hereinafter "Escrow Agent").
WHEREAS, Buyer, Seller and the Company have entered into a Stock
Purchase Agreement dated as of the date hereof (the "Purchase Agreement") which
provides for the sale by Seller to Buyer of all of the issued and outstanding
common stock of the Company, all on the terms and conditions set forth in the
Purchase Agreement; and
WHEREAS, the Purchase Agreement provides that Buyer shall deposit in
escrow with the Escrow Agent the sum of One Hundred Thousand Dollars ($100,000)
(the "Escrow Deposit") to be held and disbursed by the Escrow Agent as provided
in Article 16 of the Purchase Agreement and the terms hereof;
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment of Escrow Agent.
(a) Buyer, Seller and the Company each appoint First
Union National Bank of Florida as Escrow Agent to receive, hold, administer and
deliver the Escrow Deposit and all interest earned thereon (collectively, the
'Escrow Fund") in accordance with this Agreement and the Escrow Agent accepts
such appointment, all subject to and upon the terms and conditions set forth in
this Agreement.
(b) The Escrow Agent shall invest. and reinvest the
Escrow Fund as directed by Buyer. Absent specific instructions from Buyer, the
Escrow Agent shall invest the Escrow Fund only in U.S. government obligations
maturing not more than 90 days from the date of purchase or in a money market
account investing solely in U.S. government obligations.
2. General Intention. Buyer herewith deposits the Escrow Deposit
with the Escrow Agent and the Escrow Agent acknowledges such deposit and shall
notify Seller of the same by forwarding a Notice substantially in the form of
Exhibit 1 hereto to Seller in accordance with Section 8 below. The Escrow Agent
shall dispose of the Escrow Fund in accordance with the express provisions of
this Agreement and, except as required by the terms and conditions of Section 3
of this Agreement, shall not make, be required to make or
<PAGE> 137
be liable in any manner for its failure to make, any determination under the
Purchase Agreement or any other agreement, including, without limitation, any
determination of whether Buyer, Seller or the Company, have complied with the
terms of the Purchase Agreement or are entitled to delivery of the Escrow Fund
or to any other right or remedy thereunder.
3 . Release of Escrow Fund. The Escrow Agent shall release the
Escrow Fund as provided in this Section 3:
(a) If the Escrow Agent receives a written notice signed
by Seller and the Company stating that Seller and the Company are entitled to
any portion of the Escrow Fund and certifying that a copy of the notice has
been delivered to Buyer in a manner specified in Section 8, the Escrow Agent
shall deliver a copy thereof to Buyer in a manner specified in Section 8 and,
unless the Escrow Agent receives a written objection from Buyer within ten
business days after the date of delivery of the notice to Buyer by the Escrow
Agent as provided in Section 8, the Escrow Agent shall deliver to Seller and
the Company the portion of the Escrow Fund claimed by Seller and the Company.
If the Escrow Agent receives a written objection from Buyer, the Escrow Agent
shall continue to hold the Escrow Fund until it has received written
instructions signed by Seller, the Company and Buyer or a final, nonappealable
order of a court of competent jurisdiction directing delivery of the Escrow
Fund, in which case the Escrow Agent shall deliver the Escrow Fund in
accordance with the instructions or order.
(b) If the Escrow Agent receives a written notice signed
by Buyer stating that Buyer is entitled to any portion of the Escrow Fund and
certifying that a copy of the notice has been delivered to Seller and the
Company in a manner specified in Section 8, the Escrow Agent shall deliver a
copy thereof to Seller and the Company in a manner specified in Section 8 and,
unless the Escrow Agent receives a written objection from Seller and the
Company within ten business days after the date of delivery of the notice to
Seller and the Company as provided in Section 8, the Escrow Agent shall deliver
to Buyer the portion of the Escrow Fund claimed by Buyer. If the Escrow Agent
receives a written objection from Seller and the Company, the Escrow Agent
shall continue to hold the Escrow Fund until it has received written
instructions signed by Seller, the Company and Buyer or a final, nonappealable
order of a court of competent jurisdiction directing delivery of the Escrow
Fund, in which case the Escrow Agent shall deliver the Escrow Fund in
accordance with the instructions or order.
4. Court Order or Joint Instructions. Notwithstanding anything to
the contrary in this Agreement:
(a) The Escrow Agent may deposit the Escrow Fund with the
clerk of any court of competent jurisdiction upon commencement of an action in
the nature of interpleader or in the course of any court proceedings involving
the disbursement of the Escrow Fund. If at any time the Escrow Agent receives a
final, non-appealable order of a court of competent
2
<PAGE> 138
jurisdiction directing delivery of the Escrow Fund, the Escrow Agent shall
comply with the order or instructions.
(b) The Escrow Agent shall comply with written
instructions signed by Seller, the Company and Buyer directing the delivery of
the Escrow Fund. In this situation, the Escrow Agent's actions shall not be
governed by any notice provisions or other objection period mechanisms provided
for in Section 3 above.
(c) Upon any delivery or deposit of the entire Escrow
Fund as provided in this Section 4, the Escrow Agent shall and will thereupon
be released and discharged from any and all further obligations arising in
connection with this Agreement without further documents or action by Buyer,
Seller or the Company.
5. Partial Release of Escrow Fund. If the Escrow Agent disburses
less than all of the Escrow Fund pursuant to any demand, court order, or joint
instructions in accordance with this Agreement, that portion of the Escrow Fund
not disbursed shall continue to be held in escrow by the Escrow Agent subject
to the terms of this Agreement.
6. Escrow Agent.
(a) The Escrow Agent shall not be liable under this
Agreement except for its own gross negligence or willful misconduct. Except
with respect to gross negligence or willful misconduct that is successfully
asserted against the Escrow Agent, Buyer, Seller and the Company jointly and
severally shall indemnify and hold harmless the Escrow Agent (and any successor
Escrow Agent) from and against any and all losses, liabilities, claims,
actions, damages and expenses, including reasonable attorneys' fees and
disbursements, arising out of or in connection with this Agreement.
(b) This Agreement expressly sets forth all of the duties
of the Escrow Agent with respect to any and all matters pertinent to this
Agreement. In performing its duties hereunder, the Escrow Agent shall be
entitled to rely upon any order, judgment, certification, demand, notice
instrument or other writing delivered to it under this Agreement without being
required to determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of the service thereof. The Escrow Agent
may act in reliance upon any instrument or signature reasonably believed by it
to be genuine and may assume that any person signing such instrument or
purporting to give any notice hereunder has been duly authorized to do so.
(c) The Escrow Agent may act in good faith pursuant to
the advice of counsel with respect to any matter relating to this Agreement,
including without limitation, any determination that a court order is final and
non-appealable.
(d) The Escrow Agent may resign and be discharged from
its duties or obligations hereunder by giving written notice in a manner
specified in Section 8 to Buyer,
3
<PAGE> 139
Seller and the Company of such resignation, specifying a date when such
resignation shall take effect, which date shall not be less than ten (10)
business days from the date of such notice. In such case, Buyer, Seller and the
Company shall mutually agree upon the selection of a successor Escrow Agent
hereunder.
7. Termination. This Agreement shall be terminated (a) upon the
disbursement or release in accordance with this Agreement of the entire Escrow
Fund, including the deposit of the Escrow Fund with the clerk of any court of
competent jurisdiction in accordance with Section 4 or (b) by written consent
signed by all parties. This Agreement shall not otherwise be terminated.
8. Notices. All notices, requests, demands or other
communications herein required to permitted to be given shall be (a) in
writing, (b) delivered by personal delivery or sent by commercial delivery
service or by 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)
be addressed as follows:
If to Company and Seller: Channel 42 of Little Rock, Inc.
102 Fairmont Circle
Daphne, AL 36526
Attention: Dale Leininger
and
Leininger-Geddes Partnership
102 Fairmont Circle
Daphne, AL 36526
Attention: Dale Leininger
With a copy to Loretta K. Tobin, Esq.
Brown Nietert & Kaufman, Chartered
1920 N Street, N.W., Suite 660
Washington, D.C. 20036
If to Buyer: Paxson Communications of Little Rock-42, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Lowell W. Paxson
4
<PAGE> 140
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
To Escrow Agent: First Union National Bank of Florida
Corporate Trust Department FL0122
225 Water Street, Third Floor
Jacksonville, FL 32202
Attention: Richard Hann
9. Escrow Fees. Buyer and Seller shall each pay for or reimburse
the Escrow Agent upon request for one-half of all reasonable expenses,
including reasonable attorneys' fees, incurred by it in the performance of its
duties under this Agreement. The fees currently payable to the Escrow Agent for
the services to be rendered by the Escrow Agent under this Agreement consist of
an annual fee in the amount of $2,000. Buyer and Seller agree that (a) Buyer
shall be responsible for the portion of the Escrow Agent fees equal to the
interest earned on the Escrow Deposit and (b) Buyer and Seller shall each be
responsible for one-half of the amount of the Escrow Agent fees in excess of
the amount of such interest.
10. Benefit and Assignment. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. No party hereto may voluntarily or involuntarily assign
its interests under this Agreement without the prior written consent of the
other parties hereto.
11. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Florida.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
13. Entire Agreement. This Agreement contains all the terms agreed
upon by the parties with respect to the subject matter hereof.
14. Amendments. Except as provided in Section 7, this Agreement
may only be modified or terminated by a writing signed by all the parties
hereto, and no waiver hereunder shall be effective unless embodied in a writing
signed by the party to be charged.
15. Tax Reporting. For tax reporting purposes, all interest earned
on the Escrow Fund shall be deemed to be for the account of Buyer.
5
<PAGE> 141
IN WITNESS WHEREOF, the parties hereto have duly executed this Escrow
Agreement as of the date first above written.
CHANNEL 42 OF LITTLE ROCK, INC.
By: /s/ Dale Leininger
----------------------------
Dale Leininger
President
LEININGER-GEDDES PARTNERSHIP
By: /s/ Dale Leininger
----------------------------
Dale Leininger
General Partnership
By: /s/ Lark Hadley
----------------------------
Lark Hadley
General Partner
PAXSON COMMUNICATIONS OF
LITTLE ROCK-42, INC.
By: /s/ James B. Bocock
----------------------------
Name: James B. Bocock
Title: President
FIRST UNION NATIONAL BANK
OF FLORIDA
By:
----------------------------
Name:
Title:
6
<PAGE> 142
EXHIBIT 1
VERIFICATION OF THE ESCROW AGENT
ESCROW AGREEMENT IN CONNECTION WITH THE
PAXSON/LEININGER-GEDDES STOCK PURCHASE AGREEMENT
The Escrow Agent hereby verifies that One Hundred Thousand Dollars
($100,000.00) in cash has been deposited into the Escrow Account created
pursuant to the August _, 1996 Escrow Agreement among the parties.
Representative of
FIRST UNION NATIONAL BANK OF FLORIDA
By: , As Escrow Agent
-----------------------------------
Name:
Title:
City of
-------------- )
) ss.
State of Florida )
Before me, the undersigned, on this day personally appeared__________
___________________, and acknowledged to me to be the person whose name is
subscribed to the foregoing Verification and to be an authorized representative
of First Union National Bank of Florida, and that he/she executed said
Verification for the purpose therein expressed.
Given under my hand and seal this ____ day of ____________1996.
--------------------------------
Notary Public [SEAL]
My commission expires:
----------
<PAGE> 143
EXHIBIT 10.130
================================================================================
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
CHANNEL 42 OF LITTLE ROCK, INC.
AND
PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
FOR
TELEVISION STATION KVUT(TV)
LITTLE ROCK, ARKANSAS
AUGUST 21, 1996
================================================================================
<PAGE> 144
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. LEASE OF STATION AIR TIME
1.1 Representations ................................. 1
1.2 Effective Date; Term ............................ 2
1.3 Scope ........................................... 2
1.4 Option to Renew ................................. 2
1.5 Consideration ................................... 2
1.6 Company Operation of Station .................... 2
1.7 Company Representations and Warranties .......... 3
1.8 Programmer Responsibility ....................... 4
1.9 Contracts ....................................... 4
1.10 Must Carry ...................................... 4
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE... 4
2.1 Company Authority ............................... 4
2.2 Additional Company Obligations .................. 4
2.3 Responsibility for Employees and Expenses ....... 5
SECTION 3. STATION PROGRAMMING POLICIES..................... 5
3.1 Broadcast Station Programming Policy Statement .. 5
3.2 Company Control of Programming .................. 6
3.3 Programmer Compliance with Copyright Act ........ 6
3.4 Sales ........................................... 6
3.5 Children's Television Advertising ............... 6
3.6 Payola .......................................... 6
3.7 Cooperation on Programming ...................... 7
3.8 Staffing Requirements ........................... 7
SECTION 4. INDEMNIFICATION................................... 7
4.1 Programmer's Indemnification .................... 7
4.2 Company's Indemnification ....................... 8
4.3 Limitation ...................................... 8
4.4 Time Brokerage Challenge ........................ 8
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE. 8
5.1 Confidential Review ............................. 8
5.2 Political Advertising ........................... 8
</TABLE>
<PAGE> 145
-2-
<TABLE>
<S> <C>
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT............. 9
6.1 Termination ..................................... 9
6.3 Force Majeure .................................. 10
6.4 Other Agreements ................................ 10
SECTION 7. MISCELLANEOUS .................................... 11
7.1 Assignment ...................................... 11
7.2 Call Letters .................................... 11
7.3 Counterparts .................................... 11
7.4 Entire Agreement ................................ 11
7.5 Taxes ........................................... 11
7.6 Headings ........................................ 11
7.7 Governing Law ................................... 12
7.8 Notices ......................................... 12
7.9 Severability .................................... 12
7.10 Arbitration ..................................... 13
7.11 No Joint Venture ................................ 13
</TABLE>
<PAGE> 146
TIME BROKERAGE AGREEMENT
THE BROKERAGE AGREEMENT, made this 21st day of August, 1996, by and
between Channel 42 of Little Rock, Inc., a Delaware corporation (the "Company"),
and Paxson Communications of Little Rock-42, Inc., a Florida corporation (the
"Programmer").
WHEREAS, the Company is the proposed assignee of a construction permit,
File No. BPCT-850607KO, issued by the Federal Communications Commission ("FCC")
for new television station KVUT(TV), Channel 42, Little Rock, Arkansas (the
"Station"), which construction permit is held by Leininger-Geddes Partnership,
the assignor and sole stockholder of the Company;
WHEREAS, the Company, Programmer and Leininger-Geddes Partnership, a
general partnership formed under the laws of the State of Alabama, have entered
into a Stock Purchase Agreement dated as of the date hereof (the "Purchase
Agreement");
WHEREAS, the Purchase Agreement provides that the Company and
Programmer shall enter into this Time Brokerage Agreement, pursuant to which
Programmer shall provide programming for the Station that is in conformity with
Station policies and procedures, FCC policies for time brokerage arrangements,
and the provisions hereof, upon completion of construction of the Station and
commencement of broadcast operations pursuant to program test authority ("PTA");
WHEREAS, Programmer agrees to use the Station to broadcast such
programming of its selection that is in conformity with all rules, regulations
and policies of the FCC, subject to the Company's full authority to manage and
control the operation of the Station; and
WHEREAS, Programmer and the Company agree to cooperate to make this
Time Brokerage Agreement work to the benefit of the public and both parties and
as contemplated in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be legally
bound, agree as follows:
SECTION 1. LEASE OF STATION AIR THE
1.1 Representations. Both the Company and Programmer represent that
they are legally qualified, empowered and able to enter into this Agreement and
that the execution, delivery, and performance hereof shall not constitute a
breach or violation of any material agreement, contract or other obligation to
which either party is subject or by which it is bound.
<PAGE> 147
- 2 -
1.2 Effective Date: Term. The effective date of this Agreement shall be
the date hereof, and this Agreement shall continue in force for an initial term
of five (5) years (the "Initial Term") from that date unless otherwise extended
or terminated as set forth below; provided, however, that this Agreement shall
terminate automatically upon the consummation of the transactions contemplated
to occur at the Second Closing under the Purchase Agreement.
1.3 Scope. During the term of this Agreement and any renewal thereof as
set forth in Section 1.4 below, the Company shall make available to Programmer
broadcast time upon the Station as set forth in this Agreement. Programmer shall
deliver such programming, at its expense, to the Station's transmitter
facilities or other authorized remote control points as reasonably designated
by the Company. Subject to the Company's reasonable approval, as set forth in
this Agreement, Programmer shall provide programming of Programmer's selection,
complete with commercial matter, news, public service announcements and other
suitable programming, to the Company up to one hundred sixty-two hours per
week. Notwithstanding the foregoing, the Company may designate such additional
time as it may require without any adjustment of the monthly consideration to
be paid to the Company under Section 1.5 for the broadcast of programming
necessary for the Station to broadcast news, public affairs, children's,
religious and non-entertainment programming as required by the FCC. All program
time not reserved by or designated for the Company shall be available for use
by Programmer and no other party. Programmer may, at its option, produce the
programming (including commercial announcements and related production
activities) to be provided pursuant to this Agreement from Programmer's
existing studio and production facilities.
1.4 Option to Renew. Subject to the termination provisions of Section
6 hereof, and if the transactions contemplated to occur at the Second Closing
under the Purchase Agreement have not been consummated prior to the expiration
of the Initial Term set forth in Section 1.2 above, this Agreement may be
renewed for an additional term as mutually agreed upon by the Company and the
Programmer.
1.5 Consideration. As consideration for the air time made available
hereunder, Programmer shall make payments to the Company as set forth in
Attachment I.
1.6 Company Operation of Station. The Company will have full authority,
power and control over the management and operations of the Station during the
term of this Agreement and during any renewal of such term. The Company will
bear all responsibility for Station's compliance with all applicable provisions
of the Communications Act of 1934, as amended (the "Act"), the rules,
regulations and policies of the FCC and all other applicable laws. The Company
shall be solely responsible for and pay in a timely manner all operating costs
of the Station, including but not limited to maintenance of the studio and
transmitting facility and costs of electricity, except that Programmer shall be
responsible for the costs of its programming
<PAGE> 148
- 3 -
as provided in Sections 1.8 and 2.3 hereof The Company shall employ at its
expense management level and other employees consisting of a General Manager and
such operational and other personnel as outlined in the budget previously
provided to Programmer, who will direct the day-to-day operations of the
Station, and who will report to and be accountable to the Company. The Company
shall be responsible for the salaries, taxes, insurance and related costs for
all personnel employed by the Station and shall maintain insurance satisfactory
to Programmer covering the Station's transmission facilities. During the term of
the Agreement and any renewal hereof, Programmer agrees to perform, without
charge, routine monitoring of the Station's transmitter performance and tower
lighting by remote control, if and when requested by the Company.
1.7 Company Representations and Warranties. The Company represents and
warrants as follows:
(a) The Company owns and holds or will hold all permits and other
authorizations necessary for the construction or operation of the Station, and
such permits and other authorizations are and will be in full force and effect
throughout the term of this Agreement. There is not now pending, or to the
Company's best knowledge, threatened, any action by the FCC or by any other
party to revoke, cancel, suspend, refuse to renew or modify adversely any of
such licenses, permits or authorizations. The Company is not in material
violation of any statute, ordinance, rule, regulation, policy, order or decree
of any federal, state or local entity, court or authority having jurisdiction
over it or the Station, which would have an adverse effect upon the Company, the
Station or upon the Company's ability to perform this Agreement. The Company
shall not take any action or omit to take any action which would have an
adverse impact upon the Company, the Station or upon the Company's ability to
perform this Agreement. All reports and applications required to be filed
with the FCC or, to the Company's best knowledge, any other governmental body
have been, and during the course of the term of this Agreement or any renewal
thereof, will be filed in a timely and complete manner. During the term of this
Agreement and any renewal thereof, the Company shall not dispose of, transfer,
assign or pledge any of the Company's assets and properties except with the
prior written consent of the Programmer, if such action would adversely affect
the Company's performance hereunder or the business and operations of the
Company or the Station permitted hereby.
(b) The Company shall pay, in a timely fashion, all of the
expenses incurred in operating the Station including salaries and benefits of
its employees, lease payments, utilities, taxes, programming expenses, etc., as
set forth in Attachment II (except those for which a good faith dispute has been
raised with the vendor or taxing authority), and shall provide Programmer with a
certificate of such timely payment, in a form substantially the same as
Attachment VI, within thirty (30) days of the end of each month.
<PAGE> 149
- 4 -
1.8 Programmer Responsibility. Programmer shall be solely responsible
for any expenses incurred in the origination and/or delivery of programming from
any remote location and for any publicity or promotional expenses incurred by
Programmer, including, without limitation, ASCAP and BMI music license fees for
all programming provided by Programmer. Such payments by Programmer shall be in
addition to any other payments to be made by Programmer under this Agreement.
1.9 Contracts. Programmer shall not enter into any third-party
contracts, leases or agreements which will bind the Company in any way, except
with the Company's prior written approval.
1.10 Must Carry. Programmer shall have a reasonable opportunity to
consult with the Company concerning the Company's decision to elect must carry
or retransmission consent for the Station with respect to cable television
systems located in the Little Rock ADI, and the Company shall not make any such
election without Programmer's approval.
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE
2.1 Company Authority. Notwithstanding any other provision of this
Agreement, Programmer recognizes that the Company has certain obligations to
broadcast programming to meet the needs and interests of viewers in Little Rock,
Arkansas, the Station's service area, and the educational and informational
needs of children. From time to time, the Company shall air specific programming
on issues of importance to the local community and educational and informational
programming for children. Nothing in this Agreement shall abrogate the
unrestricted authority of the Company to discharge its obligations to the public
and to comply with the Act and the rules and policies of the FCC.
2.2 Additional Company Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the Station, the
Company shall also retain the right to interrupt Programmer's programming in
case of an emergency or for programming which, in the good faith judgment of the
Company, is of greater local or national public importance. The Company shall
also coordinate with Programmer the Station's hourly station identification and
any other announcements required to be aired by FCC rules. The Company shall
continue to maintain a main studio, as that term is defined by the FCC, within
the Station's principal community contour, shall maintain its local public
inspection file in accordance with FCC rules, regulations and policies, and
shall prepare and place in such inspection file or files in a timely manner all
material required by Section 73.3526 of the FCC's Rules, including
without limitation the Station's quarterly issues and program lists; information
concerning the broadcast of children's educational and informational
programming; and documentation of compliance with commercial limits applicable
to certain children's television programming. Programmer
<PAGE> 150
- 5 -
shall, upon request by the Company, provide the Company with such information
concerning Programmer's programs and advertising as is necessary to assist the
Company in the preparation of such information. The Company shall also maintain
the station logs, receive and respond to telephone inquiries, and control and
oversee any remote control point which may be established for the Station.
2.3 Responsibility for Employees and Expenses, Programmer shall employ
and be solely responsible for the salaries, taxes, insurance and related costs
for all personnel used in the production of its programming (including, but not
limited to, salespeople, technical staff, traffic personnel, board operators and
programming staff). The Company will provide and be responsible for the
Station personnel necessary for the broadcast transmission of its own programs
(including, without limitation, the Station's General Manager and such
operational and other personnel as may be necessary or appropriate), and will
be responsible for the salaries, taxes, benefits, insurance and related costs
for all the Company's employees used in the broadcast transmission of its
programs and necessary to other aspects of Station operation. Whenever on the
Station's premises, all personnel shall be subject to the overall supervision of
the Company's General Manager.
SECTION 3. STATION PROGRAMMING POLICIES
3.1 Broadcast Station Programming Policy Statement. The Company has
adopted and will enforce a Broadcast Station Programming Policy Statement (the
"Policy Statement"), a copy of which appears as Attachment III hereto and which
may be amended in a reasonable manner from time to time by the Company upon
notice to Programmer. Programmer agrees and covenants to comply in all material
respects with the Policy Statement, all rules and regulations of the FCC, and
all changes subsequently made by the Company or the FCC. Programmer shall
furnish or cause to be furnished the artistic personnel and material for the
programs as provided by this Agreement and all programs shall be prepared and
presented in conformity with the rules, regulations and policies of the FCC and
with the Policy Statement set forth in Attachment III hereto. All advertising
spots and promotional material or announcements shall comply with applicable
federal, state and local regulations and policies and shall be produced in
accordance with quality standards established by Programmer. If the Company
determines that a program supplied by Programmer is for any reason, within the
Company's sole discretion, unsatisfactory or unsuitable or contrary to the
public interest, or does not comply with the Policy Statement it may, upon prior
written notice to Programmer (to the extent time permits such notice), suspend
or cancel such program without liability to Programmer. The Company will use
reasonable efforts to provide such written notice to Programmer prior to the
suspension or cancellation of such program.
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3.2 Company Control of Programming. Programmer recognizes that the
Company has full authority to control the operation of the Station. The parties
agree that the Company's authority includes but is not limited to the right to
reject or refuse such portions of the Programmer's programming which the Company
believes to be unsatisfactory, unsuitable or contrary to the public interest.
Programmer shall have the right to change the programming supplied to the
Company and shall give the Company at least twenty-four (24) hours notice of
substantial and material changes in such programming.
3.3 Programmer Compliance with Copyright Act. Programmer represents and
warrants to the Company that Programmer has full authority to broadcast its
programming on the Station, and that Programmer shall not broadcast any material
in violation of the Copyright Act. All music supplied by Programmer shall be:
(i) licensed by ASCAP, SESAC or BMI; (ii) in the public domain; or (iii) cleared
at the source by Programmer. The Company will maintain ASCAP, BMI and SESAC
licenses as necessary. The right to use the programming and to authorize its use
in any manner shall be and remain vested in Programmer.
3.4 Sales. Programmer shall retain all of the Station's network
compensation revenues, any revenues received from any network or program
supplier with respect to affiliation or use of programming by Programmer, any
retransmission consent revenues and all revenues from the sale of advertising
time within the programming it provides to the Company. Programmer shall be
responsible for payment of the commissions due to any national sales
representative engaged by it for the purpose of selling national advertising
which is carried during the programming it provides to the Company. Unless
otherwise agreed between the parties, the Company shall retain all revenues from
the sale of Station's advertising during the hours each week in which the
Company airs its own programming pursuant to Section 1.3 hereof.
3.5 Children's Television Advertising. Programmer agrees that it will
not broadcast advertising within programs originally designed for children aged
12 years and under in excess of the amounts permitted under applicable FCC
rules, and will take all steps necessary to pre-screen children's programming
broadcast during the hours it is providing such programming, to establish that
Advertising is not being broadcast in excess of the applicable FCC rules and to
prevent host selling and program-length commercials.
3.6 Payola. Programmer agrees that it will not accept any
consideration, compensation, gift or gratuity of any kind whatsoever, regardless
of its value or form, including, but not limited to, a commission, discount,
bonus, material, supplies or other merchandise, services or labor (collectively
"Consideration"), whether or not pursuant to written contracts or agreements
between Programmer and merchants or advertisers, unless the payer is identified
in the program for which Consideration was provided as having paid for or
furnished such
<PAGE> 152
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Consideration, in accordance with the Act and FCC requirements. Programmer
agrees to annually, or more frequently at the request of the Company, execute
and provide the Company with a Payola Affidavit from each of its employees
involved with the Station substantially in the form attached hereto as
Attachment IV.
3.7 Cooperation on Programming. Programmer and the Company mutually
acknowledge their interest in ensuring that the Station serves the needs and
interests of viewers in Little Rock and the surrounding service area and agree
to cooperate to provide such service. The Company shall, on a regular basis,
assess the issues of concern to residents of Little Rock and the surrounding
area and address those issues in its public service programming. Programmer, in
cooperation with the Company, will endeavor to ensure that programming
responsive to the needs and interests of the community of license and
surrounding area is broadcast, in compliance with applicable FCC requirements.
The Company will describe those issues and the programming that is broadcast in
response to those issues and place issues/programs lists in the Station's public
inspection file as required by FCC rules. Further, the Company may request, and
Programmer shall provide, information concerning such of Programmer's programs
as are responsive to community issues so as to assist the Company in the
satisfaction of its public service programming obligations. The Company shall
also evaluate the local need for children's educational and informational
programming and shall inform Programmer of its conclusions in that regard. The
Company, in cooperation with Programmer, will ensure that educational and
informational programming for children is broadcast over the Station in
compliance with applicable FCC requirements. Programmer shall also provide the
Company, upon request, such other information necessary to enable the Company to
prepare records and reports required by the Commission or other local, state or
federal government entities.
3.8 Staffing Requirements. The Company will be in full compliance with
the main studio staff requirements as specified by the FCC.
SECTION 4. INDEMNIFICATION
4.1 Programmer's Indemnification. Programmer shall indemnify and hold
harmless the Company from and against any and all claims, losses, costs,
liabilities, damages, forfeitures and expenses (including reasonable legal fees
and other expenses incidental thereto) of every kind, nature and description
(collectively, "Damages") resulting from (i) Programmer's breach of any
representation, warranty, covenant or agreement contained in this Agreement, or
(ii) any action taken by Programmer or its employees and agents with respect to
the Station, or any failure by Programmer or its employees and agents to take
any action with respect to the Station, including, without limitation, Damages
relating to violations of the Act or any rule, regulation or policy of the FCC,
slander, defamation or other claims relating to programming
<PAGE> 153
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provided by Programmer and Programmer's broadcast and sale of advertising time
on the Station.
4.2 Company's Indemnification. The Company shall indemnify and hold
harmless Programmer from and against any and all claims, losses, consents,
liabilities, damages, FCC forfeitures and expenses (including reasonable legal
fees and other expenses incidental thereto) of every kind, nature and
description, arising out of the Company's operations and broadcasts, except
broadcasts of Programmer's programming and advertising, to the extent permitted
by law, and any action taken by the Company or its employees and agents with
respect permitted to the Station, or any failure by the Company or its employees
and agents to take any action with respect to the Station.
4.3 Limitation. Neither the Company nor Programmer shall be entitled to
indemnification pursuant to this section unless such claim for indemnification
is asserted in writing delivered to the other party.
4.4 Time Brokerage Challenge. If this Agreement is challenged at the
FCC, whether or not in connection with the Station's license renewal
application, counsel for the Company and counsel for the Programmer shall
jointly defend the Agreement and the parties' performance thereunder throughout
all FCC proceedings at the sole expense of the Programmer. If portions of this
Agreement do not receive the approval of the FCC Staff, then the parties shall
reform the Agreement as necessary to satisfy the FCC Staff s concerns or, at
Programmer's option and expense, seek reversal of the Staff's decision and
approval from the full Commission or a court of law.
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE
5.1 Confidential Review. Prior to the commencement of any programming
by Programmer under this Agreement, Programmer shall acquaint the Company with
the nature and type of the programming to be provided. The Company shall be
entitled to review at its discretion from time to time on a confidential basis
any of Programmer's programming material it may reasonably request. Programmer
shall promptly provide the Company with copies of all correspondence and
complaints received from the public (including any telephone logs of complaints
called in), and copies of all program logs and promotional materials. However,
nothing in this section shall entitle the Company to review the internal
corporate or financial records of the Programmer.
5.2 Political Advertising. Programmer shall cooperate with the Company
to assist the Company in complying with all rules of the FCC regarding political
broadcasting. The Company shall promptly supply to Programmer, and Programmer
shall promptly supply to the
<PAGE> 154
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Company, such information, including all inquiries concerning the broadcast of
political advertising, as may be necessary to comply with FCC rules and
policies, including the lowest unit rate, equal opportunities, reasonable
access, political file and related requirements of federal law. The Company, in
consultation with Programmer, shall develop a statement which discloses its
political broadcasting policies to political candidates, and Programmer shall
follow those policies and rates in the sale of political programming and
advertising. In the event that Programmer fails to satisfy the political
broadcasting requirements under the Act and the rules and regulations of the FCC
and such failure inhibits the Company in its compliance with the political
broadcasting requirements of the FCC, then for the extent reasonably necessary
to assure such compliance, Programmer shall, at the Company's discretion, either
provide rebates to political advertisers or release broadcast time and/or
advertising availabilities to the Company at no cost to the Company.
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT
6.1 Termination. In addition to such other remedies as may be available
at law or equity, this Agreement may be terminated as set forth below by either
the Company or Programmer by written notice to the other if the party seeking to
terminate is not then in material default or breach hereof, upon the occurrence
of any of the following:
(a) if, subject to the provisions of Section 7.9, this Agreement
is declared invalid or illegal in whole or substantial part by an order or
decree of an administrative agency or court of competent jurisdiction and such
order or decree has become final and no longer subject to further administrative
or judicial review;
(b) if the other party is in material breach of its obligations
hereunder and has failed to cure such breach within thirty (30) days of notice
from the non-breaching party;
(c) with the mutual consent of both parties;
(d) if there has been a material change in FCC rules, policies or
precedent that would cause this Agreement to be in violation thereof and such
change is in effect and not the subject of an appeal or further administrative
review and this Agreement cannot be reformed pursuant to Section 7.9, in a
manner acceptable to Programmer and the Company, to remove and/or eliminate the
violation;
(e) by either party upon six months written notice to the other
party; or
<PAGE> 155
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(f) at Programmer's election, upon six months' written notice to
the Company following an Event of Default (as defined in the Loan Agreement
dated as of August __, 1996, between Programmer and Leininger-Geddes
Partnership); or
(g) upon consummation of the transactions contemplated to occur at
the Second Closing as that term is defined in the Purchase Agreement.
6.2 Termination Requirements and Procedures.
(a) Programmer may terminate this Agreement pursuant to Section
6.1(e) hereof only if it pays the Company an amount equal to six times the
monthly compensation due for the month preceding the notice of termination by
Programmer pursuant to Attachment I.
(b) The Company may terminate this Agreement pursuant to Section
6.1(e) hereof only if it pays Programmer Liquidated Damages, as such term is
defined in Attachment V hereto.
(c) During any period prior to the effective date of any
termination of this Agreement, Programmer and the Company agree to cooperate in
good faith to ensure that Station operations will continue, to the extent
possible, in accordance with the terms of this Agreement and that the
termination of this Agreement is effected in a manner that will minimize, to the
extent possible, the resulting disruption of the Station's ongoing operations.
6.3 Force Majeure. Any failure or impairment of the Station's
facilities or any delay or interruption in the broadcast of programs, or failure
at any time to furnish facilities, in whole or in part, for broadcast, due to
Acts of God, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of the Company, or for power reductions necessitated for
maintenance of the Station or for maintenance of other stations located on the
tower from which the Station will be broadcasting, shall not constitute a breach
of this Agreement and the Company will not be liable to Programmer for
reimbursement or reduction of the consideration owed to the Company.
6.4 Other Agreements. During the term of this Agreement or any renewal
hereof, neither the Company nor Programmer will enter into any other agreement
with any third party that would conflict with or result in a material breach of
this Agreement by the contracting party.
<PAGE> 156
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SECTION 7. MISCELLANEOUS
7.1 Assignment.
(a) Neither this Agreement nor any of the rights, interests or
obligations of either party hereunder shall be assigned, encumbered,
hypothecated or otherwise transferred without the prior written consent of the
other party, such consent not to be unreasonably withheld. Notwithstanding the
foregoing, Programmer shall have the right, upon prior notice to the Company, to
assign its rights and interests hereunder to its lenders as collateral security
for Programmer's obligations to such lenders.
(b) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
7.2 Call Letters. Upon request of Programmer, subject to the consent of
the Company, the Company shall apply to the FCC for authority to change the call
letters of the Station (with the consent of the FCC) to such call letters that
Programmer shall reasonably designate. The Company shall coordinate with
Programmer any proposed changes to the call letters of the Station before taking
any action to change such letters.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
7.4 Entire Agreement. This Agreement and the Attachments hereto embody
the entire agreement and understanding of the parties relating to the operation
of the Station. No amendment, waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement will be effective unless
evidenced by an instrument in writing signed by the parties.
7.5 Taxes. The Company and Programmer shall each pay its own ad valorem
taxes, if any, which may be assessed on such party's respective personal
property for the periods that such items are owned by such party. Programmer
shall pay all taxes, if any, to which the consideration specified in Section 1.5
herein is subject provided that the Company is responsible for payment of its
own income taxes.
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
<PAGE> 157
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7.7 Governing Law. The obligations of the Company and Programmer are
subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Act and the Rules and Regulations of the FCC.
The construction and performance of the Agreement will be governed by the laws
of the State of Florida.
7.8 Notices. All notices, demands and requests required or permitted to
be given under the provisions of this Agreement shall be (i) in writing, (ii)
sent by telecopy (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by commercial delivery service or certified mail,
return receipt requested, (iii) deemed to have been given on the date telecopied
with receipt confirmed, the date of personal delivery, or the date set forth in
the records of the delivery service or on the return receipt, and (iv) addressed
as follows:
To Programmer: Paxson Communications of Little Rock-42, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Lowell W. Paxson
Telecopy: (407) 659-4252
Telephone: (407) 659-4122
To the Company: Channel 42 of Little Rock, Inc.
102 Fairmont Circle
Daphne, AL 36526
Attention: Dale Leininger
Telecopy: (334) 621-6666
Telephone: (334) 626-3339
or to any such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
7.8.
7.9 Severability. If any provision of this Agreement or the application
thereof to any person or circumstances shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law. In the event that the FCC
alters or modifies its rules or policies in a fashion which would raise
substantial and material question as to the validity of any provision of this
Agreement, the parties hereto shall negotiate in good faith to revise any such
provision of this Agreement with a view toward assuring compliance with all then
existing FCC rules and policies which may be applicable,
<PAGE> 158
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while attempting to preserve, as closely as possible, the intent of the parties
as embodied in the provision of this Agreement which is to be so modified.
7.10 Arbitration. Any dispute arising out of or related to this
Agreement that the Company and Programmer are unable to resolve by themselves
shall be settled by arbitration in Washington, D.C. by a panel of three
arbitrators. The Company and Programmer shall each designate one disinterested
arbitrator and the two arbitrators designated shall select the third arbitrator.
The persons selected as arbitrators need not be professional arbitrators, and
persons such as lawyers, accountants and bankers shall be acceptable. Before
undertaking to resolve a dispute, each arbitrator shall be duly sworn faithfully
and fairly to hear and examine the matters in controversy and to make a just
award according to the best of his or her understanding. The arbitration hearing
shall be conducted in accordance with the commercial arbitration rules of the
American Arbitration Association. The written decision of a majority of the
arbitrators shall be final and binding on the Company and Programmer. The costs
and expenses of the arbitration proceeding shall be assessed between the Company
and Programmer in a manner to be decided by a majority of the arbitrators, and
the assessment shall be set forth in the decision and award of the arbitrators.
Judgment on the award, if it is not paid within thirty days, may be entered in
any court having jurisdiction over the matter. No action at law or in equity
based upon any claim arising out of or related to this Agreement shall be
instituted in any court by the Company or Programmer against the other except:
(i) an action to compel arbitration pursuant to this Section; or (ii) an action
to enforce the award of the arbitration panel rendered in accordance with this
Section.
7.11 No Joint Venture. Nothing in this Agreement shall be deemed to
create a joint venture between the Company and the Programmer.
[THE REMINDER OF THIS PAGE 1NTENTIONALLY LEFT BLANK]
<PAGE> 159
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IN WITNESS WHEREOF, the parties hereto have executed this Time
Brokerage Agreement the day and year first above written.
PERMITTEE: CHANNEL 42 OF LITTLE ROCK, INC.
By: /s/ Dale Leininger
--------------------------------------------
Dale Leininger
President
PROGRAMMER: PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
By: /s/ James B. Bocock
-------------------------------------------
Name: JAMES B. BOCOCK
Title: PRESIDENT
<PAGE> 160
ATTACHMENT I
CONVENSATION SCHEDULE
Programmer shall reimburse the Company on a monthly basis for the
Company's payment of Station expenses listed on Attachment II upon receipt from
the Company of a certificate (with attached invoices, etc.) documenting payment
of those expenses.
Payments shall be made by delivery of a check to the Company within
seven (7) days after receipt by Programmer of the aforesaid certificate at an
address to be designated.
<PAGE> 161
ATTACHMENT II
STATION EXPENSES
(1) Lease and Utility Payments
(2) Employee Salaries and Benefits(1)
(3) Property Insurance and Taxes
(4) Professional Fees
(5) Equipment Repair and Maintenance
(6) Programming Expenses
(7) Miscellaneous Reasonable and Necessary Station Expenses
- ---------------------------
(1) Programmer's obligation to reimburse the Company for Employee
Salaries and Benefits shall be limited to an amount equal to the salary and
benefits payable to one management level employee and one non-management level
employee.
<PAGE> 162
ATTACHMENT III
BROADCAST STATION PROGRAMMING POLICY STATEMENT
The following sets forth the policies generally applicable to the
presentation of programming and advertising over Television Station KVUT(TV),
Little Rock, Arkansas. All programming and advertising broadcast by the station
must conform to these policies and to the provisions of the Communications Act
of 1934, as amended [the "Act"], and the Rules and Regulations of the Federal
Communications Commission ["FCC"].
Station Identification
The station must broadcast a station identification announcement once an hour as
close to the hour as feasible in a natural break in the programming. The
announcement must include (1) the station's call letters (currently, KVUT(TV));
followed immediately by (2) the station's city of license (Little Rock,
Arkansas).
Broadcast of Telephone Conversations
Before recording a telephone conversation for broadcast or broadcasting such a
conversation simultaneously with its occurrence, any party to the call must be
informed that the call will be broadcast or will be recorded for later
broadcast, and the party's consent to such broadcast must be obtained. This
requirement does not apply to calls initiated by the other party which are made
in a context in which it is customary for the station to broadcast telephone
calls.
Sponsorship Identification
When money, service, or other valuable consideration is either directly or
indirectly paid or promised as part of an arrangement to transmit any
programming, the station at the time of broadcast shall announce (1) that the
matter is sponsored, either whole or in part; and (2) by whom or on whose behalf
the matter is sponsored. Products or services furnished to the station in
consideration for an identification of any person, product, service, trademark
or brand name shall be identified in this manner.
In the case of any political or controversial issue broadcast for which any
material or service is furnished as an inducement for its transmission, an
announcement shall be made at the beginning and conclusion of the broadcast
stating (1) the material or service that has been furnished; and (2) the
person(s) or association(s) on whose behalf the programming is transmitted.
However, if the broadcast is 5 minutes duration or less, the required
announcement need only be made either at its beginning or end.
Prior to any sponsored broadcast involving political matters or controversial
issues, the station shall obtain a list of the chief executive officers, members
of the executive committee or board of
<PAGE> 163
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directors of the sponsoring organization and shall place this list in the
station's public inspection file.
Payola/Plugola
The station, its personnel, or its programmers shall not accept or agree to
accept from any person any money, service, or other valuable consideration for
the broadcast of any matter unless such fact is disclosed to the station so that
all required station identification announcements can be made. All persons
responsible for station programming must, from time to time, execute such
documents as may be required by station management to confirm their
understanding of and compliance with the FCC's sponsorship identification
requirements.
Rebroadcasts
The station shall not rebroadcast the signal of any other broadcast station
without first obtaining such station's prior written consent to such
rebroadcast.
Fairness
Station shall seek to afford coverage to contrasting viewpoints concerning
controversial issues of public importance.
Personal Attacks
The station shall not air attacks upon the honesty, character, integrity or like
personal qualities of any identified person or group. If such an attack should
nonetheless occur during the presentation of views on a controversial issue of
public importance, those responsible for programming shall submit a tape or
transcript of the broadcast to station management and to the person attacked
within 48 hours, and shall offer the person attacked a reasonable opportunity to
respond.
Political Editorials
Unless specifically authorized by station management, the station shall not air
any editorial which either endorses or opposes a legally qualified candidate for
public office.
<PAGE> 164
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Political Broadcasting
All "uses" of the station by legally qualified candidates for elective office
shall be in accordance with the Act and the FCC's Rules and policies, including
without limitation, equal opportunities requirements, reasonable access
requirements, lowest unit charge requirements and similar rules and regulations.
Obscenity and Indecency
The station shall not broadcast any obscene material. Material is deemed to be
obscene if the average person, applying contemporary community standards in the
local community, would find that the material, taken as a whole, appeals to the
prurient interest; depicts or describes in a patently offensive way sexual
conduct specifically defined by applicable state law; and taken as a whole,
lacks serious literary artistic, political or scientific value.
The station shall not broadcast any indecent material outside of the periods of
time prescribed by the Commission. Material is deemed to be indecent if it
includes language or material that, in context, depicts or describes, in terms
patently offensive as measured by contemporary community standards for the
broadcast medium, sexual or excretory activities or organs.
Billing
No entity which sells advertising for airing on the station shall knowingly
issue any bill, invoice or other document which contains false information
concerning the amount charged or the broadcast of advertising which is the
subject of the bill or invoice. No entity which sells advertising for airing on
the station shall misrepresent the nature or content of aired advertising, nor
the quantity, time of day, or day on which such advertising was broadcast.
Contests
Any contests conducted on the station shall be conducted substantially as
announced or advertised. Advertisements or announcements concerning such
contests shall fully and accurately disclose the contest's material terms. No
contest description shall be false, misleading or deceptive with respect to any
material term.
Hoaxes
The station shall not knowingly broadcast false information concerning a crime
or catastrophe.
<PAGE> 165
- 4 -
Children's Programming
The station shall broadcast reasonable amounts of educational and informational
programming designed for children aged 16 years and younger.
Children's Advertising
Programming designed f6r children aged 12 years and younger shall not include
more than 12 minutes of commercial matter per hour, Monday through Friday, and
shall not include more than 10.5 minutes of commercial matter per hour on
weekend programming. There shall be no host selling, as that term is defined by
the FCC, in children's programming on the station.
Emergency Information
Any emergency information which is broadcast by the station shall be transmitted
both aurally and visually or only visually.
Lottery
The station shall not advertise or broadcast any information concerning any
lottery (except the Arkansas State Lottery and any other state lottery). The
station may advertise and provide information about lotteries conducted by
non-profit groups, governmental entities and in certain situations, by
commercial organizations, if and only if there is no state or local restriction
or ban on such advertising or information and the lottery is legal under state
or local law. Any and all lottery advertising must first be approved by station
management.
Advertising
Station shall comply with all federal, state and local laws concerning
advertising, including without limitation, all laws concerning misleading
advertising, and the advertising of alcoholic beverages.
Programming Prohibitions.
Knowing broadcast of the following types of programs and announcements is
prohibited:
False Claims. False or unwarranted claims for any product or service.
<PAGE> 166
- 5 -
Unfair Imitation. Infringements of another advertiser's rights through
plagiarism or unfair imitation of either program idea or copy, or any
other unfair competition.
Commercial Disparagement. Any unfair disparagement of competitors or
competitive goods.
Profanity. Any programs or announcements that are slanderous, obscene,
profane, vulgar, repulsive or offensive, as evaluated by station
management.
Violence. Any programs which are excessively violent.
Unauthenticated Testimonials. Any testimonials which cannot be
authenticated.
<PAGE> 167
ATTACHMENT IV
FORM OF PAYOLA AFFIDAVIT
City of
----------- )
)
County of ) SS:
--------- )
)
State of )
---------- )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
_________, being first duly sworn, deposes and says as follows:
1. He is for Position _________ for ________.
Position
2. He has acted in the above capacity since ____________.
3. No matter has been broadcast by Station ___ for which service,
money or other valuable consideration has been directly or
indirectly paid, or promised to, or charged, or accepted, by him
from any person, which matter at the time so broadcast has not
been announced or otherwise indicated as paid for or furnished
by such person.
4. So far as he is aware, no matter has been broadcast by
Station ___ for which service, money, or other valuable
consideration has been directly or indirectly paid, or promised
to, or charged, or accepted by Station __ or by any independent
contractor engaged by Station __ in finishing programs, from any
person, which matter at the time so broadcast has not been
announced or otherwise indicated as paid for or furnished by
such person.
5. In future, he will not pay, promise to pay, request, or receive
any service, money, or any other valuable consideration,
direct or indirect, from a third party, in exchange for the
influencing of, or the attempt to influence, the preparation of
presentation of broadcast matter on Station __.
6. Nothing contained herein is intended to, or shall prohibit
receipt or acceptance of anything with the expressed
knowledge and approval of my employer, but henceforth any such
approval must be given in writing by someone expressly authorized
to give such approval.
<PAGE> 168
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7. He, his spouse and his immediate family do__ do not__ have any
present direct or indirect ownership interest in (other than
an investment in a corporation whose stock is publicly held),
serve as an officer or director of, whether with or without
compensation, or serve as an employee of, any person, firm or
corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale
and retail sales outlets), manufacture or exploitation of
music, films, tapes, recordings or electrical transcriptions
of any program material intended for radio broadcast use;
3. The exploitation, promotion, or management or
persons rendering artistic, production and/or other services
in the entertainment field;
4. The ownership or operation of one or more radio or
television stations;
5. The wholesale or retail sale of records intended for public
purchase;
6. Advertising on Station ___, or any other station owned by
the Company (excluding nominal stockholdings in publicly
owned companies).
8. The facts and circumstances relating to such interest are none__
as follows___:___________________________________________________
_______________________________________________________________
_______________________
___________________________
Affiant
Subscribed and sworn to before me
this day of______, 19___.
____________________
Notary Public
My Commission expires:_______________.
<PAGE> 169
ATTACHMENT V
LiQUIDATED DAMAGES
The Company acknowledges that Programmer will acquire certain assets
associated uniquely with the Station's operation and will enter into various
long-term agreements with program suppliers and other third parties to produce
programming for the Station at substantial expense and risk; that Programmer
will recruit, hire and maintain a staff of employees dedicated to acquiring and
producing quality programming to be broadcast on the Station; and that
Programmer will make substantial investments in additional hard assets to
produce quality programming for the Station. The Company also acknowledges that
Programmer will make substantial investments, both in tangible and intangible
terms, to promote the Station under the Time Brokerage Agreement, to create a
unique image for the Station, and to develop a competitive position in the
market for the Station and that such efforts on the part of Programmer will add
substantial value to the Station. The Company and Programmer acknowledge and
agree that any measure of actual damages cannot compensate Programmer for the
loss of the Company's performance under this Agreement and that the true measure
of damages to Programmer for termination without cause or material breach of
the Time Brokerage Agreement by the Company is incapable of accurate estimation
with reasonable certainty. The Company and Programmer therefore agree that it is
a fair and reasonable forecast of just compensation for the harm caused to be
measured by liquidated damages, as defined in subparagraph (a) of this
Attachment, to be paid to Programmer upon the termination without cause or
material breach of the Time Brokerage Agreement by the Company.
(a) "Liquidated Damages" shall mean an amount equal to funds expended
and/or committed to be expended by Programmer (except (i) with respect to items
(3) through (7) below, which expenditures and/or commitments shall be consistent
with industry practices and (ii) to the extent not theretofore recovered by
Programmer from the Station's gross revenues prior to the termination without
cause or material breach) in each of the following categories:
(1) the full value of all of Programmer's capital
expenditures incurred in connection with this Agreement,
less any consideration received by Programmer as a
consequence of any sale of such assets;
(2) the full value of all service contracts and
programming agreements assumed and entered into by
Programmer for purposes of providing programming and
advertising to be broadcast on the Station, which Programmer
owns at the time of termination or breach less any
consideration received by Programmer as a consequence of its
good faith efforts to sell or assign such agreements;
<PAGE> 170
- 2 -
(3) the full value of all severance and employee
benefit packages that Programmer, in its discretion, shall
provide to employees whose services would not be required in
the absence of the Time Brokerage Agreement;
(4) the full value of any contract with third
parties, which could not be performed owing to termination
without cause or breach, for services to be rendered in
connection with programming provided to the Station
including, without limitation, producers, advertising
salespeople, technicians, engineers, and any other
independent contractors whose services would not be required
in the absence of the Time Brokerage Agreement;
(5) the full value of all expenses incurred to
promote the Station and position the Station in the
marketplace;
(6) all reasonable corporate, legal,
administrative, professional and brokerage expenses
attributable to Programmer's negotiation and performance of
the Time Brokerage Agreement; and
(7) the good will and intangible value associated
with Programmer's efforts under this Agreement to create a
unique image and competitive market position for the
Station.
(b) Should the Company terminate without cause or materially breach the
Time Brokerage Agreement, Programmer shall submit its computation of Liquidated
Damages under the categories set forth above to a "Big Six" accounting firm
mutually acceptable to the parties for independent auditing and verification.
Within thirty (30) days of verification, the Company agrees to tender payment of
all verified amounts to Programmer; provided, however, that if the Company
objects to any particular enumerated component of the Liquidated Damages, as
verified, it shall notify Programmer of such object within fifteen (15)
days of verification. If thereafter Programmer and the Company cannot agree as
to the amount of the objectionable component, either party shall have the right
to elect to arbitrate such dispute pursuant to Section 7.10 of the Time
Brokerage Agreement provided it gives written notice of its election to
arbitrate by the thirtieth (30) day following the date of the Company's
objection to Programmer's verification. Notwithstanding that the Company may
question a particular component of the Liquidated Damages and either party may
elect arbitration of the dispute, the reminder of the items comprising the
Liquidated Damages shall be paid by the Company to Programmer within sixty (60)
days of accounting verification, as specified above. No payment shall be
required as to any contested component until the earlier of (i) Programmer and
the Company reaching an agreement on the amount or (ii) entering of the
arbitration award.
<PAGE> 171
- 3 -
(c) If any category of Liquidated Damages is held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of the
categories of Liquidated Damages shall not be affected thereby, and the parties
agree to use their best efforts to negotiate a replacement category that is not
invalid, illegal or unenforceable.
<PAGE> 172
ATTACHMENT VI
CERTIFICATE OF PAYMENT
Pursuant to Section 1.7(b) of the August _, 1996 Time Brokerage
Agreement concerning KVUT(TV), I,____ , on behalf of Channel 42 of Little Rock,
Inc. ("Company"), hereby certify that the Company has timely paid the expenses
listed and documented in Exhibit A hereto, which expenses were incurred in the
operation of commercial television station KVUT(TV) for the month of __________
199__.
Executed this _______ day of___________, 199_.
_________________________________
Name:
Title:
<PAGE> 173
- --------------------------------------------------------------------------------
CONSTRUCTION AGREEMENT
BY AND BETWEEN
CHANNEL 42 OF LITTLE ROCK, INC.
AND
PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
FOR
TELEVISION STATION KVUT(TV)
LITTLE ROCK, ARKANSAS
AUGUST 21, 1996
- --------------------------------------------------------------------------------
<PAGE> 174
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
SECTION 2. THE WORK . . . . . . . . . . . . . . . . . . . . . 2
SECTION 3. COMPLETION OF THE WORK . . . . . . . . . . . . . . 3
SECTION 4. COST OF THE WORK . . . . . . . . . . . . . . . . . 3
SECTION 5. BUDGET . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 6. CONTRACTOR'S CONSTRUCTION OBLIGATIONS . . . . . . 4
SECTION 7. SUBCONTRACTORS . . . . . . . . . . . . . . . . . . 5
SECTION 8. PROTECTION OF PERSONS AND PROPERTY . . . . . . . . 5
SECTION 9. INSURANCE . . . . . . . . . . . . . . . . . . . . 5
SECTION 10. DAMAGES . . . . . . . . . . . . . . . . . . . . . 6
SECTION 11. TERMINATION . . . . . . . . . . . . . . . . . . . 6
SECTION 12. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . 7
SECTION 13. COUNTERPARTS . . . . . . . . . . . . . . . . . . 8
</TABLE>
<PAGE> 175
CONSTRUCTION AGREEMENT
THIS CONSTRUCTION AGREEMENT (the "Agreement") is entered into as of this
21st day of August, 1996, by and between PAXSON COMMUNICATIONS OF LITTLE
ROCK-42, INC., a Florida corporation ("Contractor"), and CHANNEL 42 OF LITTLE
ROCK, INC., a Delaware corporation (the "Company").
W I T N E S S E T H
WHEREAS, the Company is the proposed assignee of a construction permit
issued by the Federal Communications Commission ("FCC") for new television
station KVUT(TV), Channel 42, Little Rock, Arkansas, FCC File No. BPCT-850607KO
(as subsequently modified through the date hereof, the "Construction Permit");
WHEREAS, the Company, Contractor and Leininger-Geddes Partnership,
current permittee and assignor of the construction permit for the
aforementioned television station, have entered into a Stock Purchase Agreement
dated as of the date hereof (the "Purchase Agreement"); and
WHEREAS, the Purchase Agreement provides that Contractor and the
Company shall enter into this Agreement in order to permit Contractor to
specify the materials and equipment required to construct the facilities
proposed in the Construction Permit for new television station KVUT(TV),
Channel 42, Little Rock, Arkansas (the "Station"), and to undertake, following
consultation with the Company, such construction.
NOW THEREFORE, in consideration of the above and of the mutual promises
covenants contained herein, the parties, intending to be legally bound, agree
as follows:
SECTION 1. DEFINITIONS. In addition to the terms which are
elsewhere defined in this Agreement, the following terms shall have the
respective meanings hereinafter set forth:
A. "Budget" shall mean the preliminary budget agreed to
by the Company and Contractor, as described in Exhibit A attached hereto, as
such Budget may be amended in accordance with Section 6 of this Agreement.
B. "Contract Documents" shall mean this Agreement, all
authorizations issued to the Company for the Station's operation and
construction, the Plans and Specifications and the Budget.
<PAGE> 176
- 2 -
C. "Plans and Specifications" shall mean the plans and
specifications described in Exhibit B attached hereto, and as supplemented from
time to time upon mutual agreement of Contractor and the Company.
D. "Modification Application" means the application
filed by the Company with the FCC, File No. BMPCT-950111KM, requesting
modification of the Construction Permit.
E. "Work" shall mean all labor, materials and equipment
necessary or appropriate for the construction of the facilities described in
the Plans and Specifications as authorized in the Construction Permit.
SECTION 2. THE WORK.
A. Contractor agrees to do the following at Contractor's
expense:
(i) In consultation with the Company, specify for
the purchase or lease by Contractor the equipment, supplies and materials
necessary or appropriate for the construction and installation of the
facilities described in the Plans and Specifications and as authorized in the
Construction Permit; and
(ii) With the concurrence of the Company, construct
and/or install the facilities described in the Plans and Specifications in
accordance with the Construction Permit and all applicable zoning, building or
other governmental laws, ordinances or regulations.
B. The Company has done or agrees to do the following:
(i) Maintain in effect the Construction Permit, as it
may be modified, including the filing, if necessary, of an application to
extend the expiration date of the Construction Permit;
(ii) File with the FCC or any other governmental agency
and prosecute to the fullest extent any amendments to the Construction
Permit and any other applications which may be necessary for the implementation
of the Construction Permit, the construction of the Station, and the
commencement and continuation of the Station's operations as proposed in the
Construction Permit;
(iii) Prepare and timely file with the FCC an
application for license for the constructed facilities in accordance with the
rules and regulations of the FCC; and
<PAGE> 177
- 3 -
(iv) Cooperate with Contractor in timely filing
and obtaining any zoning, building and other permits that are required in
connection with the Plans and Specifications and the Work, and execute the
necessary documents and agreements provided by Contractor in accordance with
its obligations hereunder.
SECTION 3. COMPLETION OF THE WORK
A. The Work shall be commenced upon the grant of the
Modification Application by the FCC and shall be substantially completed as
promptly as reasonably practicable but not later than the FCC imposed
construction deadline; provided, however, that the parties agree that such date
shall be extended by reason of strikes, labor troubles, inability to procure
material, failure of power, governmental actions or inactions, riots,
insurrection, war or other reasons beyond the control of the parties, in which
event the Company shall seek an extension of the FCC construction deadline.
B. The Work shall be deemed to be substantially complete
when (i) construction is sufficiently complete, in accordance with the
Contract Documents, so that the Station may begin operating pursuant to Program
Test Authority under FCC rules using the facilities proposed in the
Construction Permit and (ii) all permits, modifications of permits,
authorizations and licenses necessary to operate such facilities have been
obtained. Any Work required by the Contract Documents which remains to be
completed after the date of substantial completion shall, if reasonably
feasible, be completed by Contractor within ninety (90) days after the date of
substantial completion.
C. Upon completion of the Work, the Company and Contractor
shall enter into a Lease Agreement in the form of Exhibit C hereto, pursuant to
which Contractor shall lease to the Company certain assets used or useful in
the operation of the Station.
SECTION 4. COST OF THE WORK. Contractor shall be responsible for the
entire cost of the Work.
SECTION 5. BUDGET. The Company and Contractor acknowledge and
agree that the Budget represents the estimated cost of the Work. Promptly
after the date hereof, Contractor shall obtain firm bids from responsible
manufacturers, suppliers, and contractors approved by the Company for the
performance of the Work or portions thereof, and shall supply copies of all
bids to the Company. Upon receipt of the bids and upon mutual agreement of the
Company and Contractor to accept those bids, Contractor shall accept the bids
and the Budget shall be adjusted to conform to the bids.
<PAGE> 178
- 4 -
SECTION 6. CONTRACTOR'S CONSTRUCTION OBLIGATIONS.
A. Contractor shall supervise and direct the Work, using its
best skill and attention and, subject to the concurrence of the Company, shall
be responsible for all construction means, methods, techniques, sequences and
procedures and for coordinating all portions of the Work under this Agreement.
B. Contractor shall indemnify the Company against any losses
or liabilities incurred by the Company for the acts and omissions of
Contractor's employees, contractors, subcontractors and other persons providing
or performing any of the Work.
C. Unless otherwise provided in the Contract Documents,
Contractor shall provide all labor, materials, equipment, tools, construction,
equipment and machinery, water, heat, utilities, transportation and other
facilities and services necessary for the proper execution and completion of
the Work, whether temporary or permanent and whether or not incorporated or to
be incorporated in the Work.
D. Contractor shall at all times enforce strict discipline
and good order among any person working at the construction site.
E. Contractor warrants to the Company that all materials and
equipment furnished under this Contract will be new, unless otherwise specified
in Exhibit A, and that all Work will be of good quality, free from faults and
defects and in conformance with the Contract Documents.
F. Contractor shall comply with all laws, ordinances, rules,
regulations and lawful orders of any public authority bearing on the
performance of the Work.
G. Contractor shall prepare and submit to the Company an
estimated progress schedule for the Work. The progress schedule shall be
related to the entire project, to the extent required by the Contract
Documents, and shall provide for expeditious and practicable completion of the
Work.
H. Contractor at all times shall keep the construction site
free from accumulation of waste material or rubbish caused by the Work. At the
completion of the Work, Contractor shall remove or cause to be removed all
waste materials and rubbish from and about the construction site and tools,
construction equipment, machinery and surplus materials.
<PAGE> 179
- 5 -
SECTION 7. SUBCONTRACTORS. By an appropriate written agreement,
Contractor shall require each subcontractor retained by Contractor to be bound
by the terms of the Contract Documents, and to assume all the obligations and
responsibilities which Contractor, by those documents, assumes toward the
Company.
SECTION 8. PROTECTION OF PERSONS AND PROPERTY.
A. Contractor shall take all reasonable precautions for
the safety of, and shall provide all reasonable protection to prevent dainage,
injury or loss to:
(i) all individuals employed to perform the Work;
(ii) all materials and equipment to be used in the Work,
whether in storage, on or off the site, under the care, custody or control of
Contractor or any of its subcontractors; and
(iii) other property at the site or adjacent thereto.
B. Contractor shall give all notices and comply with all
applicable laws, ordinances, rules, regulations and lawful orders of any public
authority bearing on the safety of persons or property or their protection from
damage, injury or loss.
SECTION 9. INSURANCE.
A. Contractor shall purchase and maintain or cause to be
purchased and maintained such insurance as will protect Contractor and the
Company from claims set forth below which may arise out of or result from the
Work, whether such operations be by Contractor or by any subcontractor or by
anyone directly or indirectly employed by any of them, or by anyone for whose
acts any of them may be liable:
(i) claims under workmen's compensation, disability
benefit and other similar employee benefit acts;
(ii) claims for damages because of bodily injury,
occupational sickness or disease, or death;
(iii) claims for damages insured by usual personal
injury liability coverage which are sustained (1) by any person as a result of
an offense directly or indirectly related to the employment of such person by
Contractor, or (2) by any other person;
<PAGE> 180
- 6 -
(iv) claims for damages, other than to the Work
itself, because of injury to or destruction of tangible property; and
(v) claims for damages because of bodily injury
or death or any property damage arising out of the ownership, maintenance or
use of any motor vehicle in respect of the Work.
B. The insurance required by this Section shall be
written for not less than the limits of liability agreed to by Contractor and
the Company or required by law, whichever is greater.
C. Certificates of Insurance acceptable to the Company
and Contractor shall be delivered to the Company prior to commencement of the
Work. These Certificates shall contain a provision that coverage afforded
under the policies will not be canceled until at least thirty (30) days' prior
written notice has been given to the Company.
D. Contractor shall also purchase and maintain property
insurance upon the entire Work to the full insurable value thereof. This
insurance shall insure against the perils of fire and extended coverage shall
include "all risk" insurance for physical loss or damage including, without
duplication of coverage, theft, vandalism and malicious mischief and shall
provide that all proceeds from such insurance shall go to Contractor.
SECTION 10. DAMAGES. In the event of a default by Contractor of
its obligations under this Agreement or the failure of Contractor to complete
the Work, Contractor shall not be liable to the Company for any consequential
damages as a result of such default or failure. The sole liability of
Contractor to the Company shall be for the full cost and expense of completing
the Work in accordance with the Contract Documents and the Plans and
Specifications.
SECTION 11. TERMINATION.
A. This Agreement shall terminate, and neither party
shall have any further obligation hereunder, upon the earlier to occur of (a)
the completion of the Work, (b) the Second Closing (as defined in the Purchase
Agreement), or (c) termination of the Purchase Agreement in accordance with its
terms before the Second Closing.
B. In the event that either this Agreement or the
Purchase Agreement is terminated in accordance with its respective terms by the
Company following a material breach by Contractor of its respective obligations
hereunder or thereunder, then the Company shall have the right to (a) purchase
from Contractor the Station's transmitter building, if such
<PAGE> 181
- 7 -
building is owned by the Contractor at the time of such termination, and the
Station's transmitting antenna and transmission line at the fair market value
of such building, antenna and line determined as of the date of such
termination and (b) offer to purchase from the Contractor the Station's
transmitter. In the event that the Contractor, in its sole discretion, elects
not to sell the Station's transmitter to the Company, the Company shall have
the right to lease such transmitter from the Contractor for a period of no more
than six months and upon such other terms and conditions, including the payment
of fair market rent, as may be agreed upon by the Company and Contractor.
SECTION 12. MISCELLANEOUS PROVISIONS.
A. The Contract shall be governed by the laws of the
State of Florida applicable to contracts made and to be performed there,
without reference to the principles of the conflicts of law.
B. The Company and Contractor each binds itself and its
successors, assigns and legal representatives to the other party hereto and to
the successors, assigns and legal representatives of such other party with
respect to all covenants, agreements and obligations contained in the Contract
Documents.
C. The parties hereto agree to cooperate fully with each
other in preparing, filing, prosecuting, advocating grant, and taking any other
actions necessary with respect to any applications or actions which are or may
be necessary to obtain the consent of the FCC or of any other governmental.
instrumentality, or any third party to, or are or may be necessary or helpful
in order to accomplish the transactions contemplated by this Agreement.
D. All notices, demands and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, (ii) delivered by personal delivery or sent by commercial delivery
service or certified mail, return receipt requested, (iii) deemed to have been
given on the date of personal delivery, the date set forth in the records of
the delivery service or on the return receipt, and (iv) addressed as follows::
If to the Company: Channel 42 of Little Rock, Inc.
102 Fairmont Circle
Daphne, Alabama 36526
Attention: Dale Leininger
<PAGE> 182
- 8 -
If to Contractor: Mr. Lowell W. Paxson
Paxson Communications of Little Rock-42, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
or to any such other or additional persons and addresses as the parties may
from time to time designate in a writing delivered in accordance with this
Section 12.D.
E. No action or failure to act by the Company or
Contractor shall constitute a waiver of any right or duty afforded any of them
under this Agreement, nor shall any such action or failure to act constitute an
approval of or acquiescence in any breach thereunder, except as may be
specifically agreed in writing.
F. If the Contract Documents, laws, ordinances, rules,
regulations or orders or any public authority having jurisdiction require any
portion of the Work to be inspected, tested or approved, Contractor shall give
the Company timely notice of its readiness so the Company may observe such
inspection, testing or approval.
G. The Company's and Contractor's respective obligations
hereunder are unique and valuable and not readily subject to compensation by
money damages alone. Accordingly, in the event either party should breach its
obligations under this Agreement, the other party shall be entitled to an
order directing specific performance from a court of competent jurisdiction, in
addition to all other remedies at law or in equity.
SECTION 13. COUNTERPARTS. This Agreement may be signed in any
number of counterparts with the same effect as if the signatures on all
counterparts were upon the same instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 183
- 9 -
IN WITNESS WHEREOF, the Company and Contractor have executed this
Constniction Agreement as of the date first above written.
PAXSON COMMUNICATIONS OF LITTLE
ROCK-42, INC.
By: /s/ William L. Watson
---------------------------------
Name: William L. Watson
Title: Secretary
CHANNEL 42 OF LITTLE ROCK, INC.
By: /s/ Dale Leininger
---------------------------------
Dale Leininger
President
<PAGE> 184
EXHIBITS A AND B
BUDGET
AND
PLANS AND SPECIFICATIONS
<PAGE> 185
To Be Supplied
After Agreement by the Parties
<PAGE> 186
EXHIBIT C
- --------------------------------------------------------------------------------
LEASE AGREEMENT
BY AND BETWEEN
CHANNEL 42 OF LITTLE ROCK, INC.
AND
PAXSON COMMUNICATIONS
OF LITTLE ROCK-42, INC.
FOR
TELEVISION STATION KVUT(TV)
LITTLE ROCK, ARKANSAS
________ __, 1996
- --------------------------------------------------------------------------------
<PAGE> 187
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. TERM . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Initial and Renewal Term . . . . . . . . . . . . 1
(b) Holding Over . . . . . . . . . . . . . . . . . . 1
(C) Automatic Termination . . . . . . . . . . . . . . 2
SECTION 2. RENT AND TAXES . . . . . . . . . . . . . . . . . . 2
(a) Rent for Initial and Renewal Terms . . . . . . . 2
(b) Taxes . . . . . . . . . . . . . . . . . . . . . . 3
(C) Payment . . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. USE OF ASSETS . . . . . . . . . . . . . . . . . . 3
SECTION 4. ALTERATIONS . . . . . . . . . . . . . . . . . . . 3
SECTION 5. MAINTENANCE AND REPAIRS . . . . . . . . . . . . . 4
SECTION 6. INDEMNITY AND, INDEMNITY INSURANCE . . . . . . . . 5
SECTION 7. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . 6
SECTION 8. CONDEMNATION . . . . . . . . . . . . . . . . . . . 6
SECTION 9. INTERFERENCE AND RF RADIATION . . . . . . . . . . 7
(a) General . . . . . . . . . . . . . . . . . . . . . 7
(b) RF Radiation . . . . . . . . . . . . . . . . . . 7
SECTION 10. FORCE MAJEURE . . . . . . . . . . . . . . . . . 7
SECTION 11. MECHANICS' LIENS . . . . . . . . . . . . . . . . 7
SECTION 12. LESSOR'S LIEN . . . . . . . . . . . . . . . . . 7
SECTION 13. QUIET ENJOYMENT . . . . . . . . . . . . . . . . 7
SECTION 14. DEFAULT . . . . . . . . . . . . . . . . . . . . 8
SECTION 15. SURRENDER OF LEASED ASSETS . . . . . . . . . . . 8
SECTION 16. NOTICES . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
<PAGE> 188
<TABLE>
Page
<S> <C>
SECTION 17. PROPERTY INSURANCE . . . . . . . . . . . . . . . . 9
SECTION 18. TAXES . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 19. CAPTIONS . . . . . . . . . . . . . . . . . . . . . 10
SECTION 20. COVENANTS TO BIND AND BENEFIT RESPECTIVE PARTIES . 10
SECTION 21. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS . . . . . . . . . . . . . . . . . . . . 10
SECTION 22. COUNTERPARTS . . . . . . . . . . . . . . . . . . . 10
SECTION 23. ATTORNEYS FEES . . . . . . . . . . . . . . . . . . 10
SECTION 24. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 10
SECTION 25. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . 10
SECTION 26. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 189
EXHIBIT C
LEASE AGREEMENT
THIS LEASE is made and entered into as of this ___________ day of _____,
1996, by and between PAXSON COMMUNICATIONS OF LITTLE ROCK-42, INC., a Florida
corporation (hereinafter referred to as "Lessor"), and CHANNEL 42 OF LITTLE
ROCK, INC., a Delaware corporation (hereinafter referred to as "Lessee").
STATEMENT OF FACTS
A. Lessor, Lessee and Leininger-Geddes Partnership, a general
partnership formed under the laws of the State of Alabama, have entered into a
Stock Purchase Agreement dated as of August 21, 1996 ("Purchase Agreement").
B. The Purchase Agreement provides that Lessor and Lessee shall
enter into a Lease Agreement pursuant to which Lessor shall lease to Lessee
certain assets used or useful in the operation of new television station
KVUT(TV), Channel 42, Little Rock, Arkansas (the "Station").
C. Lessor and Lessee desire to set forth herein the terms and
conditions of such Lease.
NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Lease, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION 1. TERM.
(a) Initial and Renewal Term. Lessee shall have the
right to use the assets described in Exhibit A hereto (the "Leased Assets") for
an Initial Term commencing on the date hereof (the "Commencement Date") and
expiring at 12:00 Midnight on the date that is 180 days following the first
anniversary of the day the Station begins operating under Program Test
Authority pursuant to Section 73.1620 of the FCC's Rules (the "Initial Term"),
unless this Lease is sooner terminated as hereinafter provided. This Lease may
be renewed for one additional one-year term (the "Renewal Term"), unless at
least 90 days prior to the expiration of the Initial Term Lessor or Lessee
shall have provided written notice to the other stating that it does not intend
to renew this Lease for a Renewal Term. The Initial Term and Renewal Term
shall be subject to all of the terms and conditions set forth in this Lease.
(b) Holding Over. If Lessee or anyone claiming under
Lessee shall remain in possession of the Leased Assets or any part thereof
after the expiration of the Initial Term
<PAGE> 190
- 2 -
or the Renewal Term without any agreement in writing between the Lessor and
Lessee with respect thereto, prior to acceptance of rent by Lessor, the person
remaining in possession shall be deemed a holdover lessee, and, after
acceptance of rent by Lessor, the party remaining in possession of the Leased
Assets shall be deemed a lessee from month-to-month, subject to the provisions
of this Lease. The rental during any such period shall equal one hundred
twenty-five percent (125%) of the rental in effect immediately preceding such
expiration.
(c) Automatic Termination. Notwithstanding anything in
this Lease to the contrary, this Lease shall automatically terminate upon the
Second Closing (as defined in the Purchase Agreement), and neither Lessor nor
Lessee shall have any further obligations hereunder, except that Lessee shall
be responsible for any unpaid Rent.
SECTION 2. RENT AND TAXES.
(a) Rent for Initial and Renewal Terms. Lessee covenants
and agrees to pay Lessor for the use of the Leased Assets during the Initial
Term and the Renewal Term the amounts set forth below (the "Rent"):
(1) On or before the last day of the month in
which the Commencement Date falls, Lessee shall pay as Rent for each day of the
period beginning on the Commencement Date and ending on the last day of such
month the sum of Six Hundred Sixty-Six and 66/100 Dollars ($666.66).
(2) Lessee shall pay to Lessor an annual Rent in
the amount of Two Hundred Forty Thousand Dollars ($240,000) per year (the "Base
Rent") for the period beginning with the month first following the Commencement
Date and ending on the last day of the twelfth month thereafter, which amount
shall be payable in equal monthly installments.
(3) In the event that this Lease is renewed, the
Rent to be paid by Lessee to Lessor during the Renewal Term shall be equal to
the sum of the Base Rent plus the amount determined by multiplying the Base
Rent by the percentage increase, if any, in the U.S. Department of Labor,
Bureau of Labor Statistics, Revised All-Cities Consumer Price Index for the
Little Rock, Arkansas metropolitan area (the "CPI") published immediately prior
to the last day of the Initial Term over the CPI published immediately prior to
the Commencement Date. In no event shall the Rent to be paid by Lessee during
the Renewal Term be less than the Base Rent.
(4) If the CPI ceases to exist or is
substantially changed, Lessor shall substitute a similar index. Except as
otherwise specifically provided herein,
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installments of Rent during the Initial Term and the Renewal Term shall be paid
in advance in United States Dollars (without prior notice or invoice by Lessor)
on or before the first of the month and any amounts which are payable when
invoiced hereunder shall be due within twenty (20) days after Lessee's receipt
of such invoice.
(b) Taxes. Lessee shall pay to Lessor, when invoiced,
any and all taxes and assessments levied or assessed on or against the use of
the Leased Assets.
(c) Payment. All monthly payments of rent or other sums
due Lessor hereunder shall be sent to or made at the offices of Lessor
designated in Section 16 hereof, or such other place as may be designated by
Lessor from time to time; provided that any such designation must be in writing
and provided to Lessee at least one week before the date on which payment from
Lessee is due.
SECTION 3. USE OF ASSETS.
(a) Lessee shall have the right to use the Leased Assets
only for the purpose of constructing and operating the Station and for the
construction and operation of transmit and receive towers, satellite receivers
and associated equipment related to Lessee's operation of the Station.
(b) Lessee accepts the Leased Assets in their present
condition ("as is") and agrees that it will take good care of the Leased
Assets, subject to reasonable wear and tear, and that Lessee will return the
Leased Assets to Lessor in the same condition as said Leased Assets were in at
the time control was turned over to Lessee, subject to reasonable wear and tear
and damage done by Lessor, if any. Lessee agrees that it will comply with all
laws, ordinances, orders, rules, regulations or requirements of all
governmental authorities which are applicable to its use of the Leased Assets.
(c) Lessee, at its own cost and expense, shall obtain and
maintain in effect any and all permits, licenses and approvals that are or may
be required with respect to the construction or operation of the Station by
each governmental authority having jurisdiction over such construction or
operation.
SECTION 4. ALTERATIONS.
(a) Subject to Lessor's approval, which approval shall
not be unreasonably withheld, Lessee, at its own expense and subject to the
provisions of Subsection 4(b) hereof, may make such alterations, additions,
changes and improvements (herein called "Alterations") to the Leased Assets as
Lessee may deem necessary or desirable, subject to
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Lessor's approval, which approval shall not be unreasonably withheld; provided
that said Alterations shall not lessen the value of the Leased Assets.
(b) Before Lessee may make any Alterations to the Leased
Assets in accordance with the rights granted by Subsection 4(a) hereof, Lessee
shall submit to Lessor written specifications for such Alterations that are
proposed, for Lessor's approval. Lessor, within thirty (30) days after receipt
by it of the written specifications, shall notify Lessee whether it approves
such Alterations. If Lessor fails to notify Lessee in writing within such
thirty (30) day period that it disapproves of such Alterations, Lessee may
proceed to cause the Alterations to be made.
SECTION 5. MAINTENANCE AND REPAIRS.
(a) Lessor shall be responsible for the repair and maintenance of
the Leased Assets. In the event that Lessee reasonably determines that a
repair or replacement is needed and Lessor after written notice does not make
said repair or replacement within a reasonable period of time, Lessee shall
notify Lessor in writing that it considers said repair or replacement necessary
and that it is contemplating making said repair. Lessee may then, at its
option, make such repair or replacement and charge the reasonable cost
incurred to Lessor. It is agreed that nothing in the foregoing shall relieve
Lessor from full performance of its obligations and that the remedy referred
to above is in addition to any other remedy available to Lessee.
(b) If the Leased Assets shall be partially damaged by
fire or other cause without the fault or neglect of Lessee or its employees,
agents, visitors or licensees, the Lessor shall proceed forthwith to replace or
to repair the Leased Assets with reasonable diligence at the expense of Lessor;
provided that, if the Leased Assets are to be replaced or repaired and are
unusable in whole or in part following such damage, the rent payable hereunder
during the period in which they are unusable shall be adjusted equitably;
provided further, however, that, if the Leased Assets are totally damaged or
rendered wholly unusable by fire or other cause, including, but not limited to,
condemnation, and Lessor shall decide not to replace the same, then, within
ninety (90) days after such fire, casualty or condemnation, Lessor may give
Lessee notice in writing of the decision not to replace, whereupon the Initial
Term or Renewal Term of this Lease shall terminate, Lessee shall surrender the
Leased Assets to Lessor, and rent shall be abated for the unexpired portion of
this Lease, effective as of the date of said written notice from Lessor, and
Lessor and Lessee shall have no further obligation or liability to the other.
It is agreed that nothing in this Subsection 5(b) shall require Lessor to
replace or to repair any or all Alterations.
<PAGE> 193
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(c) Lessor will maintain the Leased Assets so as to comply with
existing rules and regulation imposed by any governmental authority having
jurisdiction over the construction or operation of the Station, and will make
any repairs and modifications reasonably necessary to maintain the Leased
Assets in good condition and in compliance with good broadcast engineering
practices. In performance of its obligation to maintain and repair the Leased
Assets, it may be necessary from time to time for Lessor to request that Lessee
temporarily cease its broadcast operation, turn off electrical power and/or
make other adjustments to its equipment and operations. Lessor agrees to
schedule such work, as far as reasonably possible, from 1:00 A.M. to 5:00 A.M.,
and Lessor will not cause any temporary interruption of Lessee's broadcast
operation under this provision unless such interruption is required by and
consistent with good engineering practices. Lessee agrees to cooperate with
Lessor and to comply with and honor Lessor's reasonable requests for temporary
cessation of its broadcast operation, to turn off electrical power and/or to
make other adjustments to its equipment or operation, as necessary, to allow
Lessor to perform such work in an orderly and timely manner.
(d) Subject to the limitation contained in the last sentence of
Section 6(a), Lessor shall indemnify and hold harmless Lessee from any and all
claims, expenses or liabilities, including reasonable attorneys' fees and court
costs, for injuries to or death of persons or damage to property arising out of
or in connection with Lessor's maintenance and repair of the Leased Assets.
SECTION 6. INDEMNITY AND INDEMNITY INSURANCE.
(a) Lessee shall indemnify and hold harmless Lessor from any and
all claims, expenses or liabilities, including reasonable attorneys' fees and
court costs, for injuries to or death of persons, or damage to property arising
out of or in connection with Lessee's use of the Leased Assets. Lessee further
agrees to defend on behalf of Lessor all legal actions, if any, arising out of
any such claim for such damages. Lessor shall not be liable for loss or damage
sustained by Lessee by reason of business interruption resulting from Lessor's
maintenance and repair of the Leased Assets as provided in Section 5 above.
(b) Lessee agrees that it will, at its expense, obtain and
maintain during the Initial Term or Renewal Term public liability insurance
against claims of injury to or death of persons, or damage to property arising
out of or in connection with Lessee's use of the Leased Assets, naming Lessee
and Lessor as insured persons. Such public liability insurance shall be with
an insurer that Lessor finds reasonably satisfactory and shall have limits of
not less than One Million Dollars ($1,000,000) with respect to claims of injury
to or death of any number of persons in any one occurrence and not less than
Two Hundred Thousand Dollars ($200,000) for property damage in any one
occurrence. Lessee agrees to name
<PAGE> 194
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Lessor as a co-insured party on any and all such public liability insurance
policies. Satisfactory evidence of such coverage shall be submitted by Lessee
to Lessor.
SECTION 7. ASSIGNMENT.
(a) Right to Assign. Neither this Lease nor any of the rights,
interests or obligations of Lessee hereunder shall be assigned, encumbered,
hypothecated, subleased or otherwise transferred without the prior written
consent of Lessor. Lessor shall have the right to assign its rights, interests
and obligations hereunder without Lessee's consent so long as Lessor provides
Lessee with prior written notice of any such assignment by Lessor.
(b) This Lease shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
SECTION 8. CONDEMNATION.
(a) If during the Initial Term or Renewal Term of this
Lease the Leased Assets or any portion thereof shall be appropriated by any
corporation or authority having the right of eminent domain, or if access to
the Leased Assets is restricted by action of any such corporation or authority
and reasonably comparable access is not made available to the Leased Assets,
this Lease and all obligations of Lessor and Lessee hereunder shall cease and
terminate as of the date the appropriating corporation or authority takes
possession thereof or materially restricts access to the Leased Assets. All
obligations of Lessee to pay any rents or other charges whatsoever under the
terms of this Lease shall be apportioned as of such date in the same manner as
if the Lease had expired on such date according to its terms.
(b) Whenever used herein, the terms "appropriated" or
"appropriation" shall include any voluntary transfer of the Leased Assets or
any part thereof to any corporation or authority having the right of eminent
domain as a result of a settlement of a threatened or pending appropriation
action.
(c) In the event of the appropriation of the whole or any
part of the Leased Assets, the amount received as compensation for the
appropriation (including in the case of an appropriation of part of the Leased
Assets, any amount allowed as damages to the remainder) shall be paid in full
to Lessor, subject, however, to any right of Lessee to receive any additional
or specific award from the appropriating corporation or authority to which it
might be entitled.
(d) In any appropriation of the Leased Assets, Lessee shall have
the right to prove in the proceeding and to receive any award which may be for
damages to or
<PAGE> 195
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condemnation of Lessee's movable trade fixtures, equipment, furniture and
furnishings and for moving and relocation expenses.
SECTION 9. INTERFERENCE AND RF RADIATION.
(a) General. Lessee will conduct its activities in accordance
with applicable requirements of the FCC and sound electronic and engineering
practice.
(b) RF Radiation. Lessee shall, at Lessee's expense,
take all actions required to ensure that Lessee's broadcast operation does not
expose workers or the general public to levels of radio frequency radiation in
excess of the "Radio Frequency Protection Guides" recommended in the American
National Standard Safety Levels with Respect to Human Exposure to Radio
Frequency Electromagnetic Fields, 300 kHz to 100 GHz (ANSI C95.1-1982) issued
by the American National Standards Institute.
SECTION 10. FORCE MAJEURE. Neither Lessor nor Lessee shall be required
to perform any term, condition or covenant in this Lease so long as such
performance is delayed or prevented by force majeure, which shall mean Acts of
God, strikes, lockouts, material or labor restrictions by any governmental
authority, civil riots, floods, and any other cause not reasonably within the
control of Lessor or Lessee and which by the exercise of due diligence Lessor
or Lessee is unable, wholly or in part, to prevent or to overcome.
SECTION 11. MECHANICS' LIENS. Lessee shall not suffer or permit
any mechanics' liens to be filed against the Leased Assets by reason of work,
labor or materials supplied or claimed to have been supplied to Lessee that are
not removed or for which adequate bond has not been provided within thirty (30)
days of such filing. Furthermore, if any such lien at any time shall be filed
against the Leased Assets, Lessee shall proceed with due diligence to cause the
same to be discharged of record by payment, deposit, bond, order of court or
otherwise.
SECTION 12. LESSOR'S LIEN. Lessor shall have a first lien upon
every right and interest of Lessee to and in the Leased Assets for the payment
of rent and all other sums payable by Lessee hereunder and as security for the
performance and observance of the agreements, conditions, and obligations of
this Lease by and between Lessor and Lessee, dated the date hereof, which
agreements, conditions, and obligations are to be performed and observed by
Lessee.
SECTION 13. QUIET ENJOYMENT. Lessor covenants that, upon payment
by Lessee of all rents and the performance by Lessee of all obligations
pursuant to this Lease, Lessee shall and may peaceably and quietly have and
enjoy the Leased Assets for and during
<PAGE> 196
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the Initial Term and any Renewal Term of this Lease, pursuant to the terms
hereof, free from any hindrance from any person or persons whomsoever claiming
by, through or under Lessor.
SECTION 14. DEFAULT. If the Lessee defaults in fulfilling any of
its material covenants or obligations hereunder, or if the Lessee does not
fully make all payments of rent when due under this Lease, Lessor at its option
may terminate and end this Lease and recover the Leased Assets; provided that
Lessee has been given written notice by Lessor and that Lessee has not made
full payment of the rent and cured all other such defaults, if any, within
fifteen (15) days following receipt of such notice. In the event of a default
hereunder, other than the nonpayment of rent or other monetary obligation, the
Lessor shall have the right to terminate this Lease if Lessee does not cure
such default within thirty (30) days of receipt of written notice of default
from Lessor. In the event of said defaults, in addition to said termination
rights, Lessor shall have all other rights and remedies to which it may be
entitled. A waiver by the Lessor of any breach of this Lease or any terms,
conditions or promises herein contained must be in writing to be effective and
shall not be or construed to be a waiver of any subsequent breach of the same
or any other term, condition or promise herein and the payment by the Lessee
and acceptance by the Lessor of rent hereunder shall not be construed to be a
waiver of any breach of terms or conditions herein, except as to the particular
installment of rent so paid and accepted.
SECTION 15. SURRENDER OF LEASED ASSETS. Lessee, upon the
expiration of the Initial Term or Renewal Term of this Lease or the earlier
termination of this Lease pursuant to Section 14 above, shall surrender to
Lessor the Leased Assets in accordance with the terms and conditions provided
for in Subsection 3(b) hereof.
SECTION 16. NOTICES. All notices, demands and requests required
or permitted to be given under the provisions of this Agreement shall be (i) in
writing, delivered by personal delivery, or sent by commercial delivery service
or certified mail, return receipt requested, (ii) deemed to have been given the
date of personal delivery, or the date set forth in the records of the delivery
service or on the return receipt, and (iii) addressed as follows:
If to Lessor: Paxson Communications of Little Rock-42, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Lowell W. Paxson
<PAGE> 197
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with a copy Dow, Lohnes & Albertson
(which shall A Professional Limited Liability Company
not constitute 1200 New Hampshire Avenue, N.W.,
notice) to: Suite 800
Washington, D.C. 20036-6802
Attention: John R. Feore, Jr., Esq.
If to Lessee: Channel 42 of Little Rock, Inc.
102 Fairmont Circle
Daphne, AL 36526
Attention: Dale Leininger
with a copy Brown Nietert & Kaufman, Chartered
(which shall 1920 N Street, N.W., Suite 660
not constitute Washington, D.C. 20036
notice) to: Attention: Lorretta K. Tobin, Esq.
or to any such other or additional persons and addresses as the parties may
from time to time designate in a writing delivered in accordance with this
Section 16.
SECTION 17. PROPERTY INSURANCE.
(a) Lessor shall, at its expense, obtain and maintain
during the Initial Term and Renewal Term of this Lease, "All Risk", hazard
insurance on the Leased Assets. Such insurance shall cover at least all risks
customarily insured against in the broadcasting industry, subject to standard
deductibles.
(b) Lessee hereby releases Lessor from and holds Lessor
harmless against any and all claims that Lessee may hereafter have for loss,
theft, disappearance, damage or destruction of the Leased Assets, regardless of
the cause thereof. Notwithstanding the generality of the foregoing, this
release shall not apply to any grossly negligent, willful or wanton act of the
Lessor, its employees, agents or representatives. In the event that insurance
on the Leased Assets was in force at the time of such loss, theft,
disappearance, damage or destruction, Lessee agrees to take all necessary
action to make this release effective and binding upon its insurance carriers
so that such carriers specifically waive all right of subrogation, if any, that
such carriers might otherwise have against Lessor and its employees, agents or
contractors, except with respect to any grossly negligent, willful or wanton
acts of Lessor, its employees, agents or representatives.
<PAGE> 198
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SECTION 18. TAXES. During the term hereof, Lessor agrees to pay
all personal property taxes assessed against the Leased Assets within thirty
(30) days of its receipt of a true and correct statement therefor.
SECTION 19. CAPTIONS. The captions or headings of sections in
this Lease are inserted for convenience only and shall not be considered in
construing the provisions hereof.
SECTION 20. COVENANTS TO BIND AND BENEFIT RESPECTIVE PARTIES.
This Lease shall inure to the benefit of and be binding upon the successors and
assigns of Lessor and Lessee.
SECTION 21. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. Any and all representations, warranties and covenants contained in
this Lease shall survive the execution of the Lease and shall continue in full
force and effect during the Initial Term and any Renewal Term hereof.
SECTION 22. COUNTERPARTS. More than one counterpart of this
Lease may be executed by the parties hereto and each duly executed counterpart
shall be deemed an original.
SECTION 23. ATTORNEYS FEES. In the event an action is brought to
enforce or construe any of the terms or conditions of this Lease, the
prevailing party shall be entitled to reasonable attorneys' fees and costs.
SECTION 24. MISCELLANEOUS.
(a) This Lease shall be governed by the laws of the State
of Florida and may be modified or amended only by a written instrument signed
by both Lessor and Lessee.
(b) Failure of either party to exercise its rights
hereunder shall not operate as a waiver of the future exercise of such right.
SECTION 25. ENTIRE AGREEMENT. This Lease, including the exhibits
hereto, sets forth the entire understanding of the parties hereto at the time
of execution and delivery hereof with respect to the subject matter hereof.
SECTION 26. WAIVER OF JURY TRIAL. To the extent they may
lawfully do so, the parties hereto irrevocably waive all rights to a trial by
jury in any proceeding hereinafter instituted by or against either party in
respect of this Lease.
<PAGE> 199
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[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 200
IN WITNESS WHEREOF, the parties have executed this Lease Agreement as of
the date first set forth above.
CHANNEL 42 OF LITTLE ROCK, INC.
By:
-------------------------------------------------
Dale Leininger
President
PAXSON COMMUNICATIONS OF LITTLE ROCK-42, INC.
By:
-------------------------------------------------
Name:
Title:
<PAGE> 201
EXHIBIT A
Leased Assets
<PAGE> 202
To Be Supplied
After Agreement by the Parties
<PAGE> 1
EXHIBIT 10.131
RADIO STATION ASSET PURCHASE AND SALE AGREEMENT
THIS RADIO STATION ASSET PURCHASE AND SALE AGREEMENT (this "Agreement")
is made as of the 27th day of August, 1996, by and between INTERMART
BROADCASTING FIRST COAST, INC., a Florida corporation (the "Seller"), and PAXSON
BROADCASTING OF JACKSONVILLE, LIMITED PARTNERSHIP, a Florida limited partnership
(the "Buyer").
W I T N E S S E T H:
WHEREAS, Seller is the sole holder of a permit (the "Permit") issued by
the Federal Communications Commission (the "Commission" or "FCC") authorizing
the operation of a new commercial FM station, WPVJ-FM on Channel 293 (106.5
MHZ), at Ponte Vedra Beach, Florida (the "Station");
WHEREAS, Seller is operating the Station pursuant to program test
authority;
WHEREAS, Seller desires to sell and Buyer desires to purchase all the
assets, except cash on hand and accounts receivable (collectively, the
"Assets"), used or useful in the operation of the Station and to obtain
assignments of the Permit and of all leases, contracts and other agreements used
in connection with or related to the construction and operation of the Station;
and
WHEREAS, the assignment of the Permit is subject to the prior approval
of the Commission;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and for other good and valuable consideration, receipt of which
is hereby acknowledged, Seller and Buyer, intending to be legally bound, do
hereby mutually agree as follows:
1. Defined Terms. Unless otherwise stated in this Agreement, the
following terms shall have the following meanings:
"ASSIGNMENT APPLICATION" refers to the application that Seller and
Buyer will join in and file with the Commission requesting its
unconditional written consent to the assignment of the Permit by Seller
to Buyer.
"BUSINESS DAY" refers to any day on which the FCC is open for business
in the ordinary course.
"CLOSING DATE" means 10:00 a.m. on a date to be set by Buyer on at
least five (5) days' written notice to Seller, that is the later of (a)
the fifth (5th) business day following the date (the "Finality Date")
on which the FCC's grant of the Assignment Application becomes a Final
Order (as hereafter defined), or (b) at Seller's election, the first
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<PAGE> 2
business day in calendar year 1997.
"CLOSING PLACE" means the office of Washington counsel for Buyer or
such other place as the parties may mutually agree to in writing.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"ESCROW AGENT" means First Union National Bank of Florida, N.A.
"ESCROW AGREEMENT" means the escrow agreement attached hereto as
Appendix A, executed by Seller, Buyer and Escrow Agent.
"FINAL ORDER" means action by the Commission or its delegated authority
granting its consent and approval to the Assignment Application, which
action is not reversed, stayed, enjoined, or set aside, and with
respect to which no timely request for stay, reconsideration, review,
rehearing or a notice of appeal is pending, and as to which the time
for filing any such request, petition or notice of appeal, or for
review by the FCC on its own motion, has expired.
"IMMEDIATELY AVAILABLE FUNDS" means cash, cashier's check or electronic
funds transfer when receipt thereof is confirmed by Seller's bank.
"PERMIT" refers to the permit to operate the Station pursuant to
program test authority granted by the FCC.
"STATION" means Radio Station WPVJ-FM, Ponte Vedra Beach, Florida, as
an operating business.
"SCHEDULE VOLUME" refers, collectively, to the schedules of the
following items of the Seller, all of which are required to be
furnished to Buyer by Seller hereunder, which have been bound in a
separate volume and initialed by the parties:
(a) all tangible real and personal property (SCHEDULE 2(B));
(b) all contracts, leases and agreements that Buyer agrees to
assume, with copies thereof (SCHEDULE 2(C));
(c) copyrights, trademarks, trade names and service marks
(SCHEDULE 2(D));
(e) Seller's litigation (SCHEDULE 4(H));
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<PAGE> 3
(f) insurance (SCHEDULE 4(I));
(g) discrepancies (SCHEDULES 4(L)(IV) AND (VI)); and
(h) prorations (SCHEDULE 12);
"TIME BROKERAGE AGREEMENT" means the agreement attached hereto as
Appendix B concurrently executed herewith providing for the sale of
substantially all of the broadcast time of Station to Buyer, subject to
the rules and policies of the FCC.
2. Assets to be Conveyed. Subject to the terms and conditions
hereinafter set forth, Seller shall sell, transfer, assign and deliver to Buyer,
and Buyer shall purchase, assume and accept from Seller, on the Closing Date (as
defined herein) the following (all of which assets described in paragraphs (a)
through (f) shall collectively constitute the "Assets"):
(a) The Permit (FCC File No. BMPH-960124ID) issued to and held by
Seller from the Commission permitting the operation of the
Station, subject to Commission approval as hereinafter
provided;
(b) All of the fixed and tangible real and personal assets (except
cash on hand and accounts receivable, the collection of which
shall be the sole responsibility of Seller and Buyer shall
have no obligation or responsibility therefore) used or useful
in the operation of the Station as listed on SCHEDULE 2(B)
attached hereto, and any additions thereto or substitutions
therefor, consisting of the property used or useful in the
operation of the Station in the normal course of business,
including but not limited to real estate, broadcast equipment,
furniture, office equipment, supplies and relevant business
records. Said assets shall be conveyed free and clear of any
and all liens, claims, encumbrances and security instruments;
(c) The leases, contracts and agreements, listed in SCHEDULE 2(C)
attached hereto, which shall be in full force and effect on
the Closing Date, as to which Buyer assumes all obligations of
Seller following the Closing Date;
(d) All right, title and interest of the Seller in and to the use
of the call letters "WPVJ-FM" and any and all copyrights,
trademarks and trade names, promotional materials, logos, TV
commercials and related materials used or useful in the
operation of the Station listed on SCHEDULE 2(D) attached
hereto;
(e) To the extent transferable to Buyer, all other permits,
licenses or authorizations, if any, issued by any regulatory
agency which are used or useful in the operation of the
Station; and
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<PAGE> 4
(f) All items in Seller's possession in the Station's FCC Public
Inspection File and all business, engineering and government
records relating to the operation of the Station, excluding
tax returns and other records pertaining to Seller's corporate
affairs.
3. Purchase Price. The purchase price (the "Purchase Price") for the
Station and all the Assets described in Section 2 of this Agreement shall be
paid by Buyer to Seller as follows: At the Closing, Buyer shall pay to or for
the benefit of, Seller FOUR MILLION ($4,000,000.00) DOLLARS. The Purchase Price
shall be paid in the following manner:
(a) Concurrently with the execution and delivery of this
Agreement, Buyer has deposited the sum of FOUR HUNDRED
THOUSAND ($400,000.00) DOLLARS with Escrow Agent (the "Escrow
Fund") pursuant to the Escrow Agreement.
(b) At the Closing, Buyer will pay to Seller in Immediately
Available Funds the Purchase Price.
4. Seller's Warranties And Representations. Seller hereby makes the
following warranties and representations, each of which shall be deemed a
separate covenant to Buyer:
(a) Organization. Seller is now and at Closing will be a corporation
duly organized and in good standing in the State of Florida, and is duly
qualified to construct and operate the Station under the laws of Florida and
under the Commission's rules and regulations. The execution and performance of
this Agreement and the compliance with its provisions by Seller on the Closing
Date will not conflict with or result in any breach of any of the terms,
conditions or provisions of any agreement, indenture, mortgage, agreement or
other instrument to which Seller is a party or by which it is bound. Now and at
Closing, Seller will have full and complete corporate authority to enter into
this Agreement and execute all instruments incident hereto.
(b) Clear Title. Seller will be solely responsible for and shall pay
all debts, taxes or impositions imposed or arising by reason of Seller's
ownership and operation of the Station and Assets prior to the Closing Date, and
Seller shall indemnify and hold Buyer harmless from any and all such charges.
Seller and Buyer shall equally divide and pay each party's share of intangible
and transfer taxes. Any debts which are liens against the Assets shall be
discharged on or before the Closing Date.
(c) Taxes. At Closing, Seller shall have filed all tax returns then
due, or properly applied for extension, and shall have paid or made provisions
for the payment of all regular and special taxes, assessments, excises, fees and
levies then due which are required of Seller arising by reason of Seller's
ownership or operation of the Station and Assets prior to the Closing Date.
(d) Leases, Contracts, etc. The leases, contracts and agreements listed
in SCHEDULE 2(C) and to be assigned to Buyer hereunder are freely assignable,
or, if consent of the contracting
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<PAGE> 5
party to the assignment is required, Seller will obtain said consent prior to
Closing. With respect to each such lease, contract and agreement:
(i) it is valid, binding and in full force and effect;
(ii) Seller has not repudiated or waived any material
provision thereof;
(iii) all amounts due and payable by Seller through the
Closing Date have been or will be paid and there will
be no amounts due after the Closing Date which relate
to the period prior to the Closing; and
(iv) no other party to any such lease, contract or
agreement is, to Seller's knowledge, in default in
any respect thereunder.
(e) Power to Convey. On the Closing Date, Seller will be the owner and
will be empowered to transfer to Buyer all the fixed and tangible assets used or
useful in the operation of Station as listed in SCHEDULE 2(B) attached hereto
and any replacements thereof and additions thereto, free and clear of all liens
and encumbrances. All broadcast equipment shall be to the best of Seller's
knowledge in good condition and operable in compliance with all Commission
regulations;
(f) Broker's Fees. Seller has not incurred any liability for brokerage
fees, finders' fees, agents' commissions or other similar forms of compensation
in connection with this Agreement or any transaction contemplated hereby.
(g) Truthful Warranties. The representations and warranties of Seller
herein, or in any exhibit, schedule or certificate given pursuant hereto, do not
contain an untrue statement of a material fact or do not omit a material fact
which would make any statement contained herein or therein misleading.
(h) Litigation. Except as disclosed in SCHEDULE 4(H), there is no
litigation, proceeding, or governmental investigation pending or, to the
knowledge of Seller, threatened in any court, arbitration board, administrative
agency or tribunal against or relating to Seller or to its principals that would
prevent or materially impede the consummation of this Agreement by Seller, nor
does Seller, after due inquiry, know of, or have any reasonable ground to know
of, any basis for such litigation, proceeding or investigation, and the
execution and performance of this Agreement by Seller will not result in the
default by Seller in respect of any judgment, order, writ, injunction, decree,
rule or regulation of any applicable court or administrative agency which could
have a material adverse effect on the operation of the Station or its assets.
(i) Insurance. Seller has in full force and effect insurance on the
assets and business of the Station pursuant to insurance policies which are
shown in SCHEDULE 4(I) hereto, and Seller will continue to maintain such
insurance in full force and effect up to and including the Closing
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<PAGE> 6
Date, or shall have obtained prior to Closing other insurance policies with
coverage and limits comparable to the policies shown on SCHEDULE 4(I) after
prior notice to, and upon the written consent of, Buyer, which consent will not
be unreasonably withheld.
(j) Barter: Other Post-Closing Obligations. There are no trade and
barter agreements currently in effect for the Station. In the event that any
such agreements, or any other agreements that obligate the Station to provide
services after the Closing, exist at Closing, then, at the Closing, Seller shall
reimburse Buyer for any bartered time or other obligation where the bartered
goods or services, or payments for such other obligation, have been received by
Seller (or constitute an account receivable retained by Seller) prior to the
Closing Date or, for any obligations that continue after the Closing as a result
of such agreements and which the value of the bartered goods or services to be
received after the Closing are reasonably determined to be less than the value
of the bartered time, for such difference in value.
(k) Compliance with FCC Rules and Regulations. The operation of the
Station conforms, and has conformed at all times since commencement of program
tests, in all material respects with the Commission's rules and regulations.
(l) Operation of Station. Seller agrees that, from the date of this
Agreement to the Closing Date, it shall:
(i) continue to operate the Station in accordance with
FCC rules and regulations, except for such violations
occurring after the date hereof that have been cured
prior to the Closing Date or which do not materially
and adversely affect the continued operations of the
Station;
(ii) not sell, lease or dispose of any of the Assets
except (A) for assets consumed or disposed of in the
ordinary course of business or (B) in connection with
replacement of such assets with assets of similar
value and utility.
(iii) not, without the knowledge and prior written consent
of Buyer, (A) renew, amend, change or modify any
lease, contract or agreement listed in SCHEDULE 2(C)
or (B) enter into any new contract or renew or modify
any existing lease or contract respecting the Station
and (C) contracts with BMI and ASCAP and, further
provided, that upon the execution and delivery of any
such extension or execution and delivery of such
contract, Seller shall promptly provide to Buyer
copies of such extension or contract).
(iv) Except as provided in SCHEDULE 4(L)(IV) attached
hereto, operate the Station in conformity with the
Permit and any special temporary authority or program
test authority issued thereunder, the Communications
Act of 1934, as amended, the rules and regulations of
the FCC, and the rules and
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<PAGE> 7
regulations of any other governmental body with
jurisdiction over the Station.
(v) not change the call letters of the Station.
(vi) Except as provided in SCHEDULE 4(L)(VI), attached
hereto, refrain from changing the Station's frequency
or making any material changes in the Station's
studio or other structures, except to the extent
required by applicable law.
(vii) maintain all the Station's assets in good operating
condition, maintenance and repair substantially in
accordance with past practice, except to the extent
of normal wear and tear with inventories of spare
parts and expendable supplies maintained at levels
consistent with past practices.
(viii) file in timely fashion all material reports, forms
and statements required to be filed by Seller with
the FCC with respect to the Station, which reports,
forms and statements will be complete and accurate in
all material respects.
(ix) consent to and cooperate with all engineering
modifications of the Permit, if any, requested by
Buyer so long as they are in the public interest and
consistent with the FCC's rules and regulations and
so long as all expenses associated therewith are
borne solely by Buyer.
5. Buyer's Warranties and Representations. Buyer hereby makes the
following warranties and representations, each of which shall be deemed a
separate covenant to Seller:
(a) Organization. Buyer is now and at Closing will be a limited
partnership duly organized, validly existing and in good standing in the State
of Florida. At Closing, Buyer will be qualified and licensed to do business
under the laws of the State of Florida, and to operate the Station under the
laws of Florida and under the rules and regulations of the Commission.
(b) Post-Closing Charges. Buyer will be solely responsible for and
shall either pay or make provision which shall be satisfactory to Seller for all
debts, taxes or impositions imposed or arising by reason of Buyer's operation of
the Station after the Closing Date, and Buyer shall indemnify and hold harmless
Seller from any and all such charges.
(c) Power to Purchase. The execution and performance of this Agreement
and the compliance with its provisions by Buyer on the Closing Date will not
conflict with, or result in any breach of Buyer's Partnership Agreement, or of
any of the terms, conditions or provisions of any agreement, indenture,
mortgage, agreement or other instrument to which Buyer is a party or by which it
is bound.
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<PAGE> 8
(d) Post-Closing Obligations. On the Closing Date, Buyer will assume
and perform promptly when due the leases, contracts, and all other obligations
to be transferred to and assumed by Buyer hereunder.
(e) Licensee Qualifications. Buyer represents that it is, and at the
Closing it shall be, legally and financially qualified under rules, regulations
and policies established by the Commission to become a licensee of Station.
(f) Broker's Fees. Buyer has not incurred any liability for brokerage
fees, finders' fees, agents' commissions or other similar forms of compensation
in connection with this Agreement or any transaction contemplated hereby.
(g) Truthful Warranties. The representations and warranties of Buyer
herein, or in any exhibit, schedule, certificate, or other document given
pursuant hereto, do not contain an untrue statement of a material fact or do not
omit a material fact which would make any statement contained herein or therein
misleading.
(h) Litigation. Except as disclosed in SCHEDULE 5(H), there is no
litigation, proceeding or governmental investigation pending or, to the
knowledge of Buyer, threatened in any court, arbitration board, administrative
agency or tribunal against or relating to Buyer or to its principals that would
prevent or materially impede the consummation of this Agreement by Buyer, nor
does Buyer know of, or have any reasonable ground to know of, in view of its
present situation or action it now contemplates taking, any basis for such
litigation, proceeding or investigation, and the execution and performance of
this Agreement by Buyer will not result in the default by Buyer in respect of
any judgment, order, writ, injunction, decree, rule or regulation of any
applicable court or administrative agency which could have a material adverse
effect on the operation of the Station or its assets.
(i) Inspection of Facilities. Buyer represents that it has inspected
the Assets, has investigated the Station's facilities, and has found the
Station's signal to be acceptable.
6. Conditions to Buyer's Obligations. The obligation of Buyer to
consummate this Agreement is subject to the satisfaction on or prior to the
Closing Date of each of the following conditions:
(a) Seller shall deliver or cause to be delivered to Buyer the
instruments of conveyance and transfer described in this
Agreement;
(b) The Commission's order granting the Assignment Application
shall have become a Final Order; except Buyer may waive this
requirement in writing and consummate the transactions
contemplated hereby prior to the time the Commission's Order
shall have become a Final Order, but not earlier than five (5)
days following the date on which the Commission issues a
Public Notice
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<PAGE> 9
announcing the grant of the Assignment Application referred to
in Section 11 hereof ("Public Notice Date");
(c) Seller shall deliver to Buyer on the Closing Date a copy of
each instrument of authorization for the operation of the
Station, which instruments shall be in full force and effect
and shall contain no materially adverse condition or
restriction, and under which instruments, the Commission's
rules shall permit the operation of the Station and
assignments of each such instrument;
(d) The representations and warranties made by Seller shall be
true and correct in all material respects at and as of the
Closing Date as though such representations and warranties had
been made at and as of the Closing Date;
(e) Seller shall have performed and complied, in all material
respects, with all agreements and conditions required by this
Agreement to be executed, performed or complied with by Seller
prior to or at the Closing Date;
(f) There shall not be any litigation or proceeding pending to
restrain Buyer's or Seller's performance of or invalidate the
transaction contemplated by this Agreement which has not been
resolved favorably. No proceedings shall have been instituted
or be threatened against Seller for the protection of
creditors or otherwise for the relief of Seller as a debtor
that have not been resolved favorably to this Agreement.
(g) Seller shall have paid all federal, state and local sales or
transfer taxes directly arising from the conveyance of the
assets to Buyer.
7. Conditions to Seller's Obligations. The obligation of Seller to
consummate this Agreement is subject to the satisfaction on or prior to the
Closing Date of each of the following conditions:
(a) The representations and warranties made by Buyer shall be true
and correct in all material respects at and as of the Closing
Date as though such representations and warranties had been
made at and as of the Closing Date;
(b) Buyer shall have performed and complied, in all material
respects, with all agreements and conditions required by this
Agreement to be executed, performed or complied with by Buyer
prior to or at the Closing Date;
(c) There shall not be any litigation or proceeding to restrain
Seller's or Buyer's performance of or invalidate the
transactions contemplated by this Agreement that has not been
resolved favorably. No proceedings shall have been instituted
or be
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<PAGE> 10
threatened against Buyer for the protection of creditors or
otherwise for the relief of Buyer as a debtor that have not
been resolved favorably to this Agreement;
(d) The FCC shall have released an order granting the Assignment
Application; and
(e) Buyer shall have delivered the Purchase Price to, or on behalf
of, Seller in accordance with the provisions of Section 3 of
this Agreement.
8. Due Diligence. Seller will provide Buyer, its representatives,
agents, experts, counsel and accountants, immediate and reasonable access to the
equipment and property of the Station wherever located, as well as to Station
management. Such information shall also include the information used by Seller
in connection with the operation of the Station, including copies of all
licenses, permits, authorizations and requirements.
9. Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, neither Buyer nor Seller, nor their
respective officers, agents or other representatives, will make any public
disclosures, except as may be required by law, including federal or state
securities laws, or court order regarding the transaction contemplated hereby,
without the other party's advance written consent. All information of a
confidential nature obtained by Buyer related to the Station and/or Seller shall
be kept strictly confidential by Buyer, its officers, agents or other
representatives, and shall be treated in the same manner accorded to its own
information of like importance. Notwithstanding anything to the contrary, Buyer
may provide all information to officers of the Buyer, or Buyer's attorneys,
bankers, engineers, appraisers and accountants. Buyer will require all such
persons to hold this information in the same confidence as agreed upon above and
acknowledges that Buyer will be held responsible should they fail to do so. If
this Agreement is terminated without the Closing having occurred, then Buyer
shall promptly return to Seller all documents and materials delivered by Seller
to Buyer pursuant to the Agreement.
10. Indemnification.
(a) Subject to paragraph (e) below, Buyer hereby agrees to indemnify
and save harmless Seller from and against any and all losses, damages, costs,
expenses, claims (including reasonable attorneys' fees) and liabilities of
Seller arising after Closing from or relating to liabilities (i) of the Station
to the extent assumed by Buyer under this Agreement, (ii) under facts or
circumstances occurring after Closing with respect to the ownership or operation
of the Station, or (iii) any material breach of Buyer's representations and
warranties set forth in Section 5 of this Agreement.
(b) Subject to paragraph (e) below, Seller hereby agrees to indemnify
and save harmless Buyer from and against any and all losses, damages, costs,
expenses, claims (including reasonable attorneys' fees) and liabilities of Buyer
arising from or relating to liabilities (i) of the Station not assumed by Buyer
under this Agreement, or if assumed by Buyer arising on or before
- 10 -
<PAGE> 11
Closing, (ii) under facts or circumstances occurring on or before Closing, or
(iii) any material breach of Seller's representations and warranties set forth
in Section 4 of this Agreement.
(c) In the event that any claim is asserted against Seller or Buyer,
which, if established, would require indemnification under the terms of this
paragraph, then the party against whom the claim is asserted shall promptly give
the indemnifying party written notice of such claim and the indemnifying party
shall, within ten (10) days after posting of said written notice, notify the
party against whom the claim is asserted in writing, of the indemnifying party's
decision whether or not to defend against the asserted claim. Either party may
assist the other party in defending against any asserted claim and provide legal
counsel to the other at their own expense subject, however, to the provisions
under subparagraphs (a) and (b) above for indemnification of attorneys' fees. In
the event a claim is asserted as described herein, and the indemnifying party
elects not to defend against such claim or fails to notify the party against
whom the claim is asserted within the time provided herein that it intends to
defend against the claim, then the party against whom the claim is asserted may
defend against the claim and recover its reasonable attorneys' fees in
accordance with subparagraphs (a) and (b) above.
(d) Seller shall indemnify and hold Buyer harmless from any claim or
liability by reasons of any noncompliance by Seller with the provisions of the
Florida bulk sales law.
(e) The covenants, warranties and representations contained in this
Agreement shall be deemed to be material and relied upon by the party to which
they are made. They shall survive the execution, delivery and performance of
this Agreement and the consummation of the transaction contemplated hereunder
for a period of 18 months after consummation or until final settlement or
adjudication of any alleged breach of which written notification is given within
the 18-month period.
11. Application for FCC Approval.
(a) Buyer and Seller will each, using their respective best efforts and
diligent cooperation, take all steps necessary to cause to be prepared and filed
with the FCC a joint Assignment Application, complete in all material respects,
in such a timely manner that the transaction herein contemplated will not be
delayed, such application in any event to be filed not later than five (5)
Business Days after the date hereof, unless the parties agree otherwise in
writing, and Buyer and Seller will thereafter take all steps necessary to the
expeditious prosecution of such application to a favorable conclusion. Both
parties agree that they shall promptly and timely file any amendments necessary
to obtain a grant of the application and/or other information reasonably
requested by the FCC. Except for one assignment by Buyer to a wholly-owned
license subsidiary, neither Buyer nor Seller will voluntarily seek to amend the
Assignment Application without first obtaining written permission from the party
not seeking to amend.
(b) Each party to the Assignment Application will bear its own expense
in connection with the preparation of the applicable portions of such Assignment
Application and the prosecution
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<PAGE> 12
of such Assignment Application. The FCC filing fees shall be shared equally by
the parties. Seller and Buyer shall each transmit to Buyer's counsel, along with
their respective portions of the Assignment Application, a check payable to
Buyer's counsel's trust account for $325.00 in payment of the filing fee (total
fee: $650.00). Seller will timely publish the notice in the newspaper and will
timely make the broadcast notice on WPVJ-FM as required by the FCC Rules and
Regulations with respect to the Assignment Application pursuant to Title 47
C.F.R. ss.73.3580. Buyer will timely furnish to Seller's counsel the necessary
information about the Buyer required to be contained in such notices.
12. Prorations. Except for those expense items listed in SCHEDULE 12,
attached hereto, the parties agree that Seller is responsible for payment of all
expenses incurred up to the Closing Date and is due credit on a pro rata basis
for the expenses paid for before the Closing Date, but for which the benefit
accrues after the Closing Date; and that Buyer is responsible for payment of all
expenses incurred on or after the Closing Date and is due credit on a pro rata
basis for such expenses which accrued before and/or on the Closing Date; and for
cash deposits (if any) made to cover charges arising after the Closing Date.
Therefore, to the extent possible, on the Closing Date, again within THIRTY (30)
days following the Closing Date, and finally, within SIXTY (60) days following
the Closing Date, the party from which the net of all adjustments, including,
but not limited to, the following, to be made on a pro rata basis as of the
Closing Date is due shall pay the same to the other party, in cash or by check
(net of deposits):
(a) Power and utility charges;
(b) All applicable sales, use and personal property taxes;
(c) Telephone; and
(d) Charges and deposits (if any) relating to items listed in
SCHEDULE 2(C) hereof.
13. Termination.
(a) This Agreement may be terminated at any time on or prior to
the Closing Date:
(i) by written agreement between Buyer and Seller; or
(ii) by Seller or Buyer at any time after the denial of
the Assignment Application or revocation of consent
by the Commission.
(b) This Agreement may be terminated by Seller provided that Seller is
not then in breach of any material representation, warranty or agreement
contained herein, at any time on or prior to the Closing Date in the event of a
material breach by Buyer of any other representation, warranty or agreement
contained herein which is not cured, or cannot be cured, within 30 days after
written notice of such breach has been delivered to the breaching party.
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<PAGE> 13
(c) This Agreement may be terminated by Buyer, provided that Buyer is
not then in breach of any material representation, warranty or agreement
contained herein, at any time on or prior to the Closing Date in the event of a
material breach by Seller of any representation, warranty or agreement contained
herein which is not cured, or cannot be cured, within 30 days after written
notice of such breach has been delivered to Seller.
(d) Notwithstanding any provision to the contrary, the obligations of
Seller and Buyer to consummate the transactions contemplated hereby shall
terminate without any action on their part at 5:00 p.m. (Washington, D.C. time),
August 1, 1997, if the FCC has not approved the Assignment Application on or
prior to such time.
14. Fees. Buyer and Seller will indemnify and save each other harmless
from any claims or causes of action for brokers' or finders' fees.
15. Instruments of Conveyance and Transfer and Execution.
(a) At the Closing Place on the Closing Date, Seller shall deliver
to Buyer:
(i) Bills of Sale and other instruments of assignment,
conveyance and transfer, covering all of the assets
of Seller (listed in SCHEDULE 2(B)) to be transferred
hereunder;
(ii) Assignments of all Seller's leases, contracts and
agreements listed in SCHEDULE 2(C);
(iii) Assignment of the Permit;
(iv) A current UCC-11 search showing no liens or other
encumbrances upon the Assets;
(v) An opinion letter of Florida counsel to Seller, dated
as of the Closing Date, in form and substance
reasonably satisfactory to Buyer as to:
(A) the valid existence and good standing of
Seller;
(B) the due execution, delivery, validity and
enforceability of this Agreement;
(C) the noncontravention of Seller's charter
documents and applicable laws (other than
laws, rules and regulations administered by
the FCC); and
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<PAGE> 14
(D) the conveyance of good title to the Assets,
subject to no recorded liens.
Provided that, in giving such opinions such Florida
counsel shall be permitted to rely on certificates
and statements of public officials and of officers of
Seller as to factual matters and may limit their
opinions to matters of Florida and federal law.
(vi) An opinion letter of FCC counsel to Seller, dated as
of the Closing Date, in form and substance reasonably
satisfactory to Buyer as to:
(A) the noncontravention of laws, rules and
regulations administered by the FCC:
(B) the absence of judgments, decrees or orders,
other than those that affect the broadcast
industry or segments thereof generally, that
have been issued by the FCC against Seller
with respect to its FCC authorizations that
reasonably could be expected to result in
termination, revocation or other material
adverse effect on such FCC authorizations;
(C) the absence of any complaint filed with the
FCC, or any proceeding, whether pending or,
to such counsel's knowledge, threatened
against Seller, or otherwise affecting the
Seller's FCC authorizations, including,
without limitation, any Notice of Violation,
Notice of Apparent Liability, Order to Show
Cause, or any investigatory proceeding
(other than investigations, actions or
proceedings that affect the broadcast
industry or segments thereof generally),
which complaint or proceeding reasonably
could be expected to result in a
termination, revocation or other material
adverse effect on Seller's FCC
authorizations or the transactions
contemplated hereby.
(D) The approval by the FCC for the assignment
of the Station's authorization to Buyer.
Provided that, in giving such opinions such FCC
counsel shall be permitted to rely on certificates
and statements of public officials and of officers of
Seller as to factual matters and may limit their
opinions to matters of federal law.
(vii) Assignment of the records described in SECTION 2(F)
hereof; and
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<PAGE> 15
(viii) Such other documents or things as Buyer may
reasonably request in order to place Buyer in actual
possession and operating control of the Assets and to
convey clear title to the Station and of the Assets
to be transferred.
(b) At the Closing Place on the Closing Date, Escrow Agent and Buyer
shall deliver to Seller the following documents and things:
(i) Buyer shall deliver in Immediately Available Funds
the Purchase Price as described in Section 3 hereof;
(ii) Buyer shall deliver to Seller an instrument of
assumption evidencing Buyer's assumption of the
obligations under all of Seller's leases, contracts
and agreements listed in SCHEDULE 2(C) to this
Agreement;
(iii) Buyer shall deliver an opinion letter of its counsel,
dated as of the Closing Date, as to the valid
existence and good standing of Buyer, the due
execution, delivery, validity and enforceability of
this Agreement, and the noncontravention of Buyer's
charter documents and applicable law, including rules
and regulations promulgated or administered by the
FCC, all in form and substance reasonably
satisfactory to Seller; provided, that, in giving
such opinions such counsel shall be permitted to rely
on certificates and statements of public officials
and of officers of Buyer as to factual matters and
may limit their opinions to matters of federal law;
and
(iv) At the Closing Place on the Closing Date Buyer and
Seller shall execute and deliver to Escrow Agent
Joint Instructions directing Escrow Agent to deliver
to Buyer the Escrow Fund.
16. Preservation and Access of Books and Records. Buyer and Seller
shall have reasonable access to such records held by the other party for a
period of THREE (3) years after the Closing Date or until all income tax
liabilities of Seller (including the principals thereof) relating to the Station
have been settled, whichever is later, for the purpose of completing their tax,
bookkeeping and accounting procedures and filing requirements, and for other
purposes for which such access is reasonably necessary or proper.
17. Assignment. This Agreement may not be assigned without the written
consent of both parties, 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.
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<PAGE> 16
18. Notices. All necessary notices, demands and requests shall be
deemed duly given, if mailed by registered mail, postage prepaid, and addressed
to the following: If to the Seller:
Mr. James E. Martin, President
InterMart Broadcasting of North Carolina, Inc.
c/o InterMart Broadcasting Company
4810 Deltona Drive
Punta Gorda, Florida 33950
cc: (which shall not constitute notice)
Gary S. Smithwick, Esq.
Smithwick & Belendiuk, P.C.
1990 M Street, N.W., Suite 510
Washington, D. C. 20036
If to the Buyer:
Paxson Broadcasting of Jacksonville, Limited Partnership
601 Clearwater Park Road
West Palm Beach, Florida 33401
c/o William L. Watson, Esquire
cc: (which shall not constitute notice)
John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson, P.L.L.C.
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
19. Miscellaneous.
(a) This Agreement and the Schedule Volume contain the entire agreement
of the parties with respect to the transactions contemplated and supersedes all
prior negotiations between the parties concerning the subject matter contained
herein. No change, modification or waiver of any provision hereof will be valid
unless in writing and signed by the party to be bound.
(b) No delay or failure on the part of either party in exercising any
rights hereunder, and no partial or single exercise thereof, will constitute a
waiver of such rights or of any other rights hereunder.
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<PAGE> 17
(c) This Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
(d) Nothing in this Agreement will be construed as giving any person,
firm, corporation or other entity, other than the parties hereto, their
respective heirs, executors, administrators, successors and assigns any right,
remedy or claim under or in respect of this Agreement or any provision hereof.
(e) This Agreement shall be construed and interpreted in accordance
with the laws of the State of Florida.
(f) This Agreement may be executed in counterpart, each of which shall
be deemed an original.
(g) If any provision of this Agreement is invalid or unenforceable,
such provision shall be deemed null and void, but the balance of this Agreement
shall remain in effect.
(h) In the event Seller refuses to close and Buyer is not in default,
it is understood and agreed that due to the unique and unascertainable value of
the Permit, Buyer may seek specific performance as well as other remedies at law
or in equity.
(i) The risk of loss, damage or destruction of the property or assets
to be transferred to the Buyer hereunder from fire or other casualty or cause
shall be borne by Seller at all times up to the completion of the Closing.
Should any loss, damage, or destruction to any of the property or assets to be
transferred hereunder from fire, casualty or other causes occur prior to the
Closing, Seller shall notify Buyer of same in writing immediately. Such notice
shall specify with particularity the loss or damage incurred, the cause thereof
(if known or reasonably ascertainable), and the insurance coverage.
In the event of such loss, damage or destruction, Seller, at Buyer's
option, shall either (i) promptly repair, replace, or restore the property or
assets to their previous condition at Seller's sole cost and expense or (ii)
assign to Buyer all proceeds of insurance theretofore received or to which
Seller would be entitled an a result of such loss, damage or destruction, in
which event Buyer shall be responsible for the repair, replacement or
restoration of the property or assets.
In the event that Buyer elects that Seller repair, replace or restore
the property or assets as set forth in clause (i) above and such property or
assets are not completely repaired, replaced or restored on or before the
Closing, Buyer, at its sole option, may elect:
(i) to postpone the Closing until such time as the
property or assets have been completely repaired,
replaced or restored to the reasonable satisfaction
of Buyer and, if necessary, Seller shall join Buyer
in requesting from the FCC
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<PAGE> 18
any extensions of time in which to consummate the
transfer of the Station which may be required in
order to complete such repairs; or
(ii) to consummate the Closing and accept the property in
its then condition, in which event Seller shall
assign to Buyer all proceeds of insurance theretofore
received or to which Seller would be entitled and a
result of such loss, damage or destruction, together
with any additional amounts required to repair,
replace or restore the property or assets if such
proceeds do not equal the loss (together with an
itemization of such costs). In the event that the
insurance proceeds and any additional amounts paid by
Seller to Buyer at Closing are insufficient to
repair, replace or restore the property or assets,
then the Seller shall pay the deficiency to Buyer in
the form of an adjustment to the Purchase Price at
Closing.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
SELLER:
ATTEST INTERMART BROADCASTING
FIRST COAST, INC.
/s/ Patricia S. Dahlin By: /s/ James E. Martin
- ---------------------------- -------------------------------
James E. Martin, President
BUYER:
ATTEST PAXSON BROADCASTING
OF JACKSONVILLE,
LIMITED PARTNERSHIP
By: /s/ Paxon Communications of
- ---------------------------- -------------------------------
Florida, Inc.
-------------------------------
GENERAL PARTNER
By: /s/ Anthony L. Morrison
-------------------------------
Anthony L. Morrison
Vice President
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EXHIBIT 10.132
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT made and entered into this _____ day of August,
1996, by and between BOARDWORKS OUTDOOR ADVERTISING COMPANY, INC., a Florida
corporation, hereinafter referred to as "Seller", and PAXSON OUTDOOR, INC., a
Florida corporation, hereinafter referred to as "Buyer."
W I T N E S S E T H :
WHEREAS, Seller is the owner of twenty-two (22) outdoor advertising
display structures and permits necessary to construct outdoor advertising
display structures in fourteen (14) additional locations, as described on
Exhibit A attached hereto ("Billboards"), real estate leasehold interests under
real property leases for each of the sites on which the Billboards are currently
located ("Land Leases"), permits necessary for the ownership and operation of
the constructed Billboards, leases of Billboard space with Billboard advertising
customers, and other related assets as will be more specifically described in
this Agreement (collectively, the "Assets") which Seller operates as part of
Seller's commercial billboard outdoor advertising business (such part
hereinafter referred to as the "Outdoor Advertising Business"), and
WHEREAS, Seller desires to sell, transfer, assign and convey the Assets
to Buyer subject to the terms, provisions and conditions of this Agreement, and
WHEREAS, Buyer desires to acquire from Seller said Assets subject to
the terms, provisions and conditions of this Agreement.
NOW, THEREFORE, in exchange for mutually agreeable consideration, the
parties hereby agree as follows:
1. Sale. Subject to the terms and conditions set forth in this
Agreement, Seller hereby agrees to sell, transfer, assign and deliver and Buyer
agrees to buy, on the Closing Date, subject to the terms and conditions set
forth herein, all of the Assets of the Outdoor Advertising Business free and
clear of all debts, liens, encumbrances or other liabilities.
2. Price. The total purchase price for the Assets shall be One Million
Three Hundred Thousand Dollars ($1,300,000). Within three (3) days of full
execution of this Agreement, Buyer shall make an earnest money deposit in the
amount of $100,000 with First Union National Bank, as escrow agent. Such deposit
shall be deposited in an interest-bearing escrow account. The deposit, together
with all interest earned thereon, shall be applied to the purchase price at
Closing. The purchase price shall be increased or decreased as required to
effectuate the proration of revenues and expenses in accordance with this
Agreement and with the principle that Seller shall be entitled to all revenues
and responsible for all expenses, costs and liabilities allocable to the period
prior
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to the Closing and Buyer shall be entitled to all revenues and responsible for
all expenses, costs and obligations allocable to the period on and after the
Closing.
3. Assets to be Purchased. The term "Assets," as used herein to mean
the assets to be purchased under this Agreement, shall include all the assets of
Seller relating to the Outdoor Advertising Business, including without
limitation all right, title, and interest in and to all of the following:
A. Any and all land, buildings, improvements, fixtures,
easements, and rights appurtenant thereto which are owned, leased or otherwise
used by Seller in the conduct of the Outdoor Advertising Business, including
without limitation any and all real property interests in the Billboards and
Seller's leasehold interests under the Land Leases described on Exhibit B
attached hereto;
B. All tangible personal property (such as machinery,
equipment, inventories of raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods, furniture, automobiles, trucks,
tractors, trailers, and tools) including without limitation the Billboards
described on Exhibit A and other tangible personal property described on Exhibit
C attached hereto;
C. All licenses and permits necessary for the ownership and
operation of the Billboards and the Outdoor Advertising Business (the
"Permits"), including without limitation the Permits listed on Exhibit D
attached hereto;
D. All leases or licenses of Billboard space between Seller
and Billboard advertising customers (the "Sign Leases"), including without
limitation those Sign Leases described on Exhibit E attached hereto;
E. Service agreements, leases and other contracts relating to
the Outdoor Advertising Business (the "Service Agreements"), including without
limitation those Service Agreements described on Exhibit F attached hereto;
F. Intellectual property, goodwill associated therewith,
licenses and sublicenses granted and obtained with respect thereto and rights
thereunder, remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions;
G. Claims, deposits, repayments, refunds, causes of action,
choses in action, rights of recovery, rights of set-off, and rights of
recoupment;
H. Franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights obtained from
governments and governmental agencies;
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I. Books, records, ledgers, files, documents, correspondence,
lists, plats, architectural plans, drawings, specifications, creative materials,
advertising and promotional materials, studies, reports, and other printed or
written materials; and
J. All currently existing and hereafter arising proceeds of
all of the foregoing.
Finally, Seller's principal, Larry Roberts and/or Warren Estes, shall
provide his services to assist Buyer in the construction of the fourteen (14)
permitted, but unbuilt billboard locations along the Florida Turnpike and I-75
following Closing. Compensation for Mr. Roberts' and or Mr. Estes service is
included as part of the Purchase Price set out in paragraph 2 above and he shall
receive no additional compensation aside from the reimbursement of approved
out-of-pocket expenses. Mr. Roberts and Mr. Estes shall supervise each
billboards construction for a period of sixty (60) days following Closing or
sooner if Buyer and Seller mutually agree that his supervision is no longer
required. Buyer shall be responsible for all other expenses associated with the
construction of the these fourteen (14) locations.
4. Assumption of Liabilities and Obligations. As of the date of
Closing, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities arising under the Land Leases, Sign Leases, Service
Contracts, or otherwise arising from the ownership or operation of the Assets
and the conduct of the Outdoor Advertising Business to the extent that such
obligations and liabilities relate to the time after the Closing. Buyer shall
not assume any other obligations or liabilities of Seller, including without
limitation: any obligations or liabilities under any agreement not included in
the agreements to be assigned hereunder; any obligations or liabilities under
the agreements to be assigned hereunder relating to a period prior to Closing;
any claims, litigation, or proceedings relating to the operation of the Assets
or the conduct of the Outdoor Advertising Business prior to Closing, whether
asserted or filed before or after Closing; any obligations or liabilities of
Seller under any management incentive, employee pension, retirement, or other
benefit plans; any obligations or liabilities of Seller under any collective
bargaining agreement; any obligation to any employee of Seller for severance
benefits, vacation time, or sick leave accrued prior to Closing; any credit
agreements, note purchase agreements, indentures, or other financing
arrangements; any agreements entered into other than in the ordinary course of
business; or any obligations or liabilities caused by, arising out of, or
resulting from any action or omission of Seller prior to Closing. All of such
excluded obligations and liabilities shall remain the obligations and
liabilities solely of Seller.
5. Representations, Covenants and Warranties of Buyer. As a material
inducement to Seller to enter into this Agreement, Buyer makes the following
representations, covenants and warranties.
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A. Buyer has all requisite power and authority to execute and
deliver this Agreement and the documents contemplated hereby and to perform and
comply with all of the terms, covenants, and conditions to be performed and
complied with by Buyer hereunder and thereunder.
B. The execution, delivery and performance of this Agreement
by Buyer have been duly authorized by all necessary actions on the part of
Buyer. This Agreement has been duly executed and delivered by Buyer and
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms except as the enforceability of this
Agreement may be affected by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally and by judicial discretion in the enforcement of
equitable remedies.
C. The execution, delivery and performance by Buyer of this
Agreement and the documents contemplated hereby (i) do not require the consent
of any third party; (ii) will not conflict with the Articles of Incorporation or
By-Laws of Buyer; (iii) will not conflict with, result in a breach of, or
constitute a default under, any law, judgment, order, injunction, regulation or
ruling of any Court or Governmental Instrumentality; or (iv) will not conflict
with, constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license or permit to which
Buyer is a party or by which Buyer may be bound, that may impair Buyer's ability
to acquire or operate the Assets.
D. No representation or warranty made by Buyer in this
Agreement or in any certificate or other document 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 that is required to make any statement
made herein or therein not misleading.
6. Representations, Covenants and Warranties of Seller. As a material
inducement to Buyer to enter into this Agreement, Seller makes the following
representations, covenants and warranties:
A. Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Florida. 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 associated with the
Assets 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.
B. The execution, delivery and performance of this Agreement
by Seller have been duly authorized by all necessary actions on the part of
Seller. This Agreement has been duly executed and delivered by Seller and
constitutes the legal, valid and binding
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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.
C. The execution, delivery, and performance by Seller of this
Agreement and the documents contemplated hereby (i) do not require the consent
of any third party, or such consent has been obtained, (ii) will not conflict
with, result in a breach of, or constitute a default under, any law, judgement,
order, rules, regulation or ruling of any court of governmental instrumentality,
(iii) will not conflict with, constitute grounds for termination of, result in a
breach of, constitute a default under or accelerate or permit the acceleration
of any performance required by the terms of any agreement instrument license or
permit to which Seller is a party or by which Seller may be bound and (iv) will
not create any claim, liability, mortgage, lien, pledge condition charge or
encumbrance of any nature whatsoever upon any of the Assets.
D. Seller has good and marketable title to or, where
applicable, a valid and insurable leasehold interest in the Assets free and
clear of all liens and encumbrances. The Assets are all of the properties and
assets required to legally conduct the Outdoor Advertising Business as currently
conducted, and immediately after consummation of the transactions contemplated
herein, Buyer will be entitled to use the Assets free and clear of all liens and
encumbrances.
E. Neither Seller nor any shareholder, employee, or agent of
Seller has incurred any obligation for any finder's, broker's, or agent's fee in
connection with the transactions contemplated hereby.
F. The Permits listed on Exhibit D constitute all the
governmental authorizations required from any governmental or regulatory
authority for the lawful conduct of the Outdoor Advertising Business and
operation of the Assets in the manner and to the full extent they are now
conducted. None of these governmental or regulatory authorities has modified or
otherwise changed its permitting ordinances in any material respect since the
issuance of the Permits. None of the Permits is subject to any restriction or
condition that would limit Buyer's full operation of the Assets or the Outdoor
Advertising Business as now operated following Closing. The Permits are in full
force and effect and the current conduct of the Outdoor Advertising Business and
operation of the Assets is in full accord therewith. Seller has no reason to
believe that any of the Permits will not continue to remain in effect following
Closing.
G. The Billboards listed on Exhibit A and the tangible
personal property listed on Exhibit C constitute all items of tangible personal
property necessary to conduct Outdoor Advertising Business at each of the
Billboard locations as now conducted. Seller owns and has good title to each
Billboard and other item of tangible personal property and,
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except as disclosed on Exhibit G, none 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.
H. The Land Leases, Sign Leases, and Service Contracts listed
on Exhibits B, E, and F, respectfully, constitute all the Land Leases, Sign
Leases, and Service Contracts associated with the operation of the Billboards
and the Outdoor Advertising Business. Seller has delivered to Buyer true and
complete copies of all such Land Leases, Sign Leases, and Services Contracts and
all of the Land Leases, Sign Leases and Service Contracts are in full force and
effect and are valid, binding and enforceable in accordance with their terms.
Seller has full legal power and authority to assign its rights under such Land
Leases, Sign Leases, and Service Contracts to Buyer in accordance with this
Agreement and such assignment will not affect the validity, enforceability or
continuation of any of the assigned Land Leases, Sign Leases, and Service
Contracts.
I. 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
associated with the Assets in essentially the same manner as such business and
operations are now conducted.
J. There is no claim, legal action, 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 Seller with respect to its ownership or operation of
the Assets nor does Seller know or have reason to be aware of any basis for the
same.
K. Seller has complied with all laws, rules, and regulations
of all federal, state and local governments concerning the environment, public
health and safety and no complaint, charge or notice has been filed or commenced
against Seller in connection with its ownership or operation of the Assets
alleging any failure to comply with any such law, rule or regulation.
L. The books of account of Seller have been kept accurately in
all material respects in the ordinary course of its business; the transactions
entered therein represent bona fide transactions; and the revenues, expenses,
assets, and liabilities of Seller have been properly recorded in such books.
M. All the Billboards are constructed within the boundaries of
the applicable Land Lease, and each Land Lease provides adequate access to and
from a public road.
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N. Seller is aware of no structural or latent defects in any
of the Assets.
O. 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
that is required to make any statement made herein or therein not misleading.
7. Due Diligence Period. Buyer shall have a period of up to thirty (30)
days after full execution of this Agreement (the "Due Diligence Period") to
inspect the Assets and the books and records of the Outdoor Advertising Business
and to conduct such other inspections or investigations to confirm the
feasibility and suitability of the Assets for Buyer's purposes. If Buyer is
dissatisfied, in its sole discretion, with the results of such inspections and
investigations for any reason, then Buyer shall be entitled to terminate this
Agreement prior to the expiration of the Due Diligence Period and receive a
return of any and all deposits paid hereunder. Seller shall permit Buyer and
Buyer's authorized representatives full access to, and make available for
inspection, all of the Assets and business premises of Seller and shall furnish
Buyer all documents, records, and information with respect to the affairs of
Seller as Buyer and its representatives may reasonably request, all for the
purpose of permitting Buyer to become familiar with the Assets, the Outdoor
Advertising Business, and liabilities of Seller. In connection therewith, Buyer,
its agents and representatives, shall have the right of access to the Assets for
purposes of conducting surveys, soil tests, market studies, engineering tests,
and such other tests, investigations, studies and inspection as Buyer deems
desirable, provided that all of the same shall be conducted at Buyer's expense.
8. Prorations; Closing Expenses. At the time of Closing, Seller shall
provide Buyer with a schedule of all rental payments and revenues received by
Seller for periods from and after the date of Closing. The aggregate amount of
all such prepaid revenues shall be deducted from the purchase price at Closing.
All normal and customarily proratable items, including without limitation, real
estate taxes and assessments, personal property taxes and assessments, utility
bills, alarm and security bills, and rents, shall be prorated as of the date of
Closing, Seller being charged and credited for all of the same up to such date
and Buyer being charged and credited for the same on and after such date. If the
actual amounts to be prorated are not known at the time of Closing, the
prorations shall be made on the basis of the best evidence then available, and
thereafter, when actual figures are received, a cash settlement will be made
between Seller and Buyer. All deposits held by Seller under Sign Leases shall be
credited in favor of Buyer against the purchase price.
9. Buyer's Conditions Precedent. Except as may be waived in writing by
Buyer, the obligations of Buyer hereunder are subject to the fulfillment at or
before the Closing of each of the following conditions:
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A. Each representation and warranty of Seller contained in
this Agreement shall be true and correct in all material respects as of the
Closing;
B. Seller shall have performed and complied with all covenants
or conditions required by this Agreement to be performed and complied with by
Seller at or before Closing;
C. No suit, action, order, or other proceeding by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted, or entered to restrain or prohibit carrying of the transactions
contemplated by this Agreement;
D. No material, adverse, undisclosed condition or material,
adverse change in the Outdoor Advertising Business or the Assets shall have
occurred;
E. Seller shall have received all consents and approvals, if
any, necessary to consummate the transactions contemplated hereby; and
F. Buyer shall have received all estoppel certificates,
consents, and non-disturbance and recognition agreements required to be
delivered hereunder.
10. Seller's Conditions Precedent. Except as may be waived in writing
by Seller, the obligations of Seller hereunder are subject to the fulfillment at
or before Closing of each of the following conditions:
A. Each representation and warranty of Buyer contained in this
Agreement shall be true and correct in all material respects as of Closing;
B. Buyer shall have performed and complied with all covenants
or conditions required by this Agreement to be performed and complied with by it
at or before Closing;
C. No order by any court or governmental body or agency shall
have been entered to restrain or prohibit the consummation of the transactions
contemplated herein.
11. Closing. The Closing hereunder shall occur on August 29, 1996, at
the Buyer's Orlando, Florida offices and the parties shall mutually agree upon
such date.
12. Documents for Closing. Upon the Closing hereof, Seller shall
deliver the following documents to Buyer:
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A. Duly executed Warranty Bill of Sale, Assignment of Land
Leases, Assignment of Sign Leases, Assignment of Permits and other transfer
documents which shall be sufficient to vest and fully warrant good and
marketable title to the Assets in the name of Buyer, free and clear of all
mortgages, liens, restrictions, encumbrances and obligations except for liens
for current taxes not yet due and payable;
B. All original documents of Land Leases, Sign Agreements,
Service Agreements, Permits and all records and correspondence with regard to
the Assets being sold hereunder;
C. Estoppel certificates of the lessors of all leasehold and
subleasehold interests included in the real property interests conveyed
hereunder (substantially in the form as set forth in Exhibit G attached hereto)
and any consents of third parties which enable Seller to transfer, assign and
convey the Assets to Buyer;
D. A certificate, dated as of the Closing Date, executed on by
Seller, certifying that these 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 that Seller has in all
material respects performed and complied with all of its obligations, covenants
and agreement set forth in this Agreement to be performed and complied with on
or prior to the Closing Date; and
E. Any other documents reasonably necessary for the
consummation of the transactions contemplated hereby.
13. Further Assurances. At any time before or after Closing, Seller
agrees to execute, acknowledge and deliver all instruments reasonably requested
by Buyer in order to consummate the transactions contemplated by this Agreement
and to fully vest in Buyer the ownership of the Assets from and after the
Closing. Promptly upon receipt of any rental payments under the Sign Leases for
periods after the Closing, Seller shall pay over to Buyer all such payments.
14. Default. If Buyer shall breach any material representation,
warranty, or covenant contained herein, then the entire earnest money deposit
paid hereunder shall be paid to Seller and Seller may undertake any and all
legal and equitable actions, including, without limitation, a suit for specific
performance. If Seller shall breach any material representation, warranty, or
covenant contained herein, Buyer, in addition to obtaining a refund of its
earnest money deposit, may undertake any and all legal and equitable actions,
including without limitation, a suit for specific performance. Seller
acknowledges that a refusal by Seller to consummate the transactions
contemplated hereby will cause irrevocable harm to Buyer, for which there may be
no adequate remedy at law and for which the ascertainment of damages would be
difficult. Therefore, Buyer shall be entitled,
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in addition to, and without having to prove the inadequacy of, other remedies at
law, to specific performance of this Agreement, as well as injunctive relief.
15. Indemnification Provisions.
A. Indemnification by Seller. After the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, Seller hereby agrees to indemnify and hold Buyer and
its officers, directors, employees, and representatives harmless against and
with respect to, and shall reimburse Buyer and its officers, directors,
employees, and representatives for:
(i) Any and all losses, liabilities, or damages
resulting from the operation or ownership of the Outdoor Advertising Business
prior to the Closing, including without limitation any environmental liabilities
and liabilities arising under the Land Leases, Sign Leases, Service Agreements,
or any other source to the extent such liabilities relate to events occurring
prior to the Closing Date, or resulting from any other obligations of Seller
that are not assumed by Buyer pursuant to this Agreement, including without
limitation any liabilities arising at any time under any contract that is not
assumed hereunder.
(ii) Any loss, liability, obligation, or cost
resulting from any agreement with any finder, broker, advisor, or similar person
retained by or on behalf of Seller relating to the transactions contemplated by
this Agreement.
(iii) Any and all out-of-pocket costs and expenses,
including reasonable legal fees and expenses, of any incident to the foregoing
or incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
B. Indemnification by Buyer. After 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
and Seller's officers, directors, employees, and representatives harmless
against and with respect to, and shall reimburse Seller and each Seller's
officers, directors, employees, and representatives for:
(i) Any and all obligations of Seller assumed by
Buyer pursuant to this Agreement.
(ii) Any and all losses, liabilities, or damages
resulting from the operation or ownership of the Outdoor Advertising Business
after the Closing.
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(iii) Any loss, liability, obligation, or cost
resulting from any agreement with any finder, broker, advisor, or similar person
retained by or on behalf of Buyer relating to the transactions contemplated by
this Agreement.
(iv) Any and all out-of-pocket costs and expenses,
including reasonable legal fees and expenses, incident to any action, suit,
proceeding, claim, demand, assessment, or judgment incident to the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity.
C. Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(i) The party claiming indemnification (the
"Claimant") shall promptly give written 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.
(ii) With respect to claims solely between the
parties, following receipt of notice from the Claimant of a claim, the
Indemnifying Party shall have thirty days to make such investigation of the
claim as the Indemnifying Party deems necessary or desirable. For the purposes
of such investigation, the Claimant agrees to make available to the Indemnifying
Party and its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity.
(iii) With respect to any claim by a third party as
to which the Claimant is entitled to indemnification under this Agreement, if
the Indemnifying Party notifies the Claimant in writing within ten days of its
receipt of notice from the Claimant of the third-party claim that the
Indemnifying Party acknowledges its potential liability to the Claimant under
this Agreement, the Indemnifying Party shall have the right, at its own expense,
to participate in or assume control of the defense of such claim, and the
Claimant shall cooperate fully with the Indemnifying Party, subject to
reimbursement for actual out-of-pocket expenses incurred by the Claimant as the
result of a request by the Indemnifying Party. If the Indemnifying Party elects
to assume control of the defense of any third-party claim, the Claimant shall
have the right to participate in the defense of such claim at its own expense.
If the Indemnifying Party fails timely to notify the Claimant in writing that
the Indemnifying Party acknowledges its potential liability to the Claimant
under this Agreement or if the Indemnifying Party does not elect to assume
control or otherwise participate in the
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defense of any third-party claim, the Indemnifying Party shall be bound by the
results obtained by the Claimant with respect to such claim.
(iv) 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.
(v) For the purpose of the procedures set forth in
this Section, any indemnification claim by any officer, director, employee, or
representative of Buyer shall be made by and through Buyer, and any
indemnification claim by any officer, director, employee, or representative of
any Seller shall be made by and through such Seller.
16. Survival. All representations, warranties and indemnifications
contained in this Agreement shall be deemed continuing representations,
warranties and indemnifications and shall survive the Closing.
17. Attorneys Fees. In the event of a default or breach hereunder 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,
including on appeals and bankruptcy proceedings.
18. Physical Condition. Except as expressly provided in this Agreement
to the contrary, Buyer and Seller agree that the Assets are being sold "as is"
as to their physical condition existing at the time of execution of this
Agreement.
19. Controlling Law. Any dispute which may arise concerning this
Agreement shall be resolved in accordance with the laws of the State of Florida
and parties agree to venue in Pinellas County, Florida.
20. Risk of Loss; Maintenance of Assets. 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 Closing. Seller shall
maintain all of the Assets in their condition as of the date of this Agreement
(ordinary wear and tear excepted), and use, operate and maintain all of the
Assets in a reasonable manner. Seller shall maintain inventories of parts and
supplies at levels consistent with past practices. If any insured or indemnified
loss, damage, impairment, confiscation, or condemnation of or to any of the
Assets occurs, Seller shall repair, replace, or restore such Assets to their
prior condition as soon thereafter as possible (and at Buyer's option, prior to
Closing), and Seller shall use the proceeds of any insurance or other recovery
solely to repair, replace, or restore such Assets. Seller shall maintain the
existing levels of insurance on the Assets. In the event of any loss, damage,
impairment, confiscation, or condemnation of any of the Assets, if restoration
or replacement has not occurred prior to Closing, Buyer shall be entitled to
elect to delay the Closing until such restoration or replacement is completed or
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close the transaction and receive from Seller a transfer or assignment of all
insurance proceeds or other compensation applicable thereto.
21. Notices. All notices, demands, and requests required or permitted
to be given under this Agreement shall be in writing and shall be either (a)
personally delivered, (b) mailed by registered or certified mail, postage
prepaid with return receipt requested, (c) delivered by overnight express
delivery service or same day local courier service, or (d) delivered by telecopy
or facsimile transmission, to the address set forth below, or to such other
address as may be designated by the parties from time to time in accordance with
this section.
If to Seller: Boardworks Outdoor Advertising Company, Inc.
P.O. Box 67
San Antonio, Florida 33576
Attention: Larry Roberts
Fax: (352) 567-6911
Phone: (352) 567-6069
with a copy to: Mitchell I. Horowitz, Esq.
Fowler, White et al.
501 East Kennedy Boulevard
Tampa, Florida 33601
Fax: (813) 229-8313
Phone: (813) 228-7411
If to Buyer: Paxson Outdoor, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401-6233
Attention: Lowell W. Paxson
Fax: (561) 655-9424
Phone: (561) 659-4122
Notice delivered personally, by overnight express delivery service or
by local courier service shall be deemed given as of actual receipt. Mailed
notices shall be deemed given three business days after mailing. Notices
delivered by telecopy or facsimile transmission shall be deemed given upon
confirmation of the transmission.
22. Entire Agreement. This Agreement supersedes all prior agreements
and understandings relating to the subject matter hereof and cannot be amended,
supplemented or changed except by an Agreement in writing signed by the party
against which enforcement of any such amendment, supplement, or modification is
sought.
<PAGE> 14
14
23. Binding Effect. This Agreement and the rights, interests and
obligations hereunder shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, personal representatives,
estates, devisees, successors, and assigns.
24. Severability. If any portion of this Agreement is invalid, illegal
or unenforceable, the balance of this Agreement shall remain in full force and
effect and this Agreement shall be construed in all respects as if such invalid,
illegal or unenforceable provision were amended.
25. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall constitute
one instrument.
<PAGE> 15
15
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the day and year first above written.
In the Presence of:
"Seller"
BOARDWORKS OUTDOOR
ADVERTISING COMPANY, INC.
- --------------------------------- ----------------------------------
By:
-------------------------------
Its: PRESIDENT
------------------------------
- ---------------------------------
As to "Seller"
"Buyer"
PAXSON OUTDOOR, INC.
- --------------------------------- ----------------------------------
By:
-------------------------------
Its:
------------------------------
- ---------------------------------
As to "Buyer"
<PAGE> 16
16
STATE OF FLORIDA ]
]
COUNTY OF _________________ ]
I, _______________________________, a Notary Public in and for the
State of Florida, do hereby certify that ___________________________ the duly
authorized ____________________ of Boardworks Outdoor Advertising Company, Inc.,
personally appeared before me in said jurisdiction and acknowledged executing
the foregoing Purchase Agreement on behalf of the corporation. He is personally
known to me or has
produced _____________________________ as identification.
Given under my signature and seal this _____ day of August, 1996.
____________________________________
[SEAL] Notary Public
STATE OF FLORIDA ]
]
COUNTY OF PALM BEACH ]
I, Lori E. Closson, a Notary Public in and for the State of Florida, do
hereby certify that _______________________________, the duly authorized
__________________ of Paxson Outdoor, Inc., personally appeared before me in
said jurisdiction and acknowledged the foregoing Purchase Agreement on behalf of
the corporation. He is personally known to me.
Given under my signature and seal this _____ day of August, 1996.
____________________________________
[SEAL] Notary Public
<PAGE> 17
17
EXHIBIT A
---------
The parties acknowledge that the following is a list of the Billboards to be
transferred from Seller to Buyer as part of this Purchase Agreement. Billboards
as referenced below shall mean a single advertising structure each having two or
four faces with the indicated dimensions including all related equipment located
above and below ground at each site:
[ADD DESCRIPTION OF BILLBOARDS]
<PAGE> 18
18
EXHIBIT B
[ADD LISTING OF LAND LEASES THEIR LOCATION AND DURATION]
<PAGE> 19
19
EXHIBIT C
[ADD DESCRIPTION OF TANGIBLE PERSONAL
PROPERTY OTHER THAN BILLBOARDS]
<PAGE> 20
20
EXHIBIT D
[ADD LISTING AND LOCATION OF PERMITS]
<PAGE> 21
21
EXHIBIT E
[ADD LISTING OF SIGN LEASES]
<PAGE> 22
22
EXHIBIT F
Manufacturing/Warehouse/Office Lease dated November 4, 1994 between First Pasco
Service Corp. and Boardworks Outdoor.
<PAGE> 23
23
EXHIBIT G
PERSONAL PROPERTY
SECURITY INTERESTS
<PAGE> 24
24
EXHIBIT H
LESSOR'S ESTOPPEL CERTIFICATE
TO: Paxson Outdoor, Inc.
_________________________________________ ("Lessor"), certifies to
Paxson Outdoor, Inc. as follows:
I. Lessor's correct legal name is __________________ __________________,
and Lessor is a _______________________ organized and existing under the laws of
the State of __________.
1. Lessor is the owner of the property described on attached Exhibit A
(the "Demised "Premises"). Lessor leases the Demised Premises to
_____________________________________ __________________________ ("Lessee"),
pursuant to a ____________________________________ __________________ dated
_____________________________ (the "Lease"). True copies of the Lease and any
amendments are attached to this certificate as Exhibit B.
2. The Lease (a) is in full force and effect according to its terms;
(b) has not been otherwise amended, assigned or modified; (c) has not been
terminated or superseded, nor has Lessor's performance of Lessor's obligations
under the Lease been waived in any material respect; and (d) constitutes the
entire agreement between Lessor and Lessee with respect to the Demised Premises.
3. Lessor has not received notice of a prior transfer, assignment,
hypothecation or pledge by Lessee of any of Lessee's interest in the Lease.
4. Lessor is not in default with respect to any obligations to the
other under the Lease.
5. To the knowledge of Lessor, Lessee is not in default with respect to
any obligations under the Lease and no condition exists that, with the passage
of time or giving of notice, would constitute a default.
6. No actions, voluntary or otherwise, involving Lessor are pending in
connection with any bankruptcy, reorganization, or insolvency proceedings under
federal or state laws.
7. Lessor acknowledges that you are purchasing an assignment of
Lessee's leasehold interest in reliance upon this certificate, and hereby
consents to such assignment.
IN WITNESS WHEREOF, Lessor has executed this certificate, this ______
day of ____________, 19____.
_______________________________________
"LESSOR"
<PAGE> 25
CLOSING STATEMENT
This Closing Statement is delivered in connection with the consummation
of the transaction contemplated by the Purchase Agreement dated as of August
29, 1996 (the "Purchase Agreement"), by and between Paxson Outdoor, Inc., a
Florida corporation ("Buyer") and Boardworks Outdoor Advertising Company, Inc.,
a Florida corporation ("Seller").
The undersigned acknowledge and agree that the Purchase Price payable at
the Closing (as those terms are defined in the Purchase Agreement) shall be as
set forth in Exhibit A hereto, subject to final adjustment and payment as
provided in Section 8 of the Purchase Agreement.
This Closing Statement may be signed in counterparts with the same
effect as if the signature on each counterpart were upon the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Closing Statement
as of August 29, 1996.
PAXSON OUTDOOR, INC.
By: /s/
---------------------------------
Its: Secretary
BOARDWORKS OUTDOOR ADVERTISING
COMPANY, INC.
By: /s/
--------------------------------
Its: President
--------------------------------
<PAGE> 26
EXHIBIT A
CLOSING STATEMENT
--------------
<TABLE>
<S> <C>
A. Calculation of Purchase Price:
Boardworks Outdoor Advertising Company, Inc.
Prorations $ 759.32
Cash Payment 1,300,000.00
-------------
Total $1,300,759.32
B. Disbursements To or For Seller:
1. Wire transfer from Buyer to: $1,200,759.32
Wauchula State Bank
ABA# 0631 0492 7
"Online with Federal Reserve"
To Credit Boardworks Outdoor Advertising Company, Inc.
Account # 1119079
2. Wire transfer from First Union to Wauchula $ 100,000.00
-------------
-------------
GRAND TOTAL $1,300,759.32
</TABLE>
<PAGE> 27
BOARDWORKS OUTDOOR ADVERTISING COMPANY, INC.
TANGIBLE TAXES PRORATION WORKSHEET
<TABLE>
<CAPTION>
TAXES THIS PRORATION
YEAR IF NO DATE
BUDGET AUGUST 29,1996 DUE TO
SIGN # FOLIO # CHANGE 124/365 SELLER
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PASCO COUNTY
BPA051-BPA052 B 00831 101 416.09 0.339726 141.36
BPA053-BPA054 B 00831 102 416.09 0.339726 141.36
BPA055-BPA058 B 00831 103 312.66 0.339726 106.22
BPA059-BPA062 B 00831 104 293.71 0.339726 99.78
BPA063-BPA066 B 00831 105 304.75 0.339726 103.53
BPAOOI-BPA004 B 00831 106
BPA005-BPA008 B 00831 106
BPA009-BPA012 B 00831 1O6
BPA013-BPA014 B 00831 106
BPA015-BPA018 B 00831 106
BPA031-BPA032 B 00831 106
BPA037-BPA038 B 00831 106
BPA039-BPA040 B 00831 106
BPA041-BPA042 B 00831 106
BPA043-BPA046 B 00831 106
BPA047 B 00831 106
BPA048-BPA051 B 00831 106
BPA052 B 00831 106
BPA053-BPA054 B 00831 106 304.75 0.339776 03.53
BPA075-BPA076 B 00831 107 275.17 0.339726 93.48
HERNANDO COUNTY
BHE019-BHE020 P-009920-000
BHE021-BHE027 P-009920-000
BHE023-BHE024 P-009920-000
BHE025-BHE076 P-009920-000
BHE027-BHE079 P-009920-000
BHE029-BHE030 P-009920-000
BHU033-BHE034 P-009920-000
BHE035-BHE036 P-009920-000
BHE057-BHE060 P-009920-000 508.57 0.339726 172.77
POLK COUNTY
BPO055-BPO056 11 303750 159.45 0.339726 54.17
---------
$1,016.20
=========
</TABLE>
<PAGE> 28
Summary
<TABLE>
<CAPTION>
Type Credit to Buyer Due Seller
- ---- --------------- ----------
<S> <C> <C> <C>
Rent Expense/Monthly $ 0.00
Rent Expense/Other $ 758.06
Tangible Taxes
Permits $ 707.46
Receivables
Ad Revenue/Monthly $1,550.00
Electric Deposits $1,860.00
--------- ---------
Totals $1,550.00 $3,325.52
Tangible Tax $1,016.20
Net Due to Seller $759.32
</TABLE>
Page 1
<PAGE> 29
Rent Expenses_Monthly
<TABLE>
<CAPTION>
Landowmer GR_mo Pro-Rations/days August Amt. paid Due to Seller
- --------- ----- ---------------- ---------------- -------------
<S> <C> <C> <C> <C>
Orsi $25.00 0 $25.00 $0.00
Orsi $25.00 0 $25.00 $0.00
Orsi $25.00 0 $25.00 $0.00
Orsi $25.00 0 $25.00 $0.00
Orsi $25.00 0 $25.00 $0.00
Orsi $25.00 0 $25.00 $0.00
Orsi $25.00 0 $25.00 $0.00
Orsi $25.00 0 $25.00 $0.00
H&S $50.00 0 $50.00 $0.00
H&S $50.00 0 $50.00 $0.00
H&S $50.00 0 $50.00 $0.00
H&S $50.00 0 $50.00 $0.00
Scotty's $53.00 0 $53.00 $0.00
Scotty's $53.00 0 $53.00 $0.00
Stor-ette $25.00 0 $25.00 $0.00
Stor-ette $25.00 0 $25.00 $0.00
Stor-ette $25.00 0 $25.00 $0.00
Stor-ette $25.00 0 $25.00 $0.00
Melton $75.00 0 $75.00 $0.00
Melton $75.00 0 $75.00 $0.00
Melton $83.50 0 $83.50 $0.00
Melton $83.50 0 $83.50 $0.00
Melton $83.50 0 $83.50 $0.00
Melton $83.50 0 $83.50 $0.00
Melton $83.50 0 $83.50 $0.00
Melton $83.50 0 $83.50 $0.00
Melton $83.50 0 $83.50 $0.00
Melton $83.50 0 $83.50 $0.00
Melton $83.50 0 $83.50 $0.00
Melton $83.50 0 $83.50 $0.00
One Pasco $53.00 0 $53.00 $0.00
One Pasco $53.00 0 $53.00 $0.00
Melton $83.50 0 $83.50 $0.00
Melton $83.50 0 $83.50 $0.00
Jan Jan $53.00 0 $53.00 $0.00
Jan Jan $53.00 0 $53.00 $0.00
Tri County $150.00 0 $150.00 $0.00
Tri County $150.00 0 $150.00 $0.00
Quach $75.00 0 $75.00 $0.00
Quach $75.00 0 $75.00 $0.00
Schwendeman $25.00 0 $25.00 $0.00
Schwendeman $25.00 0 $25.00 $0.00
</TABLE>
<PAGE> 30
Rent Expenses_Monthly
<TABLE>
<S> <C> <C> <C> <C>
Schwendeman $25.00 0 $25.00 $0.00
Schwendeman $25.00 0 $25.00 $0.00
Harris $100.00 0 $100.00 $0.00
Harris $100.00 0 $100.00 $0.00
Wendy's $27.50 0 $27.50 $0.00
Wendy's $27.50 0 $27.50 $0.00
Wendy's $27.50 0 $27.50 $0.00
Wendy's $27.50 0 $27.50 $0.00
Melton $83.50 0 $83.50 $0.00
Melton $83.50 0 $83.50 $0.00
Oliver $50.00 0 $50.00 $0.00
Oliver $50.00 0 $50.00 $0.00
$3,097.00 $3.097.00 $0.00
</TABLE>
Page 2
<PAGE> 31
Rent Expenses_Other
<TABLE>
<CAPTION>
Landowmer GR_mo Pro-Rations/days Paid up to 12/1 Due to Seller
- --------- ----- ---------------- --------------- -------------
<S> <C> <C> <C> <C>
Dame $125.00 91 $375.00 $379.03
Dame $125.00 91 $375.00 $379.03
------- ------- -------
$250.00 $750.00 $758.06
</TABLE>
Page 1
<PAGE> 32
Permits
<TABLE>
<CAPTION>
Face ID DOT # Annual Fees Proration Due Seller
- ------- ----- ----------- --------- ----------
<S> <C> <C> <C> <C>
BOA001 BJ295-35 $35 137 $13.10
BOA002 BJ296-35 $35 137 $13.10
BOA003 BJ295-35 $35 137 $13.10
BOA004 BJ296-35 $35 137 $13.10
BOA005 BJ297-35 $35 137 $13.10
BOA006 BJ298-35 $35 137 $13.10
BOA007 BJ297-35 $35 137 $13.10
BOA008 BJ298-35 $35 137 $13.10
BOA009 BK129-35 $35 137 $13.10
BOA010 BK130-35 $35 137 $13.10
BOA011 BK129-35 $35 137 $13.10
BOA012 BK130-35 $35 137 $13.10
BOA013 BJ370-35 $35 137 $13.10
BOA014 BJ371-35 $35 137 $13.10
BOA015 BK523-35 $35 137 $13.10
BOA016 BK522-35 $35 137 $13.10
BOA017 BK523-35 $35 137 $13.10
BOA018 BK522-35 $35 137 $13.10
BOA019 BK435-35 $35 137 $13.10
BOA020 BK436-35 $35 137 $13.10
BOA021 BK904-35 $35 137 $13.10
BOA022 BK905-35 $35 137 $13.10
BOA023 BK910-35 $35 137 $13.10
BOA024 BK911-35 $35 137 $13.10
BOA025 BK912-35 $35 137 $13.10
BOA026 BK913-35 $35 137 $13.10
BOA027 BK902-35 $35 137 $13.10
BOA028 BK903-35 $35 137 $13.10
BOA029 BK629-35 $35 137 $13.10
BOA030 BK630-35 $35 137 $13.10
BOA031 BL311-35 $35 137 $13.10
BOA032 BL310-35 $35 137 $13.10
BOA033 BJ908-35 $35 137 $13.10
BOA034 BK909-35 $35 137 $13.10
BOA035 BK730-35 $35 137 $13.10
BOA036 BL731-35 $35 137 $13.10
BOA037 BL474-35 $35 137 $13.10
BOA038 BJ473-35 $35 137 $13.10
BOA039 BJ082-35 $35 137 $13.10
BOA040 BJ083-35 $35 137 $13.10
BOA041 BM832-35 $35 137 $13.10
</TABLE>
<PAGE> 33
Permits
<TABLE>
<S> <C> <C> <C> <C>
BOA042 BM833-35 $35 137 $13.10
BOA043 BJ085-35 $35 137 $13.10
BOA044 BJ084-35 $35 137 $13.10
BOA045 BJ085-35 $35 137 $13.10
BOA046 BJ084-35 $35 137 $13.10
BOA047 BK744-35 $35 137 $13.10
BOA048 BK745-35 $35 137 $13.10
BOA049 BJ195-35 $35 137 $13.10
BOA050 BJ194-35 $35 137 $13.10
BOA051 BJ195-35 $35 137 $13.10
BOA052 BJ194-35 $35 137 $13.10
BOA053 BM349-35 $35 137 $13.10
BOA054 BM350-35 $35 137 $0.00
BOA055 137 $0.00
BOA056 137 $13.10
------ -------
$1,890 $707.46
</TABLE>
<PAGE> 34
Ad Rev-Monthly
<TABLE>
<CAPTION>
Face ID Advertiser Net Income Proration Credit Buyer
- ------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C>
BOA001 Columbia Regional $275 0 $0.00
BOA002 Peterson Insurance $275 0 $0.00
BOA003 Dade City Hospital $275 0 $0.00
BOA004 Ancient Oaks $300 0 $0.00
BOA005 Beef O'Brady $275 0 $0.00
BOA006 Columbia Regional $275 0 $0.00
BOA007 Avail $0 0 $0.00
BOA008 Avail $0 0 $0.00
BOA009 East Pasco Interiors $250 0 $0.00
BOA010 Avail $0 0 $0.00
BOA011 Zephyrhills Dental $300 0 $0.00
BOA012 Zephyrhills Dental $200 0 $0.00
BOA013 Dade City Hospital $400 0 $0.00
BOA014 Avail $0 0 $0.00
BOA015 Avail $0 0 $0.00
BOA016 Avail $0 0 $0.00
BOA017 Avail $0 0 $0.00
BOA018 Dade City Hospital $275 0 $0.00
BOA019 Century 21-Corp $350 0 $0.00
BOA020 Gavish Hall Cent 21 $250 0 $0.00
BOA021 Marathon $800 0 $800.00
BOA022 Racetrac $650 0 $0.00
BOA023 Big Top Flea $650 0 $0.00
BOA024 Glen Lakes $600 0 $0.00
BOA025 Florida Aquarium $765 n/a 0 $0.00
BOA026 Columbia Regional $630 0 $0.00
BOA027 Comfort Inn $750 30 $750.00
BOA028 Silverthorn $800 0 $0.00
BOA029 Columbia Regional $630 0 $0.00
BOA030 Sugar Mill $700 0 $0.00
BOA031 Texaco/Blimpie's $400 0 $0.00
BOA032 Columbia Regional $630 0 $0.00
BOA033 Avail $0 0 $0.00
BOA034 Glen Lakes $600 0 $0.00
BOA035 Jim Quinlan Ford $600 0 $0.00
BOA036 Jim Quinlan Ford $600 0 $0.00
BOA037 Avail $0 0 $0.00
BOA038 Avail $0 0 $0.00
BOA039 Lone Star $450 0 $0.00
BOA040 Krystals $500 0 $0.00
BOA041 Pit Boss BBQ $550 0 $0.00
BOA042 Silverthorn $630 0 $0.00
</TABLE>
<PAGE> 35
Ad Rev-Monthly
<TABLE>
<S> <C> <C> <C> <C>
BOA043 Avail $0 0 $0.0
BOA044 Our Father's Business $300 0 $0.00
BOA045 Mcbath $0 0 $0.00
BOA046 Avail $0 0 $0.00
BOA047 Avail $0 0 $0.00
BOA048 Avail $0 0 $0.00
BOA049 Stevens Pools $250 0 $0.00
BOA050 Stevens Pools $250 0 $0.00
BOA051 LOL Transmission $300 0 $0.00
BOA052 Columbia Regional $275 0 $0.00
BOA053 Avail $0 0 $0.00
BOA054 Avail $0 0 $0.00
BOA055 Avail $0 0 $0.00
BOA056 Avail $0 0 $0.00
------- ---------
$17,010 $1,550.00
</TABLE>
<PAGE> 36
Deposits
<TABLE>
<CAPTION>
Withlacoochee Electric
- ----------------------
<S> <C>
BOA021 $97.50
BOA022 $97.50
BOA023 $97.50
BOA025 $97.50
BOA026 $97.50
BOA027 $97.50
BOA028 $97.50
BOA029 $97.50
BOA030 $97.50
BOA031 $97,50
BOA032 $97.50
BOA033 $97.50
BOA034 $97.50
BOA035 $97.50
BOA036 $97.50
Florida Power
BOA039 $75.00
BOA040 $75.00
BOA041 $75.00
BOA042 $75.00
---------
Total Deposits $1,860.00
</TABLE>
Page 1
<PAGE> 37
ESCROW AGREEMENT
THIS IS AN AGREEMENT made and entered into this 15th day of August, 1996, by
and among: Paxson Outdoor, Inc., a Florida corporation (hereinafter "Buyer"),
Boardworks Outdoor Advertising Company, Inc., a Florida corporation
(hereinafter "Seller"), and First Union National Bank of Florida (hereinafter
"Escrow Agent").
WHEREAS, Buyer and Seller have entered into a Purchase Agreement of even
date herewith which provides for the assignment of the Assets (as therein
defined) used in the operation of Seller's commercial billboard outdoor
advertising business, all on the terms and conditions set forth in the Purchase
Agreement; and
WHEREAS, the Purchase Agreement provides that Buyer shall deposit in escrow
with the Escrow Agent the sum of One Hundred Thousand Dollars ($100,000) to
be deposited contemporaneously herewith (the "Escrow Deposit") upon the
execution of the Purchase Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment of Escrow Agent. Buyer and Seller each appoint
First Union National Bank of Florida as Escrow Agent to receive, hold,
administer and deliver the Escrow Deposit and all interest earned thereon
(collectively, the "Escrow Fund") in accordance with this Agreement and the
Escrow Agent accepts such appointment, all subject to and upon the terms and
conditions set forth in this Agreement.
The Escrow Agent shall invest and reinvest the Escrow Fund as directed
by Buyer. The Escrow Agent shall invest the Escrow Fund and the interest
thereon only in U.S. government obligations maturing not more than 90 days from
the date of purchase or in a money market account investing solely in U.S.
government obligations.
2. General Intention. Buyer herewith deposits the Escrow Fund
with the Escrow Agent and the Escrow Agent acknowledges such deposit. The
Escrow Agent shall dispose of the Escrow Fund in accordance with the express
provisions of this Agreement and, except upon the terms and conditions of
Section 3 of this Agreement, shall not make, be required to make or be liable
in any manner for its failure to make, any determination under the Purchase
Agreement or any other agreement, including without limitation any
determination of whether either Buyer or Seller has complied with the terms of
the Purchase Agreement or is entitled to delivery of the Escrow Fund or to any
other right or remedy thereunder.
3. Release of Escrow Fund. The Escrow Agent shall hold the Escrow
Fund as provided in this Section 3:
3.1 Seller's Demand. If the Escrow Agent receives a written
notice signed by Seller stating that Seller is entitled to any portion of the
Escrow Fund and certifying that
1
<PAGE> 38
a copy of the notice has been delivered to Buyer in a manner specified in
Section 6, the Escrow Agent shall deliver a copy thereof to Buyer in a manner
specified in Section 6 and, unless the Escrow Agent receives a written
objection from Buyer within ten business days after the date of delivery of the
notice to Buyer by the Escrow Agent as provided in Section 6, the Escrow Agent
shall deliver to Seller the portion of the Escrow Fund claimed by Seller. If
the Escrow Agent receives a written objection from Buyer, the Escrow Agent
shall continue to hold the Escrow Fund until it has received written
instructions signed by Seller and Buyer or a final non-appealable order of a
court of competent jurisdiction, directing delivery of the Escrow Fund, in
which case the Escrow Agent shall deliver the Escrow Fund in accordance with
the instructions or order.
3.2 Buyers Demand. If the Escrow Agent receives a written notice
signed by Buyer stating that Buyer is entitled to any portion of the Escrow
Fund and certifying that a copy of the notice has been delivered to Seller in a
manner specified in Section 6, the Escrow Agent shall deliver a copy thereof to
Seller in a manner specified in Section 6 and, unless the Escrow Agent receives
a written objection from Seller within ten business days after the date of
delivery of the notice to Seller as provided in Section 6, the Escrow Agent
shall deliver to Buyer the portion of the Escrow Fund claimed by Buyer. If the
Escrow Agent receives a written objection from Seller, the Escrow Agent shall
continue to hold the Escrow Fund until it has received written instructions
signed by Seller and Buyer or a final non-appealable order of a court of
competent jurisdiction, directing delivery of the Escrow Fund, in which case
the Escrow Agent shall deliver the Escrow Fund in accordance with the
instructions or order.
3.3 Court Order or Joint Instructions. Notwithstanding anything
to the contrary in this Agreement:
(a) The Escrow Agent may deposit the Escrow Fund with the
Clerk of any Court of competent jurisdiction upon commencement of an action in
the nature of interpleader or in the course of any Court proceedings. If at
any time the Escrow Agent receives a final non-appealable order of a Court of
competent jurisdiction directing delivery of the Escrow Fund, the Escrow Agent
shall comply with the order or instructions.
(b) The Escrow Agent shall comply with written
instructions signed by Seller and Buyer directing the delivery of the Escrow
Fund. In this situation, the Escrow Agent's actions shall not be governed by
any notice provisions or other objection period mechanisms noted above.
(c) Upon any delivery or deposit of the entire Escrow
Fund as provided in this Section 3, the Escrow Agent shall and will thereupon
be released and discharged from any and all further obligations arising in
connection with this Agreement without further documents or action by Buyer or
Seller.
2
<PAGE> 39
3.4 Partial Release of Escrow Fund. If the Escrow Agent disburses
less than all of the Escrow Fund pursuant to any demand, Court Order, or joint
instructions in accordance with this Agreement, that portion of the Escrow Fund
not disbursed shall continue to be held in escrow by the Escrow Agent subject
to the terms of this Agreement.
4. Escrow Agent. The Escrow Agent shall not be liable under this
Agreement except for its own gross negligence or willful misconduct. Except
with respect to misconduct that are successfully asserted against the Escrow
Agent, Buyer and Seller jointly and severally shall indemnify and hold harmless
the Escrow Agent (and any successor Escrow Agent) from and against any and all
losses, liabilities, claims, actions, damages and expenses, including
reasonable attorneys' fees and disbursement, arising out of or in connection
with this Agreement.
This Agreement expressly sets forth all of the duties of the Escrow
Agent with respect to any and all matters pertinent to this Agreement. In
performing its duties hereunder, the Escrow Agent shall be entitled to rely
upon any order, judgment, certification, demand, notice instrument or other
writing delivered to it under this Agreement without being required to
determine the authenticity or the correctness of any fact stated therein or the
propriety or validity of the service thereof. The Escrow Agent may act in
reliance upon any instrument or signature reasonably believed by it to be
genuine and may assume that any person signing such instrument or purporting to
give any notice hereunder has been duly authorized to do so.
The Escrow Agent may act in good faith pursuant to the advice of counsel
with respect to any matter relating to this Agreement, including without
limitation, any determination that a Court order is final and non-appealable.
The Escrow Agent may only resign and be discharged from its duties or
obligations hereunder if: (i) it has given written notice to the parties hereto
of such resignation, specifying a date when such resignation shall take effect,
and (ii) a replacement Escrow Agent has been selected and accepted by the
parties. Should the parties not agree upon a replacement Escrow Agent, both
parties agree to apply to a Court of competent jurisdiction for such a
selection.
5. Termination. This Agreement shall be terminated (a) upon the
disbursement or release in accordance with this Agreement of the entire Escrow
Fund, including the deposit of the Escrow Fund with the Clerk of any Court of
competent jurisdiction in accordance with Section 3 or (b) by written consent
signed by all parties. This Agreement shall not otherwise be terminated.
6. Notices. All notices, requests, demands or other
communications herein required to permitted to be given shall be in writing and
may be personally served, telecopied, telexed or sent by United States mail.
It shall be deemed to have been
3
<PAGE> 40
given, when delivered in person, upon receipt of telecopy of telex or seven
business days after postage prepaid and properly addressed as follows:
<TABLE>
<S> <C>
To Seller: Boardworks Outdoor Advertising Company, Inc.
Post Office Box #67
San Antonio, FL 33576
Fax: [352] 567-6911
Phone: [352] 567-6069
To Buyer: Paxson Outdoor, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention: Lowell W. Paxson
Fax No.: [407] 655-9424
Phone: [407] 659-4122
To Escrow Agent: First Union National Bank of Florida
Corporate Trust Department
225 Water Street, 3rd Floor (FLO122)
Jacksonville, FL 32202
Attention: Richard Hann, Asst. V.P.
Fax.: [904] 361-7735
Phone: [904] 361-3160
</TABLE>
7. Escrow Fees. Buyer and Seller shall share equally and pay any
fees due to the Escrow Agent for the services to be rendered by the Escrow
Agent under this Agreement. Buyer and Seller shall share equally and pay for
or reimburse the Escrow Agent upon request for all reasonable expenses,
including reasonable attorneys' fees, incurred by it in the performance of its
duties under this Agreement.
8. Benefit and Assignment. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither party hereto may voluntarily or involuntarily
assign its interests under this Agreement without the prior written consent of
the other parties hereto.
9. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Florida.
10. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument,
11. Entire Agreement. This Agreement contains all the terms
agreed upon by the parties with respect to the subject matter hereof.
4
<PAGE> 41
12. Amendments. Except as provided in Section 5, this Agreement
may only be modified or terminated by a writing signed by all the parties
hereto, and no waiver hereunder shall be effective unless embodied in a writing
signed by the party to be charged.
13. Tax Reporting. For tax reporting purposes, all interest
earned on the Escrow Fund shall be deemed to be for the account of Buyer.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
Paxson Outdoor, Inc. Boardworks Outdoor Advertising Co., Inc.
By: /s/ By: /s/
--------------------- --------------------
Its: Secretary Its: President
-------------------- ------------------
First Union National Bank of Florida
By:
----------------------
Its:
----------------------
5
<PAGE> 1
EXHIBIT 10.133
================================================================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS TELEVISION, INC.
AND
ALPHA & OMEGA COMMUNICATIONS, L.L.C.
FOR
TELEVISION STATION KOOG-TV
OGDEN, UTAH
* * *
AUGUST 30,1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Accounts Receivable". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assumed Contracts". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Consents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Construction Permit". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Consent". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Final Order". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Intangibles". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Modified Construction Permit" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Real Property". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Title to and Condition of Real Property . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Title to and Condition of Tangible Personal Property . . . . . . . . . . . . . . . . . . 8
3.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
- i -
<PAGE> 3
<TABLE>
<S> <C> <C>
3.12 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.15 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.18 Conduct of Business in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.19 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.20 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.21 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . 16
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.2 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.3 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.6 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.7 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.8 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.9 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.10 Maintenance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.12 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.14 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.15 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.17 Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.18 Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.19 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.20 Collection of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.21 Personnel Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.22 Buyer Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Control of the Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.5 Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.6 Engineering Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.7 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.8 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.9 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.10 Sales Tax Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.12 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING . . . . . . . . . . . . . . . . 23
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.3 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.11 Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
- iv -
<PAGE> 6
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 30th day of August,
1996, by and between Paxson Communications Television, Inc., a Florida
corporation ("Buyer"), and Alpha & Omega Communications, L.L.C., a Utah limited
liability company ("Seller").
R E C I T A L S
A. Seller is the licensee of and owns and operates television
station KOOG-TV, Ogden, Utah (the "Station") pursuant to licenses issued by the
Federal Communications Commission ("FCC").
B. Seller desires to sell, and Buyer desires to buy,
substantially all the assets that are used or useful in the construction,
business or operations of the Station, for the price and on the terms and
conditions set forth in this Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Seller, intending to be
bound legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of advertising time run on the Station by Seller prior to the Closing
Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7
that are specifically designated on Schedule 3.7 as Contracts that are to be
assumed by Buyer upon its purchase of the Station, (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) time sales contracts entered into
by Seller in compliance with Section 5.3.
"Closing" means the consummation of the purchase and sale of the
Assets pursuant to this Agreement in accordance with the provisions of Section
8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
<PAGE> 7
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"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.
"Construction Permit" means the FCC authorization (File No.
BPCT-890523KG, as extended in BMPCT-951103KE) held by Seller for construction
of transmitting facilities for the Station on Farnsworth Peak, Utah.
"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 construction, business
or operations of the Station, and (i) which are in effect on the date of this
Agreement or (ii) which are entered into by Seller between the date of this
Agreement and the Closing Date.
"CTTC" means Channel Twenty Television Company, L.L.C., a Utah limited
liability company and an affiliate of Seller.
"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 construction, business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing), applied for, issued to, or
owned by Seller or under which Seller is licensed or franchised and which are
used or useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local
<PAGE> 8
- 3 -
governmental authorities to Seller in connection with the conduct of the
construction, business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Loan Agreement" shall mean that certain Loan Agreement of even date
herewith pursuant to which Buyer has agreed to make loans to Seller in an
amount up to $750,000.
"Modified Construction Permit" means the Construction Permit as it
will be modified pursuant to the application (File No. BMPCT-960531LF) now
pending before the FCC for a change in the authorized transmitter location of
the Station to the KJZZ-TV tower on Little Farnsworth Peak, Utah.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real
property, including leaseholds and subleaseholds, rights to access, and rights
of way, and other improvements thereon, and other real property interests which
are used or useful in the construction, business or operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property of Seller which is
used or useful in the construction, business or operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell, transfer,
and deliver to Buyer on the Closing Date, and Buyer agrees to purchase on the
Closing Date, all of the tangible and intangible assets used or useful in
connection with the construction, business or operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date, but excluding the assets described in Section 2.2, free and clear
of any claims, liabilities, security interests, mortgages, liens, pledges,
conditions, charges, or encumbrances of any nature whatsoever (except for liens
for current taxes not yet due and payable), including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
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(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of Seller
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
(f) All of Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer
discs and tapes, plans, diagrams, blueprints, and schematics, including filings
with the FCC relating to the business and operation of the Station;
(g) All choses in action of Seller relating to the
Station; and
(h) All books and records relating to the business or
operations of the Station, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept by the Station.
2.2 Excluded Assets. The Assets shall exclude the following
assets:
(a) Seller's cash on hand as of the Closing and all other
cash in any of Sellers bank or savings accounts; any insurance policies,
letters of credit, or other similar items and cash surrender value in regard
thereto; and any stocks, bonds, certificates of deposit and similar
investments;
(b) All books and records that Seller is required by law
to retain or that pertain to Seller's corporate organization;
(c) Any pension, profit-sharing, and employee benefit
plans, and any collective bargaining agreements; and
(d) All property listed on Schedule 2.2 hereto; and
(e) The Accounts Receivable as of 11:59 p.m., Ogden, Utah
time on the day prior to the Closing Date ("Seller's Receivables").
2.3 Purchase Price. The Purchase Price for the Assets shall be
Seven Million Five Hundred Thousand Dollars ($7,500,000) adjusted as provided
below:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses. All expenses
arising from the operation of the Station, including business and license fees,
utility charges, real and
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personal property taxes and assessments levied against the Assets, property and
equipment rentals, applicable copyright or other fees, sales and service
charges, taxes (except for taxes arising from the transfer of the Assets under
this Agreement), FCC annual regulatory fees and similar prepaid and deferred
items, shall be prorated between Buyer and Seller in accordance with the
principle that Seller shall be responsible for all expenses, costs, and
liabilities allocable to the period prior to the Closing Date, and Buyer shall
be responsible for all expenses, costs, and obligations allocable to the period
on and after the Closing Date. Notwithstanding the preceding sentence, there
shall be no adjustment for, and Seller shall remain solely liable with respect
to, any Contracts not included in the Assumed Contracts and any other
obligation or liability not being assumed by Buyer in accordance with Section
2.5.
(b) Manner of Determining Adjustments. Any adjustments
will, insofar as feasible, be determined and paid on the Closing Date, with
final settlement and payment by the appropriate party occurring no later than
ninety (90) days after the Closing Date or such other date as the parties shall
mutually agree upon. Seller shall prepare and deliver to Buyer not later than
five (5) 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(a). The preliminary settlement statement (i) shall
contain all information reasonably necessary to determine the adjustments to
the Purchase Price under Section 2.3(a), 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 (ii)
shall be certified by Seller to be true and complete in all material respects
as of the date thereof.
2.4 Payment of Purchase Price. The Purchase Price shall be paid
by Buyer to Seller as follows: (a) the sum of Fifty Thousand Dollars ($50,000)
shall be paid to Seller immediately upon the execution hereof and shall be
refundable to Buyer only in the event that the FCC shall (through no fault of
Buyer) refuse to extend the Construction Permit and (b) the remainder of the
Purchase Price, as adjusted pursuant to Section 2.3(a) and as reduced pursuant
to the last sentence of this Section 2.4, shall be paid by Buyer to Seller at
Closing by wire transfer of same-day funds pursuant to wire instructions which
shall be delivered by Seller to Buyer, at least two (2) days prior to the
Closing Date. The loans under the Loan Agreement shall become due and payable
on the Closing Date subject to the terms and conditions of the Loan Agreement.
Five Hundred Thousand Dollars ($500,000) of such loans shall be applied as a
credit in favor of Buyer against the Purchase Price payable at Closing by
Buyer.
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of Seller under the Licenses and the Assumed
Contracts insofar as they relate to the time on and after the Closing Date, and
arise out of events related to Buyer's ownership of the Assets or its operation
of the Station on or after the Closing Date. Buyer shall not
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assume any other obligations or liabilities of Seller, including (i) any
obligations or liabilities under any Contract not included in the Assumed
Contracts, (ii) any obligations or liabilities under the Assumed Contracts
relating to the period prior to the Closing Date, (iii) any claims or pending
litigation or proceedings relating to the operation of the Station prior to the
Closing, (iv) any obligations or liabilities arising under capitalized leases
or other financing agreements, (v) any obligations or liabilities arising under
agreements entered into other than in the ordinary course of business, (vi) any
obligations or liabilities of Seller under any employee pension, retirement,
health and welfare or other benefit plans or collective bargaining agreements,
(vii) any obligation to any employee of the Station for severance benefits,
vacation time, or sick leave accrued prior to the Closing Date, or (viii) any
obligations or liabilities caused by, arising out of, or resulting from any
action or omission of Seller prior to the Closing, and all such obligations and
liabilities shall remain and be the obligations and liabilities solely of
Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a limited
liability company duly organized, validly existing, and in good standing under
the laws of the State of Utah. 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 construction, business and operations of the Station as now
conducted, and (iii) to execute and deliver this Agreement and the documents
contemplated hereby, and to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by Seller hereunder
and thereunder. Except for an informal agreement with CTTC for construction of
a common antenna facility for the Station and Channel 20 on the tower used by
KJZZ-TV, Seller is not a participant in any joint venture or partnership with
any other person or entity with respect to any part of the construction or
operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Seller have been duly authorized
by all necessary actions on the part of Seller and its members. 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
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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 organizational documents of
Seller; (iii) will not conflict with, result in a breach of, or constitute a
default under, any law, judgment, order, ordinance, injunction, decree, rule,
regulation, or ruling of any court or governmental instrumentality; (iv) will
not conflict with, constitute grounds for termination of, result in a breach
of, constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license, or
permit to which Seller is a party or by which Seller may be bound; and (v) will
not create any claim, liability, mortgage, lien, 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. Except as set forth in Schedule 3.4, 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
construction in accordance with the Construction Permit (as defined below) and
the conduct of the business and operations of the Station in the manner and to
the full extent they are now conducted, and none of the Licenses is subject to
any restriction or condition that would limit the full operation of the Station
as now operated. Except as set forth in Schedule 3.4, the Licenses are in full
force and effect, and the construction, business and operations of the Station
are in accordance therewith. Except as noted in Schedule 3.4, Seller has no
reason to believe that any of the Licenses would not be renewed by the FCC or
other granting authority in the ordinary course. The Station's city of
license, as determined by the FCC, is located within the Salt Lake City, Utah
Area of Dominant Influence as defined by the 1991-1992 Area of Dominant
Influence Market Guide published by The Arbitron Co. and the Salt Lake City,
Utah Designated Market Area as defined by the 1994 United States Television
Household Estimates published by Nielsen Media Research. Schedule 3.4 contains
a listing of all cable systems (including identification of cable headend and
subsidiaries) currently carrying the Station and a listing of all cable systems
denying carriage to the Station as known to Seller.
3.5 Title to and Condition of Real Property. Schedule 3.5
contains a complete and accurate description of all the Real Property and
Seller's interests therein (including street address, legal description, owner,
and use and the location of all improvements thereon). The Real Property
listed on Schedule 3.5 comprises all real property interests necessary to
conduct the business and operations of the Station as now conducted. Except as
set forth in Schedule 3.5, with respect to each leasehold or subleasehold
interest included in the Real Property being conveyed under this Agreement so
long as Seller fulfills its obligations under the lease therefor, Seller has
enforceable rights to
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nondisturbance and quiet enjoyment, and Seller holds such leasehold or
subleasehold interests free and clear all liens, mortgages, pledges, covenants,
easements, restrictions, encroachments and other encumbrances of any nature
whatsoever other than real estate taxes not yet due and payable. All towers,
guy anchors, and buildings and other improvements included in the Assets are
located entirely on the Real Property listed in Schedule 3.5. Seller has
delivered to Buyer true and complete copies of all leases pertaining to the
Real Property. All Real Property (including the improvements thereon) (i) is
in good condition and repair consistent with its present use except as set
forth in Schedule 3.5, (ii) is available for immediate use in the conduct of
the business and operations of the Station, and (iii) complies with all
applicable building or zoning codes and the regulations of any governmental
authority having jurisdiction. Seller has full legal and practical access to
the Real Property.
3.6 Title to and Condition of Tanqible Personal Property.
Schedule 3.6 lists all material items of Tangible Personal Property. The
Tangible Personal Property listed on Schedule 3.6 comprises all material items
of tangible personal property necessary to conduct the business and operations
of the Station as now conducted. 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 and for liens listed on Schedule 3.6 which shall
be removed prior to the Closing. Each item of Tangible Personal Property is
available for immediate use in the business and operations of the Station. All
items of transmitting and studio equipment included in the Tangible Personal
Property have been maintained in a manner sufficient to permit the Station and
any auxiliary broadcast facilities related to the Station to operate in
accordance with the terms of the FCC Licenses and the rules and regulations of
the FCC, and with all other applicable federal, state, and local statutes,
ordinances, rules, and regulations. Buyer recognizes, however, that many of
the items of studio equipment included in the Tangible Personal Property are
not in working order, and that Seller is not obligated to repair or replace
such items except to the extent necessary to keep the Station operating
consistent with the STA filing.
3.7 Contracts. Schedule 3.7 is a true and complete list of all
Contracts except contracts with advertisers for the sale of advertising time on
the Station for cash at prevailing rates and which have not been prepaid and
which may be canceled by the Station without penalty on not more than thirty
days' notice. Seller has delivered to Buyer true and complete copies of all
written Contracts, true and complete memoranda of all oral Contracts (including
any amendments and other modifications to such Contracts), and a schedule
summarizing Seller's obligations under trade and barter agreements relating to
the Station. Other than the Contracts listed on Schedule 3.7 and cash
programming contracts and as disclosed on Schedule 3.7, Seller requires no
contract, lease, or other agreement to enable it to carry on its business as
now conducted. All of the Assumed Contracts are in full force and effect, and
are valid,
<PAGE> 14
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binding, and enforceable in accordance with their terms. There is not under
any Assumed Contract any material default by any party thereto or any event
that, after notice or lapse of time or both, could constitute a material
default. Except as disclosed in Schedule 3.7, Seller is not aware of any
intention by any party to any Assumed Contract (i) to terminate such contract
or amend the terms thereof, (ii) to refuse to renew the Assumed Contract upon
expiration of its term, or (iii) to renew the Assumed Contract upon expiration
only on terms and conditions which are more onerous than those now existing.
Except for the need to obtain the Consents listed in Schedule 3.3, Seller has
full legal power and authority to assign its rights under the Assumed Contracts
to Buyer in accordance with this Agreement, and such assignment will not affect
the validity, enforceability, or continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in
Section 6.1 and the other Consents described in Schedule 3.3, no consent,
approval, permit, or authorization of, or declaration to or filing with any
governmental or regulatory authority, or any other third party is required (i)
to consummate this Agreement and the transactions contemplated hereby, (ii) to
permit Seller to assign or transfer the Assets to Buyer, or (iii) to enable
Buyer to conduct the business and operations of the Station in essentially the
same manner as such business and operations are now conducted and to complete
the construction contemplated by the Modified Construction Permit.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Seller has delivered to Buyer copies of
all documents establishing or evidencing all Intangibles. Seller is not
infringing upon or otherwise acting adversely to any trademarks, trade names,
service marks, service names, copyrights, patents, patent applications,
know-how, methods, or processes owned by any other person or persons, and there
is no claim or action pending, or to the knowledge of Seller threatened, with
respect thereto. The Intangibles listed on Schedule 3.9 comprise all
intangible property interests necessary to conduct the business and operations
of the Station as now conducted and to complete the construction contemplated
by the Modified Construction Permit.
3.10 Financial Statements. Schedule 3.10 hereto lists the
financial statements including balance sheets, statements of operations and a
statement of operating cash flow for the period ending December 31, 1995 and
unaudited financial statements including balance sheets, statements of
operations and a statement of operating cash flow for the five (5) month period
ending May 31, 1996 (collectively, the "Financial Statements"). None of the
Financial Statements fails to disclose any material contingent liabilities, or
inflates the revenues of the Station.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Seller that insure any part of the physical Assets or the
business of the
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governmental investigations or other legal, administrative, or tax proceedings
pursuant to which Seller is or could be made liable for any taxes, penalties,
interest, or other charges, the liability for which could extend to Buyer as
transferee of the business of the Station, and no event has occurred that could
impose on Buyer any transferee liability for any taxes, penalties, or interest
due or to become due from Seller.
3.15 Claims and Legal Actions. Except as set forth in Schedule
3.15 and except for any FCC rulemaking proceedings generally affecting the
broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative, or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to
the knowledge of Seller threatened, against or relating to Seller with respect
to its construction, ownership or operation of the Station or otherwise
relating to the Assets or the construction, business or operations of the
Station, nor does Seller know or have reason to be aware of any basis for the
same. In particular, but without limiting the generality of the foregoing, and
except as set forth in Schedule 3.15, there are no applications, complaints or
proceedings pending or, to the best of its knowledge, threatened (i) before the
FCC relating to the construction, business or operations of the Station other
than rule making proceedings which affect the television industry generally,
(ii) before any federal or state agency relating to the construction, business
or operations of the Station involving charges of illegal discrimination under
any federal or state employment laws or regulations, or (iii) before any
federal, state, or local agency relating to the construction, business or
operations of the Station involving zoning issues under any federal, state, or
local zoning law, rule, or regulation.
3.16 Environmental Matters.
(a) To the best of Sellers knowledge, Seller has complied
in all material respects with all laws, rules, and regulations of all federal,
state, and local governments (and all agencies thereof) concerning the
environment, public health and safety, and employee health and safety, and no
charge, complaint, action, suit, proceeding, hearing, investigation, claim,
demand, or notice has been filed or commenced against Seller in connection with
its construction, ownership or operation of the Station alleging any failure to
comply with any such law, rule, or regulation.
(b) To the best of Sellers knowledge, Seller has no
material liability relating to its construction, ownership and operation of the
Station (and there is no basis related to the past or present operations,
properties, or facilities of Seller for any substantial present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand against Seller giving rise to any such liability) under any law, rule,
or regulation of any federal, state, or local government (or agency thereof)
concerning release or threatened release of hazardous substances, public health
and safety, or pollution or protection of the environment.
<PAGE> 16
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(c) To the best of Seller's knowledge, Seller has no
material liability relating to its construction, ownership and operation of the
Station (and Seller has not handled or disposed of any substance, arranged for
the disposal of any substance, or owned or operated any property or facility in
any manner that could form the basis for any substantial present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand (under the common law or pursuant to any statute) against Seller giving
rise to any such liability) for damage to any site, location, or body of water
(surface of subsurface) or for illness or personal injury.
(d) To the best of Seller's knowledge, Seller has no
material liability relating to its construction, ownership and operation of the
Station (and there is no basis for any substantial present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
against Seller giving rise to any such liability) under any law, rule, or
regulation of any federal, state, or local government (or agency thereof)
concerning employee health and safety.
(e) To the best of Seller's knowledge, Seller has no
material liability relating to its construction, ownership and operation of the
Station (and Seller has not exposed any employee to any substance or condition
that could form the basis for any substantial present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
(under the common law or pursuant to statute) against Seller giving rise to any
such liability) for any illness or personal injury to any employee.
(f) In connection with its construction, ownership or
operation of the Station, to the best of Seller's knowledge, Seller has
obtained and been in compliance in all material respects with all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all federal, state, and local laws, rules,
and regulations (including all codes, plans, judgments, orders, decrees,
stipulations, injunctions, and charges thereunder) relating to public health
and safety, worker health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes.
(g) To the best of Seller's knowledge, no pollutant,
contaminant, or chemical, industrial, hazardous, or toxic material or waste has
ever been manufactured, buried, stored, spilled, leaked, discharged, emitted,
or released by Seller in connection with its construction, ownership and
operation of the Station or, to the best of Sellers knowledge, by any other
party on any Real Property.
<PAGE> 17
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3.17 Compliance with Laws. Seller has complied in all material
respects with the Licenses and all federal, state, and local laws, rules,
regulations, and ordinances applicable or relating to the construction,
ownership and operation of the Station. Neither the ownership or use of the
properties of the Station nor the conduct of the construction, business or
operations of the Station conflicts with the rights of any other person or
entity.
3.18 Conduct of Business in Ordinary Course. Since June 10,1996,
Seller has conducted the construction, business and operations of the Station
only in the ordinary course and has not:
(a) Suffered any material adverse change in the business,
assets, or properties of the Station, including any damage, destruction, or
loss affecting any assets used or useful in the conduct of the business of the
Station;
(b) Made any sale, assignment, lease, or other transfer
of any of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(c) Canceled any debts owed to or claims held by Seller
with respect to the Station, except in the normal and usual course of business;
or
(d) Transferred or granted any right under, or entered
into any settlement regarding the breach or infringement of, any license,
patent, copyright, trademark, trade name, franchise, or similar right, or
modified any existing right relating to the Station.
3.19 Transactions with Affiliates. Except for an informal
agreement with CTTC for construction of a common antenna facility for the
Station and Channel 20 on the tower used by KJZZ-TV, Seller has not been
involved in any business arrangement or relationship relating to the Station
with any affiliate of Seller, and no affiliate of Seller owns any property or
right, tangible or intangible, which is used in the business of the Station.
As used in this paragraph, "affiliate" has the meaning set forth in Rule 12b-2
promulgated under the Securities and Exchange Act of 1934.
3.20 Broker. Seller will hold Buyer harmless for any finder's or
broker's fees or commissions in connection with the transactions contemplated
by this Agreement, including the commission payable by Seller to Media Services
Group, Inc.
3.21 Full Disclosure. No representation or warranty made by Seller
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a
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material fact, or omits or will omit to state any material fact and required to
make any statement made herein or therein not misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida and at Closing will be duly qualified to conduct business as a
foreign corporation in the State of Utah. Buyer has all requisite power and
authority to execute and deliver this Agreement and the documents contemplated
hereby, and to perform and comply with all of the terms, covenants, and
conditions to be performed and complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Buyer have been duly authorized
by all necessary actions on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the documents contemplated hereby (with or without the giving of notice,
the lapse of time, or both): (i) do not require the consent of any third party;
(ii) will not conflict with the Articles of Incorporation or Bylaws of Buyer;
(iii) will not conflict with, result in a breach of, or constitute a default
under, any law, judgment, order, injunction, decree, rule, regulation, or
ruling of any court or governmental instrumentality; or (iv) will not conflict
with, constitute grounds for termination of, result in a breach of, constitute
a default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to
which Buyer is a party or by which Buyer may be bound, such that Buyer could
not acquire or operate the Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's 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
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material fact, or omits or will omit to state any material fact and required to
make any statement made herein or therein not misleading.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall operate the Station in the
ordinary course of business in accordance with its past practices (except where
such conduct would conflict with the following covenants or with Seller's other
obligations under this Agreement), and in accordance with the other covenants
in this Section 5.
5.2 Compensation. Seller may increase the compensation, bonuses,
or other benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Station but shall provide
Buyer with written notice thereof within five (5) days of such action.
5.3 Contracts. Seller will not:
(1) enter into any Contract or commitment
relating to the Station or the Assets; or
(2) amend or terminate any contract (or waive any
material right thereunder); or
(3) incur any obligation (including obligations
relating to the borrowing of money or the guaranteeing of indebtedness) that
will be binding on Buyer after Closing, except for cash time sales agreements
made in the ordinary course of business. Prior to the Closing Date, Seller
shall deliver to Buyer a list of all Contracts entered into between the date of
this Agreement and the Closing Date, together with copies of such Contracts.
5.4 Disposition of Assets. Seller shall not sell, assign, lease,
or otherwise transfer or dispose of any of the Assets, except where no longer
used or useful in the business or operations of the Station or in connection
with the acquisition of replacement property of equivalent kind and value.
5.5 Encumbrances. Seller shall not create, assume or permit to
exist any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets, except for (i) liens
disclosed on Schedule 3.5 and Schedule 3.6, which shall be removed prior to the
Closing Date, (ii) liens for current taxes not yet due and payable, and (iii)
mechanics' liens and other similar liens, which shall be removed prior to the
Closing Date.
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5.6 Licenses. Seller shall not cause or permit, by any act or
failure to act, any of the Licenses to expire or to be revoked, suspended, or
modified, or take any action that could cause the FCC or any other governmental
authority to institute proceedings for the suspension, revocation, or adverse
modification of any of the Licenses. Seller shall not fail to prosecute with
due diligence any applications to any governmental authority in connection with
the construction or operation of the Station, provided, however, that Seller
shall take all reasonable actions (with the cooperation of Buyer) to join with
Roberts Broadcasting Company of Utah in seeking prompt FCC approval and grant
of the application of Seller for the Modified Construction Permit and of the
pending application of Roberts Broadcasting Company of Utah to modify the
facilities of Television Station KZAR-TV (FCC File No. BMPCT-960313KE).
Subject to Seller's compliance with its obligations as set forth below, Buyer
will take no action detrimental to the grant of all such applications,
including the application to modify the Construction Permit and the application
to extend the Construction Permit and Buyer will use its best efforts to secure
the dismissal of the opposition filed by Roberts Broadcasting Company of Utah
("Roberts") to the application to modify the Construction Permit. Within five
business days following the execution of this Agreement, simultaneously with
the filing of a request by Roberts for dismissal of its opposition, Seller will
file a request for dismissal of its petition to deny the application (File No.
BMPCT-960313KE) of Roberts for modification of the facilities of station
KZAR-TV. Beyond the filing of such request for dismissal, Seller shall not
have an affirmative duty to advocate the grant of the KZAR-TV application, nor
shall Seller interfere with the FCC's processing of the Roberts application for
KZAR-TV.
5.7 Rights. Seller shall not waive any right relating to the
Station or any of the Assets. Seller shall not cause, by any act or failure to
act, any cable system located within the Station's Area of Dominant Influence
to refuse to carry the Station's signal, except for those cable systems to
whose headends the Station does not deliver an off-air signal of -45 dBm as
required by Section 76.55(c)(3) of the FCC's Rules.
5.8 No Inconsistent Action. Seller shall not take any action that
is inconsistent with its obligations under this Agreement or that could hinder
or delay the consummation of the transactions contemplated by this Agreement.
5.9 Access to Information. Seller shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives
reasonable access to the Assets and to all other properties, equipment, books,
records, Contracts, and documents relating to the Station for the purpose of
audit and inspection, including inspections incident to the environmental study
described in Section 6.5 and the engineering study described in Section 6.6,
and will furnish or cause to be furnished to Buyer or its authorized
representatives all information with respect to the affairs and business of the
Station that Buyer may reasonably request (including any financial reports and
operations reports produced with respect to the affairs and business of the
<PAGE> 21
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Station). Without limiting the generality of the foregoing, Seller shall give
Buyer and its counsel, accountants and other authorized representatives
reasonable access to Seller's financial records and Seller's employees,
counsel, accountants and other representatives for the purpose of preparing and
auditing such financial statements as Buyer determines, in its sole judgment,
are required or advisable to comply with federal or state securities laws and
the rules and regulations of securities markets as a result of the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
5.10 Maintenance of Assets. Seller shall use its best efforts and
take all reasonable actions to maintain all of the Assets in as good a
condition (ordinary wear and tear excepted as at the date hereof), and use,
operate, and maintain all of the Assets in a reasonable manner and in
accordance with the terms of the pending request for special temporary
authority ("STA") referenced in Schedule 3.4 of the FCC Licenses, all rules and
regulations of the FCC and generally accepted standards of good engineering
practice. Seller shall maintain inventories of spare parts and expendable
supplies at levels consistent with past practices. If any loss, damage,
impairment, confiscation, or condemnation of or to any of the Assets occurs,
Seller shall repair, replace, or restore the Assets to their prior condition as
represented in this Agreement as soon thereafter as possible, and Seller shall
use the proceeds of any claim under any insurance policy solely to repair,
replace, or restore any of the Assets that are lost, damaged, impaired, or
destroyed.
5.11 Insurance. Seller shall maintain the existing insurance
policies on the Station and the Assets.
5.12 Consents. Seller shall obtain the Consents and the estoppel
certificates described in Section 8.2(b), without any change in the terms or
conditions of any Contract or License that could be less advantageous to the
Station than those pertaining under the Contract or License as in effect on the
date of this Agreement. Seller shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon Buyer's request, Seller
shall cooperate with Buyer and use its best efforts to obtain from the lessors
under the studio lease and the transmitter/antenna space lease on Little
Farnsworth Peak such estoppel certificates and consents to the collateral
assignment of the lessee's interest under each such lease as Buyer's senior
lenders may request.
5.13 Books and Records. Seller shall maintain its books and
records relating to the Station in accordance with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing
of any unusual or material developments with respect to the business or
operations of the Station, and of
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any material change in any of the information contained in Seller's
representations and warranties contained in Section 3 of this Agreement.
5.15 Financial Information. Seller shall furnish to Buyer within
forty days after the end of each month ending between the date of this
Agreement and the Closing Date a statement of income and expense and a
statement of operating cash flow for the month just ended and such other
financial information (including information on payables and receivables) as
Buyer may reasonably request. All financial information delivered by Seller to
Buyer pursuant to this Section shall be prepared from the books and records of
Seller shall accurately reflect the books, records, and accounts of the
Station, shall be complete and correct in all material respects, and shall
present fairly the financial condition of the Station operation as at their
respective dates and the results of operations for the periods then ended
(except for expenses not paid from Station accounts).
5.16 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
construction, ownership and operation of the Station, subject to Schedule 3.4.
5.17 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.
5.18 Programming. Seller shall not make any material changes in
the broadcast hours or in the percentages of types of programming broadcast by
the Station, or make any other material change in the Station's programming
policies, except such changes as in the good faith judgment of the Seller are
required by the public interest.
5.19 Preservation of Business. Seller shall use its best efforts
to preserve the existing business and organization of the Station and use its
best efforts to keep available to the Station its present employees and to
preserve the audience of the Station and the Station's present relationships
with suppliers, advertisers, and others having business relations with it, to
the end that the business, operations, and prospects of the Station shall be
unimpaired at the Closing Date for purposes of Buyer's proposed operation,
provided, however, that Seller may cooperate in efforts by CTTC to develop a
new television station on Channel 20 in Salt Lake City, and Seller shall not
have any duty to preclude employees of the Station from rendering services, to,
or becoming employees of, CTTC. The ordinary and customary operating,
marketing, promotional, sales, and advertising practices of the Station shall
be maintained. Seller shall have no obligation to maintain in force any
contract (including programming syndication contracts) which Buyer has not
agreed to assume.
<PAGE> 23
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5.20 Collection of Accounts Receivable. Seller shall collect the
accounts receivable of the Station only in the ordinary course consistent with
its past practices and will not take any action designed or likely to
accelerate the collection of its accounts receivable.
5.21 Personnel Recommendations. Seller shall promptly notify Buyer
as personnel vacancies occur at the Station and consider for employment all
personnel recommended by Buyer for such vacant positions.
5.22 Buyer Notification. Buyer shall promptly notify Seller in
writing of any material change in any of Buyer's representations and warranties
contained in Section 4 of 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 an
appropriate application for the FCC Consent and shall file the application with
the FCC within five (5) business days of the execution of this Agreement. The
parties shall prosecute the application with all reasonable diligence and
otherwise use their best efforts to obtain a grant of the application as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on it by the FCC Consent, except that no party shall be required to
comply with a condition if (1) the condition was imposed on it as the result of
a circumstance the existence of which does not constitute a breach by the party
of any of its representations, warranties, or covenants under this Agreement,
and (2) compliance with the condition would have a material adverse effect upon
it.
(c) Buyer and Seller shall oppose any requests for
reconsideration or judicial review of the FCC Consent except for a request
filed by the other party in an attempt to remove a condition describing in (b)
(1) or (2) above. If the Closing shall not have occurred for any reason within
the original effective period of the FCC Consent, and neither party shall have
terminated this Agreement under Section 9, the parties shall jointly request an
extension of the effective. period of the FCC Consent. No extension of the FCC
Consent shall limit the exercise by either party of its rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the
<PAGE> 24
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operations of the Station; such operations, including complete control and
supervision of all of the Station programs, employees, and policies, shall be
the sole responsibility of Seller until the Closing.
6.3 Risk of Loss.
(a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing except for any loss,
damage, impairment, confiscation or condemnation caused by Buyer or agents of
Buyer.
(b) If any damage or destruction of the Assets or any
other event occurs which (i) causes the Station to cease broadcasting
operations for a period of three or more days or (ii) prevents in any material
respect signal transmission by the Station in the normal and usual manner and
Seller fails to restore or replace the Assets so that normal and usual
transmission is resumed within seven days of the damage, destruction or other
event, Buyer, in its sole discretion, may (x) terminate this Agreement
forthwith without any further obligations hereunder upon written notice to
Seller, or (y) proceed to consummate the transaction contemplated by this
Agreement and complete the restoration and replacement of the Assets after the
Closing Date, in which event Seller shall deliver to Buyer all insurance
proceeds received in connection with such damage, destruction or other event.
6.4 Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Agreement, including Buyers obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Environmental Audit. Buyer may, at its option and expense,
retain an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Station. If the survey discloses
any material environmental hazard or material possibility of future liability
for environmental damages or clean-up costs, Buyer shall so notify Seller as
soon as practicable.
6.6 Engineering Study. Buyer may, at its option and expense,
retain an engineering firm to conduct a proof of performance study of the
Station and to prepare a report on the Station's compliance with customary
engineering practices and all applicable FCC rules, regulations, prescribed
practices, and technical standards. If the
<PAGE> 25
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survey discloses any material deficiencies in the operations or equipment of
the Station, Buyer shall so notify Seller as soon as practicable.
6.7 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their 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. Buyer shall have a reasonable opportunity to
consult with Seller prior to October 1, 1996 concerning Seller's decision to
elect must carry or retransmission consent for the Station with respect to
cable television systems located in the Salt Lake City ADI, and Seller shall
not make any such election without Buyers approval.
6.8 Bulk Sales Law. If applicable, the Bulk Sales law of the
State of Utah shall be complied with by Seller. Any loss, liability,
obligation, or cost suffered by Seller or Buyer as the result of the failure of
Seller or Buyer to comply with the provisions of any bulk sales law applicable
to the transfer of the Assets as contemplated by this Agreement shall be borne
by Seller.
6.9 [Reserved]
6.10 Sales Tax Filings. Seller shall continue to file Utah sales
tax returns with respect to the Station in accordance with Sellers past
practices and shall concurrently deliver copies of all such returns to Buyer.
6.11 Access to Books and Records. Seller shall provide Buyer
access and the right to copy for a period of three years from the Closing Date
any books and records relating to the Assets that are 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.
6.12 Appraisal. Buyer and Seller agree to allocate the Purchase
Price for tax and recording purposes in accordance with an appraisal to be
conducted by an appraisal firm selected and paid for by Buyer with experience
in the valuation and appraisal of television station assets.
6.13 Broadcasting After Closing. Following the Closing, Buyer
shall have the right to broadcast the Stations's programming on Seller's Low
Power Television Station
<PAGE> 26
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in Salt Lake City, Utah (the "LPTV") until a date which is thirty days after
the Station has commenced broadcast operations pursuant to the Minor
Modification (as defined below) and during such period, Seller shall broadcast
all of the Station's programming free of charge on Seller's LPTV.
6.14 Assumption of Certain Contracts.
(a) Buyer shall not assume at Closing the Network
Affiliation Agreement, dated as of July 12, 1994, by and between Seller and
Warner Brothers (the "WB Affiliation Agreement"), provided, however, that Buyer
shall be required to broadcast after Closing Warner Brothers' programming in
accordance with the terms of the WB Affiliation Agreement as of the date of
execution of this Agreement until the earlier to occur of (i) the date on which
CTTC commences operation of Channel 20 in the Salt Lake City, Utah market or
(ii) the date which is nine months after the Closing Date (the "WB Termination
Date"). During the period from the Closing Date to the WB Termination Date,
Buyer shall have no obligation or liability under or relating to the WB
Affiliation Agreement other than the broadcasting of Warner Brothers'
programming as set forth in the preceding sentence. Following the WB
Termination Date, Buyer shall have no obligation or liability whatsoever under
or relating to the WB Affiliation Agreement. Prior to Closing, Seller shall
deliver to Buyer a written acknowledgment and acceptance from Warner Brothers
to this programming arrangement.
(b) Buyer shall assume at Closing the Affiliation
Agreement, dated as of March 3, 1994, as amended, by and between Seller and
Home Shopping Network, Inc. (the "HSN Affiliation Agreement") for the remaining
term of such HSN Affiliation Agreement which Seller represents and warrants
will expire on March 1, 1997. During the period after the Closing and prior to
the expiration of the HSN Affiliation Agreement, Buyer shall broadcast Home
Shopping Network's program schedule as is in place under the HSN Affiliation
Agreement on June 12, 1996. Within five business days following the execution
of this Agreement, Seller shall give Home Shopping Network written notice of
its intent to cancel the HSN Affiliation Agreement on March 1, 1997.
(c) Buyer shall assume at Closing the Studio Lease, dated
as of ________________ by and between Seller and AIM Associates (the "Studio
Lease") so long as Buyer-shall have the right to vacate the premises leased
pursuant to the Studio Lease upon ninety days prior written notice to Seller
at which time Seller shall assume all payment obligations under the Studio
Lease until the expiration of its term. Seller represents and warrants that
the Studio Lease expires in 1999.
<PAGE> 27
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SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing are subject at Buyer's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Seller contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Seller shall have
performed and complied in all material respects with all covenants, agreements,
and conditions required, by this Agreement to be performed or complied with by
it prior to or on the Closing Date.
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied
with by Buyer under Section 6.1 hereof, Seller shall have complied with any
conditions imposed on it by the FCC Consent, and the FCC Consent shall have
become a Final Order.
(e) Governmental Authorizations. Seller shall be the
holder of all Licenses and there shall not have been any modification of any
License that could have an adverse effect on the Station or the conduct of its
business and operations. No proceeding shall be pending or threatened the
effect of which could be to revoke, cancel, fail to renew, suspend, or modify
adversely any License.
(f) Deliveries. Seller shall have made or stand willing
to make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change in the
business, assets, or properties of the Station, including any damage,
destruction, or loss affecting any assets used or useful in the conduct of the
business of the Station.
(h) Construction Permit and Minor Modification. Seller
shall have received a grant from the FCC of the application to extend Seller's
Construction Permit with respect to the Station, file number BMPCT-960605__
(the "Extension Application") and the FCC shall have granted the Modified
Construction Permit application to relocate the Station's antenna to Channel
14's transmitter site on Little Farnsworth Peak, Utah (the "Minor
Modification").
<PAGE> 28
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(i) Tower Lease. Seller shall have entered into a tower
lease for the site specified in the Modified Construction Permit acceptable to
Buyer which permits the Station to install a standby power generator (or to use
an existing standby power generator located at the site), a receive-only
satellite dish and two microwave antennas. Such tower lease shall be assumed
by Buyer at Closing and Seller shall have obtained any necessary Consents to
transfer to Buyer at the Closing such tower lease.
7.2 Conditions to Obligations of Seller. All obligations of
Seller at the Closing are subject at Seller's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Buyer shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing
to make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00
a.m. on a date, to be set by Buyer on at least five days' written notice to
Seller, that is (1) not earlier than the first business day after the FCC
Consent is granted, and (2) not later than ten business days' following the date
upon which the FCC Consent has become a Final Order, subject to satisfaction or
waiver of all other conditions precedent to the holding of the Closing. If
Buyer fails to specify the date for Closing prior to the fifth business day
after the date upon which the FCC Consent becomes a Final Order, the Closing
shall take place on the tenth business day after the date upon which the FCC
Consent becomes a Final Order.
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(b) 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, assignments, and other transfer documents which shall be sufficient to
vest good and marketable title to the Assets in the name of Buyer, free and
clear of all claims, liabilities, security interests, mortgages, liens,
pledges, conditions, charges or encumbrances, 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 (except for the Weber County transmitter site) and estoppel
certificates of contracting parties to those Assumed Contracts listed in
Schedule 3.7 that are designated to indicate that estoppel certificates are
required under this Paragraph (Seller shall indemnify Buyer from any and all
post-Closing losses, damages or other liabilities with respect to Buyer's
termination of the Weber County transmitter site lease);
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Seller by an officer 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) 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 Utah as well as the records of those counties in Utah in which
any of the Assets are located, such searches having been made no earlier than
fifteen days prior to the Closing Date;
(f) Licenses, Contracts, Business Records, Etc. Copies
of all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by
Seller in connection with its operations;
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(g) Accounts Receivable. A complete and accurate list of
the Station's accounts receivable as of a date no more than five business days
prior to the Closing Date, including, with respect to each of the accounts
receivable, the account number, date of issuance, name and address of account
debtor, aggregate amount, and balance due;
(h) Opinion of Counsel. An Opinion of Sellers counsel
dated as of the Closing Date, substantially in the form of Schedule 8.2(h)
hereto;
(i) Lender's Certificates. Such certificates and
confirmations to Buyer's senior lenders as Buyer may reasonably request in
connection with obtaining financing for the performance of its payment
obligations hereunder. This paragraph shall not, however, be construed as
placing a substantive obligation on Seller beyond the obligations of Seller
expressed elsewhere herein.
(j) Warner Brothers Acknowledgment. The written
acknowledgment and acceptance from Warner Brothers to be delivered by Seller
pursuant to Section 6.14(a).
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;
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Sellers obligations under the Licenses and Assumed Contracts insofar as they
relate to the time on and after the Closing Date and arise out of events
related to Buyer's ownership of the Assets or its operation of the Station on
or after the Closing Date:
(c) Officers Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by an officer 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)
hereto.
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SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Seller
set forth in this Agreement have not been satisfied or waived in writing by
Seller.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make the Closing unlawful.
(c) Upset Date. If the Closing shall not have occurred
by June 1, 1997.
(d) Breach. Without limiting Seller's rights under the
other provisions of this Section 9.1, if Buyer has failed to cure any material
breach of any of its representations, warranties or covenants under this
Agreement within fifteen days after Buyer received written notice of such
breach from Seller.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Station abandoned, if Buyer is not then
in material default, upon written notice to Seller, upon the occurrence of any
of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer
set forth in this Agreement have not been satisfied or waived in writing by
Buyer.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make the Closing unlawful.
(c) Upset Date. If the Closing shall not have occurred
by June 1, 1997.
(d) Interruption of Service. If any event shall have
occurred that prevented signal transmission of the Station in the normal and
usual manner for a continuous period of three days within the 45 day period
preceding the Closing, except for operation at reduced power occasioned by a
relocation of the Station's main transmitter to the site specified in the
Modified Construction Permit.
(e) Environmental Hazards. Buyer shall have notified
Seller of material environmental hazards or the material possibility of
environmental damages or clean-up
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costs, as indicated in the environmental study described in Section 6.5, at
least 30 days prior to the Closing Date, and the cause thereof shall not have
been remedied prior to the Closing Date, or if Seller shall not have agreed to
escrow an amount of money from the purchase price reasonably sufficient to
remedy such environmental problem following the Closing Date.
(f) Technical Deficiencies. Buyer shall have notified
Seller of material deficiencies in the operations or equipment of the Station,
as indicated in the engineering study described in Section 6.6, at least 30
days prior to the Closing Date, and the cause thereof shall not have been
remedied prior to the Closing Date, or if Seller shall not have agreed to a
purchase price reduction, reasonably satisfactory to Buyer, to remedy the
technical deficiency.
(g) 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.
9.3 Rights on Termination. If this Agreement is terminated
pursuant to Section 9.1 or Section 9.2 and neither party is in material breach
of 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 Buyer due to Seller's material breach of this
Agreement, Buyer shall have all rights and remedies available under Sections
10.5 and 11.2. If this Agreement is terminated by Seller due to Buyer's
material breach of this Agreement, Seller shall have all rights and remedies
available under Section 11.2.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
eighteen months. Any investigations by or on behalf of any party hereto shall
not constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
Seller shall affect Buyer's right to rely on any representation or warranty
made by Seller or relieve Seller of any obligations under this Agreement as the
result of a breach of any of its representations and warranties.
10.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or
any information Buyer may have, Seller hereby agrees to indemnify and hold
Buyer harmless against and with respect to, and shall reimburse Buyer for:
<PAGE> 33
- 30 -
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Seller contained in this Agreement or in any certificate, document,
or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by
Buyer pursuant to this Agreement, including any liabilities arising at any time
under any Contract not included in the Assumed Contracts.
(c) Any loss, liability, obligation, or cost resulting
from the failure of the parties to comply with the provisions of any bulk sales
law applicable to the transfer of the Assets.
(d) Any and all losses, liabilities, or damages resulting
from the construction, operation or ownership of the Station prior to the
Closing, including any liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring prior the Closing Date.
(e) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer hereby agrees to indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, document,
or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station on and after the Closing.
(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.
<PAGE> 34
- 31 -
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim. If the claim relates to an action, suit, or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant within five days
after written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnifications rights provided in Sections 10.2
and 10.3 shall extend to the shareholders, directors, officers, employees,
members and
<PAGE> 35
- 32 -
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other
remedies that may be available, including money damages, to obtain specific
performance of the terms of this Agreement. If any action is brought by Buyer
to enforce this Agreement, Seller shall waive the defense that there is an
adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either party
which results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing party shall be entitled to reimbursement from
the other party of its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Seller
to Buyer pursuant to this Agreement shall be paid by Seller. Buyer and Seller
shall each pay one-half of all filing fees required by the FCC in connection
with 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. Seller
shall pay at the Closing all brokerage fees and commissions payable to Media
Services Group, Inc., and each party shall be responsible for all fees or
commissions payable to any other finder, broker, advisor, or similar person
retained by or on behalf of such party.
11.2 Arbitration. Except as otherwise provided to the contrary
below, any dispute arising out of or related to this Agreement that Seller and
Buyer are unable to resolve by themselves shall be settled by arbitration by a
panel of three (3) neutral arbitrators who shall be selected in accordance with
the procedures set forth in the commercial arbitration rules of the American
Arbitration Association. The persons selected as arbitrators shall have prior
experience in the broadcasting industry but need not be professional
arbitrators, and persons such as lawyers, accountants, brokers and bankers
shall be acceptable. Before undertaking to resolve the dispute, each
arbitrator shall be duly sworn faithfully and fairly to hear and examine the
matters in controversy and to make a just award according to the best of his or
her understanding. The arbitration hearing shall be conducted in accordance
with the commercial arbitration rules of the American Arbitration Association
in Washington, D.C. The written decision
<PAGE> 36
- 33 -
of a majority of the arbitrators shall be final and binding on Seller and
Buyer. The costs and expenses of the arbitration proceeding shall be assessed
between Seller and Buyer in a manner to be decided by a majority of the
arbitrators, and the assessment shall be set forth in the decision and award of
the arbitrators. Judgment on the award, if it is not paid within thirty days,
may be entered in any court having jurisdiction over the matter. No action at
law or suit in equity based upon any claim arising out of or related to this
Agreement shall be instituted in any court by Seller or Buyer against the other
except (i) an action to compel arbitration pursuant to this Section, (ii) an
action to enforce the award of the arbitration panel rendered in accordance
with this Section, or (iii) a suit for specific performance pursuant to Section
10.5.
11.3 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed
to have been given on the date of personal delivery or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
If to Seller: Alpha & Omega Communications, L.L.C.
530 East First South Street, #204
Salt Lake City, Utah 84102
With a copy to: Barry D. Wood, Esquire
Jones, Waldo, Holbrook & McDonough
2300 M Street, N.W., Suite 900
Washington, D.C. 20037
If to Buyer: Lowell W. Paxson, Chairman
Paxson Communications Television, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
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.
<PAGE> 37
- 34 -
11.4 Benefit and Binding Effect. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement, in whole or in part, to one or more subsidiaries or commonly
controlled affiliates of Buyer without seeking or obtaining Seller's prior
approval in which event Buyer shall guarantee its assignee's performance
hereunder and Buyer may collaterally assign its rights and interests hereunder
to its senior lenders without seeking or obtaining Sellers prior approval.
Upon any permitted assignment by Buyer or Seller in accordance with this
Section 11.4, all references to "Buyer" herein shall be deemed to be references
to Buyer's assignee and all references to "Seller" herein shall be deemed to be
references to Seller's assignee, as the case may be. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
Seller, any additional bills of sale, deeds, or other transfer documents that,
in the reasonable opinion of Buyer, may be necessary to ensure, complete, and
evidence the full and effective transfer of the Assets to Buyer pursuant to
this Agreement.
11.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF UTAH (WITHOUT REGARD
TO THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for
ease of reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless
of the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
<PAGE> 38
- 35 -
11.10 Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in its judgement be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 39
- 36 -
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
PAXSON COMMUNICATIONS TELEVISION,
INC.
By: /s/ William L. Watson
------------------------------
Name: William L. Watson
Title: Secretary
ALPHA & OMEGA COMMUNICATIONS,
L.L.C.
By: /s/ Isaac Max Jaramille
------------------------------
Name:
Title:
<PAGE> 40
SCHEDULE 2.2
EXCLUDED ITEMS
1. FCC License (File No. BRTT-930622IL) for television translator station
K46BJ, Salt Lake City, Utah.
2. TTC transmitter (1 kW), standby 100 Watt ITS transmitter, 6' Bogner
antenna, 8' tower section and mounts, rf cable, cabinet, tool box and related
translator equipment, including supplies and tools.
3. Lease for translator transmitter/antenna space, Beneficial Life Tower
<PAGE> 41
SCHEDULE 3.3
CONSENTS
1. Consent of the Federal Communications Commission to the assignment of
the FCC Licenses for KOOG-TV to Buyer.
2. Consent of WB Communications (cannot unreasonably be withheld, per
Station Affiliation Agreement as of July 12, 1994, Section 7).
3. Consent of Home Shopping Club, Inc.
<PAGE> 42
SCHEDULE 3.4
FCC LICENSES; CABLE PENETRATION
1. LICENSE (File No. BRCT-930602KFE) to operate KOOG-TV, Channel 30,
Ogden, Utah.
2. Construction Permit (File No. BPCT-890523KG, as extended) for
transmitting facilities on Farnsworth Peak, Tooele County, Utah.
3. Special temporary authority to operate KOOG-TV at reduced power
(request for extension pending).
4. Existing Studio-Transmitter Link and other microwave licenses,
CABLE SYSTEMS CARRYING KOOG-TV (ALL IN UTAH)
<TABLE>
<CAPTION>
Franchise Area Operator Subscribers*
- -------------- -------- ------------
<S> <C> <C>
Bear River TCI 653
Brigham City Insight Cablevision 4,060
Davis County TCI 20,965
(includes Farmington, Bountiful,
Centerville, Kaysville, Layton
North Salt Lake, etc.)
Fruit Heights Insight 468
Hooper Insight 3,974
(includes West Weber areas)
Ogden TCI 27,819
Salt Lake City TCI 46,301
</TABLE>
<PAGE> 43
<TABLE>
<S> <C> <C>
Sandy TC1 10,662
Tremonton Insight 1,183
West Valley City TC1 25,301
Willard TC1 232
</TABLE>
* Information mostly from 1996 Television & Cable Factbook; some updated
courtesy of cable operator.
Seller has not demanded carriage on systems which are currently unable to
receive the signal of KOOG-TV off air, such as those south of Salt Lake County.
Upon relocation of the Station's transmitting facilities to the Farnsworth Peak
area, the Station will request carriage on those systems (particularly those in
Utah County, Utah) capable of receiving signals off air from such transmitter
location.
<PAGE> 44
SCHEDULE 3.5
LEASES OF REAL PROPERTY
Month to month lease of transmitting/tower site on Little Mountain, Weber
County, Utah, with Mr. & Mrs. Wendell Winegar, rental $1,058 per month(1)
Lease of studio facility at 1309 16th Street Ogden 84404 with AIM
Associates; rental $2400 per month
(Excluded: Lease for space for translator facility on Beneficial Life Tower;
$300 per month)
- -----------------------
(1) Landlord has asserted the validity of a long term lease for the
site, but Alpha & Omega disputes that assertion. The landlord has taken no
legal action to further that position.
<PAGE> 45
SCHEDULE 3.6
TANGIBLE PERSONAL PROPERTY
<PAGE> 46
KOOG-TV Inventory Asset Location Codes
A: OUTSIDE YARD
B: OUTSIDE YARD
C: MASTER CoNTROL
D: PRODUCTION
E: STUDIO
F: SHIPPING
G: SHOP
H: ENGINEERING
I: MANAGER
J: LOBBY
K: PROGRAMING
L: LIBRARY
M: TRAFFIC
N: SALES
0: BREAK ROOM
P: BENEFICIAL LIFE TOWER- See excluded items
SALT LAKE City
Q: TRANSMITTER WEST
WEBER COUNTY
R: STORAGE - BELCO
<PAGE> 47
A: OPERATIONS
Location Item Status Recommend
- ------------------------------------------------------------------------------
Sony one inch Record/Play Deck in use 11+yrs replace
Sony BVT Time Base Corrector in use 11+yrs replace
Sony BVC 10 Barcode Printer in use 11+yrs replace
Rack 1 Belar Modulation Monitor can't use 11+yrs replace
Belar Modulation Amplifier can't use 11+yrs replace
Microwave Transmitter 2GHZ in use 11+yrs replace
Orban Optimod non-stereo in use 11+yrs replace
InterGroup 982 10x Switcher in use 11+yrs
MRC Marley Remote Modem in use 11+yrs
Scientific Atlanta Receiver [H] in use 11+yrs replace
Scientific Atlanta Receiver [V] in use 11+yrs replace
Tracker for Big Dish IV in use 11+yrs
Rack 2 Tektronix monitor in use used replace
Videotek Audio monitor in use 11+yrs replace
Leader LBO5860A & LVS 5850 in use 11+yrs
BVW40 Sony Beta Record/Play in use 11+yrs replace
BVBC10 Barcode Writer in use 11+yrs replace
Rack 3 Lenco Sync Pulse Generator in use 11+yrs
Duel bank Panasonic 9" monitors in use 11+yrs replace
Sony V05800 Record/Play Deck in use 11+yrs replace
Sony V05850 Record/Play Deck in use 11+yrs replace
Sony RM440 Edit Controller in use 11+yrs
Hedco Distribution Amplifier in use 11+yrs
Rack 4 Leader NTSC Signal Generator in use 11+yrs
Commodore monitor in use used
3M Character Generator in use 11+yrs replace
Patch Panel [Audio] in use 11+yrs
Rack 5 Grass Valley 200 mother board in use 8+yrs
Videotronics monitor in use 11+yrs replace
Standard Sat. receiver HSC only in use 9+yrs
3M Router 12x15 in use used
Patch Panel [Video] in use 11+yrs
Hedco Distribution Amplifier in use 11+yrs
Hedco Distribution Amplifier in use 11+yrs
Rack 6 Inergroup Master Control mother in use 11+yrs replace
Hedco Audio Distribution Amplifier in use 11+yrs
Commodore monitor spare
4 misc. tables
12 misc. tape shelves
<PAGE> 48
B: OUTSIDE YARD
Location Item Status Recommend
- -------------------------------------------------------------------------
K.U. Sat. receiver in use 10+yrs
3.5 meter Sat. dish & drive in use 11+yrs
10' Sat. dish not in use
10' Sat. dish not in use
60' Rohn Tower in use 11+yrs
Microwave dish in use 11+yrs
Off Air Antenna in use 11+yrs
KOOG TV sign 11+yrs
Basketball standard
misc. LNA and LNS receivers in use 50 spares
Operations Airconditioner
<PAGE> 49
C: MASTER CONTROL
Location Item Status Recommend
- -------------------------------------------------------------------------
Cart System Sony BVC-10 Betacart System in use 11+yrs replace
4 Sony BVW-11 Cart Machines 1-in use 11+yrs replace
PVW-2600 in use NEW
PVR-11 remote keyboard in use 11+yrs replace
Panasonic monitor in use used
Rack 1 VO-5600 Sony Record/Play in use used
3-bank 9" monitors in use used
3-bank 9" monitors in use used
VO-5850 Record/Play in use 11+yrs replace
Rack 2 2-bank 13" monitors in use 2 years
Sony VO-9850 SP/Record Play in use 2 years
Rack 3 Digital time base corrector in use used replace
Sony BVT 810 TBC in use 11+yrs replace
EBS Encoder in use 11+yrs replace
Master clock controller in use 11+yrs
Wave Form monitor in use used
3-Audio match boxes in use
Intergroup Master Control Switcher in use 11+yrs replace
2-tape shelves
1-Table/Rack combo-Oak in use 11+yrs
misc. wires and cables
Intercom for back door
Executone phone system in use 11+yrs
Private phone Dedicated engineering in use
Alarm system Deactivated
Water heater small replace
2-chairs
<PAGE> 50
D. PRODUCTION
Location Item Status Recommend
- -------------------------------------------------------------------------
Production Yamaha Audio Switcher in use 11+yrs upgrade
Panasonic Turn table in use 11+yrs
3 Audio Cart Decks in use 11+yrs upgrade
Match Box (audio) in use
Tascom Reel To Reel tape player in use 11+yrs
2 Sony Receivers in use
Sony Cassette player in use
Yamaha CD player in use
misc. Audio carts in use
misc. LPs (records)
misc. Cassettes
misc. Video Tapes
2 tape shelves
Rack 1 2 Sony Camera control units in use 11+yrs
Videotek monitor in use bad replace
3 Sony stereo speakers
Rack 2 Tektroniks monitor bad replace
LBO5800 wave form monitor/monitor in use bad monitor
Barco monitor in use
3M graphics disc server in use needs upgrade
3M graphics keyboard in use
2 Shure audio mixers in use
Rack 3 Panasonic b&w monitor in use
Panasonic monitor in use
Beta SP PVW2800 player/record in use New
Rack 4 Beta SP PVW2600 player for edit in use New
Panasonic monitor in use
Sony TBC remote control in use
Grass Valley power supply rack in use
Grass Valley 200 Production switcher in use 8 years
Intercome remote for studio
misc. production supplies
<PAGE> 51
E. STUDIO
Item Status Recommend
- -------------------------------------------------------------------------
3 Sony BVP-150 camera in use replace
Portable tripod
2 Pedestal Tripods in use
Portable screen tripod
Flat reflective screen
6 misc. chairs
Desk
Table
Monitor
Pulpit
2 tape shelves
Metal storage cabinet
Camera storage shelf
Misc. stored video tapes
Vacuum cleaner
Fire extinguisher
3 camera boxes
Misc. stage risers
Misc. props
misc. studio items
Overhead lighting Grid
10 misc. studio lights on grid
Large cork mounting board
Misc. cables and wires
Misc. audio supplies
<PAGE> 52
F. SHIPPING
Item Status Recommend
- -------------------------------------------------------------------------
2 misc. tables
Desk
Sony television in use 11+yrs replace
2 chairs
Scale (shipping)
Misc. video tapes
Misc. shipping and office supplies
G: SHOP ROOM
2 BVW-11 Sony Beta players need repair
BVW15-Sony Beta player need repair
2 VO-5800 Sony Tape record/player need repair
4 misc. monitors need repair
Employee clock in computer in use
Desk
5 misc. chairs
Misc. tools and supplies
Misc. parts
Videocypher 2 descrambler
Ikegami camera control
10 studio lights
2 light kits
Camera case
<PAGE> 53
H: ENGINEERING
Item Status Recommend
- -------------------------------------------------------------------------
2 BVWII Sony Beta players need repair replace
BVW40 Sony Beta record/player need repair replace
Panasonic camera and stand
[?]
Monitor
RCA television
Portable Realistic TV
Leader 8104 Oscthscope New
3 misc. soldering stations
2 VCR recorder/players
Misc. repair and supply books
Misc. parts and tools
2 Chairs
2 desk
Metal storage cabinet
4 drawer file cabinet
Flake voltmeter
Misc. portable equipment for cameras
Misc. Audio and microphone items
Misc. supporting supplies for entire station
<PAGE> 54
I: MANAGER'S OFFICE
Item
---------------------------------------------
2 desks
6 misc. chairs
2 typewriters
Metal shelf
2-4 drawer file cabinets
Misc. office items
J: LOBBY
---------------------------------------------
4-drawer file cabinet
Desk
2-tables
Sofa
Love Seat
3 chairs
Misc. office decorations
Misc. office items
Misc. office supplies
Fire extinguisher
K: Programming
---------------------------------------------
2 desk
4 tables
4-drawer file cabinet
2 book cases
Coat rack
VCR and monitor
Computer and monitor
Printer
Fax
Misc. office items and supplies
<PAGE> 55
L: LIBRARY
Item Status Recommend
----------------------------------------------------------
Misc. video tapes
Archives for saved videos
Day to day business saves
3 chairs
M: TRAFFIC OFFICE
----------------------------------------------------------
4 desks
3 tables
5-4 drawer file cabinets
Traffic computer system
Computer System New
Traffic print system
Laser printer New
2 computer monitors
Typewriter
Misc. office supplies
4 chairs
Misc. computer supplies
N: SALES ROOM
----------------------------------------------------------
6 desks
6 chairs
2 tables
Savin copier
Computer and printer
Monitor
Typewriter
Paper cutter
Misc. office supplies
Misc. office items
Room divider
<PAGE> 56
O: BREAK ROOM
Item
-----------------------------------------------
Love seat
Chair
3 tables
Small refrigerator
Microwave oven
Coffee pot
Misc. supplies
<PAGE> 57
<TABLE>
<CAPTION>
<S> <C> <C>
Q: TRANSMITTER
Item Status Recommend
- -----------------------------------------------------------------------------------------
Comark IOT Transmitter in use 2 years
IOT is TYPE of TUBE & TECHNOLOGY
Dummy load (antenna power absorber) in use 11 years
Station equipment rack
Belar TV monitor (due to multiplex) can't use 11 years
Sony monitor
Tektronics waveform monitor
Tektronics oscilloscope
Microwave receive dish
Mosley remote receiver
2 modems
Demodulator
Processing Amplifier 11 years
Misc. cable and RF connectors
Staco voltage regulator
Misc. electrical control panels and boxes
Dielectric dehydrator
2 ledgers
Pirod tower (300')
Bogner antenna (60')
Misc. attaching hardware and cable
80% efficient finance 1 year
Overhead Airconditioner needs repair replace
Misc. tools and parts
2 Magnetic cabinets for old transmitter surplus
2 sets of cavities for old transmitter Klystrons surplus
2 Transmitter housing cabinets surplus
Blue equipment rack (old blue) surplus
2 used monitors junk
Telenet demod surplus
Telcine table
Desk
3 chairs
3 tables
Compressor needs repair
Hipotronics voltage regulator surplus
Pump surplus
RF load (oil) surplus
Many extra and spare parts
Contact switch surplus
Grinder (bench)
Vise
Diplexer surplus
110 gals of standby transmitter water
4 fan head exchanger surplus
Powersupply surplus
</TABLE>
<PAGE> 58
R: STORAGE
Item Status Recommend
- -------------------------------------------------------------------------
Copier older replace
[?] older
Snow blower
17' Standby transmitter antenna
RCA projector
2 Quad machines older
Many misc. items broken and surplus
Original boxes for equipment
Misc. tapes and everything not mentioned
<PAGE> 59
SCHEDULE 3.7
CONTRACTS
* Leases listed on Schedule 3.5 (*-For Studio Lease)
Insurance policies listed on Schedule 3.11
* Television Affiliation Agreement with Home Shopping Club, Inc. dated as of
March 3, 1994; as amended effective March 1, 1996.
Station Affiliation Agreement with WB Communications dated July 12, 1994.
* Option Agreement dated May 15, 1989 between Ogden Television Company, Inc. and
Royal Television of Utah, Inc., a Nevada corporation. (Royal contends that the
Option Agreement has lapsed or was not effectively assigned to Miracle Rock
Church or to Alpha & Omega Communications, LLC.)
Informal agreement with Channel Twenty Television Company for use of diplexed
antenna to be erected on KIZZ-TV tower, and sublease of transmitter space
PROGRAM CONTRACTS
Twentieth Century Fox Television (Doogie Howser) ($1,347 per month --expires in
1997)
MTM Entertainment (WKRP, Newhart, Hill Street Blues, St. Elsewhere -- $3,000
per month)
Tribune Entertainment (Geraldo) (not renewed for fall 1996)
Barter agreements (substantially all expire September, 1997):
All American Television
Rysher Entertainment
ITC Entertainment (Movie of the Month Package)
King World (movie package)
MTM International Family Entertainment (movie package)
New Vision Syndication
New Line Cinema (movie package)
New Line Television ("Inside America's Courts" (Court TV))
<PAGE> 60
Tradewinds Television (Bounty Hunters and Movie Package - "Tradewinds
Movie Specials")
World Vision (Nightstand)
Fishing the West (Vision West and Northwest Hunter)
*Contracts to be assumed by Buyer
<PAGE> 61
SCHEDULE 3.9
INTANGIBLES
KOOG-TV logo and call sign
<PAGE> 62
SCHEDULE 3.10
FINANCIAL STATEMENTS
Statements of Assets and Liabilities for year end 1995 and May 31, 1996
Statements of Revenues and Expenditures for year end 1995 and May 31, 1996
General Ledger Listings for year end 1995 and May 31, 1996
<PAGE> 63
SCHEDULE 3.11
INSURANCE POLICIES
Commercial Package Policy through Fred A. Morton & Company (coverage
provided by the Continental Insurance Company), policy no. 50 CBP 06135717-96
Communication Equipment Policy through Fred A. Morton & Company
(coverage provided by the Continental Insurance subsidiary Marine Office of
America Corporation), policy no. IMC 841859
<PAGE> 64
SCHEDULE 3.13
KOOG-TV
EMPLOYEE LIST
August, 1996
<TABLE>
<CAPTION>
Employee Title Hire Date Salary
- -------- ----- --------- ------
<S> <C> <C> <C>
Bishop, Brian Oper. Assistant/TD 6-15-89 $8.00/hour
Bramlette, Daniel TD-part time 10-19-95 $6.50/hour
Davies, Benjamin Engineer 9-25-85 $2,000/month
Davis, Brent Production/TD 6-01-94 $7.25/hour
Davis, Bruce TD 10-14-93 S7.50/hour
McCraney, Willie TD-part time 10-01-95 $6.00/hour
Obin, James Operations/program 3-15-93 $2,000/month
Pettingill, Debbie TD-part time 8-01-96 $5.00/hour
Smith, Rebecca Office/Taffic 8-25-86 $1,900/month
</TABLE>
The last review of compensation occurred August 12, 1996.
<PAGE> 65
SCHEDULE 3.15
CLAIMS AND LEGAL ACTIONS
Suit filed by Davidson Enterprises, Inc. in Third Judicial District
Court of Salt Lake County, Utah, Civil No. 960901288CV, vs. Miracle Rock
Church, seeking title to equipment of translator station K46BJ.
Suit filed by Alpha & Omega Communications, LLC, in Second District
Court of Weber County, Utah, Civil No. 960900274, vs. Royal Television of
Utah, Inc. and Roberts Broadcasting Corporation of Utah, Inc., for breach of
Option Agreement dated May 15, 1989.
<PAGE> 66
SCHEDULE 8.2(h)
SELLER'S OPINION
1. Seller is a limited liability company duly organized and
subsisting under the laws of the State of Utah.
2. Seller has full corporate power and authority to execute,
deliver and perform the Purchase Agreement and the other Transaction Documents
[Transaction Documents shall mean the documents executed and delivered at
Closing] to which it is a party. Seller's execution, delivery, and performance
of the Purchase Agreement and the other Transaction Documents to which it is a
party have been duly and validly authorized by all necessary corporate action
on the part of Seller.
3. The Purchase Agreement and each of the other Transaction
Documents to which Seller is a party have been duly executed and delivered by
Seller and constitute the valid and binding obligation of Seller, enforceable
against Seller in accordance with their respective terms subject to (i)
bankruptcy, insolvency, reorganization, moratorium and other similar laws now
or hereinafter in effect relating to creditors' rights and (ii) the possibility
that the remedies of specific performance or injunctive or other forms of
equitable relief may be subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
4. The execution, delivery and performance by Seller of the
Purchase Agreement and the other Transaction Documents to which Seller is a
party (a) do not require the consent of any third party under any of the Seller
Agreements [Seller Agreements shall mean such agreements that are certified by
Seller to Seller's counsel to be material to the operation of the business of
Seller or the transactions contemplated by the Purchase Agreement], other than
consents set forth on Schedule 3.3 of the Purchase Agreement; (b) do not
violate any provisions of Seller's organizational documents; (c) do not violate
Applicable Law [Applicable Law means those laws and regulations that a lawyer
exercising customary professional diligence would recognize as being applicable
to the transactions contemplated by the Transaction Documents] or any law,
judgment, order, injunction, decree, which is applicable to Seller and known to
us; (d) no not, either alone or with the giving of notice or the passage of
time or both, conflict with, constitute grounds for termination of, or result
in a breach of the terms, conditions or provisions of, or constitute a default
under any of the Seller Agreements; and (e) do not result in the creation of
any lien, charge or encumbrance on any of the Assets pursuant to the terms of
any of the Seller Agreements.
<PAGE> 67
- 2 -
5. All bills of sale, assignments, and other conveyancing
documents delivered by Seller to Buyer on the date hereof are in proper form to
convey and assign all of Seller's right, title, and interest in and to the
Tangible Personal Property to Buyer.
6. The Licenses listed on Exhibit A hereto (the "FCC Licenses")
were validly issued to Seller, are in full force and effect and are not subject
to any condition other than such conditions that are set forth in the FCC
Licenses.
7. Except as specifically identified in the Purchase Agreement,
to the best of our knowledge based on a review of the FCC's files and records,
our internal files and records and the Officer's Certificate, there are no
notices, orders or decrees issued, or complaints, proceedings or investigations
pending or threatened, against Seller, or applications filed by Seller, by or
before the FCC relating to the business or operations of the Station other than
notices, orders, decrees, applications, complaints, proceedings or
investigations which generally affect the television broadcasting industry.
8. The FCC has granted its consent to the assignment of the FCC
Licenses from Seller to Buyer (the "FCC Consent"). To the best of our
knowledge based solely on a review of the FCC's files and records and the
Officer's Certificate, the FCC Consent has not been reversed, stayed, enjoined,
set aside, annulled or suspended, no requests have been filed for
administrative or judicial review, reconsideration, appeal or stay of the FCC
Consent, and the time periods for filing any such requests and for the FCC to
set aside the FCC Consent on its own motion have expired.
9. The execution delivery and performance by Seller of the
Transaction Documents do not violate or otherwise conflict with the
Communications Act of 1934 as amended, the rules and regulations of the FCC or
any of the FCC Licenses listed on Exhibit A.
<PAGE> 68
SCHEDULE 8.3(d)
BUYER'S OPINION
1. Buyer is a corporation duly organized and in good standing under the
laws of the State of Florida. Based solely, on certificates obtained from
public officials, Buyer is duly qualified to do business and is in good standing
under the laws of the State of Utah.
2. Buyer has full corporate power and authority to execute, deliver and
perform the Purchase Agreement and the other Transaction Documents
[Transaction Documents shall mean the documents executed and delivered at
Closing], to which it is a party. Buyer's execution, delivery, and
performance of the Purchase Agreement and the other Transaction Documents to
which it is a party have been duly and validly authorized by all necessary
corporate action on the part of Buyer.
3. The Purchase Agreement and each of the other Transaction Documents to
which Buyer is a party have been duly executed and delivered by Buyer and
constitute the valid and binding obligation of Buyer, enforceable against Buyer
in accordance with their respective terms subject to (i) bankruptcy,
insolvency, reorganization, moratorium and other similar laws now or
hereinafter in effect relating to creditors' rights and (ii) the possibility
that the remedies of specific performance or injunctive or other forms of
equitable relief may be subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
4. The execution, delivery and performance by Buyer of the Purchase
Agreement and the other Transaction Documents to which it is a party (a) do not
require the consent of any third party under any of the Buyer Agreements [Buyer
Agreements shall mean such agreements that are certified by Buyer to Buyer's
counsel to be material to the operation of Buyer's business or the transactions
contemplated by the Purchase Agreement]; (b) do not violate any provisions of
Buyer's corporate charter or by-laws; (c) do not violate any Applicable Law
[Applicable Law means those laws and regulations that a lawyer exercising
customary professional diligence would recognize as being applicable to the
transactions contemplated by the Transaction Documents], or judgment, order,
injunction, or decree, which is applicable to Buyer and known to us; and (d) do
not, either alone or with the giving of notice or the passage of time or both,
conflict with, constitute grounds for termination of, or result in a breach of
the terms, conditions or provisions of, or constitute a default under any of
the Buyer Agreements.
5. The execution, delivery and performance by Buyer and PCC of the
Transaction Documents do not violate or otherwise conflict with the
Communications Act of 1934 as amended, the rules and regulations of the FCC
or any of the FCC Licenses listed on Exhibit A.
<PAGE> 1
EXHIBIT 10.134
================================================================================
LOAN AGREEMENT
BY AND BETWEEN
PONCE-NICASIO BROADCASTING, A
LIMITED PARTNERSHIP
AND
PAXSON COMMUNICATIONS OF
SACRAMENTO-29, INC.
FOR
TELEVISION STATION KCMY-TV
SACRAMENTO, CALIFORNIA
* * *
SEPTEMBER 6, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I AMOUNT AND TERMS OF THE LOANS ............................. 2
Section 1.1 The Loan ......................................... 2
Section 1.2 The Promissory Note ............................... 2
Section 1.3 Interest ......................................... 2
Section 1.4 Principal ......................................... 3
Section 1.5 Mandatory Prepayment ............................. 3
Section 1.6 Information ....................................... 3
Section 1.7 Prepayment ....................................... 3
Section 1.8 Payments; Payment on Non-Business Days ........... 3
Section 1.9 Taxes ............................................. 3
ARTICLE II CLOSING ................................................... 4
Section 2.1 Closing ........................................... 4
ARTICLE III SECURITY ................................................... 4
Section 3.1 Security Interest ................................. 4
Section 3.2 Pledge Agreements ................................. 4
Section 3.3 Collateral Assignments ........................... 4
ARTICLE IV CONDITIONS OF LENDING ..................................... 5
Section 4.1 Conditions Precedent to Loan ..................... 5
Section 4.2 Compliance ....................................... 7
ARTICLE V REPRESENTATIONS AND WARRANTIES ............................. 7
Section 5.1 Existence and Standing ........................... 7
Section 5.2 Authorizations, Compliance with Laws ............. 7
Section 5.3 Capitalization ................................... 8
Section 5.4 No Consent ....................................... 8
Section 5.5 Binding Obligations ............................... 8
Section 5.6 Litigation ....................................... 9
Section 5.7 No Default ....................................... 9
Section 5.8 Compliance with Laws ............................. 9
Section 5.9 Taxes ............................................. 9
Section 5.10 Title to Properties ............................... 9
Section 5.11 Absence of Undisclosed Liabilities ............... 9
Section 5.12 Solvency ....................................... 10
Section 5.13 Claims ......................................... 10
Section 5.14 Material Misstatement ........................... 10
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI COVENANTS OF BORROWER ................................... 10
Section 6.1 Affirmative Covenants ........................... 10
Section 6.2 Negative Covenants ............................. 12
Section 6.3 Reporting Requirements ......................... 15
ARTICLE VII EVENTS OF DEFAULT ....................................... 16
Section 7.1 Events of Default ............................... 16
Section 7.2 Effect of Event of Default ..................... 18
ARTICLE VIII MISCELLANEOUS ........................................... 19
Section 8.1 No Waiver; Cumulative Remedies ................. 19
Section 8.2 Amendments ..................................... 19
Section 8.3 Conflicts ....................................... 19
Section 8.4 Address for Notices ............................. 19
Section 8.5 Expenses ....................................... 20
Section 8.6 Binding Effect; Assignment ..................... 20
Section 8.7 Governing Law; Venue ........................... 21
Section 8.8 Severability of Provisions ..................... 21
Section 8.9 Headings ....................................... 22
Section 8.10 Rights Affected by Extensions ................... 22
Section 8.11 Survival of Representations and Warranties ...... 22
Section 8.12 FCC Compliance ................................. 22
Section 8.13 Further Assurances ............................. 22
Section 8.14 Indemnification ................................. 23
Section 8.15 Maximum Interest ............................... 23
Section 8.16 Subsidiary ..................................... 24
Section 8.17 No Joint Ventures ............................... 24
</TABLE>
-ii-
<PAGE> 4
LIST OF EXHIBITS
Exhibit 1 -- Promissory Note
Exhibit 2 -- Security Agreement
Exhibit 3 -- Pledge Agreements
Exhibit 4 -- Collateral Assignment
Exhibit 5 -- Acknowledgment and Consent
Exhibit 6 -- Acknowledgment and Estoppel Agreement
LIST OF SCHEDULES
Schedule 5.3 -- Partnership Interests
Schedule 5.11 -- Unsecured Creditors
Schedule 5.13 -- Claims
-iii-
<PAGE> 5
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 6th day of September, 1996, is
by and between PAXSON COMMUNICATIONS OF SACRAMENTO-29, INC., a Florida
corporation having its principal offices at 601 Clearwater Park Road, West Palm
Beach, Florida 33401 ("Lender"), and PONCE-NICASIO BROADCASTING, A LIMITED
PARTNERSHIP, a California limited partnership having its principal offices at
3100 Gold Nugget Way, Placerville, California 95667 ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower owns and operates television station KCMY-TV,
Channel 29, Sacramento, California (the "Station"), pursuant to authorizations
issued by the Federal Communications Commission ("FCC");
WHEREAS, Borrower and Lender have entered into an Option Agreement
dated as of September 6, 1996 (the "Option Agreement"), pursuant to which
Lender grants to Borrower an option to require Lender to purchase substantially
all of the assets of the Station, and Borrower grants to Lender an option to
require Borrower to sell substantially all of the assets of the Station,
pursuant to the terms of an Asset Purchase Agreement to be entered into by
Lender and Borrower upon the exercise of either such option (the "Purchase
Agreement");
WHEREAS, Lender has agreed to make a loan to Borrower in the total
principal amount of Eight Million Five Hundred Thousand Dollars ($8,500,000);
WHEREAS, such loan shall be evidenced by a promissory note in the same
amount, which shall be issued by Borrower and dated as of the date hereof;
WHEREAS, Ponce-Nicasio Broadcasting, Inc., a California corporation
and the sole general partner of Borrower ("General Partner"), and certain
limited partners of Borrower (the "Pledging Limited Partners") own in the
aggregate 50.4 percent of the partnership interests of the Borrower (the
General Partner and the Pledging Limited Partners are collectively, the
"Partners"), have agreed to grant Lender a security interest in all of their
respective partnership interests of Borrower (the "Pledged Interests") as
collateral security for the obligations of Borrower hereunder;
WHEREAS, Borrower and Lender have entered into a Time Brokerage
Agreement, dated as of the date hereof (the "Time Brokerage Agreement" and,
together with the Option
<PAGE> 6
-2-
Agreement and Purchase Agreement, the "Transaction Documents"), pursuant to
which Lender agrees to provide programming for broadcast on the Station.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, Lender, Borrower and the Partners agree as follows:
ARTICLE I AMOUNT AND TERMS OF THE LOANS
Section 1.1 The Loan. Lender agrees, upon the terms and
conditions hereinafter set forth, to make a loan or loans to Borrower in an
aggregate principal amount not to exceed at any one time outstanding Eight
Million Five Hundred Thousand Dollars ($8,500,000) (the "Loan").
Section 1.2 The Promissory Note. The outstanding principal
amount of the Loan shall be evidenced by and subject to the terms of a
promissory note, dated of even date herewith, substantially in the form set
forth as Exhibit 1 hereto (as amended, renewed, restated, increased,
consolidated or substituted from time to time, the "Note"), payable to the
order of Lender and representing the obligation of Borrower to pay Lender the
amount of the Loan, with interest thereon, as prescribed in Section 1.4. All
references to the "Note" in this Loan Agreement, the Security Agreement, the
Partnership Pledge Agreement, the Stock Pledge Agreement, the Collateral
Assignment (each as defined in this Loan Agreement) and in such other
agreements and documents executed and delivered in connection with this Loan
Agreement shall be deemed to be references to the Note referred to in this
Section.
Section 1.3 Interest. The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum at all times equal to seven
percent. Interest shall be calculated on the basis of a year of three-hundred
and sixty (360) days and the actual number of days elapsed during the period
for which such interest is payable. Interest shall begin to accrue on the
outstanding principal amount of the Loan on the date of disbursement of all or
a portion of the Loan. The first payment of interest to Lender shall be due on
the fifth day of the first month following disbursement of all or any portion
of the Loan, at which time all accrued but unpaid interest shall become due and
payable. Thereafter, accrued interest shall be paid monthly on or before the
fifth day of each month until all principal and interest hereunder is paid in
full at the repayment or maturity of the Loan. If any installment of principal
or interest is not paid when due, that installment shall bear interest at a
rate per annum equal to the lower of the highest rate permitted by law or
fifteen percent (15%) from the date due thereof until paid in full.
<PAGE> 7
-3-
Section 1.4 Principal. Subject to the terms of Section 1.5, the
outstanding principal balance of the Loan plus any accrued and unpaid interest
thereon shall be due and payable on the fifth anniversary of the funding of the
Loan (the "Maturity Date").
Section 1.5 Mandatory Prepayment. Notwithstanding anything in
this Agreement to the contrary, upon (a) any termination of the Option
Agreement, Purchase Agreement or Time Brokerage Agreement in accordance with
their respective terms or (b) the closing of a sale of substantially all of the
Station's assets or the partnership interests of Borrower to any party other
than Lender or any affiliate of Lender, if Borrower fails to exercise its Put
Option prior to the expiration of the Put Termination Date and Lender fails to
exercise its Call Option prior to the expiration of the Call Termination Date
(as such terms are defined in the Option Agreement), Lender shall have no
further obligation to make any Loans hereunder and the entire outstanding
principal balance and all accrued but unpaid interest thereon and all other
amounts owed by Borrower to Lender hereunder shall be due and payable within
thirty (30) days following such termination.
Section 1.6 Information. Borrower agrees to furnish to Lender
such information as Lender may reasonably request in connection with the Loan
or the Station, including, without limitation, copies of invoices or other
evidence of the expenses incurred by Borrower in connection with the operation
of the Station.
Section 1.7 Prepayment. Borrower may prepay the Note in whole at
any time, or from time to time in part, with accrued interest to the date of
prepayment on the amount prepaid, without penalty, provided that each payment,
other than that for the full amount of the outstanding balance, shall be in the
amount of Ten Thousand Dollars ($10,000) or an integral multiple thereof. Each
prepayment on the Note shall be applied to installments of principal payable on
the Note in the inverse order of maturity.
Section 1.8 Payments, Payment on Non-Business Days. Whenever any
payment to be made hereunder or under the Note shall be due on a Saturday,
Sunday or public holiday, such payment may be made on the next succeeding
business day, and such extension of time in such case shall be included in the
computation of interest hereunder and under the Note. Payments of principal,
interest or any other amounts due hereunder or under the Note shall be made by
wire transfer or by delivery of a check by overnight courier to Lender in
accordance with wire instructions provided by Lender or at Lender's address
specified in Section 8.4, as the case may be, or by such other method as may be
agreed upon by Borrower and Lender.
Section 1.9 Taxes. All sums payable by Borrower hereunder or
under the Note, whether of principal, interest, fees, expenses or otherwise,
shall be paid in full, free of any
<PAGE> 8
-4-
deductions or withholdings for any and all present and future taxes, levies,
imposts, stamps, duties, fees, assessments, deductions, withholdings, and other
governmental charges and all liabilities with respect thereto. If Borrower is
prohibited by law from making payments hereunder or under the Note free of such
deductions or withholdings, then Borrower shall pay such additional amount as
may be necessary in order that the actual amount received by Lender after such
deduction or withholding shall equal the full amount stated to be payable
hereunder or under the Note.
ARTICLE II CLOSING
Section 2.1 Closing. The closing of the transactions
contemplated by this Agreement shall occur, subject to the satisfaction of all
of the conditions set forth in Article IV, on the date hereof (the "Closing
Date") at the offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue,
N.W., Suite 800, Washington, D.C. 20036; provided, however, that Lender and
Borrower agree to use their reasonable best efforts to conduct the closing by
mail.
ARTICLE III SECURITY
Section 3.1 Security Interest. As partial security for the Loan,
Borrower shall execute and deliver to Lender, on or before the Closing Date, a
security agreement in the form of Exhibit 2 hereto (the "Security Agreement").
Section 3.2 Pledge Agreements. As further security for the Loan,
on or before the Closing Date, (a) the Partners shall execute and deliver to
Lender a pledge agreement in the form of Exhibit 3-A hereto (the "Partnership
Pledge Agreement"), pursuant to which the Partners pledge to Lender all of
their respective rights and interests in the Pledged Interests as collateral
security for the Borrower's obligations hereunder and (b) each stockholder of
the General Partner (the "Stockholders") shall execute and deliver to Lender a
pledge agreement in the form of Exhibit 3-1B hereto (the "Stock Pledge
Agreement"), pursuant to which the Stockholders pledge to Lender all of their
rights and interests in all of the issued and outstanding capital stock of
General Partner (the "Stock") as collateral security for the Borrower's
obligations hereunder.
Section 3.3 Collateral Assignments. As further security for the
Loan, on or before the Closing Date, Borrower shall execute and deliver to
Lender a Collateral Assignment of Lease in the form of Exhibit 4 hereto (the
"Collateral Assignment"), pursuant to which Borrower assigns for security to
Lender all of Borrower's right, title and interest in and to the Radio Tower
Lease Agreement dated July 1, 1990 (the "Lease"), between Borrower and Halldark
Enterprises, Inc. ("Lessor"). In the event that, following the Closing Date,
<PAGE> 9
-5-
Borrower enters into or assumes the lessee's interest under any other lease for
the Station's transmitter site, it shall execute and deliver to Lender a
Collateral Assignment substantially in the form of Exhibit 4 with respect to
such other lease. If requested by Lender, Borrower shall also deliver to
Lender with respect to any such other lease an Acknowledgment and Estoppel
Agreement in the form of Exhibit 6 hereto executed by the landlord under such
lease.
ARTICLE IV CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to Loan. The obligation of
Lender to disburse the Loan hereunder is subject to the following conditions
precedent:
(a) The Option Agreement and Time Brokerage Agreement
shall be in full force and effect and Borrower shall have complied in all
material respects with its obligations thereunder.
(b) Lender shall have received all of the following, on
or before the Closing Date, in form and substance satisfactory to Lender:
(i) The Note, duly executed and delivered by
Borrower;
(ii) The Security Agreement, together with
appropriate UCC-1 forms, duly executed and delivered by Borrower;
(iii) The Partnership Pledge Agreement, duly
executed and delivered by the Partners;
(iv) The Acknowledgment and Consent attached
hereto as Exhibit 5, duly executed by the General Partner and each limited
partner of Borrower (the "Consent");
(v) The Stock Pledge Agreement together with
share certificates for the Stock and blank stock powers, duly executed and
delivered by the Stockholders;
(vi) Certified copies of the resolutions of the
Board of Directors of Borrower's general partner evidencing approval of the
execution, delivery and performance of this Agreement, the Note and the
Security Agreement and other matters contemplated hereby;
<PAGE> 10
-6-
(vii) Certified copies of the resolutions of the
Board of Directors of other Partners evidencing approval of the execution,
delivery and performance of this Agreement, the Partnership Pledge Agreement
and the other matters contemplated hereby;
(viii) Certified copies of the resolutions of the
Board of Directors of the Stockholders evidencing approval of the execution,
delivery and performance of this Agreement and the Stock Pledge Agreement and
the other matters contemplated hereby;
(ix) Certificate of Good Standing for Borrower
from the State of California issued no more than ten (10) days prior to the
Closing Date;
(x) Certificates of Good Standing for the General
Partner and each other Partner that is a corporation or limited partnership
from its respective state of organization issued no more than ten (10) days
prior to the Closing Date;
(xi) Copies of UCC, judgment and tax lien searches
in each jurisdiction in which collateral covered by the Security Agreement is
located, naming Borrower and the Partners as debtors;
(xii) A pay-off letter and such termination
statements as are required to terminate all security interests held by Union
Bank in any part of the collateral covered by the Security Agreement, each duly
executed by Union Bank;
(xiii) Pay-off letters from other secured creditors
of Borrower;
(xiv) The Collateral Assignment, duly executed and
delivered by Borrower;
(xv) Copies of the certificates evidencing the
insurance required to be maintained by Borrower pursuant to Section 6.l(e); and
(xvi) Such other agreements, certificates, opinions
of counsel and documents that Lender may reasonably require.
(c) In addition to the foregoing, Borrower shall use its
reasonable best efforts to obtain an Estoppel Agreement in the form of Exhibit
6 hereto duly executed by Lessor and shall use its best efforts to obtain an
Estoppel Agreement in the form of Exhibit 6 hereto duly executed by Great
Western Broadcasting as lessor under the master lease referred to in paragraph
12 of the Lease.
<PAGE> 11
-7-
Section 4.2 Compliance. All of the representations and
warranties of Borrower in this Loan Agreement shall be true and accurate in all
material respects on and as of the Closing Date and the date of any subsequent
disbursement of any portion of the Loan, as if made on and as of such date and
time. Borrower shall be in compliance with all of the applicable terms and
provisions of this Agreement and no Event of Default or any event which with
the lapse of any applicable grace period or the giving of notice or both would
constitute an Event of Default shall have occurred and be continuing. Borrower
shall have performed all obligations and taken all actions to be performed or
taken by it hereunder on or prior to such date. On the Closing Date, Borrower
shall deliver to Lender a certificate, dated as of such date and signed by an
executive officer of Borrower, certifying compliance with the conditions of
this Section 4.2. The disbursement of the Loan to Borrower shall, in and of
itself, constitute a representation and warranty that Borrower, as of the date
of the Loan, is in compliance with this Section and if Borrower is not in
compliance with this Section, Lender shall not be required to disburse the Loan
to Borrower.
ARTICLE V REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and make the
Loan, Borrower represents and warrants as follows:
Section 5.1 Existence and Standing. Borrower is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of California and is qualified to do business and in good
standing under the laws of any other jurisdiction in which it conducts its
business, and has all requisite power and authority, partnership or otherwise,
to conduct its business, to own its properties and to execute and deliver, and
to perform all of its obligations under this Agreement, the Note, the
Collateral Assignment, the Security Agreement, and all other documents that
have been or will be executed and delivered by Borrower pursuant to this
Agreement (the foregoing documents, together with the Partnership Pledge
Agreement and the Stock Pledge Agreement, are collectively, the "Loan
Documents") .
Section 5.2 Authorizations, Compliance with Laws. The execution,
delivery and performance by Borrower of this Agreement, the Note, the
Collateral Assignment, the Security Agreement, and all other documents required
to be executed and delivered by Borrower pursuant to this Agreement, and the
execution, delivery and performance by the Partners of the Partnership Pledge
Agreement and by the Stockholders of the Stock Pledge Agreement, have been duly
authorized by all necessary action and do not and will not (i) violate (A) any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to
Borrower, the Partners, the Stockholders or the Station or (B) any provision of
the certificate of limited
<PAGE> 12
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partnership or agreement of limited partnership of Borrower or the Articles of
Incorporation or By-laws of the Partners; or (ii) result in a breach of or
constitute a default under any agreement or instrument to which Borrower, the
Stockholders or the Partners is a party or by which their properties may be
affected; or (iii) result in the creation of a lien, charge or encumbrance of
any nature upon Borrower's properties or assets other than as contemplated by
this Agreement.
Section 5.3 Capitalization. The Partners listed on Schedule 5.3
own beneficially and of record all of the partnership interests of Borrower
specified as owned by them on such Schedule. The Stockholders own beneficially
and of record all of the capital stock of the General Partner. All of the
partnership interests of Borrower and all of the capital stock of the General
Partner have been duly and validly issued, are fully paid and nonassessable and
are free and clear of any liens, security interests or other claims or
encumbrances, except those granted to Lender pursuant to the terms of this Loan
Agreement and the other Loan Documents. Neither Borrower nor the Partners has
any commitment or obligation, either firm or conditional, to issue, deliver,
purchase or sell, under any offer, option agreement, bonus agreement, purchase
plan, incentive plan, compensation plan, warrant, conversion rights, contingent
share agreement, stockholders agreement, partnership agreement or otherwise,
any Pledged Interests or other equity securities or securities convertible into
Pledged Interests, except for any such commitment or obligation that complies
with clauses (i), (ii) or (iii) of Section 6.2(e) hereof.
Section 5.4 No Consent. Except for such filings with and
approvals of the FCC that may be required in connection with the exercise by
Lender of its rights under the Loan Documents upon an Event of Default, no
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department or agency, is or will be
necessary for the valid execution, delivery and performance by Borrower of this
Agreement, the Note, the Collateral Assignment, the Security Agreement, or any
other document required to be executed and delivered by Borrower pursuant to
this Agreement, by the Partners of this Agreement or the Partnership Pledge
Agreement or by the Stockholders of this Agreement or the Stock Pledge
Agreement.
Section 5.5 Binding Obligations. This Agreement, the Note, the
Collateral Assignment, the Security Agreement, the Partnership Pledge
Agreement, the Stock Pledge Agreement and all other documents required to be
executed and delivered by Borrower, Stockholders or the Partners pursuant to
this Agreement have been executed and delivered by a duly authorized officer of
Borrower, or, in the case of the Partnership Pledge Agreement, by the Partners,
or, in the case of the Stock Pledge Agreement, by the Stockholders, and
constitute legal, valid and binding obligations of Borrower, in the case of the
Partnership
<PAGE> 13
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Pledge Agreement, of the Partners, or, in the case of the Stock Pledge
Agreement, by the Stockholders, enforceable in accordance with their respective
terms.
Section 5.6 Litigation. There are no actions, suits or
proceedings pending, or, to the knowledge of Borrower, threatened against or
affecting Borrower or its properties or the Partners before any court or
governmental department or agency which materially adversely affects the
transactions contemplated by this Agreement or which would have a material
adverse effect on the business, properties, prospects, operation or condition
(financial or otherwise) of the Station or Borrower.
Section 5.7 No Default. Borrower is not in default in the
performance, observance or fulfillment of any of the obligations or conditions
contained in any material agreement or instrument to which it is a party, nor
with respect to any order, judgment, writ, injunction or decree of any court,
governmental authority or arbitration board.
Section 5.8 Compliance with Laws. Borrower has complied with all
applicable federal, state and local laws. Borrower has obtained all necessary
licenses and permits required for the conduct of its business and operations or
such licenses and permits have been applied for and are now being diligently
pursued.
Section 5.9 Taxes. Borrower has filed all tax returns and
reports (federal, state and local) required to be filed by it, and has paid all
taxes shown thereon, including interest and penalties, and all assessments
received by it (except to the extent that the same are being contested in good
faith by appropriate proceedings diligently prosecuted and as to which adequate
reserves have been set aside on the books of Borrower in conformity with
generally accepted accounting principles).
Section 5.10 Title to Properties. Borrower has good and
marketable title to all of its property and assets and valid and enforceable
leasehold interests in the property which it holds under lease, all such
property, assets and leasehold interests being free and clear of any and all
mortgages, deeds of trust, assignments, liens, security interests, charges or
encumbrances of any nature whatsoever, except for those created hereby, and no
mortgages, deeds of trust, financing statements or other evidences of security
interests covering all or any of the aforesaid property are on file among the
records of any public office, except those evidencing a security interest in
favor of Lender.
Section 5.11 Absence of Undisclosed Liabilities. Except for (i)
obligations arising under the rules and regulations of the FCC, (ii)
obligations under the Loan Documents, (iii) liabilities and obligations
incurred pursuant to the terms of the Transaction Documents, (iv) unsecured
indebtedness for borrowed money not in excess of $1,000,000, a complete and
<PAGE> 14
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accurate list of each such creditor and the amount owed to each such creditor
is set forth in Schedule 5.11 hereto, and (v) liabilities incurred in the
ordinary course of business (other than for borrowed money), Borrower has on
the date hereof no material liabilities or obligations relating to the Station
or otherwise of any nature, whether accrued, absolute, contingent or otherwise.
Section 5.12 Solvency. Borrower has received, or has the right to
receive, consideration which is the reasonable equivalent value of the
obligations and liabilities that Borrower has incurred to Lender. Borrower is
not insolvent as defined in Section 101 of Title 11 of the United States Code
or any applicable state insolvency statute, nor, after giving effect to the
consummation of the transactions contemplated herein, will Borrower be rendered
insolvent by the execution and delivery of this Agreement, the Note or the
other Loan Documents to Lender. Borrower is not engaged, and, after the
application of proceeds of the Loan to redeem certain partnership interests of
Borrower and the distribution of proceeds of the Loan to certain partners of
Borrower, Borrower is not about to engage, in any business or transaction for
which the assets retained by it shall be an unreasonably small capital, taking
into consideration the obligations to Lender incurred hereunder and under the
Loan Documents. Borrower does not intend to, and Borrower does not believe
that it will, incur debts beyond its ability to pay them as they mature.
Section 5.13 Claims. Schedule 5.13 is an accurate and complete
list, in all material respects, of all debts owed to or claims held by Borrower.
Section 5.14 Material Misstatement. No statement made herein or
information, exhibit or report furnished by Borrower to Lender in connection
with this Agreement or its negotiation, contains any material misstatement of
fact or omits to state a material fact or any fact necessary to make the
foregoing not misleading.
ARTICLE VI COVENANTS OF BORROWER
Section 6.1 Affirmative Covenants. So long as the Note shall
remain unpaid, Borrower hereby covenants and agrees that it will:
(a) Payment of Obligations. So long as Lender shall have
made the payments to Borrower required by the terms of the Time Brokerage
Agreement, it being understood that any failure by Lender to make such payments
as a result of a breach by Borrower of the Time Brokerage Agreement shall not
excuse Borrower from complying with its obligations under this Section 6.1(a),
pay punctually and discharge when due: (i) the Notice of Apparent Liability for
Forfeiture in the amount of $20,000 assessed by the FCC's Mass Media Bureau
against the Borrower by letter dated March 29, 1995; (ii) all
<PAGE> 15
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indebtedness, other than the indebtedness listed on Schedule 5.11, hereafter
incurred; (iii) all taxes, assessments and governmental charges or levies
imposed upon it or its income or profits, or upon any properties belonging to
it; (iv) claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords and other like persons which, if unpaid might become a lien or charge
upon the property of Borrower; provided that this covenant shall not require
the payment of any of the matters set forth in (ii), (iii) and (iv) above if
the same shall be contested in good faith and by proper proceedings diligently
pursued and as to which adequate reserves have been set aside on the books of
Borrower in accordance with generally accepted accounting principles.
(b) Preservation of Existence. Preserve and maintain its
respective existence, rights, franchises and privileges in the jurisdiction of
its organization.
(c) Maintenance of Properties. Maintain and preserve all
of its properties necessary or useful in the proper conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(d) Compliance with Laws. Comply in all material
respects with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority.
(e) Maintenance of Insurance. Maintain with responsible
and reputable insurance companies policies on all of its properties and
covering such risks, including public liability and workers' compensation, in
such amounts as are usually carried by companies engaged in similar businesses
and owning similar properties as Borrower, and promptly upon execution thereof
provide to Lender copies of all such policies and any riders or amendments
thereto. The policies of insurance required hereunder shall name Lender as an
additional loss payee or additional insured, as applicable, and shall provide
that Lender shall receive at least thirty (30) days' written notice prior to
the cancellation, termination or alteration of any such policy.
(f) Operations in Ordinary Course. Continue to operate
its business in the ordinary course.
(g) Perfection of Liens. Do all things reasonably
requested by Lender to preserve and perfect as first liens and security
interests the liens and security interests of Lender arising pursuant to the
Security Agreement, the Partnership Pledge Agreement, the Stock Pledge
Agreement, the Collateral Assignment or any other agreement required hereunder.
<PAGE> 16
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(h) FCC Approval. If counsel to Lender reasonably
determines that the consent of the FCC is required in connection with the
performance of this Agreement, the Partnership Pledge Agreement, the Stock
Pledge Agreement, the Security Agreement, the Collateral Assignment or any
other document delivered to Lender in connection herewith or therewith or as a
result of any action which may be taken pursuant hereto or thereto, then
Borrower, at Lender's expense at any time prior to the occurrence of an Event
of Default (as defined in Article VII hereof), and at Borrower's expense at any
time after the occurrence of an Event of Default, agrees to use its best
efforts to secure such consent and to cooperate with Lender in any action
commenced by Lender to secure such consent.
(i) Agreements. Comply with its obligations under the
Transaction Documents.
(j) Information and Inspection. Borrower shall furnish
to Lender from time to time, upon request, such information as is reasonably
requested by Lender pertaining to the performance by Borrower of its
obligations hereunder or to any matter concerning the books, records,
operations, financial condition, properties, activities or business of the
Station. At all reasonable times and with reasonable notice to Borrower,
Borrower shall permit any authorized representatives designated by Lender to
visit and inspect any of the properties of Borrower and its books and records
relating to the Station, and to make copies thereof, and to discuss Borrower's
affairs, finances and accounts with the management and independent accountants
of Borrower. Nothing herein shall be deemed to permit Lender to have access to
any documents or other materials not relating to the assets of the Partnership
or the transactions contemplated hereunder.
Section 6.2 Negative Covenants. So long as the Note shall remain
unpaid and the Agreement shall not have been terminated, Borrower hereby
covenants that it will not:
(a) Indebtedness. Create or incur, assume or suffer to
exist any indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, except for:
(i) indebtedness evidenced by the Note; (ii) unsecured indebtedness (other than
for borrowed money) incurred in the ordinary course of business not to exceed
Seventy-Five Thousand Dollars ($75,000) in the aggregate at any one time; (iii)
unsecured indebtedness for borrowed money not to exceed One Million Dollars
($1,000,000) in the aggregate at any one time; (iv) obligations or liabilities
arising under the indemnification provisions of the Purchase Agreement.
(b) Liens. Create, assume or suffer to exist, directly
or indirectly, any security interest, mortgage, deed of trust, pledge, lien,
charge or other encumbrance, of any
<PAGE> 17
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nature whatsoever upon any of its properties or assets, now owned or hereafter
as acquired, excluding, however, from the operation of this covenant:
(i) any security interest or lien created
pursuant to or in connection with this Agreement or securing the Loan, the
Security Agreement, the Partnership Pledge Agreement, Stock Pledge Agreement or
the Collateral Assignment;
(ii) liens for taxes or assessments either not
delinquent or the validity of which are being contested in good faith by
appropriate legal or administrative proceedings and as to which adequate
reserves shall have been set aside on its books, in conformity with generally
accepted accounting principles;
(iii) materialmen's, mechanics', carriers',
workmen's, repairmen's, warehousemen's or other like liens arising in the
ordinary course of business and either not yet due and payable or being
contested in good faith by appropriate legal proceedings and as to which
adequate reserves shall have been set aside on its books, in conformity with
generally accepted accounting principles;
(iv) deposits or pledges to secure payment of
workers' compensation, unemployment insurance or other social security
benefits or obligations; or
(v) any judgment lien, singly or aggregated with
other judgment liens, in an amount less than Fifty Thousand Dollars ($50,000),
unless the judgment it secures shall not, within sixty (60) days after the
entry thereof, have been discharged, vacated, reversed, or execution thereof
stayed pending appeal, or shall not have been discharged, vacated or reversed
within sixty (60) days after the expiration of any such stay.
(c) Disposition of Assets. Except pursuant to the terms
of the Purchase Agreement, sell, transfer, lease or otherwise dispose of any of
its assets or properties other than sales of assets in the ordinary course of
business (which sales in the ordinary course of business shall expressly not
include any transfer or assignment of any FCC License).
(d) Merger. Enter into any consolidation or merger with,
or into any acquisition of all or substantially all of the properties or assets
of any person or entity.
(e) Transfer or Issuance of Equity. Issue any
partnership interests of Borrower or permit the transfer of any Pledged
Interests, or permit any options, warrants, convertible securities or other
rights to purchase such Pledged Interests, except that the foregoing shall not
apply to (i) any issuances or transfers to the Lender, (ii) any redemption by
the Borrower of its partnership interests prior to the occurrence of an Event
of Default, or
<PAGE> 18
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(iii) any transfers of any Pledged Interests so long as any such transfer does
not impair the security interest granted to the Lender in such Pledged
Interests and, prior to any such transfer, the transferee of the Pledged
Interests executes and delivers to Lender the Acknowledgment and Consent and
agrees to be bound by the Partnership Pledge Agreement pursuant to documents in
form and substance acceptable to Lender.
(f) Remove Assets. Remove any of the assets included in
the collateral described in the Security Agreement or any replacements for such
assets, to a jurisdiction in which no financing statement on Form UCC-1 has
been filed by Lender with respect to such assets.
(g) Distributions or Dividends. Declare or make,
directly or indirectly, any payment or distribution to any partner of Borrower,
as a dividend, return of capital or other payment or distribution of any kind
in respect of Borrower's partnership interests, that does not comply with
applicable laws, rules, regulations and orders of any governmental authority.
(h) Transactions with Affiliates. Enter into any
transaction or agreement, other,than the Transaction Documents, with any
affiliate of Borrower, except (i) Borrower shall be permitted to make loans,
advances or any other extension of credit to any affiliate of Borrower so long
as the total amount of any such loans, advances and extensions of credit by
Borrower to affiliates of Borrower and to all other parties does not exceed at
any time One Million Dollars ($1,000,000) in the aggregate, (ii) Borrower shall
be permitted to make capital contributions to the subsidiary partnership
contemplated by Section 8.15 hereof, and (iii) that Borrower shall be permitted
to enter into any other transaction or agreement with any affiliate of Borrower
so long as Borrower's monthly payment obligations, whether scheduled or by
penalty, foreclosure or acceleration, under all such transactions and
agreements in effect at any time do not exceed, in the aggregate, the
difference between the monthly Program Fee payable by Lender to Borrower under
the Time Brokerage Agreement and the monthly interest payments on the Loan
required by Section 1.3 hereof (such difference is the "Excess TBA Payment").
(i) Contracts. Enter into any contract or commitment
relating to its assets except for contracts involving monthly aggregate
payments of less than the Excess TBA Payment and contracts which can be
terminated without penalty on thirty (30) days' notice or less, or amend or
terminate any material contract (or waive any substantial right thereunder).
(j) Adverse Change. Suffer any material adverse change
resulting from any action taken by Borrower in the business, assets or
properties of the Station, including
<PAGE> 19
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any damage, destruction or loss affecting any assets used or useful in the
conduct of the business of the Station.
(k) Write-Down. Make any significant write-down of the
value of any assets without the prior written consent of Lender except and as
required by generally accepted accounting principles as required to present
accurate financial information on Borrower.
(l) Rights. Transfer or grant any right under, or enter
into any settlement regarding the breach or infringement of, any license,
patent, copyright, trademark, service mark, trade name, franchise, or similar
right, or modify any existing right relating to Borrower.
(m) Agreements. Commit any material breach or default
under the Transaction Documents.
(n) Loans. Make any loans, advances or other extensions
of credit that exceed at any time One Million Dollars ($1,000,000) in the
aggregate.
Section 6.3 Reporting Requirements. So long as the Note shall
remain unpaid and the Agreement shall not have been terminated, Borrower shall,
unless Lender shall otherwise consent in writing, furnish to Lender:
(a) Default Certificate. As soon as possible and in any
event within five (5) business days after the occurrence of each Event of
Default (as defined in Section 7.1) of which Borrower has knowledge, the
statement of the President of the general partner of Borrower setting forth
details of such Event of Default and the action which Borrower proposes to take
with respect thereto.
(b) Notice of Litigation. Promptly give written notice
of all actions, suits and proceedings before any court or governmental agency,
domestic or foreign, which may be commenced or threatened against Borrower in
which the claim involved is Fifty Thousand Dollars ($50,000) or more and of any
other matter of the type described in Section 5.6.
(c) Indebtedness Certificate. On the last business day
of each calendar quarter, Borrower shall deliver to Lender a certificate signed
by the General Partner setting forth the total indebtedness of the Borrower,
whether matured or unmatured, liquidated or unliquidated, direct or contingent,
joint or several, as of the date of such certificate.
<PAGE> 20
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(d) Other Information. Such other information respecting
the business, properties, operations or the condition, financial or otherwise,
of Borrower or the Station as Lender may from time to time reasonably request.
ARTICLE VII EVENTS OF DEFAULT
Section 7.1 Events of Default. Under this Agreement, an Event of
Default shall be any of the following:
(a) Borrower shall fail to pay any installment of
principal or interest on the Note, or any other obligation to Lender in respect
of fees and expenses payable under the Loan Documents when due whether at the
due date thereof or by acceleration or otherwise, and, in the case of any
installment of interest, such default shall remain unremedied for a period of
five (5) days after written notice thereof is given by Lender to Borrower;
provided, however, that the payment defaults described in this Section 7.1(a)
shall not constitute an Event of Default if, at the time of such payment
default, Lender shall have failed to pay Borrower a Program Fee in accordance
with Attachment I of the Time Brokerage Agreement, it being understood that any
failure by Lender to make such payment as a result of a breach by Borrower of
the Time Brokerage Agreement shall not excuse Borrower from complying with its
obligations under this Section 7.1(a); or
(b) The security interest or lien of Lender in any
material portion of the collateral covered by the Security Agreement,
Partnership Pledge Agreement, Stock Pledge Agreement or the Collateral
Assignment shall at any time not constitute a legal, valid and enforceable
security interest or lien, and Borrower shall have failed to take such actions
as are reasonably requested by Lender to correct any such illegality,
invalidity or unenforceability within a reasonable period of time following
such request; or
(c) Any representation or warranty made by Borrower
herein, in the Security Agreement or the Collateral Assignment, by the Partners
in the Partnership Pledge Agreement, or by the Stockholders in the Stock Pledge
Agreement, or in any certificate, agreement, instrument or statement
contemplated by or made or delivered pursuant to or in connection with this
Agreement, the Note, the Collateral Assignment, the Security Agreement, the
Partnership Pledge Agreement, or the Stock Pledge Agreement, shall prove to
have been incorrect in any material respect when made; or
(d) Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement, the Note, the Security
Agreement, the Collateral Assignment, the Partners shall fail to perform or
observe any material term, covenant or agreement contained in the Partnership
Pledge Agreement, or Stockholders shall fail to
<PAGE> 21
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perform or observe any term, covenant or agreement contained in the Stock
Pledge Agreement, and any such failure remains unremedied for thirty (30) days
after written notice thereof shall have been given to Borrower by Lender; or
(e) Borrower or the Partners shall fail to pay any
indebtedness for borrowed money owing by Borrower or the Partners, or any
interest or premium thereon, when due, whether such indebtedness shall become
due by scheduled maturity, by required prepayment, by acceleration, by demand
or otherwise, or Borrower or the Partners shall fail to perform any term,
covenant or agreement under any agreement or instrument evidencing or securing
or relating to any such indebtedness owing by Borrower or the Partners, if the
effect of such failure is to accelerate, or to permit the holder of such
indebtedness to accelerate the maturity of such indebtedness and, in the case
of any of the foregoing, Lender reasonably determines in the exercise of its
sole discretion that the failure to pay or perform could have a material
adverse effect on (i) the value of the assets of Borrower or the Pledged
Interests, (ii) the enforceability of the Loan Documents by the Lender in
accordance with their respective terms or (iii) the exercise by the Lender of
its rights and remedies under the Loan Documents; or
(f) [Reserved]
(g) Either (i) Borrower, the Partners or the Stockholders
shall fail to pay its debts as they mature in the ordinary course of business;
or (ii) Borrower, the Partners or the Stockholders shall file a petition
commencing a voluntary case concerning it under any Chapter of Title 11 of the
United States Code entitled "Bankruptcy"; or (iii) Borrower, the Partners or
the Stockholders shall apply for or consent to the appointment of any receiver,
trustee, custodian or similar officer for it or for all or any substantial part
of its property; or (iv) such receiver, trustee, custodian or similar officer
shall be appointed without the application or consent of Borrower, the Partners
or the Stockholders and such appointment shall continue undischarged for a
period of thirty (30) days; or (v) an involuntary case is commenced against
Borrower, the Partners or the Stockholders under any Chapter of the
aforementioned Title 11 and an order for relief under such Title 11 is entered
or the petition commencing the case is controverted but is not dismissed within
thirty (30) days after the commencement of the case; or (vi) Borrower, the
Partners or the Stockholders shall institute (by petition, application, answer,
consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding relating
to it under the laws of any jurisdiction; or (vii) any such proceeding shall be
instituted against Borrower, the Partners or the Stockholders and shall remain
undismissed for a period of thirty (30) days; or (viii) Borrower, the Partners
or the Stockholders shall take any action for the purpose of effectuating the
foregoing, and, in the case of any of the foregoing events with respect to the
Stockholders or the Partners other than the General
<PAGE> 22
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Partner, Lender reasonably determines in the exercise of its sole discretion
that the occurrence of any of the foregoing events could have a material
adverse effect on (i) the value of the assets of Borrower or the Pledged
Interests, (ii) the enforceability of the Loan Documents by the Lender in
accordance with their respective terms or (iii) the exercise by the Lender of
its rights and remedies under the Loan Documents; or
(h) Any court, government, or government agency shall
condemn, seize or otherwise appropriate or take custody or control of all or a
substantial portion of the property or assets of Borrower; or
(i) Other than any license for ATV or DTV facilities,
there shall be a cancellation, denial or revocation of any material FCC License
for the Station, Borrower shall be finally denied renewal of any such FCC
License, or any such FCC License shall be renewed on terms that materially
adversely affect the economic or commercial value or usefulness thereof; or
(j) Any money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an amount in excess of
Fifty Thousand Dollars ($50,000), or (ii) in the aggregate at any time an
amount in excess of Fifty Thousand Dollars ($50,000), and in either case not
adequately covered by insurance as to which the insurance company has
acknowledged coverage, shall be entered or filed against Borrower or its assets
and shall remain undischarged, unvacated, unbonded or unstayed for a period of
60 days or in any event later than five days prior to the date of any proposed
sale thereunder; or
(k) Any material adverse effect upon or change in (a) as
a result of any action taken by Borrower, the business, assets or properties of
the Station, including any damage, destruction or loss affecting any assets
used or useful in the conduct of the business of the Station, (b) as a result
of any action taken by Borrower, liabilities or capitalization of Borrower or
on the ability of Borrower to conduct its business, (c) as a result of any
action taken by Borrower or the Partners, the ability of Borrower, the Partners
or any other party to a Loan Document (other than Lender) to perform its
obligations hereunder or under any other Loan Document to which it is a party,
(d) the validity or enforceability of this Agreement, the Note or any other
Loan Document, (e) the rights or remedies of Lender under this Agreement, the
Note or any other Loan Document or at law or in equity, or (f) as a result of
any action taken by Borrower, the value of any material collateral granted to
Lender pursuant to any Loan Document shall occur.
Section 7.2 Effect of Event of Default. Should any Event of
Default occur, Lender may at its option by written notice to Borrower declare
the entire unpaid principal amount of the Note, together with all unpaid
interest and all other amounts payable under this
<PAGE> 23
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Agreement and every other obligation of Borrower to Lender, immediately due and
payable, whereupon the Note and all such obligations shall become and be
forthwith due and payable, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by Borrower, anything
contained herein or in the Note or in such other note or evidence of
indebtedness to the contrary notwithstanding; provided, however, that in case
of an Event of Default under Section 7.1(g), all the obligations of Borrower
under this Agreement and the Note shall become immediately due and payable as
of the date of any such Event of Default regardless of the cause of such Event
of Default and without any notice to Borrower required from Lender. Lender
shall have, in addition to all other rights and remedies allowed by law, the
rights and remedies of a secured party under the Uniform Commercial Code and,
without limiting the generality of the foregoing, the rights and remedies
provided for in the Security Agreement, Partnership Pledge Agreement, the Stock
Pledge Agreement and the Collateral Assignment, which provisions are hereby
incorporated by reference.
ARTICLE VIII MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies. No failure or delay
on the part of Lender in exercising any right, power or remedy hereunder shall
operate as a waiver, nor shall any single or partial exercise of any such
right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
Section 8.2 Amendments. No amendment, modification, termination
or waiver of any provision of this Agreement, the Note, the Security Agreement,
the Partnership Pledge Agreement, the Stock Pledge Agreement or the Collateral
Assignment, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless in writing, signed by Lender and then only in the
specific instance and for the specific purpose for which given. No notice to
or demand on Borrower in any case shall entitle it to any other or further
notice or demand in similar or other circumstances.
Section 8.3 Conflicts. In the event of any conflict or
inconsistency between any provision of this Agreement and a provision of the
Note, the Security Agreement, the Partnership Pledge Agreement, the Stock
Pledge Agreement or the Collateral Assignment, the provisions of this Agreement
shall control.
Section 8.4 Address for Notices. All notices and other
communications under this Agreement shall be in writing and shall be served by
personal service or by mailing a copy thereof by registered or certified mail,
return receipt requested, to the applicable party at the addresses indicated
below:
<PAGE> 24
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If to Borrower: Ponce-Nicasio Broadcasting, A Limited Partnership
3100 Gold Nugget Way
Placerville, California 95667
Attention: Ron V. Briggs
If to Lender: Paxson Communications of Sacramento-29, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson
or at such other address as may be designated by either party in a written
notice to the other complying as to delivery with the terms of this Section.
All such notices and other communications shall be effective when deposited in
the mails.
Section 8.5 Expenses. In the event of a default by Borrower or
Lender hereunder which results in a lawsuit or other proceeding for any remedy
available under this Agreement or any other Loan Document, the prevailing party
shall be entitled to reimbursement from the other party of all costs and
expenses incurred by such party directly in the enforcement of this Agreement
or the other Loan Documents, including, without limitation, the reasonable fees
and expenses of any attorney to whom the Note is referred for collection
(whether or not litigation is commenced) or for representation out of court, in
trial, on appeal or in proceedings under any bankruptcy or insolvency law or
otherwise. Borrower shall pay any and all taxes and fees payable or determined
to be payable in connection with the execution, delivery or recordation of any
instruments and documents to be delivered hereunder. In addition, Borrower
agrees to pay all the costs and expenses of Borrower in connection with the
negotiation, preparation and execution of the Loan Documents and all the costs
of furnishing all opinions by counsel for Borrower, and of Borrower's
performance of and compliance with all agreements and conditions contained
herein and in the other Loan Documents on its part to be performed or complied
with including, without limitation, confirming compliance with insurance
requirements.
Section 8.6 Binding Effect; Assignment. This Agreement shall
become effective when executed and thereafter shall be binding upon and inure
to the benefit of Borrower, Lender and their respective successors and assigns,
except that Borrower shall not have the right to assign any rights or
obligations hereunder without the prior written consent of Lender. Lender
shall be permitted to assign, upon prior written notice to Borrower but without
Borrower's consent, all or any portion of Lender's rights and interests
hereunder and under each other document executed in connection with this Loan
Agreement (x) to one or more other affiliates of Lender, and, upon any such
assignment, each reference herein or in such other document to "Lender" shall
be deemed to be and include a reference to such other
<PAGE> 25
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affiliate and (y) to creditors of Lender or its affiliates as security for
indebtedness of Lender or such affiliates. For purposes of this section, the
term affiliate shall mean, as applied to any entity or individual, any other
entity or individual directly or indirectly controlling, controlled by, or
under common control with, that entity or individual. For purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and under "common control with"), as applied to
any entity or individual, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
entity or individual, whether through the ownership of voting securities,
partnership interests or otherwise by contract.
Section 8.7 Governing Law; Venue. This Agreement, the Note, the
Security Agreement, the Partnership Pledge Agreement, the Stock Pledge
Agreement and related documents shall be governed by, and construed in
accordance with, the laws of the State of Florida with the exception of its
conflicts of laws provisions; provided that the effect of any recordation shall
be determined by the State thereof. Borrower and Lender hereby irrevocably
submit to the exclusive jurisdiction and venue of the state and federal
district courts for Sacramento, California for the purposes of any action or
proceeding arising out of or relating to this Agreement or the subject matter
hereof. Borrower and Lender hereby waive and agree not to assert, by way of
motion, as a defense or otherwise, in any such action or proceeding, any claim
that (A) they are not personally subject to the jurisdiction of such courts,
(B) the action or proceeding is brought in an inconvenient forum or (C) the
venue of the action or proceeding is improper. Borrower and Lender agree that,
notwithstanding any right or privilege they may possess at any time, they and
their property are and shall be generally subject to suit on account of the
obligations they have assumed hereunder. Borrower and Lender agree that
service in person or by certified or registered U.S. mail to its address set
forth in Section 8.4, or as subsequently changed as provided therein, shall
constitute valid in personam service upon Borrower and Lender and their
successors and assigns in any action or proceeding with respect to any matter
as to which they have submitted to jurisdiction hereunder. The obligations of
Borrower and Lender under this Section shall survive any termination of this
Agreement.
Section 8.8 Severability of Provisions. Any provision of this
Agreement, the Note, the Partnership Pledge Agreement, the Stock Pledge
Agreement, the Security Agreement, or the Collateral Assignmnent that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions or affecting the validity or
enforceability of any provisions in any other jurisdiction.
<PAGE> 26
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Section 8.9 Headings. Article and Section headings in this
Agreement are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 8.10 Rights Affected by Extensions. The rights of Lender
and its assigns shall not be impaired by any indulgence, release, renewal,
extension or modification which Lender may grant with respect to the
indebtedness or any part thereof, or with respect to the collateral or with
respect to any endorser, guarantor, or surety without notice or consent of
Borrower or any endorser, guarantee, or surety.
Section 8.11 Survival of Representations and Warranties. All
representations and warranties made in this Agreement and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Agreement and the Note and the making of the Loan
hereunder and continue in full force and effect, as of the respective dates as
of which they were made, until all of the obligations of Borrower to Lender
hereunder have been paid in full.
Section 8.12 FCC Compliance. Notwithstanding anything herein or
in any of the other Loan Documents to the contrary, but without limiting or
waiving Borrower's obligations hereunder or under any of the other Loan
Documents, Lender's remedies hereunder and under the other Loan Documents are
subject to compliance with the Communications Act of 1934, as amended, and all
applicable rules, regulations and policies of the FCC, and Lender will not take
any action pursuant to this Agreement or any of the other Loan Documents that
would constitute or result in any assignment of any FCC authorization held by
Borrower or any change of control of the Station if such assignment or change
of control would require under then existing law (including the written rules
and regulations promulgated by the FCC), the prior approval of the FCC, without
first obtaining such approval of the FCC. This Agreement, the other Loan
Documents and the transactions contemplated hereby and thereby do not and will
not constitute, create, or have the effect of constituting or creating,
directly or indirectly, actual or practical ownership of Borrower by Lender or
control, affirmative or negative, direct or indirect, of Borrower by Lender,
over the programming, management or any other aspect of the operation of
Borrower, which ownership and control remain exclusively and at all times in
Borrower until such time as Lender has complied with such law, rules,
regulations and policies.
Section 8.13 Further Assurances. From time to time, Borrower
shall execute and deliver to Lender such additional documents as Lender may
reasonably require to carry out the purposes of this Agreement or any of the
documents entered into in connection herewith, or to preserve and protect the
rights of Lender hereunder or thereunder.
<PAGE> 27
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Section 8.14 Indemnification. Borrower hereby indemnifies and
holds harmless Lender and its directors, officers, shareholders, employees,
agents, counsel, subsidiaries and affiliates (the "Indemnified Persons") from
and against any and all losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against any
Indemnified Person arising from any material breach by Borrower of the
provisions hereof, including, without limitation, any of the representations
and warranties, the documents entered into in connection herewith, or any of
them or any of the transactions contemplated hereby or thereby; provided,
however, that Borrower shall not be liable to any Indemnified Person, if there
is a judicial determination that such losses, liabilities, obligations,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the gross negligence or willful misconduct of such
Indemnified Person.
Section 8.15 Maximum Interest. Lender and Borrower intend that
this Agreement and the other Loan Documents conform to all applicable usury
laws. Accordingly, no provisions of the Loan Documents shall require the
payment or permit the collection of interest in excess of the maximum rate
permitted by applicable law ("Maximum Rate"), or obligate Borrower to pay any
taxes, assessments, charges, insurance premiums or other amounts which are held
to constitute interest to the extent that such payments, when added to the
other obligations under the Loan Documents, would be held to constitute
contracting for, or the payment by Borrower of, interest at a rate greater than
the Maximum Rate. Lender and Borrower further agree that:
(i) if any excess of interest in such respect is herein
or in any such other instrument provided for, or shall be adjudicated to be so
provided for herein or in any such instrument, the provisions of this
subsection 8.15 shall govern, and neither Borrower nor its successors or
assigns shall be obligated to pay the amount of such interest to the extent it
is in excess of the Maximum Rate;
(ii) if at any time the amount of interest under any of
the Loan Documents for a calendar year exceeds the Maximum Rate had the Maximum
Rate at all times been in effect, the interest chargeable under any such Loan
Document shall be limited to the amount of interest that could have been
charged if the Maximum Rate had at all times been in effect, but any subsequent
reductions in the interest due shall not reduce the rate of interest chargeable
under any such Loan Document below the Maximum Rate until the total amount of
interest accrued under any such Loan Document equals the amount of interest
that would have accrued if the interest provided for in any such Loan Document
had at all times been in effect and collectible;
<PAGE> 28
-24-
(iii) if the maturity of any Loan Document is accelerated
for any reason, or in the event of any prepayment by Borrower, or in any other
event, earned interest may never include more than the Maximum Rate, computed
from the date of disbursement of the funds evidenced by such Loan Document
until payment, and any interest otherwise payable under such Loan Document that
is in excess of the Maximum Rate shall be canceled automatically as of such
acceleration or such other event and (if theretofore paid) shall be credited
against principal;
(iv) if it should be held that any interest payable or
chargeable under any Loan Document is in excess of the Maximum Rate, the
interest payable or chargeable under such Loan Document shall be reduced to the
maximum amount permitted by applicable federal or state law, whichever shall
permit the higher lawful interest, as construed by courts having jurisdiction
thereof; and
(v) the spreading, prorating and amortizing of interest
over the Maturity Date of the Loan Documents shall be allowed to the fullest
extent permitted by applicable law.
Section 8.16 Subsidiary. Notwithstanding anything to the contrary
contained herein, Borrower may establish a subsidiary partnership, of which
Borrower shall be the sole limited partner, and General Partner shall be the
sole general partner, and such subsidiary partnership, and the assets,
liabilities, business and prospects thereof, shall not be subject to the terms
and conditions of this Agreement.
Section 8.17 No Joint Ventures. Neither this Agreement, any other
Loan Document nor any action taken by Lender or Borrower hereunder or
thereunder shall be deemed to create any joint venture, partnership or other
business relationship between Lender and Borrower other than the
lender-borrower relationship expressly created hereby.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 29
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IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be executed by their respective duly authorized officers as of the
date first above written.
PAXSON COMMUNICATIONS OF
SACRAMENTO-29, INC.
By: /s/ James B. Bocock
-------------------------------------
James B. Bocock
President
PONCE-NICASIO BROADCASTING, A
LIMITED PARTNERSHIP
By: Ponce-Nicasio Broadcasting, Inc.,
its general partner
By: /s/ Carmen Briggs
--------------------------------
Name: Carmen Briggs
Title: President
<PAGE> 1
EXHIBIT 10.135
================================================================================
OPTION AGREEMENT
BY AND BETWEEN
PONCE-NICASIO BROADCASTING, A
LIMITED PARTNERSHIP
AND
PAXSON COMMUNICATIONS OF
SACRAMENTO-29, INC.
FOR
TELEVISION STATION KCMY-TV
SACRAMENTO, CALIFORNIA
* * *
SEPTEMBER 6, 1996
================================================================================
<PAGE> 2
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement") is entered into as of
September 6, 1996 by and between PAXSON COMMUNICATIONS OF SACRAMENTO-29, INC., a
Florida corporation ("Paxson"), and PONCE-NICASIO BROADCASTING, A LIMITED
PARTNERSHIP, a California limited partnership ("PNB").
RECITALS
A. PNB owns or leases all of the assets (the "Assets") that are
used or useful in the business and operations of Television Station KCMY-TV,
Channel 29, Sacramento, California (the "Station"), including, without
limitation, the licenses issued by the Federal Communications Commission
("FCC") for the Station (the "FCC Licenses").
B. Paxson and PNB have entered into a Time Brokerage Agreement
dated as of the date hereof (the "Time Brokerage Agreement"), pursuant to which
Paxson shall provide programming for broadcast on the Station.
C. Paxson and PNB have entered into a Loan Agreement dated as of
the date hereof (the "Loan Agreement"), pursuant to which Paxson agrees to loan
PNB up to Eight Million Five Hundred Thousand Dollars ($8,500,000).
D. PNB desires to grant to Paxson an exclusive and irrevocable
option to purchase the Assets, including the FCC Licenses, and Paxson desires
to grant to PNB an exclusive and irrevocable option to require Paxson to
purchase the Assets, including the FCC Licenses, on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Grant of Put Option.
(a) Paxson hereby grants to PNB an exclusive and
irrevocable option to require Paxson to acquire the Assets, including the FCC
Licenses (the "Put Option"), for a purchase price of Seventeen Million Dollars
($17,000,000), payable upon the closing of the Option Purchase Agreement (as
defined in Section 3 below).
(b) PNB may deliver to Paxson written notice of PNB's
intention to exercise the Put Option (the "Put Notice") at any time during the
period commencing on the date hereof and ending on May 31, 1998 (the "Put
Termination Date"). In the event that
<PAGE> 3
PNB fails to give Paxson the Put Notice prior to the Put Termination Date, the
Put Option shall expire.
2. Grant of Call Option.
(a) PNB hereby grants to Paxson an exclusive and irrevocable
option to acquire the Assets, including the FCC Licenses (the "Call Option"),
for a purchase price of Seventeen Million Dollars ($17,000,000), payable upon
the closing of the Option Purchase Agreement.
(b) Paxson may deliver to PNB written notice of Paxson's
intention to exercise the Call Option (the "Call Notice") at any time during
the period commencing on June 1, 1998 and ending on June 30, 1998 (the "Call
Termination Date"). Notwithstanding the requirement in the preceding sentence,
Paxson may deliver to PNB a Call Notice at any time following (i) a termination
of the Time Brokerage Agreement in accordance with its terms for any reason
other than a material breach by Paxson of its obligations thereunder or a
termination of the Time Brokerage Agreement by Paxson pursuant to Section
6.1(e) thereof, (ii) the deletion or preemption by PNB during any consecutive
30-day period of more than 30 hours of programming supplied by Paxson for
broadcast on the Station pursuant to the Time Brokerage Agreement, other than a
deletion or preemption of programming by PNB for the broadcast of programming
covering natural disasters occurring in Northern California, or (iii) the
delivery by Paxson to PNB of the written notice contemplated by section 7.2 of
the Loan Agreement upon an Event of Default, as that term is defined in the
Loan Agreement. In the event that Paxson fails to give PNB the Call Notice
prior to the Call Termination Date, the Call Option shall expire.
3. Option Purchase Agreement. Within five (5) business days
following Paxson's receipt of the Put Notice or PNB's receipt of the Call
Notice, as the case may be, PNB and Paxson shall enter into the Option Purchase
Agreement in the form of Schedule A hereto (the "Option Purchase Agreement"),
it being understood that the only change to such form shall be changes, if any,
in the information contained in the Schedules thereto and the addition, if any,
of Schedules thereto that are reasonably required to reflect events occurring
after the date hereof; provided, however, that Paxson shall not be required to
accept any such change or addition that, as a result of any action taken by
PNB, could reasonably be expected to cause a material adverse change in, or
have a material adverse effect on, the assets to be conveyed to Paxson pursuant
to the Option Purchase Agreement, the business or operations of the Station or
the ability of PNB to consummate the transactions contemplated by the Option
Purchase Agreement in accordance with its terms. Upon the execution and
delivery of the Option Purchase Agreement, PNB and Paxson shall perform their
respective obligations thereunder, including, without limitation, filing and
prosecuting an appropriate
- 2 -
<PAGE> 4
application for FCC consent to the assignment of the FCC Licenses from PNB to
Paxson (the "FCC Consent").
4. Survival of Options.
(a) In the event that the exercise of the Put Option is
not consummated for any reason whatsoever, the Put Option shall nevertheless
remain exercisable by PNB until the Put Termination Date, and PNB may at any
time, and from time to time, prior to such expiration again exercise the Put '
Option as set forth in this Option Agreement and, upon such exercise, Paxson
and PNB shall enter into an Asset Purchase Agreement that is substantially
identical to the Option Purchase Agreement and thereafter diligently proceed to
perform their obligations thereunder.
(b) In the event that the exercise of the Call Option is
not consummated for any reason whatsoever, the Call Option shall nevertheless
remain exercisable by Paxson until the Call Termination Date, and Paxson may at
any time, and from time to time, prior to such expiration again exercise the
Call Option as set forth in this Option Agreement and, upon such exercise, PNB
and Paxson shall enter into an Asset Purchase Agreement that is substantially
identical to the Option Purchase Agreement and thereafter diligently proceed to
perform their obligations thereunder.
5. Control of the Station. Prior to the closing of the
transactions contemplated by the Option Purchase Agreement, Paxson shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of PNB until the closing of the
transactions contemplated by the Option Purchase Agreement.
6. Programming Agreements. In the event that (a) PNB does not
exercise the Put Option on or prior to the Put Termination Date, (b) Paxson
does not exercise the Call Option on or prior to the Call Termination Date, and
(c) the InfoMall TV Network ("inTV") continues to provide infornercial
programming to affiliated television stations on the Call Termination Date,
then PNB may, at any time during the period commencing on the day after the
Call Termination Date and ending on the 5th business day thereafter (the
"Programming Notice Period"), deliver to Paxson written notice (the
"Affiliation Notice") of PNB's intention to enter into an Affiliation
Agreement with inTV. Within five business days following Paxson's receipt of
the Affiliation Notice, PNB and inTV shall enter into an Affiliation Agreement
on the same terms and conditions contained in the Affiliation Agreement between
inTV and PNB that is in effect on the date hereof; provided that the term of
such Affiliation Agreement shall be for a period of two years from the
execution thereof;
- 3 -
<PAGE> 5
and provided further that neither party shall be permitted to terminate such
Affiliation Agreement without cause prior to the end of the two-year term.
Notwithstanding anything in this Section 6 to the contrary, if inTV no longer
provides infomercial programming to affiliated television stations as of the
Call Termination Date, then PNB may, at any time during the Programming Notice
Period, deliver to Paxson written notice of PNB's intention to extend the Time
Brokerage Agreement (the "TBA Extension Notice") for a two-year term ending on
the second anniversary of the Call Termination Date. If PNB fails to deliver
either the Affiliation Notice or the TBA Extension Notice prior to the end of
the Programming Notice Period, then neither Paxson nor inTV shall have any
further obligations hereunder. In addition to the foregoing, PNB may deliver
the Affiliation Notice or, if inTV no longer provides infornercial programming
to affiliated television stations, PNB, may deliver the TBA Extension Notice,
within 30 days following a termination by PNB or Paxson of this Option
Agreement, the Time Brokerage Agreement or the Asset Purchase Agreement in
accordance with their respective terms so long as, at the time of any such
termination, PNB is not in default of its obligations under this Option
Agreement, the Time Brokerage Agreement, the Asset Purchase Agreement and the
Loan Agreement.
7. Representations and Warranties of PNB. PNB represents and
warrants to Paxson as follows:
(a) PNB is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of California. PNB
has full partnership power and authority to execute and deliver this Option
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Option Agreement and the consummation of the
transactions contemplated hereby by PNB have been duly and validly authorized
by all necessary partnership action on the part of PNB. This Option Agreement
has been duly and validly executed and delivered by PNB and constitutes a
legal, valid and binding agreement of PNB enforceable against PNB in accordance
with its terms, except as such enforceability may be affected by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
(b) Except for the FCC Consent, there is no requirement
applicable to PNB to make any filing with, or to obtain any permit,
authorization, consent or approval of, any governmental or regulatory authority
or any other third party as a condition to the consummation by PNB of the
transactions contemplated by this Option Agreement and the Option Purchase
Agreement.
(c) Subject to obtaining the FCC Consent, the execution,
delivery and performance of this Option Agreement and the Option Purchase
Agreement by PNB will not
- 4 -
<PAGE> 6
(i) conflict with PNB's organizational documents or agreements, (ii) conflict
with or result in a default (or give rise to any right of first refusal,
termination, cancellation or acceleration that has not been duly and validly
waived by the holder thereof) under any of the terms, conditions or provisions
of any note, bond, mortgage, agreement, or lease to which PNB is a party or by
which any of the FCC Licenses or the other Assets are bound, or (iii) violate
any statute, law, rule, regulation, order, writ, injunction or decree
applicable to PNB, the FCC Licenses or the other Assets.
8. Representations and Warranties of Paxson. Paxson represents
and warrants to PNB as follows:
(a) Paxson has full corporate power and authority to
execute and deliver this Option Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Option Agreement and
the consummation of the transactions contemplated hereby by Paxson have been
duly and validly authorized by all necessary corporate action on the part of
Paxson. This Option Agreement has been duly and validly executed and delivered
by Paxson and constitutes a legal, valid and binding agreement of Paxson
enforceable against Paxson in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by judicial discretion in the
enforcement of equitable remedies.
(b) Except for the FCC Consent, there is no requirement
applicable to Paxson to make any filing with, or to obtain any permit,
authorization, consent or approval of, any governmental or regulatory authority
or any other third party as a condition to the consummation by Paxson of the
transactions contemplated by this Option Agreement and the Option Purchase
Agreement.
(c) Subject to obtaining the FCC Consent, the execution,
delivery and performance of this Option Agreement and the Option Purchase
Agreement by Paxson will not (i) conflict with Paxson's organizational
documents, (ii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, agreement, or lease to which Paxson is a party or
by which any of its assets are bound, or (iii) violate any statute, law, rule,
regulation, order, writ, injunction or decree applicable to Paxson.
9. Covenants of PNB. PNB will not (i) commit any act that is
inconsistent with the grant of the Call Option to Paxson or the transactions
contemplated by this Option Agreement and the Option Purchase Agreement or (ii)
violate any of the covenants, by any act or failure to act, set forth in
Section 5 of the Option Purchase Agreement. Without limiting the generality of
the foregoing, PNB agrees that from and after the date hereof and
- 5 -
<PAGE> 7
until the termination of this Option Agreement in accordance with its terms,
PNB will not sell, transfer or otherwise dispose of any assets of the Station,
except in the normal course of business consistent with prior practices, and
PNB will not respond to inquiries or proposals, or enter into or pursue any
discussions, or enter into any agreements (oral or written), with respect to
any sale, transfer or other disposition prohibited by this Section 9.
10. Cooperation. PNB and Paxson shall cooperate fully with each
other and their respective counsel and accountants in connection with any steps
required to be taken as part of their respective obligations under this Option
Agreement and the Option Purchase Agreement and will each use their respective
best efforts to perform or fulfill all conditions and obligations to be
performed or fulfilled by them under this Option Agreement and the Option
Purchase Agreement so that the transactions contemplated hereby shall be
consummated.
11. Specific Performance. The parties recognize that if PNB
breaches this Option Agreement and refuses to perform under the provisions of
this Option Agreement, monetary damages alone would not be adequate to
compensate Paxson for its injury. Paxson shall therefore be entitled, in
addition to any other remedies that may be available, including money damages,
to obtain specific performance of the terms of this Option Agreement. If any
action is brought by Paxson to enforce this Option Agreement, PNB; shall waive
the defense that there is an adequate remedy at law.
12. Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Option Agreement shall be
(a) in writing, (b) delivered by personal delivery, or sent by commercial
delivery service or registered or certified mail, return receipt requested, (c)
deemed to have been given on the date of personal delivery or the date set
forth in the records of the delivery service or on the return receipt, and (d)
addressed as follows:
If to PNB: Ron V. Briggs
Ponce-Nicasio Broadcasting, A Limited Partnership
3100 Gold Nugget Way
Placerville, California 95667
If to Paxson: Lowell W. Paxson
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
- 6 -
<PAGE> 8
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
12.
13. Entire Agreement; Amendment. This Option Agreement and the
Option Purchase Agreement supersede all prior agreements and understandings of
the parties, oral and written, with respect to its subject matter. This Option
Agreement and the Option Purchase Agreement may be modified only by an
agreement in writing executed by all of the parties hereto. No waiver of
compliance with any provision of this Option Agreement or the Option Purchase
Agreement will be effective unless evidenced by an instrument evidenced in
writing and signed by the parties hereto.
14. Further Assurances. From time to time after the date of
execution hereof, the parties shall take such further action and execute such
further documents, assurances and certificates as either party reasonably may
request of the other to effectuate the purposes of this Option Agreement.
15. Counterparts. This Option Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and shall become
effective when each of the parties hereto shall have delivered to it this
Option Agreement duly executed by the other parties hereto.
16. Headings. The headings in this Option Agreement are for the
sole purpose of convenience of reference and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Option Agreement.
17. Governing Law; Venue. This Option Agreement shall be
construed under and in accordance with the laws of the State of California,
without giving effect to the principles of conflicts of law. PNB and Paxson
hereby irrevocably submit to the exclusive jurisdiction and venue of the state
and federal district courts for Sacramento, California for the purposes of any
action or proceeding arising out of or relating to this Option Agreement or the
subject matter hereof. PNB and Paxson hereby waive and agree not to assert, by
way of motion, as a defense or otherwise, in any such action or proceeding, any
claim that (A) they are not personally subject to the jurisdiction of such
courts, (B) the action or proceeding is brought in an inconvenient forum or (C)
the venue of the action or proceeding is improper. PNB and Paxson agree that,
notwithstanding any right or privilege they may possess at any time, they and
their property are and shall be generally subject to suit on account of the
obligations they have assumed hereunder. PNB and Paxson agree that service in
person or by certified or registered U.S. mail to its address set forth in
Section 12, or as subsequently changed as provided therein, shall constitute
valid in personam service upon PNB and Paxson and their
- 7 -
<PAGE> 9
successors and assigns in any action or proceeding with respect to any matter
as to which they have submitted to jurisdiction hereunder. The obligations of
PNB and Paxson under this Section shall survive any termination of this
Agreement.
18. Benefit and Binding Effect; Assignability. This Option
Agreement shall inure to the benefit of and be binding upon PNB, Paxson and
their respective successors and permitted assigns. No party hereto may assign
this Option Agreement without the prior written consent of the other parties
hereto, except that Paxson at any time prior to the consummation of the
transactions contemplated by this Option Agreement may assign its rights and
obligations under this Option Agreement without PNB's consent to (a) any entity
controlled by or under common control with Paxson or (b) any other entity
designated by Paxson, so long as Paxson determines, in the exercise of
reasonable business judgment, that such entity possesses the financial
capacity, and the requisite qualifications under the Communications Act of
1934, as amended, and the rules and regulations promulgated thereunder, to
consummate the transactions contemplated by this Option Agreement and the
Option Purchase Agreement; provided, however, that Paxson Communications
Corporation hereby agrees to guarantee the performance by Paxson's assignee of
Paxson's obligations hereunder in the event that Paxson's assignee fails to
perform such obligations. Upon any permitted assignment by a party in
accordance with this Section 18, all references to "Paxson" herein shall be
deemed to be references to Paxson's assignee and all references to "PNB"
herein shall be deemed to be references to PNB's assignee, as the case may be.
Notwithstanding the foregoing, Paxson may, at its sole cost and expense, assign
its rights, benefits, duties or obligations hereunder to its lenders as
collateral security for the obligations of Paxson to such lenders.
19. Confidentially. Except as necessary for the consummation of
the transaction contemplated by this Option Agreement, and except as and to the
extent required by law, each party will keep confidential any information
obtained from the other party in connection with the transactions contemplated
by this Option Agreement. If this Option Agreement is terminated, each party
will return to the other party all information obtained by the such party from
the other party in connection with the transactions contemplated by this Option
Agreement.
20. Press Release. No party shall publish any press release, make
any other public announcement or otherwise communicate with any news media
concerning this Option Agreement or the transactions contemplated hereby or the
transactions contemplated by the Loan Agreement and the Time Brokerage
Agreement without the prior written consent of the other party.
- 8 -
<PAGE> 10
21. Termination.
(a) Paxson may, at its option and expense, retain a consultant
selected by Paxson to perform a Phase I environmental survey of the properties
of the Station. If such survey, which shall be completed no later than forty
(40) days following the execution of this Option Agreement, discloses any
material environmental hazard or material possibility of future liability for
environmental damages or clean-up costs, Paxson shall so notify PNB in writing
(the "Environmental Notice") on or before the date that is 45 days following
execution of this Option Agreement.
(b) Paxson may, at its option and expense, retain an engineering
firm selected by Paxson to conduct a proof of performance study of the Station
and to prepare a report on the Station's compliance with customary engineering
practices and all applicable FCC rules, regulations, prescribed practices, and
technical standards. If the study or report, which shall be completed no later
than forty (40) days following the execution of this Option Agreement,
discloses any material deficiencies in the operations or equipment of the
Station, Paxson shall so notify PNB in writing (the "Engineering Notice") on
or before the date that is 45 days following execution of this Option Agreement.
(c) This Option Agreement may be terminated by Paxson and the
purchase and sale of the Station abandoned if:
(i) Paxson shall have notified PNI3 of material environmental
hazards or the material possibility of future liability for
environmental damages or clean-up costs, as indicated in the
environmental study described in Section 21(a), and the cause thereof
shall not have been remedied within thirty (30) days following the date
the Environmental Notice is given to PNB.
(ii) Paxson shall have notified PNB of material deficiencies in
the operations or equipment of the Station, as indicated in the
engineering study described in Section 21(b), and the cause thereof shall
not have been remedied within thirty (30) days following the date the
Engineering Notice is given to PNB.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 9 -
<PAGE> 11
IN WITNESS WHEREOF the parties hereto have executed this Option
Agreement as of the date first above written.
PAXSON COMMUNICATIONS OF
SACRAMENTO-29, INC.
By: /s/ James B. Bocock
------------------------------------
James B. Bocock
President
PONCE-NICASIO BROADCASTING, A
LIMITED PARTNERSHIP
By: Ponce-Nicasio Broadcasting, Inc.,
its general partner
By: /s/ Carmen Briggs
-----------------------------
Name: Carmen Briggs
Title: President
PAXSON COMMUNICATIONS CORPORATION HEREBY
JOINS IN THE EXECUTION OF THE FOREGOING
AGREEMENT SOLELY TO AGREE TO THE GUARANTY SET
FORTH IN SECTION 18 HEREOF, AS OF THE DATE
FIRST ABOVE WRITTEN.
By: /s/ James B. Bocock
------------------------------------
James B. Bocock
President
- 10 -
<PAGE> 12
SCHEDULE A
===============================================================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
SACRAMENTO-29, INC.
AND
PONCE-NICASIO BROADCASTING, A
LIMITED PARTNERSHIP
FOR
TELEVISION STATION KCMY-TV
SACRAMENTO, CALIFORNIA
* * *
SEPTEMBER 6, 1996
===============================================================================
<PAGE> 13
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 1
"Accounts Receivable" . . . . . . . . . . . . . . . . . 1
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assumed Contracts" . . . . . . . . . . . . . . . . . . 1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . 2
'Closing Date" . . . . . . . . . . . . . . . . . . . . . 2
"Consent" . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts" . . . . . . . . . . . . . . . . . . . . . . 2
"FC" . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Consent" . . . . . . . . . . . . . . . . . . . . . 2
"FCC Licenses" . . . . . . . . . . . . . . . . . . . . . 2
"Final Order" . . . . . . . . . . . . . . . . . . . . . 2
"HSR Act" . . . . . . . . . . . . . . . . . . . . . . . 2
"Intangibles " . . . . . . . . . . . . . . . . . . . . . 2
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . 3
"Loan Documents" . . . . . . . . . . . . . . . . . . . . 3
"Purchase Price" . . . . . . . . . . . . . . . . . . . . 3
"Real Property" . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . 3
"Time Brokerage Agreement" . . . . . . . . . . . . . . . 3
"Transaction Document" . . . . . . . . . . . . . . . . 3
SECTION 2. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . 3
2.1 Agreement to Sell and Buy . . . . . . . . . . . 3
2.2 Excluded Assets . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . 5
2.4 Payment of Purchase Price . . . . . . . . . . . 6
2.5 Assumption of Liabilities and Obligations . . . 6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . 6
3.1 Organization, Standing, and Authority . . . . . 6
3.2 Authorization and Binding Obligation . . . . . . 6
3.3 Absence of Conflicting Agreements . . . . . . . 7
3.4 Governmental Licenses . . . . . . . . . . . . . 7
3.5 Title to and Condition of Real Property . . . . 8
3.6 Title to and Condition of Tangible Personal
Property . . . . . . . . . . . . . . . . . . . . 8
3.7 Contracts . . . . . . . . . . . . . . . . . . . 8
3.8 Consents . . . . . . . . . . . . . . . . . . . . 9
3.9 Intangibles . . . . . . . . . . . . . . . . . . 9
</TABLE>
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<PAGE> 14
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
3.10 [Reserved] . . . . . . . . . . . . . . . . . . . 9
3.11 Insurance . . . . . . . . . . . . . . . . . . . 9
3.12 Reports . . . . . . . . . . . . . . . . . . . . 10
3.13 Personnel . . . . . . . . . . . . . . . . . . . 10
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . 12
3.15 Claims and Legal Actions . . . . . . . . . . . . 12
3.16 Environmental Matters . . . . . . . . . . . . . 13
3.17 Compliance with Laws . . . . . . . . . . . . . . 14
3.18 Conduct of Business in Ordinary Course . . . . 14
3.19 Transactions with Affiliates . . . . . . . . . . 14
3.20 Broker . . . . . . . . . . . . . . . . . . . . . 15
3.21 Full Disclosure . . . . . . . . . . . . . . . . 15
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . 15
4.1 Organization, Standing, and Authority . . . . . 15
4.2 Authorization and Binding Obligation . . . . . . 15
4.3 Absence of Conflicting Agreements . . . . . . . 15
4.4 Broker . . . . . . . . . . . . . . . . . . . . . 16
4.5 Full Disclosure . . . . . . . . . . . . . . . . 16
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING . . . . 16
5.1 Generally . . . . . . . . . . . . . . . . . . . 16
5.2 Compensation . . . . . . . . . . . . . . . . . . 16
5.3 Contracts . . . . . . . . . . . . . . . . . . . 16
5.4 Disposition of Assets . . . . . . . . . . . . . 16
5.5 Encumbrances . . . . . . . . . . . . . . . . . . 17
5.6 Licenses . . . . . . . . . . . . . . . . . . . . 17
5.7 Rights . . . . . . . . . . . . . . . . . . . . . 17
5.8 No Inconsistent Action . . . . . . . . . . . . . 17
5.9 Access to Information . . . . . . . . . . . . . 17
5.10 Maintenance of Assets . . . . . . . . . . . . . 18
5.11 Insurance . . . . . . . . . . . . . . . . . . . 18
5.12 Consents . . . . . . . . . . . . . . . . . . . . 18
5.13 Books and Records . . . . . . . . . . . . . . . 18
5.14 Notification . . . . . . . . . . . . . . . . . . 18
5.15 Financial Information . . . . . . . . . . . . . 18
5.16 Compliance with Laws . . . . . . . . . . . . . . 18
5.17 Financing Leases . . . . . . . . . . . . . . . . 19
5.18 Preservation of Business . . . . . . . . . . . . 19
5.19 Collection of Accounts Receivable . . . . . . . 19
</TABLE>
- ii -
<PAGE> 15
<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . 19
6.1 FCC Consent . . . . . . . . . . . . . . . . . . 19
6.2 Control of the Station . . . . . . . . . . . . 19
6.3 Risk of Loss . . . . . . . . . . . . . . . . . 20
6.4 Confidentiality . . . . . . . . . . . . . . . . 20
6.5 Cooperation . . . . . . . . . . . . . . . . . . 20
6.6 Bulk Sales Law . . . . . . . . . . . . . . . . 20
6.7 Access to Books and Records . . . . . . . . . . 20
6.8 Appraisal . . . . . . . . . . . . . . . . . . . 21
6.9 Noncompetition Agreement . . . . . . . . . . . 21
6.10 HSR Act Filing . . . . . . . . . . . . . . . . 21
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING . . . . . . . . . . . . . . . . . . . 21
7.1 Conditions to Obligations of Buyer . . . . . . . 21
7.2 Conditions to Obligations of Seller . . . . . . 23
SECTION 8. CLOSING AND CLOSING DELIVERIES. . . . . . . . . . . 23
8.1 Closing . . . . . . . . . . . . . . . . . . . . 23
8.2 Deliveries by Seller . . . . . . . . . . . . . 24
8.3 Deliveries by Buyer . . . . . . . . . . . . . . 25
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . 26
9.1 Termination by Seller . . . . . . . . . . . . . 26
9.2 Termination by Buyer . . . . . . . . . . . . . 26
9.3 Rights on Termination . . . . . . . . . . . . . 27
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . 27
10.1 Representations and Warranties . . . . . . . . 27
10.2 Indemnification by Seller . . . . . . . . . . . 27
10.3 Indemnification by Buyer . . . . . . . . . . . 28
10.4 Procedure for Indemnification . . . . . . . . . 28
10.5 Specific Performance . . . . . . . . . . . . . 29
10.6 Attorneys' Fees . . . . . . . . . . . . . . . . 29
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . 30
11.1 Fees and Expenses . . . . . . . . . . . . . . . 30
11.2 Notices . . . . . . . . . . . . . . . . . . . . 30
11.3 Benefit and Binding Effect . . . . . . . . . . 31
11.4 Further Assurances . . . . . . . . . . . . . . . 31
</TABLE>
- iii -
<PAGE> 16
<TABLE>
<CAPTION>
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<S> <C> <C>
11.5 Governing Law; Venue . . . . . . . . . . . . . . 31
11.6 Headings . . . . . . . . . . . . . . . . . . . . 32
11.7 Gender and Number . . . . . . . . . . . . . . . 32
11.8 Entire Agreement . . . . . . . . . . . . . . . . 32
11.9 Waiver of Compliance; Consents . . . . . . . . . 32
11.10 Press Release . . . . . . . . . . . . . . . . . 32
11.11 Counterparts . . . . . . . . . . . . . . . . . . 33
</TABLE>
- iv -
<PAGE> 17
LIST OF SCHEDULES
<TABLE>
<S> <C> <C>
Schedule 2.2 - Excluded Property
Schedule 3.3 - Consents
Schedule 3.4 - Licenses
Schedule 3.5 - Real Property
Schedule 3.6 - Tangible Personal Property
Schedule 3.7 - Contracts
Schedule 3.9 - Intangibles
Schedule 3.1 - Insurance-Policies
Schedule 3.13 - Employee Matters
Schedule 3.15 - Legal Actions
Schedule 3.19 - Affiliate Transactions
Schedule 6.13 - Form of Noncompetition Agreement
Schedule 8.2(g) - Form of Opinions of Seller's Counsel
Schedule 8.3(d) - Form of Opinion of Buyer's Counsel
</TABLE>
<PAGE> 18
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the day of 199_, by and
between PAXSON COMMUNICATIONS OF SACRAMENTO-29, INC., a Florida corporation
("Buyer"), and PONCE-NICASIO BROADCASTING, A LIMITED PARTNERSHIP, a California
limited partnership ("Seller").
RECITALS
A. Seller is the licensee of and owns and operates television
station KCMY-TV, Sacramento, California (the "Station"), pursuant to licenses
issued by the Federal Communications Commission ("FCC").
B. Seller desires to sell, and Buyer desires to buy, substantially
all the assets that are used or useful in the business or operations of the
Station, for the price and on the terms and conditions set forth in this
Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Seller, intending to be bound
legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of advertising time run on the Station by Seller as of 11:59 p.m.,
Sacramento time, on the day prior to the effective date of the Time Brokerage
Agreement (as defined below).
"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 specifically designated on Schedule 3.7 as Contracts that are to be
assumed by Buyer upon its purchase of the Station, (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) time sales contracts entered into
by Seller in compliance with Section 5.3.
<PAGE> 19
- 2 -
"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, nongovernmental licenses, and
other agreements (including leases for personal or real property and employment
agreements), written or oral (including any amendments and other modifications
thereto) to which Seller is a party or which are binding upon Seller and which
relate to or affect the Assets or the business or operations of the Station, and
(i) which are in effect on the date of this Agreement or (H) which are entered
into by Seller between the date of this Agreement and the Closing Date.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by Seller
or under which Seller is licensed or franchised and which are used or useful in
the business and operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date.
<PAGE> 20
- 3 -
"Licenses" means all licenses, permits, and other authorizations issued
by the FCC, the Federal Aviation Administration, or any other federal, state, or
local governmental authorities to Seller in connection with the conduct of the
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date.
"Loan Documents" means, collectively, the Loan Agreement dated as of
the date hereof between Buyer and Seller (the "Loan Agreement") and the
Promissory Note, Security Agreement, Collateral Assignment, Pledge Agreements
and the other agreements executed and delivered pursuant to the Loan Agreement.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings and
other improvements thereon, and other real property interests which are used or
useful in the business or operations of the Station, together with any additions
thereto between the date of this Agreement and the Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts, and other tangible personal property which is used or useful in the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Time Brokerage Agreement" means the Time Brokerage Agreement dated as
of the date hereof between Buyer and Seller.
"Transaction Documents" means the Time Brokerage Agreement and the Loan
Documents.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
set forth in this Agreement, Seller hereby agrees to sell, transfer, and deliver
to Buyer on the Closing Date, and Buyer agrees to purchase, all of the tangible
and intangible assets used or useful in connection with the conduct of the
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date, but excluding the
assets described in Section 2.2, free and clear of any claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever (except for liens for current taxes not
yet due and payable), including the following:
<PAGE> 21
- 4 -
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of Seller
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
(f) All of Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station;
(g) All choses in action of Seller relating to the Station,
other than those referred to in Section 2.2(e) below; and
(h) All books and records relating to the business or
operations of the Station, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept by the Station.
2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Seller's cash on hand as of the Closing and all other cash
in any of Seller's bank or savings accounts; any insurance policies, letters of
credit, or other similar items and cash surrender value in regard thereto; and
any stocks, bonds, certificates of deposit and similar investments;
(b) The Accounts Receivable;
(c) All books and records that Seller is required by law to
retain and that pertain to Seller's organization;
(d) Any pension, profit-sharing, or employee benefit plans, and
any collective bargaining agreements;
(e) All choses in action of Seller with respect to which, as of
the Closing Date, Seller has incurred any loss, liability, cost or expense;
<PAGE> 22
- 5 -
(f) All assets, if any, purchased by Seller pursuant to Section
7. 10(a) of the Time Brokerage Agreement in the event that Buyer fails to
exercise the ATV Option referred to therein; and
(g) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets and the
covenants of Seller set forth in the Noncompetition Agreement referred to in
Section 6.13 shall be Seventeen Million Dollars ($17,000,000), adjusted as
provided below, less the total outstanding principal balance, all accrued but
unpaid interest and all fees, expenses or other charges payable by Seller to
Buyer as of the Closing Date pursuant to the terms of the Loan Documents:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses, other than
expenses for which Buyer is obligated to reimburse Seller under the Time
Brokerage Agreement. All expenses arising from the operation of the Station,
including business and license fees, utility charges, real and personal property
taxes and assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, taxes (except for
taxes arising from the transfer of the Assets under this Agreement), FCC annual
Irregulatory fees and similar prepaid and deferred items, shall be prorated
between Buyer and Seller in accordance with the principle that Seller shall be
responsible for all expenses, costs, and liabilities allocable to the period
prior to the Closing Date (subject to reimbursement by Buyer to the extent
provided under the Time Brokerage Agreement), and Buyer shall be responsible for
all expenses, costs, and obligations allocable to the period on and after the
Closing Date. Notwithstanding the preceding sentence, there shall be no
adjustment for, and Seller shall remain solely liable with respect to, any
Contracts not included in the Assumed Contracts and any other obligation or
liability not being assumed by Buyer in accordance with Section 2.5.
(b) Manner of Determining Adjustments. Any adjustments will,
insofar as feasible, be determined and paid on the Closing Date, with final
settlement and payment by the appropriate party occurring no later than ninety
(90) days after the Closing Date or such other date as the parties shall
mutually agree upon. Seller shall prepare and deliver to Buyer not later than
five (5) 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(a). The preliminary settlement statement (i) shall
contain all information reasonably necessary to determine the adjustments to the
Purchase Price under Section 2.3(a), 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 (ii)
shall be certified by Seller to be true and complete in all material respects as
of the date thereof.
<PAGE> 23
- 6 -
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer, at
least two (2) days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of Seller under the Licenses and the Assumed
Contracts insofar as they relate to the time on and after the Closing Date, and
arise out of events related to Buyer's ownership of the Assets or its operation
of the Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or proceedings
relating to the operation of the Station prior to the Closing, (iv) any
obligations or liabilities arising under capitalized leases or other financing
agreements, (v) any obligations or liabilities arising under agreements entered
into other than in the ordinary course of business, (vi) any obligations or
liabilities of Seller under any employee pension, retirement, health and welfare
or other benefit plans or collective bargaining agreements, (vii) any obligation
to any employee of the Station for severance benefits, vacation time, or sick
leave accrued prior to the Closing Date, or (viii) any obligations or
liabilities caused by, arising out of, or resulting from any action or omission
of Seller prior to the Closing, and all such obligations and liabilities shall
remain and, be the obligations and liabilities solely of Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authori1y. Seller is a limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of California. Seller has all requisite power and authority
(i) to own, lease, and use the Assets as now owned, leased, and used, (ii) to
conduct the business and operations of the Station as now conducted, and (iii)
to execute and deliver this Agreement and the documents contemplated hereby, and
to perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Seller hereunder and thereunder. Seller is not a
participant in any joint venture or partnership with any other person or entity
with respect to any part of the operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement by Seller have been duly authorized by all
necessary actions on the part of Seller and its partners. This Agreement has
been duly executed and delivered by Seller and constitutes the legal, valid, and
binding obligations of Seller, enforceable against it in accordance with its
terms except as the enforceability of this Agreement may be
<PAGE> 24
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affected by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally, and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the documents contemplated hereby (with or without the giving
of notice, the lapse of time, or both): (i) do not require the consent of any
third party; (ii) will not conflict with any provision of the Certificate of
Limited Partnership or Limited Partnership Agreement 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, accelerate or permit the acceleration of any performance required
by the terms of, or give rise to any right of first refusal that has not been
duly and validly waived by the holder thereof, any agreement, instrument,
license, or permit to which Seller is a party or by which Seller may be bound;
and (v) will not create any claim, liability, mortgage, lien, pledge, condition,
charge, or encumbrance of any nature whatsoever upon any of the Assets.
3.4 Governmental Licenses. Schedule 3.4 includes a true and
complete list of the Licenses. Seller has delivered to Buyer true and complete
copies of the Licenses (including any amendments and other modifications
thereto). The Licenses have been validly issued, and Seller is the authorized
legal holder thereof. The Licenses listed on Schedule 3.4 comprise all of the
licenses, permits, and other authorizations required from any governmental or
regulatory authority for the lawful conduct of the business and operations of
the Station in the manner and to the full extent they are now conducted, and
none of the Licenses is subject to any restriction or condition that would
limit the full operation of the Station as now operated. The Licenses are in
full force and effect, and the conduct of the business and operations of the
Station is in accordance therewith. Seller has no reason to believe that any
of the Licenses would not be renewed by the FCC or other granting authority in
the ordinary course. The Station's city of license, as determined by the FCC,
is located within the Sacramento-Stockton-Modesto Area of Dominant Influence
(the "Sacramento ADI") as defined by the 1991-1992 Area of Dominant Influence
Market Guide published by The Arbitron Co. and the Sacramento-Stockton-Modesto
Designated Market Area as defined by the 1995 United States Television
Household Estimates published by Nielsen Media Research. On or before June 17,
1993, Seller made a valid election of must carry with respect to each cable
system located within the Station's Area of Dominant Influence, no cable system
has advised Seller of any signal quality or copyright indemnity or other
prerequisite to cable carriage of the Station's signal, and no cable system has
declined
<PAGE> 25
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or threatened to decline such carriage or failed to respond to a request for
carriage or sought any form of relief from carriage from the FCC.(1)
3.5 Title to and Condition of Real Property. Schedule 3.5 contains
a complete and accurate description of all the Real Property and Seller's
interests therein (including street address, legal description, owner, and use
and the location of all improvements thereon). The Real Property listed on
Schedule 3.5 comprises all real property interests necessary to conduct the
business and operations of the Station as now conducted. The Real Property
does not include any fee estates. With respect to each leasehold or
subleasehold interest included in the Real Property being conveyed under this
Agreement so long as Seller fulfills its obligations under the lease therefor,
Seller has enforceable rights to nondisturbance and quiet enjoyment. All
towers, guy anchors, and buildings and other improvements included in the
Assets are located entirely on the Real Property listed in Schedule 3.5. As of
September 6, 1996, all Real Property (including the improvements thereon) (i)
was in good condition and repair consistent with its present use, (ii) was
available for immediate use in the conduct of the business and operations of
the Station, and (iii) complied with all applicable building or zoning codes
and the regulations of any governmental authority having jurisdiction. Seller
has full legal and practical access to the Real Property.
3.6 Title to and Condition of Tangible Personal Property. Schedule
3.6 lists all material items of Tangible Personal Property. The Tangible
Personal Property listed on Schedule 3.6 comprises all material items of
tangible personal property necessary to conduct the business and operations of
the Station as now conducted. Except as described in Schedule 3.6, Seller owns
and has good title to each item of Tangible Personal Property, and none of the
Tangible Personal Property owned by Seller is subject to any security interest,
mortgage, pledge, conditional sales agreement, or other lien or encumbrance,
except for liens for current taxes not yet due and payable. Each item of
Tangible Personal Property is available for immediate use in the business and
operations of the Station. As of September 6, 1996, all items of transmitting
and studio equipment included in the Tangible Personal Property (i) had been
maintained in a manner consistent with generally accepted standards of good
engineering practice, and (ii) permitted the Station and any auxiliary broadcast
facilities related to the Station to operate in accordance with the terms of the
FCC Licenses and the rules and regulations of the FCC, and with all other
applicable federal, state, and local statutes, ordinances, rules, and
regulations.
3.7 Contracts. Schedule 3.7 is a true and complete list of all
Contracts except contracts with advertisers for the sale of advertising time on
the Station for cash at prevailing rates and which have not been prepaid and
which may be canceled by the Station without
- --------------------
(1) In the event this Asset Purchase Agreement is executed and delivered
after October 1, 1996, then "June 17, 1993" shall be deleted from this sentence
and "October 1, 1996" shall be substituted in its place.
<PAGE> 26
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penalty on not more than thirty days' notice. 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's obligations under trade and
barter agreements relating to the Station. Other than the Contracts listed on
Schedule 3.7 and cash programming contracts, Seller requires no contract,
lease, or other agreement to enable it to carry on its business as now
conducted. All of the Assumed Contracts are in full force and effect, and are
valid, binding, and enforceable in accordance with their terms. There is not
under any Assumed Contract any default by any party thereto or any event that,
after notice or lapse of time or both, could constitute a default. Seller is
not aware of any intention by any party to any Assumed Contract (i) to
terminate such contract or amend the terms thereof, (ii) to refuse to renew the
Assumed Contract upon expiration of its term, or (iii) to renew the Assumed
Contract upon expiration only on terms and conditions which are more onerous
than those now existing. Except for the need to obtain the Consents listed in
Schedule 3.3, Seller has full legal power and authority to assign its rights
under the Assumed Contracts to Buyer in accordance with this Agreement, and
such assignment will not affect the validity, enforceability, or continuation
of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section
6.1 and the other Consents described in Schedule 3.3 and any filing required
under the HSR Act, no consent, approval, permit, or authorization of, or
declaration to or filing with any governmental or regulatory authority, or any
other third party is required (i) to consummate this Agreement and the
transactions contemplated hereby, (ii) to permit Seller to assign or transfer
the Assets to Buyer, or (iii) to enable Buyer to conduct the business and
operations of the Station in essentially the same manner as such business and
operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Seller has delivered to Buyer copies of
all documents establishing or evidencing all Intangibles. Seller is not
infringing upon or otherwise acting adversely to any trademarks, trade names,
service marks, service names, copyrights, patents, patent applications,
know-how, methods, or processes owned by any other person or persons, and there
is no claim or action pending, or to the knowledge of Seller threatened, with
respect thereto. The Intangibles listed on Schedule 3.9 comprise all
intangible property interests necessary to conduct the business and operations
of the Station as now conducted.
3. 3.10 [Reserved].
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the business
of the Station. All policies of insurance listed in Schedule 3.11 are in full
force and effect. The insurance policies listed in
<PAGE> 27
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Schedule 3.11 are adequate in amount with respect to, and for the fill value
(subject to customary deductibles) of, the Assets, and insure the Assets and
the business of the Station against all customary and foreseeable risks.
During the three-year period ending on September 6, 1996, no insurance policy
of Seller on the Assets or the Station has been canceled by the insurer and no
application of Seller for insurance has been rejected by any insurer.
3.12 Reports. All returns, reports, and statements that the
Station is currently required to file with the FCC or with any other
governmental agency have been filed, and all reporting requirements of the FCC
and other governmental authorities having jurisdiction over Seller and the
Station have been complied with. All of such returns, reports, and statements
are substantially complete and correct as filed. Seller has timely paid to the
FCC all annual regulatory fees payable with respect to the FCC Licenses.
3.13 Personnel.
(a) 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 Station, 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
Station, 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 seg. of ERISA.
<PAGE> 28
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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) sponsors, maintains or
contributes to any Employee Plan or Compensation Arrangement that provides
retiree medical or retiree life insurance coverage to former employees of
Seller at the Station.
(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 the 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), (in) or (o) of the Code)
contributes or to which Seller or any entity related to Seller (under the terms
of Sections 414(b), (c), (m) or (o) of the Code) sponsors, maintains or
otherwise is bound which provides benefits to persons employed or previously
employed at the Station; (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,
partners 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 Station 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) contributes or is required to
contribute.
<PAGE> 29
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(g) Seller is not a party to or subject to any collective
bargaining agreements with respect to the Station. Seller has no written or
oral contracts of employment with any employee of the Station, other than those
listed in Schedule 3.7. Seller has complied with all laws, rules, and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety, discrimination, and
the payment of social security and other payroll related taxes, and 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 Station. No
labor union or other collective bargaining unit represents or claims to
represent any of the employees of the Station. To the best of Seller's
knowledge, there is no union campaign being conducted to represent any
employees of the Station 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 Station.
3.14 Taxes. Seller has filed or caused to be filed all
federal income tax returns and all other federal, state, county, local, or city
tax returns which are required to be filed, and it has paid or caused to be
paid all taxes shown on those returns or on any tax assessment received by it
to the extent that such taxes have become due, or has set aside on its books
adequate reserves (segregated to the extent required by generally accepted
accounting principles) with respect thereto. There are no governmental
investigations or other legal, administrative, or tax proceedings pursuant to
which Seller is or could be made liable for any taxes, penalties, interest, or
other charges, the liability for which could extend to Buyer as transferee of
the business of the Station, and no event has occurred that could impose on
Buyer any transferee liability for any taxes, penalties, or interest due or to
become due from Seller. Seller is not required to pay California sales tax
with respect to the business or operations of the Station.
3.15 Claims and Legal Actions. Except as set forth on
Schedule 3.15 and except for any FCC rulemaking proceedings generally affecting
the broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative, or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to
the knowledge of Seller threatened, against or relating to Seller with respect
to its ownership or operation of the Station or otherwise relating to the
Assets or the business or operations of the Station, nor does Seller know or
have reason to be aware of any basis for the same. In particular, but without
limiting the generality of the foregoing, there are no applications, complaints
or proceedings pending or, to the best of its knowledge, threatened (i) before
the FCC relating to the business or operations of the Station other than rule
making proceedings which affect the television industry generally, (ii) before
any federal or state agency relating to the business or operations of the
Station involving charges of illegal discrimination under any federal or state
employment laws or regulations, or (iii) before any
<PAGE> 30
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federal, state, or local agency relating to the business or operations of the
Station involving zoning issues under any federal, state, or local zoning law,
rule, or regulation.
3.16 Environmental Matters.
(a) As of September 6, 1996, Seller had 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. No charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand, or
notice has been filed or commenced against Seller in connection with its
ownership or operation of the Station alleging any failure to comply with any
such law, rule, or regulation.
(b) To the best of Seller's knowledge, as of September 6,
1996, Seller had no liability relating to its ownership and operation of the
Station (and there was no basis related to the past or present operations,
properties, or facilities of Seller for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
against Seller giving rise to any such liability) under any law, rule, or
regulation of any federal, state, or local government (or agency thereof)
concerning release or threatened release of hazardous substances, public health
and safety, or pollution or protection of the environment.
(c) To the best of Seller's knowledge, as of September 6,
1996, Seller had no liability relating to its ownership and operation of the
Station (and Seller had not handled or disposed of any substance, arranged for
the disposal of any substance, or owned or operated any property or facility in
any manner that could form the basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
(under the common law or pursuant to any statute) against Seller giving rise to
any such liability) for damage to any site, location, or body of water (surface
of subsurface) or for illness or personal injury.
(d) To the best of Seller's knowledge, as of September 6,
1996, Seller had no liability relating to its ownership and operation of the
Station (and there was no basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand against
Seller giving rise to any such liability) under any law, rule, or regulation of
any federal, state, or local government (or agency thereof) concerning employee
health and safety.
(e) In connection with its ownership or operation of the
Station, as of September 6, 1996, Seller had obtained and been in compliance in
all material respects with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and had complied
with all other limitations, restrictions, conditions,
<PAGE> 31
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standards, prohibitions, requirements, obligations, schedules, and timetables
which are contained in, all federal, state, and local laws, rules, and
regulations (including all codes, plans, judgments, orders, decrees,
stipulations, injunctions, and charges thereunder) relating to public health
and safety, worker health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes.
(f) As of September 6, 1996, no pollutant, contaminant,
or chemical, industrial, hazardous, or toxic material or waste has ever been
manufactured, buried, stored, spilled, leaked, discharged, emitted, or released
by Seller in connection with its ownership and operation of the Station or, to
the best of Seller's knowledge, by any other party on any Real Property.
3.17 Compliance with Laws. Seller has complied in all material
respects with the Licenses and all federal, state, and local laws, rules,
regulations, and ordinances applicable or relating to the-ownership and
operation of the Station. Neither the ownership or use of the properties of the
Station nor the conduct of the business or operations of the Station conflicts
with the rights of any other person or entity.
3.18 Conduct of Business in Ordinary Course. Seller has not:
(a) Caused or permitted by any act or failure to act any
material adverse change in the business, assets, or properties of the Station,
including any damage, destruction, or loss affecting any assets used or useful
in the conduct of the business of the Station;
(b) Made any sale, assignment, lease, or other transfer
of any of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor; or
(c) Made any material write-down of the value of any
Assets; or
(d) Transferred or granted any right under, or entered
into any settlement regarding the breach or infringement of, any license,
patent, copyright, trademark, trade name, franchise, or similar right, or
modified any existing right relating to the Station.
3.19 Transactions with Affiliates. Except as set forth on Schedule
3.19, Seller has not been involved in any business arrangement or relationship
relating to the Station with any
<PAGE> 32
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affiliate of Seller, and no affiliate of Seller owns any property or right,
tangible or intangible, which is used in the business of the Station. As used
in this paragraph, "affiliate" has the meaning set forth in Rule 12b-2
promulgated under the Securities and Exchange Act of 1934.
3.20 Broker. Neither Seller nor any person acting on Seller's
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
3.21 Full Disclosure. No representation or warranty made by Seller
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida and at Closing will be duly qualified to conduct business as a
foreign corporation in the State of California. Buyer has all requisite power
and authority to execute and deliver this Agreement and the documents
contemplated hereby, and to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by Buyer hereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Buyer have been duly authorized
by all necessary actions on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents and making any filing required under the HSR Act, the execution,
delivery, and performance by Buyer of this Agreement and the documents
contemplated hereby (with or without the giving of notice, the lapse of time,
or both): (i) do not require the consent of any third party; (ii) will not
conflict with the Articles of Incorporation or Bylaws of Buyer; (iii) will not
conflict with, result in a breach of, or constitute a default under, any law,
judgment, order, injunction, decree, rule, regulation, or ruling of any court
or governmental instrumentality; or (iv) will not conflict with, constitute
grounds for termination of, result in a breach of,
<PAGE> 33
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constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license, or
permit to which Buyer is a party or by which Buyer may be bound, such that
Buyer could not acquire or operate the Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's 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 and required to make any statement made herein or therein not
misleading.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall operate the Station diligently in
the ordinary course of business in accordance with its past practices (except
where such conduct has been expressly delegated to Buyer pursuant to the terms
of the Time Brokerage Agreement or would conflict with the following covenants
or with Seller's other obligations under this Agreement), and in accordance
with the other covenants in this Section 5.
5.2 Compensation. Seller shall not increase the compensation,
bonuses, or other benefits payable or to be payable to any person employed in
connection with the conduct of the business or operations of the Station,
except in accordance with past practices.
5.3 Contracts. Seller will not enter into any contract or
commitment relating to the Station or the Assets, or amend or terminate any
Contract (or waive any material right thereunder), or incur any obligation
(including obligations relating to the borrowing of money or the guaranteeing
of indebtedness) that will be binding on Buyer after Closing, except for cash
time sales agreements made in the ordinary course of business. Prior to the
Closing Date, Seller shall deliver to Buyer a list of all Contracts entered
into between the date of this Agreement and the Closing Date, together with
copies of such Contracts.
5.4 Disposition of Assets. Seller shall not sell, assign, lease,
or otherwise transfer or dispose of any of the Assets, except where no longer
used or useful in the business or operations of the Station or in connection
with the acquisition of replacement property of equivalent kind and value.
<PAGE> 34
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5.5 Encumbrances. Seller shall not create, assume or permit to
exist any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets, except for (i) liens
disclosed on Schedule 3.5 and Schedule 3.6, which shall be removed prior to the
Closing Date, (ii) liens for current taxes not yet due and payable, and (iii)
mechanics' liens and other similar liens, which shall be removed prior to the
Closing Date.
5.6 Licenses. Seller shall not cause or permit, by any act or
failure to act, any of the Licenses to expire or to be revoked, suspended, or
modified, or take any action that could cause the FCC or any other governmental
authority to institute proceedings for the suspension, revocation, or adverse
modification of any of the Licenses. Seller shall not fail to prosecute with
due diligence any applications to any governmental authority in connection with
the operation of the Station.
5.7 Rights. Seller shall not waive any right relating to the
Station or any of the Assets. Buyer shall have a reasonable opportunity to
consult with Seller concerning Seller's decision to elect must carry or
retransmission consent for the Station with respect to cable television systems
located in the Sacramento ADI, and Seller shall not make any such election
without Buyer's approval. Seller shall not cause, by any act or failure to
act, any cable system located within the Sacramento ADI to refuse to carry the
Station's signal.
5.8 No Inconsistent Action. Seller shall not take any action that
is inconsistent with its obligations under this Agreement or that could hinder
or delay the consummation of the transactions contemplated by this Agreement.
5.9 Access to Information. Seller shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives
reasonable access to the Assets and to all other properties, equipment, books,
records, Contracts, and documents relating to the Station for the purpose of
audit and inspection and, upon reasonable notice to Seller, will furnish or
cause to be furnished to Buyer or its authorized representatives all
information with respect to the affairs and business of the Station that Buyer
may reasonably request (including any financial reports and operations reports
produced with respect to the affairs and business of the Station). Without
limiting the generality of the foregoing, upon reasonable notice to Seller,
Seller shall give Buyer and its counsel, accountants and other authorized
representatives reasonable access to Seller's financial records and Seller's
employees, counsel, accountants and other representatives for the purpose of
preparing and auditing such financial statements as Buyer determines, in its
sole judgment, are required or advisable to comply with federal or state
securities laws and the rules and regulations of securities markets as a result
of the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. Nothing herein shall be deemed to permit
Buyer to have access to any documents or other materials not relating to the
properties, books or records of Buyer or the transactions contemplated
hereunder.
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5.10 Maintenance of Assets. Seller shall not cause or permit, by
any act or failure to act, any loss, damage or impairment of the Assets
(ordinary wear and tear excepted). 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, other than a loss, damage or impairment resulting from actions
taken by Buyer pursuant to the Time Brokerage Agreement, Seller shall repair,
replace, or restore the Assets to their prior condition as represented in this
Agreement as soon thereafter as possible, and Seller shall use the proceeds of
any claim under any insurance policy solely to repair, replace, or restore any
of the Assets that are lost, damaged, impaired, or destroyed.
5.11 Insurance. Seller shall maintain the existing insurance
policies on the Station and the Assets.
5.12 Consents. Seller shall obtain the Consents and the estoppel
certificates described in Section 8.2(b), without any change in the terms or
conditions of any Contract or License that could be less advantageous to the
Station than those pertaining under the Contract or License as in effect on the
date of this Agreement. Seller shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon Buyer's request, Seller
shall cooperate with Buyer and use it best efforts to obtain from the lessors
under each Real Property lease such estoppel certificates and consents to the
collateral assignment of the lessee's interest under each such lease as Buyer's
senior lenders may request.
5.13 Books and Records. Seller shall maintain its books and
records relating to the Station in accordance with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing
of any unusual or material developments with respect to the business or
operations of the Station, and of any material change in any of the information
contained in Seller's representations and warranties contained in Section 3 of
this Agreement.
5.15 Financial Information. Seller shall furnish to Buyer within
twenty days after the end of each month ending between the date of this
Agreement and the Closing Date such financial information (including
information on payables and receivables) as Buyer may reasonably request. All
financial information delivered by Seller to Buyer pursuant to this Section
shall accurately reflect the books, records, and accounts of the Station and
shall be complete and correct in all material respects.
5.16 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Station.
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5.17 Financing Leases. Seller will satisfy at or prior to Closing
all outstanding obligations under capital and financing leases with respect to
any of the Assets and obtain good title to the Assets leased by Seller pursuant
to those leases so that those Assets shall be transferred to Buyer at Closing
free of any interest of the lessors.
5.18 Preservation of Business. Seller shall use its best efforts
to preserve that portion of the business and organization of the Station not
delegated to Buyer pursuant to the Time Brokerage Agreement and use its best
efforts to keep available to the Station its employees and to preserve the
Station's present relationships with suppliers and others having business
relations with it, to the end that the business and operations of the' Station
shall be unimpaired at the Closing Date.
5.19 Collection of Accounts Receivable. Seller shall collect the
accounts receivable of the Station only in the ordinary course consistent with
its past practices and will not take any action designed or likely to
accelerate the collection of its accounts receivable.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with
the purchase and sale of the Assets pursuant to this Agreement shall be subject
to the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an
appropriate application for the FCC Consent and shall file the application with
the FCC within five (5) business days of the execution of this Agreement. The
parties shall prosecute the application with all reasonable diligence and
otherwise use their best efforts to obtain a grant of the application as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on it by the FCC Consent, except that no party shall be required to
comply with a condition if (1) the condition was imposed on it as the result of
a circumstance the existence of which does not constitute a breach by the party
of any of its representations, warranties, or covenants under this Agreement,
and (2) compliance with the condition would have a material adverse effect upon
it. Buyer and Seller shall oppose any requests for reconsideration or judicial
review of the FCC Consent. If the Closing shall not have occurred for any
reason within the original effective period of the FCC Consent, and neither
party shall have terminated this Agreement under Section 9, the parties shall
jointly request an extension of the effective period of the FCC Consent. No
extension of the FCC Consent shall limit the exercise by either party of its
rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer
shall not, directly or indirectly, control, supervise, direct, or attempt to
control, supervise, or direct, the
<PAGE> 37
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operations of the Station; such operations, including complete control and
supervision of all of the Station programs, employees, and policies, shall be
the sole responsibility of Seller until the Closing.
6.3 Risk of Loss. The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets, other than any loss, damage
or impairment resulting from actions taken by Buyer pursuant to the Time
Brokerage Agreement, from any cause whatsoever shall be borne by Seller at all
times prior to the Closing.
6.4 Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, Buyer shall have no obligation (i) to expend
funds to obtain any of the Consents or (ii) to agree to any adverse change in
any License or Assumed Contract to obtain a Consent required with respect
thereto.
6.6 Bulk Sales Law. If applicable, the Bulk Sales law of the
State of California 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.
6.7 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 that are 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.
<PAGE> 38
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6.8 Appraisal. Buyer and Seller shall retain Bond & Pecaro
("B&P") to conduct an appraisal of the Assets (the "B&P Appraisal"). Buyer and
Seller agree to allocate the Purchase Price for tax and recording purposes in
accordance with the B&P Appraisal unless Buyer or Seller notifies the other in
writing within ten (10) business days following its receipt of the B&P
Appraisal of any reasonable, good faith objection to the allocation set forth
in the B&P Appraisal (the "Objection Notice"). The Objection Notice shall
describe in reasonable detail the basis for the objection. Buyer and Seller
shall mutually designate, no later than ten (10) business days following
receipt of an Objection Notice, a second appraisal firm (the "Alternate
Appraiser") with experience in the valuation and appraisal of television
station assets to conduct the appraisal. Buyer and Seller agree to abide by
the appraisal produced by the Alternate Appraiser and allocate the Purchase
Price for tax and recording purposes in accordance with such appraisal. The
fee Section and expenses of B&P shall be paid by Buyer, unless Seller delivers
to Buyer an Objection Notice, in which event Seller shall pay the fees and
expenses of B&P. The fees and expenses of any Alternate Appraiser shall be
paid one-half by Buyer and one-half by Seller.
6.9 Noncompetition Agreement. At Closing, Buyer and Seller shall
enter into a Noncompetition Agreement in the form of Schedule 6.13 and $340,000
of the Purchase Price shall be allocated to the covenants of Seller set forth
therein on the Closing Date.
6.10 HSR Act Filing. Seller and Buyer agree to (a) file, or cause
to be filed, with ,the U.S. Department of Justice ("DOJ") and Federal Trade
Commission ("FTC") all filings, if any, which are required in connection with
the transactions contemplated hereby under the HSR Act within ten (10) business
days of the date of this Agreement; (b) submit to the other party, prior to
filing, their respective HSR Act filings to be made hereunder, and to discuss
with the other any comments the reviewing party may have; (c) cooperate with
each other in connection with such HSR Act filings, which cooperation shall
include furnishing the other with any information or documents in such party's
possession that may be reasonably required in connection with such filings; (d)
promptly file, after any request by the FTC or DOJ and after appropriate
negotiation with the FTC or DOJ of the scope of such request, any information
or documents requested by the FTC or DOJ; and (e) furnish each other with any
correspondence from or to, and notify each other of any other communications
with, the FTC or DOJ which relates to the transactions contemplated hereunder,
and to the extent practicable, to permit each other to participate in any
conferences with the FTC or DOJ.
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:
<PAGE> 39
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(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 date, except insofar as any representation or warranty of Seller (i)
was true and complete in all material respects at and as of the date hereof but
shall not be true and complete in all material respects at and as of the
Closing Date as a result of actions taken by Buyer pursuant to the Time
Brokerage Agreement or (ii) expressly relates to any specified earlier date
only.
(b) Covenants and Conditions. Seller shall have
performed and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
it prior to or on the Closing Date.
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied
with by Buyer under Section 6.1 hereof, Seller shall have complied with any
conditions imposed on it by the FCC Consent, and the FCC Consent shall have
become a Final Order.
(e) Governmental Authorizations. Seller shall be the
holder of all Licenses and there shall not have been any modification of any
License that could have an adverse effect on the Station or the conduct of its
business and operations. No proceeding shall be pending or threatened the
effect of which could be to revoke, cancel, fail to renew, suspend, or modify
adversely any License.
(f) Deliveries. Seller shall have made or stand willing
to make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change
resulting from any action taken by Seller in the business, assets, or
properties of the Station, including any damage, destruction, or loss affecting
any assets used or useful in the conduct of the business of the Station.
(h) HSR Act. If applicable, the waiting period under the
HSR Act shall have expired without unresolved action by the DOJ or the FTC to
prevent the Closing.
(i) Transaction Documents. The Time Brokerage Agreement
shall be in full force and effect and Seller shall have complied in all
material respects with its obligations thereunder and there shall exist no
Event of Default (as defined in the Loan Agreement).
<PAGE> 40
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7.2 Conditions to Obligations of Seller. All obligations of
Seller at the Closing are subject at Seller's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that date.
(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.
(e) HSR Act. If applicable, the waiting period under the
HSR Act shall have expired without unresolved action by the DOJ or the FTC to
prevent the Closing.
(f) Time Brokerage Agreement. The Time Brokerage
Agreement shall be in full force and effect, and Buyer shall have complied in
all material respects with its obligations thereunder.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00
a.m. on a date, to be set by Buyer on at least five days' written notice to
Seller, that is (1) not earlier than the first business day after the FCC
Consent is granted, and (2) not later than ten business days following the date
upon which the FCC Consent has become a Final Order, subject to satisfaction or
waiver of all other conditions precedent to the holding of the Closing. If
Buyer fails to specify the date for Closing prior to the fifth business day
after the date upon which the FCC Consent becomes a Final Order, the Closing
shall take place on the tenth business day after the date upon which the FCC
Consent becomes a Final Order. Notwithstanding the foregoing, if the waiting
period under the HSR Act shall not have expired on or before the date that is
the tenth business day after the date on which the FCC Consent becomes a Final
Order, the Closing shall take place at 10:00 a.m. on a date to be
<PAGE> 41
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set by Buyer, on at least five days' written notice to Seller, that is not
earlier than the first business day and not later than the tenth business day
after the date such waiting period shall have expired.
(b) Closing Place. The Closing shall be held at the
offices of McQuaid, Metzler, McCormick & Van Zandt, L.L.P., One Maritime Plaza,
23rd Floor, San Francisco, California, or any other place that is agreed upon
by Buyer and Seller; provided, however, that Buyer and Seller shall use their
reasonable best efforts to conduct the Closing by mail.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty bills of
sale, deeds, motor vehicle titles, assignments, and other transfer documents
which shall be sufficient to vest good and marketable title to the Assets in
the name of Buyer, free and clear of all claims, liabilities, security
interests, mortgages, liens, pledges, conditions, charges or encumbrances,
except for liens for current taxes not yet due and payable;
(b) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property and estoppel certificates of contracting parties to those Assumed
Contracts listed in Schedule 3.7 that are designated to indicate that estoppel
certificates are required under this paragraph;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Seller by an officer of Seller or
Seller's general partner, certifying (1) that all 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 at and as of that date,
except insofar as any representation or warranty of Seller (i) was true and
complete in all material respects at and as of the date hereof but is not be
true and complete in all material respects at and as of the Closing Date as a
result of actions taken by Buyer pursuant to the Time Brokerage Agreement or
(ii) expressly relates to any specified earlier date only; and (2) that Seller
has 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;
(e) Tax, Lien, and Judgment Searches. Results of a
search for tax, lien, and judgment filings in the Secretary of State's records
of the State of California as well as
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the records of those counties in California in which any of the Assets are
located, such searches having been made no earlier than fifteen days prior to
the Closing Date;
(f) Licenses, Contracts, Business Records, Etc. Copies
of all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by
Seller in connection with its operations;
(g) Opinion of Counsel. An Opinion of Seller's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.2(g)
hereto;
(h) Noncompetition Agreement. The Noncompetition
Agreement in the form as Schedule 6.13, duly executed on behalf of Seller; and
(i) Lenders Certificates. Such certificates and
confirmations to Buyer's senior lenders as Buyer may reasonably request in
connection with obtaining financing for the performance of its payment
obligations hereunder at no cost or expense to Seller; provided, however, that
Seller shall not be required to deliver under this section any signature of a
third party on, or consent to, any document.
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;
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Seller's obligations under the Licenses and Assumed Contracts insofar as they
relate to the time on and after the Closing Date and arise out of events
related to Buyer's ownership of the Assets or its operation of the Station on
or after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Buyer by an officer of Buyer,
certifying (1) that all representations and warranties of Buyer contained in
this Agreement are true and complete in all material respects at and as of the
Closing Date as though made at and as of that date, and (2) that Buyer has
performed and complied in all material respects with all of its covenants,
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or on the Closing Date;
(d) Opinion of Counsel. An opinion of Buyer's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3(d)
hereto.
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(e) Noncompetition Agreement. The Noncompetition
Agreement in the form of Schedule 6.13 duly executed by Buyer and the payment
of $340,000 to Seller thereunder.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Seller
set forth in this Agreement have not been satisfied or waived in writing by
Seller.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
June 30, 1999.
(d) Breach. Without limiting Seller's rights under this
Agreement, 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 Station abandoned, if Buyer is not then
in material default, upon written notice to Seller, upon the occurrence of any
of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer
set forth in this Agreement have not been satisfied or waived in writing by
Buyer.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
June 30, 1999.
(d) Interruption of Service. If Seller shall have taken
any action that prevented signal transmission of the Station in the normal and
usual manner for a continuous period of seven days.
<PAGE> 44
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(e) Breach. Without limiting Buyer's rights under this
Agreement, 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.
9.3 Rights on Termination. If this Agreement is terminated
pursuant to Section 9.1 or Section 9.2 and neither party is in material
breach of 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 Buyer due to Seller's material breach of
this Agreement, Buyer shall have all rights and remedies available at law or
equity. If this Agreement is terminated by Seller due to Buyer's material
breach of this Agreement, Seller 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 its representations and warranties.
10.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or
any information Buyer may have, Seller hereby agrees to indemnify and hold
Buyer harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Seller contained in this Agreement or in any certificate, document,
or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by
Buyer pursuant to this Agreement, including any liabilities arising at any time
under any Contract not included in the Assumed Contracts.
(c) Any loss, liability, obligation, or cost resulting
from the failure of the Seller to comply with the provisions of any bulk sales
law applicable to the transfer of the Assets.
<PAGE> 45
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(d) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station prior to the Closing, including
any liabilities arising under the Licenses or the Assumed Contracts which
relate to events occurring prior the Closing Date.
(e) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer hereby agrees to indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, document,
or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station on and after the Closing.
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or incurred in investigating
or attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim. If the claim relates to an action, suit, or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant within five days
after written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make
<PAGE> 46
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such investigation of the claim as the Indemnifying Party deems necessary or
desirable. For the purposes of such investigation, the Claimant agrees to make
available to the Indemnifying Party and/or its authorized representatives the
information relied upon by the Claimant to substantiate the claim. If the
Claimant and the Indemnifying Party agree at or prior to the expiration of the
thirty-day period (or any mutually agreed upon extension thereof) to the
validity and amount of such claim, the Indemnifying Party shall immediately pay
to the Claimant the full amount of the claim. If the Claimant and the
Indemnifying Party do not agree within the thirty-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate remedy at law
or equity or under the arbitration provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnifications rights provided in Sections 10.2
and 10.3 shall extend to the shareholders, partners, directors, officers,
employees, and representatives of any Claimant although for the purpose of the
procedures set forth in this Section 10.4, any indemnification claims by such
parties shall be made by and through the Claimant.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other
remedies that may be available, including money damages, to obtain specific
performance of the terms of this Agreement. If any action is brought by Buyer
to enforce this Agreement, Seller shall waive the defense that there is an
adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either party
which results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing
<PAGE> 47
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party shall be entitled to reimbursement from the other party of its reasonable
legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Seller
to Buyer pursuant to this Agreement shall be paid by Seller. Buyer and Seller
shall each pay one-half of all filing fees required by the FCC in connection
with the FCC Consent. Buyer shall pay all filing fees required by the FTC or
DOJ under the HSR Act. Except as otherwise provided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents, and representatives, and each
party shall be responsible for all fees or commissions payable to any other
finder, broker, advisor, or similar person retained by or on behalf of such
party.
11.2 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by 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: Ron V. Briggs
Ponce-Nicasio Broadcasting, A Limited Partnership
3100 Gold Nugget Way
Placerville, CA 95667
With a copy to: Roger J. Metzler, Esq.
McQuaid, Metzler, McCormick & Van Zandt, L.L.P.
One Maritime Plaza, 23rd Floor
San Francisco, CA 94111
If to Buyer: Lowell W. Paxson, Chairman
Paxson Communications of Sacramento-29, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
<PAGE> 48
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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
11.2.
11.3 Benefit and Binding Effect. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement, in whole or in part, without seeking or obtaining Seller's prior
approval, to (a) one or more subsidiaries or commonly controlled affiliates of
Buyer or (b) any other entity designated by Buyer, so long as Buyer determines,
in the exercise of reasonable business judgment, that such entity possesses the
financial capacity, and the requisite qualifications under the Communications
Act of 1934, as amended, and the rules and regulations promulgated thereunder,
to consummate the transactions contemplated by this Agreement; provided,
however, that Paxson Communications Corporation hereby agrees to guarantee the
performance by Buyer's assignee of Buyer's obligations hereunder in the event
that Buyer's assignee fails to perform such obligations. Notwithstanding the
foregoing, Buyer may, at its sole cost and expense, collaterally assign its
rights and interests hereunder to its lenders without seeking or obtaining
Seller's prior approval. Upon any permitted assignment by Buyer or Seller in
accordance with this Section 11.4, all references to "Buyer" herein shall be
deemed to be references to Buyer's assignee and all references to "Seller"
herein shall be deemed to be references to Seller's assignee, as the case may
be. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
11.4 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.
11.5 Governing Law; Venue. This agreement shall be governed,
construed, and enforced in accordance with the laws of the State of California
(without regard to the choice of law provisions thereof). Seller and Buyer
hereby irrevocably submit to the exclusive jurisdiction and venue of the state
and federal district courts for Sacramento, California for the purposes of any
action or proceeding arising out of or relating to this Agreement or the
subject matter hereof. Buyer and Seller waive and agree not to assert, by way
of motion, as
<PAGE> 49
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a defense or otherwise, in any such action or proceeding, any claim that (a)
they are not personally subject to the jurisdiction of such courts, (b) the
action or proceeding is brought in an inconvenient forum or (c) the venue of
the action or proceeding is improper. Seller and Buyer agree that,
notwithstanding any right or privilege they may possess at any time, they and
their property are and shall be generally subject to suit on account of the
obligations they have assumed hereunder. Seller and Buyer agree that service
in person or by certified or registered U.S. mail to its address set forth in
Section 11.2, or as subsequently changed as provided therein, shall constitute
valid in personam service upon Seller and Buyer and their successors and
assigns in any action or proceeding with respect to any matter as to which they
have submitted to jurisdiction hereunder. The obligations of Seller and Buyer
under this Section shall survive any termination of this Agreement.
11.6 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.
11.7 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.
11.8 Entire Agreement. This Agreement, the schedules, hereto, and
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.9 Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.10 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this
<PAGE> 50
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Agreement or the transactions contemplated hereby without the prior written
consent of the other party; provided, however, that nothing contained herein
shall prevent either party from promptly making all filings with governmental
authorities as may, in its judgement be required or advisable in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
1.11 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 51
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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
SACRAMENTO-29, INC.
By:
------------------------------------------
James B. Bocock
President
PONCE-NICASIO BROADCASTING, A
LIMITED PARTNERSHIP
By: Ponce-Nicasio Broadcasting, Inc.,
its general partner
By:
--------------------------------
Name:
Title:
PAXSON COMMUNICATIONS CORPORATION HEREBY
JOINS IN THE EXECUTION OF THE FOREGOING
AGREEMENT SOLELY TO AGREE TO THE GUARANTY SET
FORTH IN SECTION 11.3 HEREOF, AS OF THE DATE
FIRST ABOVE WRITTEN.
By:
------------------------------------------
James B. Bocock
President
<PAGE> 1
EXHIBIT 10.136
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
THE MOODY BIBLE INSTITUTE
OF CHICAGO
AND
PAXSON BROADCASTING OF TAMPA,
LIMITED PARTNERSHIP
FOR
RADIO STATION WKES-FM,
ST. PETERSBURG, FLORIDA
SEPTEMBER 12, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <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
"Escrow Agreement".......................................................................................2
"Excluded Records".......................................................................................2
"FCC" ................................................................................................2
"FCC Consent"............................................................................................2
"FCC Licenses"...........................................................................................2
"Final Order"............................................................................................2
"HSR Act"................................................................................................3
"Intangibles"............................................................................................3
"Licenses"...............................................................................................3
"New Lease"..............................................................................................3
"Purchase Price".........................................................................................3
"Real Property"..........................................................................................3
"Tampa Tower Lease"......................................................................................3
"Tangible Personal Property".............................................................................3
"Time Brokerage Agreement"...............................................................................4
SECTION 2 PURCHASE AND SALE OF ASSETS............................................................................4
2.1 Agreement to Sell and Buy...........................................................................4
2.2 Excluded Assets.....................................................................................5
2.3 Purchase Price......................................................................................5
2.4 Payment of Purchase Price...........................................................................7
2.5 Assumption of Liabilities and Obligations...........................................................7
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER...............................................................8
3.1 Organization, Standing, and Authority...............................................................8
3.2 Authorization and Binding Obligation................................................................8
3.3 Absence of Conflicting Agreements...................................................................8
3.4 Governmental Licenses...............................................................................8
</TABLE>
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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 Insurance.........................................................................................11
3.11 Reports...........................................................................................11
3.12 Labor Relations...................................................................................11
3.13 Taxes.............................................................................................11
3.14 Claims and Legal Actions..........................................................................12
3.15 Environmental Matters.............................................................................12
3.16 Compliance with Laws..............................................................................13
3.17 Conduct of Business in Ordinary Course............................................................13
3.18 Transactions with Affiliates......................................................................14
3.19 Broker............................................................................................14
3.20 Full Disclosure...................................................................................14
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER...............................................................14
4.1 Organization, Standing, and Authority..............................................................14
4.2 Authorization and Binding Obligation...............................................................15
4.3 Absence of Conflicting Agreements..................................................................15
4.4 Closing Funds......................................................................................15
4.5 Broker.............................................................................................15
4.6 Qualifications.....................................................................................15
4.7 Full Disclosure....................................................................................15
SECTION 5 OPERATIONS OF THE STATION PRIOR TO CLOSING............................................................16
5.1 Generally..........................................................................................16
5.2 Compensation.......................................................................................16
5.3 Contracts..........................................................................................16
5.4 Disposition of Assets..............................................................................16
5.5 Encumbrances.......................................................................................16
5.6 Licenses...........................................................................................16
5.7 Rights.............................................................................................17
5.8 No Inconsistent Action.............................................................................17
5.9 Access to Information..............................................................................17
5.10 Maintenance of Assets.............................................................................17
5.11 Insurance.........................................................................................18
5.12 Consents..........................................................................................18
5.13 Books and Records.................................................................................18
5.14 Notification......................................................................................18
</TABLE>
ii
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<TABLE>
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5.15 Compliance with Laws..............................................................................18
5.16 Financing Leases..................................................................................18
5.17 Preservation of Business..........................................................................18
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS......................................................................19
6.1 FCC Consent........................................................................................19
6.2 Control of the Station.............................................................................19
6.3 Risk of Loss.......................................................................................19
6.4 Confidentiality....................................................................................20
6.5 Environmental Audit................................................................................20
6.6 Engineering Study..................................................................................20
6.7 Cooperation........................................................................................20
6.8 Bulk Sales Law.....................................................................................21
6.9 Title Insurance and Surveys........................................................................21
6.10 [Reserved]........................................................................................21
6.11 Appraisal.........................................................................................21
6.12 HSR Act Filing....................................................................................22
6.13 Billboards........................................................................................22
6.14 Time Brokerage Option.............................................................................22
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING..............................................23
7.1 Conditions to Obligations of Buyer.................................................................23
7.2 Conditions to Obligations of Seller................................................................24
SECTION 8 CLOSING AND CLOSING DELIVERIES........................................................................25
8.1 Closing............................................................................................25
8.2 Deliveries by Seller...............................................................................25
8.3 Deliveries by Buyer................................................................................26
SECTION 9 TERMINATION...........................................................................................27
9.1 Termination by Seller..............................................................................27
9.2 Termination by Buyer...............................................................................28
9.3 Rights on Termination..............................................................................29
9.4 Escrow Deposit.....................................................................................29
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES.....................................................................29
10.1 Representations and Warranties....................................................................29
10.2 Indemnification by Seller.........................................................................30
10.3 Indemnification by Buyer..........................................................................30
10.4 Procedure for Indemnification.....................................................................31
</TABLE>
iii
<PAGE> 5
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10.5 Specific Performance..............................................................................32
10.6 Attorneys' Fees...................................................................................32
SECTION 11 MISCELLANEOUS.........................................................................................32
11.1 Fees and Expenses.................................................................................32
11.2 [Reserved]........................................................................................33
11.3 Notices...........................................................................................33
11.4 Benefit and Binding Effect........................................................................33
11.5 Further Assurances................................................................................34
11.6 Governing Law.....................................................................................34
11.7 Headings..........................................................................................34
11.8 Gender and Number.................................................................................34
11.9 Entire Agreement..................................................................................34
11.10 Waiver of Compliance; Consents...................................................................34
11.11 Press Release....................................................................................35
11.12 Counterparts.....................................................................................35
</TABLE>
iv
<PAGE> 6
LIST OF SCHEDULES
Schedule 2.1 -- Disclosure Statement
Schedule 3.3 -- Consents
Schedule 3.4 -- Licenses
Schedule 3.5 -- Real Property
Schedule 3.6 -- Tangible Personal Property
Schedule 3.7 -- Contracts
Schedule 3.10 -- Insurance Policies
Schedule 3.18 -- Transactions with Affiliates
Schedule 8.2(g) -- Form of Opinions of Seller's Counsel
Schedule 8.3(d) -- Form of Opinion of Buyer's Counsel
v
<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 12th day of September,
1996, by and between The Moody Bible Institute of Chicago, an Illinois
not-for-profit corporation and a private, Christian educational institution
("Seller"), and Paxson Broadcasting of Tampa, Limited Partnership, a Florida
limited partnership ("Buyer").
R E C I T A L S
A. Seller is the licensee of and owns and operates radio station
WKES-FM, St. Petersburg, Florida (the "Station"), pursuant to licenses issued by
the Federal Communications Commission ("FCC").
B. Seller desires to sell, and Buyer desires to buy, substantially all
the assets that are used or useful in the business or operations of the Station,
for the price and on the terms and conditions set forth in this Agreement.
A G R E E M E N T S
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Seller, intending to be bound
legally, agree as follows:
SECTION 1 DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means all donations and contributions to Seller,
all of Seller's underwriting receivables and the rights of Seller to payment for
program time run on the Station by Seller prior to the Closing Date; provided,
however, that Accounts Receivable shall not include any network compensation,
advertising or program revenues or other amounts payable to Buyer under the Time
Brokerage Agreement (as defined below).
"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 specifically designated on Schedule 3.7 as Contracts that are to be assumed
by Buyer upon its purchase of the
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<PAGE> 8
Station and (ii) the New Lease and any other Contracts entered into by Seller
between the date of this Agreement and the Closing Date that Buyer agrees in
writing to assume.
"Closing" means the consummation of the purchase and sale of the Assets
pursuant to this Agreement in accordance with the provisions of Section 8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer or
otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses, and
other agreements (including leases for personal or real property and employment
agreements), written or oral (including any amendments and other modifications
thereto) to which Seller is a party or which are binding upon Seller and which
relate to or affect the Assets or the business or operations of the Station, and
(i) which are in effect on the date of this Agreement or (ii) which are entered
into by Seller between the date of this Agreement and the Closing Date.
"Escrow Agent" means First Union National Bank of Florida.
"Escrow Agreement" means the Escrow Agreement dated as of the date
hereof among Buyer, Seller and the Escrow Agent.
"Excluded Records" means all financial books and records of Seller or
the Station and all books and records that Seller is required by law to retain,
that pertain to Seller's corporate organization, and that comprise Accounts
Receivable lists or records of contributors, donors or other supporters of
Seller or the Station.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for
- 2 -
<PAGE> 9
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.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Intangibles" means, other than the "WKES" call letters, all licenses,
permits, technical information (including all engineering studies and other
documents prepared by or for Seller in connection with the relocation of the
Station's auxiliary and primary antenna sites) and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by Seller or under which Seller is licensed or franchised and which are used or
useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations issued
by the FCC, the Federal Aviation Administration, or any other federal, state, or
local governmental authorities to Seller in connection with the conduct of the
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date.
"New Lease" means a lease, or a binding option to enter into a lease,
(a) for a new primary transmission facility for the Station that (i) is at a
location and antenna height above ground level acceptable to Buyer and (ii)
conforms to applicable requirements of the FCC, the Federal Aviation
Administration and other governmental authorities, including, without
limitation, environmental and zoning agencies, and (b) that is otherwise in form
and substance acceptable to Buyer.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real property
listed on Schedule 3.5, including all options, easements, licenses, rights to
access, and rights of way relating thereto, together with any additions thereto
between the date of this Agreement and the Closing Date.
"Tampa Tower Lease" means the Lease Agreement dated as of April 20,
1989, between Tampa Tower General Partnership and Seller.
"Tangible Personal Property" means all machinery, equipment, tools,
leasehold improvements, plant, inventory, spare parts, and other tangible
personal property listed on Schedule 3.6, together with any additions thereto
between the date of this Agreement and the Closing Date.
- 3 -
<PAGE> 10
"Time Brokerage Agreement" shall mean the Time Brokerage Agreement in
the form of Schedule 6.15 hereto to be entered into by Buyer and Seller subject
to the satisfaction of the conditions specified in Section 6.15.
SECTION 2 PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to sell, transfer, and deliver to
Buyer on the Closing Date, and Buyer agrees to purchase, all of the tangible and
intangible assets used or useful in connection with the conduct of the business
or operations of the Station, together with any additions thereto between the
date of this Agreement and the Closing Date, but excluding the assets described
in Section 2.2, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges, or encumbrances of any nature
whatsoever (except for liens for current taxes not yet due and payable),
including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of Seller
relating to the Station, other than the "WKES" call letters, that are not
specifically included within the Intangibles, including the goodwill of the
Station, if any;
(f) All of Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station;
(g) All choses in action of Seller relating to the Assets,
including, without limitation, all choses in action arising from or relating to
the matter described in Schedule 2.1; and
(h) All books and records relating to the Assets or the
technical operation of the Station, including executed copies of the Assumed
Contracts, and all records required by the FCC to be kept by the Station.
2.2 Excluded Assets. The Assets shall exclude the following assets:
- 4 -
<PAGE> 11
(a) Seller's cash on hand as of the Closing and all other cash
in any of Seller's bank or savings accounts; any insurance policies, letters of
credit, or other similar items and cash surrender value in regard thereto; and
any stocks, bonds, certificates of deposit and similar investments;
(b) All Excluded Records;
(c) Any pension, profit-sharing, or employee benefit plans,
and any collective bargaining agreements;
(d) Any Contract that is not an Assumed Contract;
(e) The Accounts Receivable as of 11:59 p.m., St. Petersburg
time, on the day prior to the Closing Date;
(f) The "WKES" call letters; and
(g) All employees of the Station.
2.3 Purchase Price. The Purchase Price for the Assets shall be
THIRTY-FIVE MILLION THREE HUNDRED TWENTY-THREE THOUSAND DOLLARS ($35,323,000),
adjusted as provided below:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses, other than, in
the event the parties enter into the Time Brokerage Agreement, expenses for
which Buyer is obligated to reimburse Seller pursuant to the Time Brokerage
Agreement. All expenses arising from the operation of the Station, including
business and license fees, utility charges, real and personal property taxes and
assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, taxes (except for
taxes arising from the transfer of the Assets under this Agreement) and similar
prepaid and deferred items, shall be prorated between Buyer and Seller in
accordance with the principle that Seller shall be responsible for all expenses,
costs, and liabilities allocable to the period prior to the Closing Date
(subject to, in the event the parties enter into the Time Brokerage Agreement,
reimbursement by Buyer to the extent provided in the Time Brokerage Agreement),
and Buyer shall be responsible for all expenses, costs, and obligations
allocable to the period on and after the Closing Date. Notwithstanding the
preceding sentence, there shall be no adjustment for, and Seller shall remain
solely liable with respect to, (i) any Contracts not
- 5 -
<PAGE> 12
included in the Assumed Contracts and any other obligation or liability not
being assumed by Buyer in accordance with Section 2.5 and (ii) any commissions,
wages, bonuses, incentive programs, payroll taxes, vacation pay, sick leave,
severance benefits, or other obligations to Seller's employees, including any of
the foregoing arising by virtue of the Closing, all of which obligations shall
be discharged and satisfied in full by Seller at or prior to the Closing.
(b) 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(a). The preliminary settlement statement (A)
shall contain all information reasonably necessary to determine the adjustments
to the Purchase Price under Section 2.3(a), 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 materially 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(a)
hereof prior to the Closing. The Purchase Price payable at Closing under Section
2.3 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 preliminary settlement statement and
shall instead be determined as part of the post-closing adjustments under this
Section 2.3(b).
(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 45 days after its receipt of Buyer's statement a statement setting forth
its 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 45-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 45-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
accounting for non-commercial radio broadcasting stations within forty-five days
following delivery of Seller's Statement, to resolve the dispute. If Seller and
Buyer fail to agree to the appointment of such certified public accountant
within said forty-five day period, either party may
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submit to the American Arbitration Association for the appointment of such
accountant under the commercial arbitration rules of the American Arbitration
Association. 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(b) 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(b), the
difference between the Purchase Price and the Estimated Purchase Price. If the
Purchase Price as finally determined pursuant to Section 2.3(b) 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(b), the difference between the Purchase
Price and the Estimated Purchase Price.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted, shall
be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer at
least two (2) days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall assume and undertake to pay, discharge, and perform all obligations
and liabilities of Seller under the Licenses and the Assumed Contracts insofar
as they relate to the time on and after the Closing Date, and arise out of
events related to Buyer's ownership of the Assets or its operation of the
Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or proceedings
relating to the operation of the Station prior to the Closing, (iv) any
obligations or liabilities arising under capitalized leases or other financing
agreements, (v) any obligations or liabilities arising under agreements entered
into other than in the ordinary course of business, (vi) any obligations or
liabilities of Seller under any employee pension, retirement, health and welfare
or other benefit plans or collective bargaining agreements, (vii) any obligation
to any employee of the Station for wages, severance benefits, vacation time, or
sick leave accrued prior to the Closing Date, and (viii) any obligations or
liabilities caused by, arising out of, or resulting from any action or omission
of Seller prior to the Closing, and all such obligations and liabilities shall
remain and be the obligations and liabilities solely of Seller.
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SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a not-for-profit
corporation duly organized, validly existing, and in good standing under the
laws of the State of Illinois and is duly qualified to conduct business as a
foreign not-for-profit corporation in the State of Florida. Seller has all
requisite power and authority (i) to own, lease, and use the Assets as now
owned, leased, and used, (ii) to conduct the business and operations of the
Station as now conducted, and (iii) to execute and deliver this Agreement, the
Escrow Agreement and the documents contemplated hereby and thereby, and to
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Seller hereunder and thereunder. Except as
disclosed in Schedule 2.1, Seller is not a participant in any joint venture or
partnership with any other person or entity with respect to any part of the
operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement and the Escrow Agreement by Seller have been duly
authorized by all necessary actions on the part of Seller. This Agreement and
the Escrow Agreement have been duly executed and delivered by Seller and
constitute the legal, valid, and binding obligations of Seller, enforceable
against it in accordance with their respective terms except as the
enforceability of this Agreement and the Escrow Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3 and making any filing required under the HSR
Act, the execution, delivery, and performance of this Agreement and the Escrow
Agreement and the documents contemplated hereby and thereby (with or without the
giving of notice, the lapse of time, or both): (i) do not require the consent of
any third party; (ii) will not conflict with any provision of the Articles of
Incorporation or Bylaws of Seller; (iii) will not conflict with, result in a
breach of, or constitute a default under, any law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; (iv) except as described on Schedule 2.1, will not conflict
with, constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to which
Seller is a party or by which Seller may be bound; and (v) will not create any
claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of
any nature whatsoever upon any of the Assets.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete
list of the Licenses. Seller has delivered to Buyer true and complete copies of
the Licenses (including any amendments and other modifications thereto). The
Licenses have been validly issued, and Seller
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is the authorized legal holder thereof. The Licenses listed on Schedule 3.4
comprise all of the licenses, permits, and other authorizations required from
any governmental or regulatory authority for the lawful conduct of the business
and operations of the Station in the manner and to the full extent they are now
conducted, and none of the Licenses is subject to any restriction or condition
that would limit the full operation of the Station as now operated. The Licenses
are in full force and effect, and the conduct of the business and operations of
the Station is in accordance therewith. Seller has no reason to believe that any
of the Licenses would not be renewed by the FCC or other granting authority in
the ordinary course.
3.5 Title to and Condition of Real Property. Except for the License
described in Schedule 2.1 and Seller's leasehold interest in the Station's
studio and office facilities located at 5800 100th Way, St. Petersburg, Florida,
Schedule 3.5 contains a complete and accurate description (including street
address, legal description, owner, and use and the location of all improvements
thereon) of all real property and real property interests, including leaseholds
and subleaseholds, purchase options, easements, rights-of-way and licenses, used
or useful in the business or operations of the Station. The Real Property does
not include any fee estates. With respect to each leasehold or subleasehold
interest included in the Real Property being conveyed under this Agreement,
except as disclosed on Schedule 2.1 and so long as Seller fulfills its
obligations under the lease therefor, Seller has enforceable rights to
nondisturbance and quiet enjoyment, and no third party holds any interest in the
leased premises with the right to foreclose upon Seller's leasehold or
subleasehold interest. All towers, guy anchors, and buildings and other
improvements included in the Assets are located entirely on the Real Property
listed in Schedule 3.5. All Real Property (including the improvements thereon)
(i) is in good condition and repair consistent with its present use, (ii) is
available for immediate use in the conduct of the business and operations of the
Station, and (iii) complies with all applicable building or zoning codes and the
regulations of any governmental authority having jurisdiction. Seller has full
legal and practical access to the Real Property.
3.6 Title to and Condition of Tangible Personal Property. Except for
the Transmission Equipment described in Schedule 2.1 and the tangible personal
property that is used or useful solely and exclusively in connection with the
operation of the Station's studio and office facilities located at 5800 100th
Way, St. Petersburg, Florida, the Tangible Personal Property listed on Schedule
3.6 comprises all material items of tangible personal property necessary to
conduct the business and operations of the Station as now conducted. Except as
described in Schedule 3.6, Seller owns and has good title to each item of
Tangible Personal Property, and none of the Tangible Personal Property owned by
Seller is subject to any security interest, mortgage, pledge, conditional sales
agreement, or other lien or encumbrance, except for liens for current taxes not
yet due and payable. Each item of Tangible Personal Property is available for
immediate use in the business and operations of the Station. All items of
Tangible Personal Property (i) have been maintained in a manner consistent with
generally accepted standards of good engineering practice, and (ii) will permit
the Station and any auxiliary broadcast stations used in connection with the
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operation of the Station to operate in accordance with the terms of the FCC
Licenses and the rules and regulations of the FCC, and with all other applicable
federal, state, and local statutes, ordinances, rules, and regulations.
3.7 Contracts. Schedule 3.7 is a true and complete list of all
Contracts relating to or affecting, directly or indirectly, the Real Property
and the other Assets. Seller has delivered to Buyer true and complete copies of
all written Assumed Contracts, true and complete memoranda of all oral Assumed
Contracts (including any amendments and other modifications to such Assumed
Contracts). Other than the Contracts listed on Schedule 3.7, Seller requires no
contract, lease, or other agreement to enable it to continue the Station's
broadcast operations. 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) except as
disclosed on Schedule 2.1, to terminate such contract or amend the terms
thereof, (ii) to refuse to renew the Assumed Contract upon expiration of its
term, or (iii) to renew the Assumed Contract upon expiration only on terms and
conditions which are more onerous than those now existing. Except for the need
to obtain the Consents listed in Schedule 3.3, Seller has full legal power and
authority to assign its rights under the Assumed Contracts to Buyer in
accordance with this Agreement, and such assignment will not affect the
validity, enforceability, or continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1,
any filing required under the HSR Act 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 operations of the Station in
essentially the same manner as such operations are now conducted.
3.9 Intangibles. All Intangibles are valid and in good standing and
uncontested. 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. Other than the "WKES" call letters, the
Intangibles comprise all intangible property interests necessary to conduct the
business and operations of the Station as now conducted.
3.10 Insurance. Schedule 3.10 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the business
of the Station. All policies of insurance listed in Schedule 3.10 are in full
force and effect. The insurance policies listed in Schedule 3.10
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are adequate in amount with respect to, and for the full value (subject to
customary deductibles) of, the Assets, and insure the Assets and the business of
the Station against all customary and foreseeable risks. During the past three
years, no insurance policy of Seller on the Assets or the Station has been
canceled by the insurer and no application of Seller for insurance has been
rejected by any insurer.
3.11 Reports. All returns, reports, and statements that the Station is
currently required to file with the FCC or with any other governmental agency
have been filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction over Seller and the Station have
been complied with. All of such returns, reports, and statements are
substantially complete and correct as filed.
3.12 Labor Relations. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Station. Seller has
complied with all laws, rules, and regulations relating to the employment of
labor, including those related to wages, hours, collective bargaining,
occupational safety, discrimination, and the payment of social security and
other payroll related taxes, and it has not received any notice alleging that it
has failed to comply in any material respect with any such laws, rules, or
regulations. No controversies, disputes, or proceedings are pending or, to the
best of its knowledge, threatened, between it and any employee (singly or
collectively) of the Station. No labor union or other collective bargaining unit
represents or claims to represent any of the employees of the Station. To
Seller's knowledge, there is no union campaign being conducted to represent
employees of the Station or solicit cards from employees to authorize a union to
request a National Labor Relations Board certification election with respect to
any employees at the Station; and
3.13 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local, or city tax returns
which are required to be filed, and it has paid or caused to be paid all taxes
shown on those returns or on any tax assessment received by it to the extent
that such taxes have become due, or has set aside on its books adequate reserves
(segregated to the extent required by generally accepted accounting principles)
with respect thereto. There are no governmental investigations or other legal,
administrative, or tax proceedings pursuant to which Seller is or could be made
liable for any taxes, penalties, interest, or other charges, the liability for
which could extend to Buyer as transferee of the business of the Station, and no
event has occurred that could impose on Buyer any transferee liability for any
taxes, penalties, or interest due or to become due from Seller. Seller is not
required to file Florida state sales tax returns or pay Florida state sales tax.
3.14 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry, there is no claim,
legal action, counterclaim, suit, arbitration, governmental investigation or
other legal, administrative, or tax proceeding, nor any order, decree or
judgment, in progress or pending, or to the knowledge of Seller threatened,
against or relating
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to Seller with respect to its ownership or operation of the Station or otherwise
relating to the Assets or the business or operations of the Station, nor does
Seller know or have reason to be aware of any basis for the same. In particular,
but without limiting the generality of the foregoing, there are no applications,
complaints or proceedings pending or, to the best of its knowledge, threatened
(i) before the FCC relating to the business or operations of the Station other
than rule making proceedings which affect the radio broadcasting industry
generally, (ii) before any federal or state agency relating to the business or
operations of the Station involving charges of illegal discrimination under any
federal or state employment laws or regulations, or (iii) before any federal,
state, or local agency relating to the business or operations of the Station
involving zoning issues under any federal, state, or local zoning law, rule, or
regulation.
3.15 Environmental Matters. With respect to the Real Property:
(a) Seller, and, to the best of Seller's knowledge without
inquiry or investigation, each other party on the Real Property, has complied in
all material respects with all laws, rules, and regulations of all federal,
state, and local governments (and all agencies thereof) concerning the
environment, public health and safety, and employee health and safety, and no
charge, complaint, action, suit, proceeding, hearing, investigation, claim,
demand, or notice has been filed or commenced against Seller in connection with
its operation of the Station alleging any failure to comply with any such law,
rule, or regulation;
(b) Seller has no liability relating to its operation of the
Station (and there is no basis related to the past or present operation of the
Station 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 any law, rule, or regulation of any federal, state,
or local government (or agency thereof) concerning release or threatened release
of hazardous substances, public health and safety, or pollution or protection of
the environment;
(c) Seller has no liability relating to its operation of the
Station (and Seller has not handled or disposed of any substance, arranged for
the disposal of any substance, or owned or operated any property or facility in
any manner that could form the basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
(under the common law or pursuant to any statute) against Seller giving rise to
any such liability) for damage to any site, location, or body of water (surface
of subsurface) or for illness or personal injury;
(d) Seller has no liability relating to its operation of the
Station (and there is no basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand against
Seller giving rise to any such liability) under any law, rule, or regulation of
any federal, state, or local government (or agency thereof) concerning employee
health and safety;
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(e) Seller has no liability relating to its operation of the
Station (and Seller has not exposed any employee to any substance or condition
that could form the basis for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand (under the common law
or pursuant to statute) against Seller giving rise to any such liability) for
any illness or personal injury to any employee;
(f) In connection with its operation of the Station, Seller
has obtained and been in compliance in all material respects with all of the
terms and conditions of all permits, licenses, and other authorizations which
are required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all federal, state, and local laws, rules,
and regulations (including all codes, plans, judgments, orders, decrees,
stipulations, injunctions, and charges thereunder) relating to public health and
safety, worker health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes; and
(g) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by Seller in
connection with its operation of the Station or, to the best of Seller's
knowledge without inquiry or investigation, by any other party on the Real
Property.
3.16 Compliance with Laws. Seller has complied in all material respects
with the Licenses and all federal, state, and local laws, rules, regulations,
and ordinances applicable or relating to the ownership and operation of the
Station. Neither the ownership or use of the properties of the Station nor the
conduct of the business or operations of the Station conflicts with the rights
of any other person or entity.
3.17 Conduct of Business in Ordinary Course. Since December 31, 1995,
Seller has conducted the business and operations of the Station only in the
ordinary course and has not:
(a) Except as disclosed on Schedule 2.1, suffered any material
adverse change in the business, assets, or properties of the Station, including
any damage, destruction, or loss affecting any assets used or useful in the
conduct of the business of the Station;
(b) Made any sale, assignment, lease, or other transfer of any
of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
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(c) Transferred or granted any right under, or entered into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right relating to the Station; or
(d) Incurred any obligation or liability (fixed or contingent)
except obligations and liabilities incurred in the ordinary course of the
conduct of the business and operations of the Station.
3.18 Transactions with Affiliates. Except as disclosed on Schedule
3.18, Seller has not been involved in any business arrangement or relationship
relating to the Assets with any affiliate of Seller. As used in this paragraph,
"affiliate" has the meaning set forth in Rule 12b-2 promulgated under the
Securities and Exchange Act of 1934.
3.19 Broker. Neither Seller nor any person acting on Seller's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement, except for the
broker's commission payable by Seller to Media Services Group.
3.20 Full Disclosure. No representation or warranty made by Seller in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of Florida. Buyer has all requisite power and authority to
execute and deliver this Agreement and the Escrow Agreement and the documents
contemplated hereby and thereby, and to perform and comply with all of the
terms, covenants, and conditions to be performed and complied with by Buyer
hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement and the Escrow Agreement by Buyer have been duly
authorized by all necessary actions on the part of Buyer. This Agreement and the
Escrow Agreement have been duly executed and delivered by Buyer and constitute
the legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms except as the enforceability of this
Agreement and the Escrow Agreement may be affected by bankruptcy, insolvency, or
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similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the Escrow Agreement and the documents contemplated hereby and thereby (with
or without the giving of notice, the lapse of time, or both): (i) do not require
the consent of any third party; (ii) will not conflict with the Certificate of
Limited Partnership or Limited Partnership Agreement of Buyer; (iii) will not
conflict with, result in a breach of, or constitute a default under, any law,
judgment, order, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality; or (iv) will not conflict with, constitute grounds
for termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Closing Funds. Funds necessary to consummate the transactions
contemplated by this Agreement are currently on deposit and are available for
the Closing.
4.5 Broker. Neither Buyer nor any person acting on Buyer's behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.6 Qualifications. Buyer is legally, financially and otherwise
qualified to be the licensee of, acquire, own and operate the Station under the
Communications Act of 1934, as now in effect, and the rules, regulations and
policies of the FCC as now in effect. Buyer knows of no fact that would, under
existing law and the existing rules, regulations, policies and procedures of the
FCC disqualify Buyer as an assignee of the FCC Licenses or as the owner and
operator of the Station. Buyer 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.
4.7 Full Disclosure. No representation or warranty made by Buyer in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Buyer pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
SECTION 5 OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Except for such changes in the current operation of the
Station as may be required as a result of the matter disclosed in Schedule 2.1,
Seller agrees that, between the date of this Agreement and the Closing Date,
Seller shall operate the Station diligently in the ordinary course of business
in accordance with its past practices (except where such conduct, in the event
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the parties enter into the Time Brokerage Agreement, has been expressly
delegated to Buyer pursuant to the terms of the Time Brokerage Agreement or
would conflict with the following covenants or with Seller's other obligations
under this Agreement), and in accordance with the other covenants in this
Section 5.
5.2 Compensation. Seller shall not increase the compensation, bonuses,
or other benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Station, except in
accordance with past practices.
5.3 Contracts. Except for the leases referred to in Sections 6.14(a)
and (b) hereof, Seller will not enter into any contract or commitment relating
to the Station or the Assets, or amend or terminate any Assumed Contract (or
waive any material right thereunder), or incur any obligation (including
obligations relating to the borrowing of money or the guaranteeing of
indebtedness) that will be binding on Buyer after Closing. Prior to the Closing
Date, Seller shall deliver to Buyer a list of all Contracts entered into between
the date of this Agreement and the Closing Date, together with copies of such
Contracts.
5.4 Disposition of Assets. Seller shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except where no longer used
or useful in the business or operations of the Station or in connection with the
acquisition of replacement property of equivalent kind and value.
5.5 Encumbrances. Seller shall not create, assume or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets, except for (i) liens disclosed on
Schedule 3.5 and Schedule 3.6, which shall be removed prior to the Closing Date,
(ii) liens for current taxes not yet due and payable, and (iii) mechanics' liens
and other similar liens, which shall be removed prior to the Closing Date.
5.6 Licenses. Seller shall not cause or permit, by any act or failure
to act, any of the Licenses to expire or to be revoked, suspended, or modified,
or take any action that could cause the FCC or any other governmental authority
to institute proceedings for the suspension, revocation, or adverse modification
of any of the Licenses. Seller shall not fail to prosecute with due diligence
any applications to any governmental authority in connection with the operation
of the Station.
5.7 Rights. Seller shall not waive any right relating to the Station or
any of the Assets.
5.8 No Inconsistent Action. Seller shall not take any action that is
inconsistent with its obligations under this Agreement or that could hinder or
delay the consummation of the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, Seller covenants that neither
it nor any of its directors, officers or agents will, (a) solicit, initiate
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or encourage the submission of any proposal or offer relating to any (i)
liquidation, dissolution or recapitalization, (ii) merger or consolidation,
(iii) acquisition or sale of securities, (iv) transfer or assignment of any FCC
License (v) sale, lease or disposition of substantially all of the assets of
Seller, or (vi) similar transaction or business combination, in each case
involving Seller or (b) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any party to do or seek
any of the foregoing. Seller shall notify Buyer as soon as practicable if any
party makes any proposal with respect to any of the foregoing. Notwithstanding
any other provision in this Agreement to the contrary, in the event that Seller
violates its obligations in this Section 5.8, Buyer shall have the right to seek
specific performance of Seller's obligations hereunder.
5.9 Access to Information. Seller shall give Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
to the Assets and to all other properties, equipment, books and records relating
to the Station, other than the Excluded Records, for the purpose of audit and
inspection, including inspections incident to the environmental study described
in Section 6.5 and the engineering study described in Section 6.6.
5.10 Maintenance of Assets. Seller shall use its best efforts and take
all reasonable actions to maintain all of the Assets in good condition (ordinary
wear and tear excepted), and use, operate, and maintain all of the Assets in a
reasonable manner and in accordance with the terms of the FCC Licenses, all
rules and regulations of the FCC and generally accepted standards of good
engineering practice. Seller shall maintain inventories of spare parts and
expendable supplies at levels consistent with past practices. If any loss,
damage, impairment, confiscation, or condemnation of or to any of the Assets
occurs (other than, in the event the parties enter into the Time Brokerage
Agreement, a loss, damage or impairment resulting from actions taken by Buyer
pursuant to the Time Brokerage Agreement), Seller shall repair, replace, or
restore the Assets to their prior condition as represented in this Agreement as
soon thereafter as possible, and Seller shall use the proceeds of any claim
under any insurance policy solely to repair, replace, or restore any of the
Assets that are lost, damaged, impaired, or destroyed.
5.11 Insurance. Seller shall maintain the existing insurance policies
on the Station and the Assets.
5.12 Consents. Seller shall obtain the Consents and the estoppel
certificates described in Section 8.2(b), without any change in the terms or
conditions of any Contract or License that could be less advantageous to the
Station than those pertaining under the Contract or License as in effect on the
date of this Agreement. Seller shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon Buyer's request, Seller
shall cooperate with Buyer and use it best efforts to obtain from the lessors
under each Real Property lease such estoppel
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certificates and consents to the collateral assignment of the lessee's interest
under each such lease as Buyer's lenders may request.
5.13 Books and Records. Seller shall maintain its books and records
relating to the Assets and the technical operation of the Station in accordance
with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing of any
unusual or material developments with respect to the business or operations of
the Station, and of any material change in any of the information contained in
Seller's representations and warranties contained in Section 3 of this
Agreement.
5.15 Compliance with Laws. Seller shall comply in all material respects
with all laws, rules, and regulations applicable or relating to the ownership
and operation of the Station.
5.16 Financing Leases. Seller will satisfy at or prior to Closing all
outstanding obligations under capital and financing leases with respect to any
of the Assets and obtain good title to the Assets leased by Seller pursuant to
those leases so that those Assets shall be transferred to Buyer at Closing free
of any interest of the lessors.
5.17 Preservation of Business. Except to the extent the operation and
organization of the Station has been delegated to Buyer pursuant to the Time
Brokerage Agreement, Seller shall use its best efforts to preserve the operation
and organization of the Station and use its best efforts to preserve the
Station's present relationships with suppliers and others having business
relations with it, to the end that the business and operations of the Station
shall be unimpaired at the Closing Date. The ordinary and customary operating
practices of the Station shall be maintained.
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC; and
(b) Seller and Buyer shall promptly prepare an appropriate
application for the FCC Consent and shall file the application with the FCC on
the date that is 30 days following the execution of this Agreement. The parties
shall prosecute the application with all reasonable diligence and otherwise use
their best efforts to obtain a grant of the application as expeditiously as
practicable. Each party agrees to comply with any condition imposed on it by the
FCC Consent, except that no party shall be required to comply with a condition
if (1) the condition was imposed on it as the result of a circumstance the
existence of which does not constitute a breach
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by the party of any of its representations, warranties, or covenants under this
Agreement, and (2) compliance with the condition would have a material adverse
effect upon it. Buyer and Seller shall oppose any requests for reconsideration
or judicial review of the FCC Consent. If the Closing shall not have occurred
for any reason within the original effective period of the FCC Consent, and
neither party shall have terminated this Agreement under Section 9, the parties
shall jointly request an extension of the effective period of the FCC Consent.
No extension of the FCC Consent shall limit the exercise by either party of its
rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not, directly
or indirectly, control or attempt to control the operations of the Station; such
operations, including complete control and supervision of all of the Station
programs, employees, and policies, shall be the sole responsibility of Seller
until the Closing.
6.3 Risk of Loss.
(a) The risk of any loss, damage, impairment (other than, in
the event the parties enter into the Time Brokerage Agreement, a loss, damage or
impairment resulting from actions taken by Buyer pursuant to the Time Brokerage
Agreement), confiscation, or condemnation of any of the Assets from any cause
whatsoever shall be borne by Seller at all times prior to the Closing; and
(b) If any damage or destruction of the Assets or any other
event occurs which (i) causes the Station to cease broadcasting operations for a
period of three (3) or more days or (ii) prevents in any material respect signal
transmission by the Station in the normal and usual manner and Seller fails to
restore or replace the Assets so that normal and usual transmission is resumed
within seven days of the damage, destruction or other event, Buyer, in its sole
discretion, may (x) terminate this Agreement forthwith without any further
obligations hereunder upon written notice to Seller, in which event all funds
held by the Escrow Agent pursuant to the Escrow Agreement, including all
interest and other proceeds from the investment of such funds, shall be
immediately returned to Buyer, or (y) proceed to consummate the transaction
contemplated by this Agreement and complete the restoration and replacement of
the Assets after the Closing Date, in which event Seller shall deliver to Buyer
all insurance proceeds received in connection with such damage, destruction or
other event.
6.4 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will
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return to the other party all information obtained by the such party from the
other party in connection with the transactions contemplated by this Agreement.
6.5 Environmental Audit. Buyer may, at its option and expense, retain
an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Station. Buyer shall promptly
notify Seller if such survey discloses any material environmental hazard or
material possibility of future liability for environmental damages or clean-up
costs.
6.6 Engineering Study. Buyer may, at its option and expense, retain an
engineering firm to conduct a proof of performance study of the Station and to
prepare a report on the Station's compliance with customary engineering
practices and all applicable FCC rules, regulations, prescribed practices, and
technical standards. Buyer shall promptly notify Seller if such survey discloses
any material deficiencies in the operations or equipment of the Station.
6.7 Cooperation. Buyer and Seller shall cooperate fully with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary or desirable to the implementation and consummation of this Agreement,
and otherwise use their best efforts to consummate the transaction contemplated
hereby and to fulfill their obligations under this Agreement. Notwithstanding
the foregoing, Buyer shall have no obligation (i) to expend funds to obtain any
of the Consents or (ii) to agree to any adverse change in any License or Assumed
Contract to obtain a Consent required with respect thereto.
6.8 Bulk Sales Law. If applicable, the Bulk Sales law of the State of
Florida shall be complied with by Seller. Any loss, liability, obligation, or
cost suffered by Seller or Buyer as the result of the failure of Seller or Buyer
to comply with the provisions of any bulk sales law applicable to the transfer
of the Assets as contemplated by this Agreement shall be borne by Seller.
6.9 Title Insurance and Surveys.
(a) Title Insurance on Fee Property. With respect to each
parcel of Real Property, Buyer may obtain, at Buyer's expense, at or prior to
Closing, an ALTA Owner's Policy of Title Insurance Form B-1987 (or equivalent
policy acceptable to Buyer), issued by a title insurer satisfactory to Buyer, in
an amount equal to the fair market value of Buyer's interest in the property as
of the Closing and any improvements thereon (as reasonably determined by Buyer),
insuring Buyer's interest in such parcel as of the Closing, subject only to
liens or encumbrances expressly permitted by this Agreement;
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(b) General Requirements as to Title Insurance Policies. Each
title insurance policy obtained by Buyer pursuant to this Agreement shall (1)
insure title to the Real Property described in the policy and all recorded
easements benefitting such Real Property, (2) contain an "extended coverage
endorsement" insuring over the general exceptions customarily contained in title
policies, (3) contain an ALTA Zoning Endorsement 3.1 (or equivalent), (4)
contain an endorsement insuring that the Real Property described in the policy
is the same real estate shown in the survey delivered with respect to such
property, (5) contain an inflation endorsement, (6) contain a "contiguity"
endorsement with respect to any Real Property consisting of more than one record
parcel, and (7) not be subject to any survey exception or any defect or
encroachment disclosed by a survey delivered with respect to the property; and
(c) Surveys. With respect to each parcel of Real Property, as
to which a title insurance policy is procured pursuant to this Agreement, Buyer
will procure a current survey of the parcel, prepared by a licensed surveyor and
conforming to current ALTA Minimum Detail Requirements for Land Title Surveys,
disclosing the location of all improvements, easements, party walls, sidewalks,
roadways, utility lines, and other matters customarily shown on such surveys,
and showing access affirmatively to public streets and roads.
6.10 [Reserved].
6.11 Appraisal. Buyer and Seller agree to allocate the Purchase Price
for tax and recording purposes in accordance with an appraisal to be conducted
by an appraisal firm selected and paid for by Buyer with experience in the
valuation and appraisal of radio station assets.
6.12 HSR Act Filing. Seller and Buyer agree to (a) file, or cause to be
filed, with the U.S. Department of Justice ("DOJ") and Federal Trade Commission
("FTC") all filings, if any, which are required under the HSR Act in connection
with the transactions contemplated hereby or by the Time Brokerage Agreement
within ten (10) business days of the date of this Agreement; (b) submit to the
other party, prior to filing, their respective HSR Act filings to be made
hereunder, and to discuss with the other any comments the reviewing party may
have; (c) cooperate with each other in connection with such HSR Act filings,
which cooperation shall include furnishing the other with any information or
documents in such party's possession that may be reasonably required in
connection with such filings; (d) promptly file, after any request by the FTC or
DOJ and after appropriate negotiation with the FTC or DOJ of the scope of such
request, any information or documents requested by the FTC or DOJ; and (e)
furnish each other with any correspondence from or to, and notify each other of
any other communications with, the FTC or DOJ which relates to the transactions
contemplated hereunder, and to the extent practicable, to permit each other to
participate in any conferences with the FTC or DOJ.
6.13 Billboards. Commencing upon the earlier to occur of the effective
date of the Time Brokerage Agreement or the Closing Date, Buyer or an affiliate
of Buyer shall donate to Seller
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space on ten (10) billboard faces owned by Buyer or its affiliate and located in
Pinellas, Pasco or Hernando Counties, Florida, upon such terms and conditions,
other than the payment of rent, that are customarily applicable to such
transactions. The billboard locations in one or more of such counties shall be
subject to availability and shall be determined by Buyer or its affiliate in
their sole discretion. Seller shall be permitted to use each such billboard for
a period of 180 days commencing from the date each billboard is made available
to Seller.
6.14 Time Brokerage Option. Upon the satisfaction of each of the TBA
Option Conditions, as defined below, Seller may, at its option, deliver to Buyer
a written notice indicating Seller's intention to enter into the Time Brokerage
Agreement (the "TBA Option Notice"), whereupon Buyer and Seller shall execute
and deliver the Time Brokerage Agreement effective as of the day that is 30 days
following Buyer's receipt of the TBA Option Notice. Seller shall not be
permitted to deliver the TBA Option Notice until each of the following
conditions (the "TBA Option Conditions") shall have been satisfied:
(a) Seller shall have entered into one or more lease
agreements, in form and substance acceptable to Buyer, that grant Seller
uninterrupted access to (i) antenna space and related premises required for the
operation and maintenance, as currently operated and maintained, of the
Station's existing auxiliary antenna described in Section 2.0(a) of the Tampa
Tower Lease, and (ii) transmitter building space and related premises required
to operate and maintain, as currently operated and maintained, the Station's
transmitter;
(b) Seller shall have entered into the New Lease;
(c) the Station shall have commenced regular broadcast
operation without interruption at full authorized effective radiated power and
in accordance with generally accepted standards of good engineering practice
from, as applicable, the auxiliary antenna site specified in the Tampa Tower
Lease or the primary antenna site specified in any New Lease;
(d) Seller shall have delivered to Buyer estoppel certificates
from the lessors under the leases referred to in Sections 6.14(a) and (b) above;
and
(e) If applicable to the commencement of the transactions
contemplated by the Time Brokerage Agreement, the waiting period under the HSR
Act shall have expired without unresolved action by the DOJ or the FTC to
prevent such commencement.
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:
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(a) Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time;
(b) Covenants and Conditions. Seller shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date;
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization;
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied with
by Buyer under Section 6.1 hereof, Seller shall have complied with any
conditions imposed on it by the FCC Consent, and the FCC Consent shall have
become a Final Order;
(e) Governmental Authorizations. Seller shall be the holder of
all Licenses and there shall not have been any modification of any License,
other than a modification resulting from the matter described in Schedule 2.1,
that could have an adverse effect on the Station or the conduct of its business
and operations. No proceeding shall be pending the effect of which could be to
revoke, cancel, fail to renew, suspend, or modify adversely any License;
(f) Deliveries. Seller shall have made or stand willing to
make all the deliveries to Buyer set forth in Section 8.2;
(g) Adverse Change. Between the date of this Agreement and the
Closing Date, except, in the event the parties enter into the Time Brokerage
Agreement, as a result of actions taken by Buyer pursuant to the Time Brokerage
Agreement, there shall have been no material adverse change in the assets or
properties of the Station as presently utilized by Seller, including any damage,
destruction, or loss that could reasonably be expected to have a materially
adverse effect on the business or operations of the Station;
(h) HSR Act. The waiting period under the HSR Act shall have
expired without unresolved action by the DOJ or the FTC to prevent the Closing.
(i) Time Brokerage Agreement. In the event the parties shall
have entered into the Time Brokerage Agreement, Seller shall have performed in
all material respects its obligations thereunder.
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(j) Tower Site. As of the Closing Date, each of the TBA Option
Conditions shall have been satisfied, the leases referred to in Section 6.15(a)
and (b) hereof shall be in full force and effect and all approvals of state and
local governmental authorities, including, without limitation, environmental and
zoning agencies, required for the construction and operation of the tower and
related facilities described in the New Lease, shall have been obtained.
7.2 Conditions to Obligations of Seller. All obligations of Seller at
the Closing are subject at Seller's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time;
(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date;
(c) Deliveries. Buyer shall have made or stand willing to make
all the deliveries set forth in Section 8.3; and
(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.
(e) HSR Act. The waiting period under the HSR Act shall have
expired without unresolved action by the DOJ or the FTC to prevent the Closing.
(f) Time Brokerage Agreement. In the event the parties shall
have entered into the Time Brokerage Agreement, Buyer shall have performed in
all material respects its obligations thereunder.
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 agreed upon by Buyer and Seller, that is (1) not earlier than
the FCC Consent is granted, and (2) not later than ten (10) business days
following the date upon which the FCC Consent has become a Final Order, subject
to the satisfaction or waiver of all of the other conditions precedent to the
holding of the Closing. If Buyer and Seller fail to agree upon the date for the
Closing pursuant
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to the preceding sentence prior to the fifth day after the date upon which the
FCC Consent has become a Final Order, the Closing shall take place on the tenth
business day after the date upon which the FCC Consent has become a Final Order.
Notwithstanding the foregoing, if the waiting period under the HSR Act shall not
have expired on or before the date that is the tenth business day after the date
on which the FCC Consent becomes a Final Order, 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 not earlier than the first business day and not later than
the tenth business day after the date such waiting period shall have expired.
(b) 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,
motor vehicle titles, assignments, and other transfer documents which shall be
sufficient to vest good and marketable title to the Assets in the name of Buyer,
free and clear of all claims, liabilities, security interests, mortgages, liens,
pledges, conditions, charges or encumbrances, 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;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Seller by its Vice President, certifying (1)
all representations and warranties of Seller contained in this Agreement are
true and complete in all material respects at and as of the Closing Date as
though made at and as of that date; and (2) that Seller has 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;
(e) Tax, Lien, and Judgment Searches. Results of a search for
tax, lien, and judgment filings in the Secretary of State's records of the State
of Florida, as well as the records of those counties in Florida in which any of
the Assets are located, such searches having been made no earlier than fifteen
days prior to the Closing Date;
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(f) Licenses, Contracts, Business Records, Etc. Copies of all
Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans,
projections, engineering records, and all available files and records relating
to the Assets or the technical operation of the Station;
(g) Opinions of Counsel. Opinions of Seller's counsel dated as
of the Closing Date, substantially in the form of Schedule 8.2(g) hereto;
(h) Lenders Certificates. Such certificates and confirmations
to Buyer's lenders as Buyer may reasonably request in connection with obtaining
financing for the performance of its payment obligations hereunder; and
(i) Certificates. Such other certificates and documents that
Seller is required to deliver pursuant to the terms hereof.
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 Seller's
obligations under the Licenses and Assumed Contracts insofar as they relate to
the time on and after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by its President or Secretary,
certifying (1) all representations and warranties of Buyer contained in this
Agreement are true and complete in all material respects at and as of the
Closing Date as though made at and as of that date, and (2) that Buyer has
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;
(d) Opinion of Counsel. An opinion of Buyer's counsel dated as
of the Closing Date, substantially in the form of Schedule 8.3(d) hereto; and
(e) Certificates. Such other certificates and documents that
Buyer is required to deliver pursuant to the terms hereof.
SECTION 9 TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by Seller
and the purchase and sale of the Station abandoned, if Seller is not then in
material default, upon written notice to Buyer, upon the occurrence of any of
the following:
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(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, 1997;
(d) Breach. Without limiting Seller's rights under the other
provisions of this Section 9.1, if Buyer has failed to cure any material breach
of any of its representations, warranties, or covenants under this Agreement
within fifteen days after Buyer received written notice of such breach from
Seller; and
(e) Environmental Hazards. Buyer shall have notified Seller of
the matters described in Section 9.2(e) and the clean-up costs specified in such
notice shall exceed $10,000.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer and
the purchase and sale of the Station abandoned, if Buyer is not then in material
default, upon written notice to Seller, upon the occurrence of any of the
following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Buyer set
forth in this Agreement have not been satisfied or waived in writing by Buyer;
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing;
(c) Upset Date. If the Closing shall not have occurred by
December 31, 1997;
(d) Interruption of Service. If any event shall have occurred
that prevented signal transmission of the Station in the normal and usual manner
for a continuous period of three days (other than, if the parties enter into the
Time Brokerage Agreement, an event caused by Buyer as a result of actions taken
by Buyer under the Time Brokerage Agreement);
(e) Environmental Hazards. Buyer shall have notified Seller of
material environmental hazards or the material possibility of environmental
damages or clean-up costs, as indicated in the environmental study described in
Section 6.5, within thirty (30) days prior to the Closing Date, and the cause
thereof shall not have been remedied prior to the Closing Date;
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(f) Technical Deficiencies. Buyer shall have notified Seller
of material deficiencies in the operations or equipment of the Station, as
indicated in the engineering study described in Section 6.6, within thirty (30)
days prior to the Closing Date, and the cause thereof shall not have been
remedied prior to the Closing Date; and
(g) 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.
9.3 Rights on Termination. If this Agreement is terminated pursuant to
Section 9.1 or Section 9.2 and neither party is in material breach of 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, then the
payment to Seller of Three Million Dollars ($3,000,000) pursuant to Section 9.4
below shall be liquidated damages and shall constitute full payment and the
exclusive remedy for any damages suffered by Seller by reason of Buyer's
material breach of this Agreement. Seller and Buyer agree in advance that actual
damages would be difficult to ascertain and that the amount of Three Million
Dollars ($3,000,000) is a fair and equitable amount to reimburse Seller for
damages sustained due to Buyer's material breach of this Agreement. If this
Agreement is terminated by Buyer due to Seller's material breach of this
Agreement, Buyer shall have all rights and remedies available at law or equity.
9.4 Escrow Deposit. Buyer has deposited with the Escrow Agent the sum
of Three Million Dollars ($3,000,000) in accordance with the Escrow Agreement.
All such funds deposited with the Escrow Agent shall be held and disbursed in
accordance with the terms of the Escrow Agreement and the following provisions:
(a) At the Closing, all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, shall be disbursed to or at
the direction of Buyer;
(b) If this Agreement is terminated pursuant to Section 9.1 or
9.2 and Buyer is not in material breach of 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; and
(c) If this Agreement is terminated by Seller due to Buyer's
material breach of this Agreement, then all amounts held by the Escrow Agent
pursuant to the Escrow Agreement shall be disbursed to or at the direction of
Seller as liquidated damages under Section 9.3 above and any
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interest or other proceeds from the investment of funds held by the Escrow Agent
shall be disbursed by the Escrow Agent to or at the direction of Buyer.
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the Closing for a period of eighteen (18) months.
Any investigations by or on behalf of any party hereto shall not constitute a
waiver as to enforcement of any representation, warranty, or covenant contained
in this Agreement. No notice or information delivered by Seller shall affect
Buyer's right to rely on any representation or warranty made by Seller or
relieve Seller of any obligations under this Agreement as the result of a breach
of any of its representations and warranties.
10.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, Seller hereby agrees to indemnify and hold Buyer
harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any covenant
by Seller contained in this Agreement or in any certificate, document, or
instrument delivered to Buyer under this Agreement;
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to this Agreement, including any liabilities arising at any time under
any Contract not included in the Assumed Contracts;
(c) Any loss, liability, obligation, or cost resulting from
the failure of the parties to comply with the provisions of any bulk sales law
applicable to the transfer of the Assets;
(d) Except, in the event the parties enter into the Time
Brokerage Agreement, as a result of actions taken by Buyer pursuant to the Time
Brokerage Agreement, any and all losses, liabilities, or damages resulting from
the operation or ownership of the Station prior to the Closing, including any
liabilities arising under the Licenses or the Assumed Contracts which relate to
events occurring prior the Closing Date; and
(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.
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10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer hereby agrees to indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any covenant
by Buyer contained in this Agreement or in any certificate, document, or
instrument delivered to Seller under this Agreement;
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement;
(c) Any and all losses, liabilities, or damages resulting from
the operation or ownership of the Station on and after the Closing; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within five days after
written notice of such action, suit, or proceeding was given to Claimant;
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration provisions
of this Agreement, as applicable;
- 30 -
<PAGE> 37
(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; and
(e) The indemnifications rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other remedies
that may be available, including money damages, to obtain specific performance
of the terms of this Agreement. If any action is brought by Buyer to enforce
this Agreement, Seller shall waive the defense that there is an adequate remedy
at law.
10.6 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
SECTION 11 MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or transfer
tax arising in connection with the conveyance of the Assets by Seller to Buyer
pursuant to this Agreement shall be paid by Seller. Buyer and Seller shall each
pay one-half of (a) the fees payable to the Escrow Agent, (b) the filing fee
required in connection with the application for the FCC Consent and (c) the
filing fee required by the FTC under the HSR Act. Except as otherwise provided
in this Agreement, each party shall pay its own expenses incurred in connection
with the authorization, preparation, execution, and performance of this
Agreement, including all fees and expenses of counsel, accountants, agents, and
representatives. Seller shall pay the broker's commission
- 31 -
<PAGE> 38
payable to Media Services Group, Inc. as a result of this transaction and each
party shall be responsible for all fees or commissions payable to any other
finder, broker, advisor, or similar person retained by or on behalf of such
party. Notwithstanding any provision herein or in the Time Brokerage Agreement
to the contrary, Seller shall pay, without reimbursement by Buyer, all costs and
expenses required in connection with the installation of the new auxiliary
antenna and the new auxiliary transmission line for the Station that are listed
on Schedule 3.6.
11.2 [Reserved].
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: Robert C. Neff
Vice President
The Moody Bible Institute of Chicago
820 North LaSalle Boulevard
Chicago, Illinois 60610
With a copy to: Jeffrey D. Southmayd, Esq.
Southmayd & Miller
1220 19th Street, N.W., Suite 400
Washington, D.C. 20036
If to Buyer: Lowell W. Paxson
Paxson Broadcasting of Tampa, Limited Partnership
601 Clearwater Park Road
West Palm Beach, FL 33401
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson
1200 New Hampshire Ave., 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; provided, however, that Buyer may assign its
- 32 -
<PAGE> 39
rights and obligations under this Agreement, in whole or in part, to one or more
subsidiaries or commonly controlled affiliates of Buyer without seeking or
obtaining Seller's prior approval in which event Buyer shall have no further
obligation hereunder and Buyer may assign its rights and interests hereunder to
its lenders as collateral security for Buyer's obligations to such lenders
without seeking or obtaining Seller's prior approval. Upon any permitted
assignment by Buyer or Seller in accordance with this Section 11.4, all
references to"Buyer" herein shall be deemed to be references to Buyer's assignee
and all references to "Seller" herein shall be deemed to be references to
Seller's assignee, as the case may be. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
11.5 Further Assurances. The parties shall take any actions and execute
any other documents that may be necessary or desirable to the implementation and
consummation of this Agreement, including, in the case of Seller, any additional
bills of sale, deeds, or other transfer documents that, in the reasonable
opinion of Buyer, may be necessary to ensure, complete, and evidence the full
and effective transfer of the Assets to Buyer pursuant to this Agreement.
11.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA
(WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless of the
gender and number specifically used, shall be deemed and construed to include
any other gender, masculine, feminine, or neuter, and any other number, singular
or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to,
- 33 -
<PAGE> 40
any subsequent or other failure. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby or thereby
prior to the filing of the application for FCC Consent. Following such filing,
neither party shall publish any press release or make any other public
announcement or otherwise make such communications without the prior consent of
the other party, which consent shall not be unreasonably withheld or delayed;
provided, however, that nothing contained herein shall prevent either party from
(a) making such public announcements as may be required to comply with federal
or state securities laws or (b) 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, the Time Brokerage Agreement or
the consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 34 -
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
THE MOODY BIBLE INSTITUTE
OF CHICAGO
By: /s/ Marvin E. Beckman
-----------------------------------------
Name: Marvin E. Beckman
Title: Vice President
PAXSON BROADCASTING OF TAMPA,
LIMITED PARTNERSHIP
By: Paxson Communications Florida, Inc.,
its General Partner
By: /s/ William L. Watson
-----------------------------------------
Name: William L. Watson
Title: Secretary
- 35 -
<PAGE> 42
SCHEDULE 2.1
DISCLOSURE STATEMENT
Seller is a party to a Sales Agreement dated May 10, 1989 (the "Sales
Agreement"), with Jacor Broadcasting of Tampa Bay, Inc. ("Jacor"). Buyer has
received a copy of the Sales Agreement and is aware of the terms and conditions
contained therein. Pursuant to the Sales Agreement, Seller purchased a
one-quarter undivided interest in Jacor's primary antenna and transmission line
used in the operation of the Station's primary antenna system (collectively, the
"Transmission Equipment"). Under the Sales Agreement, Seller also holds a right
(the "License") to maintain its FM transmitter in Jacor's transmitter building.
Section 2(d) of the Sales Agreement provides that, under certain specified
circumstances and upon the satisfaction of certain specified conditions, Jacor
has the right to repurchase Seller's ownership interest in the Transmission
Equipment (a "Repurchase") upon thirty days' written notice following public
notice of acceptance for filing by the FCC of a Form 314, 315 or 301 filed by
Seller. Under Section 2(g), the License shall automatically terminate
simultaneously with the Repurchase. Jacor has advised Seller that Jacor intends
to exercise the Repurchase and terminate the License upon a sale by Seller of
substantially all of the assets of the Station to a purchaser who intends to
operate the Station on a commercial basis. Buyer acknowledges that Seller's
ability to assign the FCC "main station" License for the Station is subject to
Jacor's possible exercise of the Repurchase.
<PAGE> 43
SCHEDULE 3.3
CONSENTS
1. Consent of Tampa Tower General Partnership with respect to the
Tampa Tower Lease.
2. Consent of Jacor Broadcasting of Tampa Bay, Inc. with respect
to the Sales Agreement; provided, however, that Buyer and
Seller acknowledge and agree that such Consent will not be
necessary if Jacor terminates the Sales Agreement as a result
of the matters described in Schedule 2.1.
<PAGE> 44
SCHEDULE 3.4
LICENSES
Attached
<PAGE> 45
SCHEDULE 3.5
REAL PROPERTY
1. Tampa Tower Lease (as defined in Section 1 hereto)
<PAGE> 46
SCHEDULE 3.6
TANGIBLE PERSONAL PROPERTY
Attached
<PAGE> 47
SCHEDULE 3.7
CONTRACTS
1. Tampa Tower Lease*
2. Jacor Sales Agreement (as defined on Schedule 2.1)*
- -------------------
* The assignment and assumption of the Tampa Tower Lease and Jacor Sales
Agreement are subject to the matters described on Schedule 2.1 hereto.
<PAGE> 48
SCHEDULE 3.10
INSURANCE POLICIES
Attached
<PAGE> 49
SCHEDULE 3.18
TRANSACTIONS WITH AFFILIATES
None
<PAGE> 50
SCHEDULE 8.2(G)
FORM OF OPINIONS OF SELLER'S COUNSEL
Attached
<PAGE> 51
SCHEDULE 8.3(D)
FORM OF OPINION OF BUYER'S COUNSEL
Attached
<PAGE> 1
EXHIBIT 10.137
================================================================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CHANNEL 46 OF BOSTON, INC.
AND
MASSACHUSETTS REDEVELOPMENT
LIMITED LIABILITY COMPANY
FOR
TELEVISION STATION WHRC(TV)
NORWELL, MASSACHUSETTS
SEPTEMBER 27, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. DEFINITIONS
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assumed Contracts" . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Consents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Escrow Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Escrow Agreement" . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Consent" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Final Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . 3
SECTION 2. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . 3
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . 3
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . 5
2.5 Assumption of Liabilities and Obligations . . . . . . . . . 5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . 6
3.2 Organization, Standing, and Authority . . . . . . . . . . . 7
3.3 Authorization and Binding Obligation . . . . . . . . . . . . 7
3.4 Absence of Conflicting Agreements . . . . . . . . . . . . . 7
3.5 Governmental Licenses . . . . . . . . . . . . . . . . . . . 7
3.6 Title to and Condition of Real Property . . . . . . . . . . 8
3.7 Title to and Condition of Tangible Personal Property . . . . 8
3.8 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Claims and Legal Actions . . . . . . . . . . . . . . . . . . 10
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
3.15 Environmental Matters . . . . . . . . . . . . . . . . . . 11
3.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . 12
3.17 Conduct of Business in Ordinary Course . . . . . . . . . . 12
3.18 Transactions with Affiliates . . . . . . . . . . . . . . . 13
3.19 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.20 Full Disclosure . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . 14
4.1 Organization, Standing, and Authority . . . . . . . . . . 14
4.2 Authorization and Binding Obligation . . . . . . . . . . . 14
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . 14
4.4 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Full Disclosure . . . . . . . . . . . . . . . . . . . . . 14
4.6 Qualification as Licensee . . . . . . . . . . . . . . . . 15
SECTION 5. CONSTRUCTION AND OPERATIONS OF THE STATION PRIOR TO
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Contracts . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Disposition of Assets . . . . . . . . . . . . . . . . . . 15
5.4 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . 15
5.5 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.6 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.7 No Inconsistent Action . . . . . . . . . . . . . . . . . . 16
5.8 Access to Information . . . . . . . . . . . . . . . . . . 16
5.9 Maintenance of Assets . . . . . . . . . . . . . . . . . . 17
5.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 17
5.11 Consents . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.12 Books and Records . . . . . . . . . . . . . . . . . . . . 17
5.13 Notification . . . . . . . . . . . . . . . . . . . . . . . 17
5.14 Compliance with Laws . . . . . . . . . . . . . . . . . . . 18
5.15 Financing Leases . . . . . . . . . . . . . . . . . . . . . 18
5.16 Preservation of Business . . . . . . . . . . . . . . . . . 18
5.17 Personnel Recommendations . . . . . . . . . . . . . . . . 18
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . 18
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 Control of the Station . . . . . . . . . . . . . . . . . . 19
6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . 19
6.5 Environmental Audit . . . . . . . . . . . . . . . . . . . 19
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
6.6 Engineering Study . . . . . . . . . . . . . . . . . . . . 20
6.7 Cooperation . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . 20
6.9 Tax Filings . . . . . . . . . . . . . . . . . . . . . . . 20
6.10 Access to Books and Records . . . . . . . . . . . . . . . 20
6.11 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . 21
7.2 Conditions to Obligations of Seller . . . . . . . . . . . 22
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . 23
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . 23
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . 24
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . 25
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . 25
9.3 Rights on Termination . . . . . . . . . . . . . . . . . . 26
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . . . 27
10.1 Representations and Warranties . . . . . . . . . . . . . . 27
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . 27
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . 28
10.4 Procedure for Indemnification . . . . . . . . . . . . . . 29
10.5 Specific Performance . . . . . . . . . . . . . . . . . . . 30
10.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . 30
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 30
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . 30
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . 30
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . 32
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . 32
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . 32
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . 32
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C> <C>
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . 33
11.11 Press Release . . . . . . . . . . . . . . . . . . . . . 33
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
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<PAGE> 6
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 27th day of September,
1996, by and between Channel 46 of Boston, Inc., a Florida corporation
("Buyer"), and Massachusetts Redevelopment Limited Liability Company, a
Delaware limited liability company ("Seller").
RECITALS
A. Seller is the licensee of television station WHRC(TV),
Norwell, Massachusetts (the "Station") pursuant to construction permits and
licenses issued by the Federal Communications Commission (the "FCC").
B. Seller desires to sell, and Buyer desires to buy,
substantially all the assets that are used or useful in the business or
operations of the Station for the price and on the terms and conditions set
forth in this Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Seller, intending to be
bound legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"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 3.8
that are specifically designated on Schedule 3.8 as Contracts that are to be
assumed by Buyer upon its purchase of the Station, (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) time sales contracts entered into
by Seller in compliance with Section 5.2.
"Closing" means the consummation of the purchase and sale of the Assets
pursuant to this Agreement in accordance with the provisions of Section 8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
<PAGE> 7
- 2 -
"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,
other than the qualification of Buyer as a foreign corporation in the State of
Massachusetts and local business licenses applicable directly to Buyer.
"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 construction, business or operations of
the Station, and (i) which are in effect on the date of this Agreement or (ii)
which are entered into by Seller between the date of this Agreement and the
Closing Date.
"Escrow Agent" means First Union National Bank of Florida.
"Escrow Agreement" means the Escrow Agreement dated as of the date
hereof among Buyer, Seller and the Escrow Agent.
"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 in connection with
the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests for administrative or judicial review, reconsideration, appeal, or
stay have been filed within the time for filing any such requests, and the time
for filing any such requests and for the FCC to set aside the action on its own
motion have expired.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the FAA, or any other federal, state, or local governmental
authorities in connection with the business or operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date, other than the qualification of Buyer as a foreign corporation in
the State of Massachusetts and local business licenses applicable directly to
Buyer.
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"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real
property, including fee estates, leaseholds and subleaseholds, purchase
options, easements, licenses, rights to access, and rights of way, and all
buildings and other improvements thereon, and other real property interests
which are used or useful in the construction, business or operations of the
Station, together with any additions thereto between the date of this Agreement
and the Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property which is used or
useful in the construction, business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell, transfer,
and deliver to Buyer on the Closing Date, and Buyer agrees to purchase, all of
the assets of Seller used or useful in connection with the business or
operations of the Station, together with any additions thereto between the date
of this Agreement and the Closing Date, but excluding the assets described in
Section 2.2 (collectively, the "Assets"), free and clear of any claims,
liabilities, security interests, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for liens for current
taxes not yet due and payable), including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) Any rights possessed by Seller to the call signs used
in the operation of the Station and the goodwill of the Station, if any;
(f) All of Seller's proprietary information, rights to
and under any pending application before any federal, state or local
governmental authority, including the FCC, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints, and schematics, including all of Seller's rights to
filings with the FCC relating to the construction, business and operation of
the Station;
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(g) Except as set forth in Section 2.2(d), all choses in
action of Seller relating to the Station; and
(h) All books and records relating to the construction,
business or operations of the Station, including executed copies of the Assumed
Contracts, and all records required by the FCC to be kept by the Station.
2.2 Excluded Assets. The Assets shall exclude the following
assets:
(a) Seller's cash on hand as of the Closing and all other
cash in any of Seller's bank or savings accounts; any insurance policies,
letters of credit, or other similar items and cash surrender value in regard
thereto; and any stocks, bonds, certificates of deposit and similar
investments;
(b) All books and records that pertain to Seller's
corporate organization;
(c) Any pension, profit-sharing, or employee benefit
plans, and any collective bargaining agreements; and
(d) All property and choses in action listed on Schedule
2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets and the
covenants of Seller set forth in the Noncompetition Agreement referred to in
Section 6.12 shall be Fifteen Million Dollars ($15,000,000) adjusted as
provided below:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses. All expenses
arising from the construction, business or operation of the Station, including
business and license fees, utility charges, real and personal property taxes
and assessments levied against the Assets, property and equipment rentals,
applicable copyright or other fees, sales and service charges, taxes (except
for taxes arising from the transfer of the Assets under this Agreement), FCC
annual regulatory fees and similar prepaid and deferred items, shall be
prorated between Buyer and Seller in accordance with the principle that Seller
shall be responsible for all expenses, costs, and liabilities allocable to the
period prior to the Closing Date, and Buyer shall be responsible for all
expenses, costs, and obligations allocable to the period on and after the
Closing Date. Notwithstanding the preceding sentence, there shall be no
adjustment for, and Seller shall remain solely liable with respect to, any
Contracts not included in the Assumed Contracts and any other obligation or
liability not being assumed by Buyer in accordance with Section 2.5.
(b) Manner of Determining Adjustments. Any adjustments
will, insofar as feasible, be determined and paid on the Closing Date, with
final settlement and payment by
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the appropriate party occurring no later than ninety (90) days after the
Closing Date or such other date as the parties shall mutually agree upon.
Seller shall prepare and deliver to Buyer not later than five (5) 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(a). The preliminary settlement statement (i) shall contain all
information reasonably necessary to determine the adjustments to the Purchase
Price under Section 2.3(a), 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 (ii) shall be
certified by Seller to be true and complete in all material respects as of the
date thereof.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer, at
least two (2) days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of Seller under the Licenses and the Assumed
Contracts insofar as they relate to the time on and after the Closing Date, and
arise out of events related to Buyer's ownership of the Assets or its operation
of the Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or
proceedings relating to the construction or operation of the Station prior to
the Closing, (iv) any obligations or liabilities arising under capitalized
leases or other financing agreements, (v) any obligations or liabilities
arising under agreements entered into other than in the ordinary course of
business, (vi) any obligations or liabilities of Seller under any employee
pension, retirement, health and welfare or other benefit plans or collective
bargaining agreements, (vii) any obligation to any employee of the Station for
severance benefits, vacation time, or sick leave accrued prior to the Closing
Date, or (viii) any obligations or liabilities caused by, arising out of, or
resulting from any action or omission of Seller prior to the Closing, and all
such obligations and liabilities shall remain and be the obligations and
liabilities solely of Seller.
At Closing, Seller shall retain all choses in action listed on Schedule
2.2 hereto and subject to the following sentences, shall retain exclusive
control over the conduct of litigation relating to such choses in action.
Notwithstanding the foregoing, Buyer and Seller acknowledge that Seller is
conveying to Buyer plans and certain real property interests which Seller has
in a site located in Bridgewater, Massachusetts (hereinafter, the "Bridgewater
Site"). Seller has held a construction permit issued by the FCC for a
1,049-foot tower to be located at the Bridgewater Site, and Seller believes
that the site is suitable for such a tower and transmitter facility. However,
the parties acknowledge that on September 10, 1996
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Seller filed an amendment to that construction permit as described in Section
5.1 and Seller was denied certain local permits needed to construct the tower
at the Bridgewater Site. Seller understands that Buyer may elect to proceed
with plans to develop the Bridgewater Site as a tower site in the future, and
that if Buyer so elects, Buyer will need to obtain the local permits necessary
to operate the Station from the Bridgewater Site. As a result, Seller hereby
agrees to take at Buyer's expense prior to or following the Closing any and all
action that Buyer may reasonably request to assist Buyer in obtaining such
local permits, including, without limitation, naming Buyer as an additional
plaintiff in the Bridgewater Site litigation, amending or adding a new claim to
such litigation, diligently prosecuting any claims or appeals and/or taking any
and all other actions relating to such litigation that Buyer may reasonably
request in order to facilitate the issuance of the local permits to Buyer as
promptly as possible. Nothing contained herein shall prevent Buyer from
pursuing any separate actions, claims or proceedings or take any and all other
separate actions relating to the Bridgewater Site litigation that Buyer may
want to pursue or take in its sole discretion; provided, however, that Buyer
shall consult with Seller in advance concerning any such action to be taken by
Buyer and shall promptly deliver to Seller copies of all pleadings and other
submissions by Buyer to a court or other tribunal in connection with such
action. Buyer shall not be required to assume any obligations or liabilities
under any litigation as a result of this paragraph and shall not be required to
take any actions under any litigation as a result of this paragraph.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Specific Representations. Notwithstanding any other provision
of this Agreement or the Escrow Agreement, Seller represents to Buyer that the
Station is not operating and has not operated since prior to the time Seller
purchased said Station. Seller and its predecessor purchased the Station from
the bankruptcy estate of the prior owner, and Seller owns the Station free and
clear of all liens, claims, security interests and encumbrances. Seller has
caused the filing of an application for construction permit with the FCC and an
application for special temporary authority to construct and operate a new
antenna transmitter facility for the Station from a tower of 400 feet above
mean sea level in height located at West Bridgewater, Massachusetts (the "West
Bridgewater Site"). No Licenses are required to operate the Station from the
West Bridgewater Site except for local zoning permits and variances for which
application has been made, the FCC Licenses described above and a studio
transmitter link which Buyer will apply for and pursue diligently. As of the
date hereof, the Station has no studio, and the Tangible Personal Property is
not alone sufficient to operate a television studio for the Station. Seller
has applied for permission from the FCC for the Station to be "dark" as of the
date of this Agreement and will continue to apply for or possess such
permission up to and including the date of resumption of broadcast
operations.
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3.2 Organization, Standing, and Authority. Seller is a limited liability
company duly organized, validly existing, and in good standing under the laws
of the State of Delaware and is duly qualified as a foreign limited liability
company in the State of Massachusetts and is in good standing in the State of
Massachusetts. Except as otherwise described herein, Seller has all requisite
power and authority (i) to own, lease, or use the Assets as now owned, leased,
or used, (ii) to conduct the business and operations of the Station as now
conducted, and (iii) to execute and deliver this Agreement, the Escrow
Agreement and the documents contemplated hereby and thereby, and to perform and
comply with all of the terms, covenants, and conditions to be performed and
complied with by Seller hereunder and thereunder. Seller is not a participant
in any joint venture or partnership with any other person or entity with
respect to any part of the construction or operations of the Station or any of
the Assets.
3.3 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement and the Escrow Agreement by Seller have been duly
authorized by all necessary actions on the part of Seller and its members.
This Agreement and the Escrow Agreement have been duly executed and delivered
by Seller and constitute the legal, valid, and binding obligations of Seller,
enforceable against it in accordance with their respective terms except as the
enforceability of this Agreement and the Escrow Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
and by judicial discretion in the enforcement of equitable remedies.
3.4 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.4, the execution, delivery, and performance of
this Agreement and the Escrow Agreement and the documents contemplated hereby
and thereby (with or without the giving of notice, the lapse of time, or both):
(i) do not require the consent of any third party; (ii) will not conflict with
any provision of the organizational or charter documents of Seller; (iii) will
not conflict with, result in a breach of, or constitute a default under, any
law, judgment, order, ordinance, injunction, decree, rule, regulation, or
ruling of any court or governmental instrumentality; (iv) will not conflict
with, constitute grounds for termination of, result in a breach of, constitute
a default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to
which Seller is a party or by which Seller may be bound; and (v) will not
create any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon any of the Assets.
3.5 Governmental Licenses. Schedule 3.5 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. Except as set forth in Section 3.1, the Licenses listed on Schedule
3.5 comprise all of the licenses, permits, and other authorizations required
from any governmental or regulatory authority for the lawful construction and
<PAGE> 13
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operation of the Station in the manner and to the full extent they are now
conducted, and none of the Licenses is subject to any restriction or condition
that would delay or adversely affect such construction and operation. The
Licenses are in full force and effect, and the construction and the conduct of
the business and operations of the Station are in accordance therewith.
Subject to the requirements of Section 312(g) of the Communications Act of
1934, as amended, 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. No cable system has advised Seller of any copyright indemnity or other
prerequisite to cable carriage of the Station's signal, and no cable system has
declined or threatened to decline such carriage for any reason other than
alleged failure of Seller to deliver a signal of minimally required strength,
or failed to respond to a request for carriage or sought any form of relief
from carriage from the FCC.
3.6 Title to and Condition of Real Property. Schedule 3.6 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 3.6 comprises all real property interests necessary to conduct the
business and operations of the Station as now conducted, except that the
Station has no, studio site. Seller owns no Real Property. With respect to
each leasehold or subleasehold interest included in the Real Property being
conveyed under this Agreement so long as Seller fulfills its obligations under
the lease therefor, Seller has enforceable rights to nondisturbance and quiet
enjoyment and Seller has a valid leasehold interest in such leases, free and
clear of all liens, mortgages, pledges, claims and encumbrances of any nature
whatsoever. All towers, guy anchors, and buildings and other improvements
included in the Assets are located entirely on the Real Property listed in
Schedule 3.6. Seller has delivered to Buyer true and complete copies of all
leases pertaining to the Real Property. All Real Property (including the
improvements thereon) (i) to the best of Seller's knowledge, is in good
condition and repair consistent with its present use, (ii) except as described
in Section 3.1, is available for immediate use in the conduct of the business
and operations of the Station, and (iii) complies with all applicable building
or zoning codes and the regulations of any governmental authority having
jurisdiction. Seller has full legal and practical access to the Real Property.
To the best of Seller's knowledge, all easements, rights-of-way, and real
property licenses have been properly recorded in the appropriate public
recording offices.
3.7 Title to and Condition of Tangible Personal Property. Schedule 3.7
lists all material items of Tangible Personal Property. The Tangible Personal
Property listed on Schedule 3.7 comprises all material items of tangible
personal property necessary to complete construction of and to conduct the
business and operations of the Station as now conducted. 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 and liens disclosed
on Schedule 3.7 which shall be
<PAGE> 14
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removed prior to the Closing. Each item of Tangible Personal Property is
available for immediate use in the construction, business and operations of the
Station. To the best of Seller's knowledge, all items of transmitting and
studio equipment included in the Tangible Personal Property (i) have been
maintained in a manner consistent with generally accepted standards of good
engineering practice, and (ii) will be readily usable in operation of the
Station in accordance in all material respects with the terms of the FCC
Licenses and the rules and regulations of the FCC, and with all other
applicable federal, state, and local statutes, ordinances, rules, and
regulations.
3.8 Contracts. Schedule 3.8 is a true and complete list of all
Contracts. Seller has delivered to Buyer true and complete copies of all
Contracts. Other than the Contracts listed on Schedule 3.8 and the lack of a
lease for a studio site, Seller requires no contract, lease, or other agreement
to enable it to complete the construction of and operate the Station in
accordance with the Licenses. To the best knowledge of Seller, 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 Seller or any event that, after notice or lapse of time
or both, could constitute a default by Seller, and to the best of Seller's
knowledge, there is not under any Assumed Contract any default by any other
party thereto or any event that, after notice or lapse of time or both, could
constitute a default by any other party thereto. Seller is not aware of any
intention by any party to any Assumed Contract (i) to terminate such contract
or amend the terms thereof, (ii) to refuse to renew the Assumed Contract upon
expiration of its term, or (iii) to renew the Assumed Contract upon expiration
only on terms and conditions which are substantially more onerous than those now
existing. Except for the need to obtain the Consents listed in Schedule 3.4,
Seller has full legal power and authority to assign its rights under the
Assumed Contracts to Buyer in accordance with this Agreement, and subject to
obtaining such Consents, such assignment will not affect the validity,
enforceability, or continuation of any of the Assumed Contracts.
3.9 Consents. Except for the FCC Consent provided for in Section 6.1
and the other Consents described in Schedule 3.4, no consent, approval, permit,
or authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Station after the Closing as contemplated by
this Agreement.
3.10 Insurance. Schedule 3.10 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the
construction or business of the Station. All policies of insurance listed in
Schedule 3. 10 are in full force and effect. The insurance policies listed in
Schedule 3.10 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
<PAGE> 15
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the Station against all customary and foreseeable risks. Since Seller has
assumed ownership of the Station, no insurance policy of Seller on the Assets
or the Station has been canceled by the insurer and no application of Seller
for insurance has been rejected by any insurer.
3.11 Reports. All returns, reports, and statements that the
Station is currently required to file with the FCC or with any other
governmental agency have been filed, and all reporting requirements of the FCC
and other governmental authorities having jurisdiction over Seller and the
Station have been complied with in all material respects. All of such returns,
reports, and statements are substantially complete and correct as filed.
Seller has timely paid to the FCC all annual regulatory fees payable with
respect to the FCC Licenses.
3.12 Personnel. Seller has not had at any time nor will it have at
any time prior to Closing any employees. Seller has not had at any time nor
will it have at any time prior to Closing any liability or obligation under any
employee benefit plan, pension plan, workers compensation arrangement or any
other arrangement or plan relating to employees.
3.13 Taxes. Seller has filed or caused to be filed all federal
income tax returns and all other federal, state, county, local, or city tax
returns which are required to be filed, and it has paid or caused to be paid
all taxes shown on those returns or on any tax assessment received by it to the
extent that such taxes have become due, or has set aside on its books adequate
reserves (segregated to the extent required by generally accepted accounting
principles),with respect thereto. There are no governmental investigations or
other legal, administrative, or tax proceedings pursuant to which Seller is or
could be made liable for any taxes, penalties, interest, or other charges, the
liability for which could extend to Buyer as transferee of the business of the
Station, and no event has occurred that could impose on Buyer any transferee
liability for any taxes, penalties, or interest due or to become due from
Seller.
3.14 Claims and Legal Actions. Except for any FCC rulemaking or
other proceedings affecting the television broadcasting industry generally, the
disclosures set forth in Section 2.5 and the actions listed in Schedule 2.2 to
which Seller is a party plaintiff, there is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative, or tax proceeding, nor any order, decree or judgment, in
progress or pending, or to the knowledge of Seller threatened, against or
relating to Seller with respect to its ownership, construction or operation of
the Station or otherwise relating to the Assets or the construction, business
or operations of the Station, nor does Seller know or have reason to be aware
of any basis for the same. In particular, but without limiting the generality
of the foregoing, there are no applications, complaints or proceedings pending
or, to the best of its knowledge, threatened (i) before the FCC relating to the
construction, business or operations of the Station other than rulemaking
proceedings which affect the television industry generally, (ii) before any
federal or state agency relating to the construction, business or operations of
the Station involving charges of illegal discrimination under any
<PAGE> 16
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federal or state employment laws or regulations, or (iii) before any federal,
state, or local agency relating to the construction, business or operations of
the Station involving zoning issues under any federal, state, or local zoning
law, rule, or regulation.
3.15 Environmental Matters.
(a) To the best of Seller's knowledge, Seller has
complied in all material respects with all laws, rules, and regulations of all
federal, state, and local governments (and all agencies thereof) concerning the
environment, public health and safety, and employee health and safety, and no
charge, complaint, action, suit, proceeding, hearing, investigation, claim,
demand, or notice has been filed or commenced against Seller in connection with
its ownership, construction or operation of the Station alleging any failure to
comply with any such law, rule, or regulation.
(b) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership, construction
and operation of the Station (and there is no basis related to the past or
present operations, properties, or facilities of Seller for any present or
future charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand against Seller giving rise to any such liability) under any
law, rule, or regulation of any federal, state, or local government (or agency
thereof) concerning release or threatened release of hazardous substances,
public health and safety, or pollution or protection of the environment.
(c) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership, construction
and operation of the Station (and Seller has not handled or disposed of any
substance, arranged for the disposal of any substance, or owned or operated any
property or facility in any manner that could form the basis for any present or
future charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand (under the common law or pursuant to any statute) against
Seller giving rise to any such liability) for damage to any site, location, or
body of water (surface of subsurface) or for illness or personal injury.
(d) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership, construction
and operation of the Station (and there is no basis for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand against Seller giving rise to any such liability) under any law, rule,
or regulation of any federal, state, or local government (or agency thereof)
concerning employee health and safety.
(e) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership, construction
and operation of the Station (and Seller has not exposed any employee to any
substance or condition that could form the basis for any
<PAGE> 17
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present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand (under the common law or pursuant to statute)
against Seller giving rise to any such liability) for any illness or personal
injury to any employee.
(f) To the best of Seller's knowledge, in connection with
its ownership, construction or operation of the Station, Seller has obtained
and been in compliance in all material respects with all of the terms and
conditions of all permits, licenses, and other authorizations which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all federal, state, and local laws, rules,
and regulations (including all codes, plans, judgments, orders, decrees,
stipulations, injunctions, and charges thereunder) relating to public health
and safety, worker health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants,or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes.
(g) To the best of Seller's knowledge, no pollutant,
contaminant, or chemical, industrial, hazardous, or toxic material or waste has
ever been manufactured, buried, stored, spilled, leaked, discharged, emitted,
or released by Seller in connection with its ownership, construction and
operation of the Station or, after due investigation, by any other party on any
Real Property.
3.16 Compliance with Laws. Except with respect to environmental
matters which are covered by Section 3.15, 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,
construction and operation of the Station. To the best of Seller's knowledge,
neither the ownership or use of the properties of the Station nor the
construction, business or operation of the Station conflicts with the rights of
any other person or entity.
3.17 Conduct of Business in Ordinary Course. Subject to the
disclosures set forth in Section 3.1, Seller has conducted the business and
operations of the Station only in the ordinary course and has not:
(a) suffered any material adverse change in the business,
assets, or properties of the Station, including any damage, destruction, or
loss affecting any assets used or useful in the conduct of the business of the
Station;
<PAGE> 18
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(b) made any sale, assignment, lease, or other transfer
of any of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(c) canceled any debts owed to or claims held by Seller
with respect to the Station, except in the normal and usual course of business;
(d) suffered any material write-down of the value of any
Assets; or
(e) transferred or granted any right under, or entered
into any settlement regarding the breach or infringement of, any license
patent, copyright, trademark, trade name, franchise, or similar right, or
modified any existing right relating to the Station.
3.18 Transactions with Affiliates. Seller acquired ownership of
the Station from Massachusetts Redevelopment Corporation, and as part of such
acquisition, Massachusetts Redevelopment Corporation transferred certain
Contracts to Seller. Massachusetts Redevelopment Corporation is not entitled
to any compensation from Seller for the conveyance described herein. Other
than the foregoing, Seller has not been involved in any business arrangement or
relationship relating to the Station with any affiliate of Seller, and no
affiliate of Seller owns any property or right, tangible or intangible, which
is used in the construction or business of the Station. As used in this
paragraph, "affiliate" has the meaning set forth in Rule 12b-2 promulgated
under the Securities and Exchange Act of 1934.
3.19 Broker. Neither Seller nor any person acting on Seller's
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
3.20 Full Disclosure. No representation or warranty made by Seller
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
3.21 Hart-Scott-Rodino. Michael L. Parker "holds" more than 50% of
the voting securities of Seller, and he is "controlled" by no other person (as
these terms are defined in 16 CFR Section 801.1). Accordingly, Mr. Parker is an
"ultimate parent entity" with respect to Seller, as that term is defined in 16
CFR Section 801.1(a)(3). The "total assets" of Mr. Parker and each entity that
he controls, as (i) stated on his most recent, regularly prepared balance sheet
dated June 30, 1996; and (ii) determined in accordance with 16 CFR Section
801.1 were less than 10 million. Neither Seller, Mr. Parker nor their
Controlled Entities is "engaged in manufacturing" as that term is defined in 16
CFR Section 801.1.
<PAGE> 19
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida and at Closing will be duly qualified to conduct
business as a foreign corporation in the State of Massachusetts. Buyer has all
requisite power and authority to execute and deliver this Agreement and the
Escrow Agreement and the documents contemplated hereby and thereby, and to
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement and the Escrow Agreement by Buyer
have been duly authorized by all necessary actions on the part of Buyer. This
Agreement and the Escrow Agreement have been duly executed and delivered by
Buyer and constitute the legal, valid, and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms except as
the enforceability of this Agreement and the Escrow Agreement may be affected
by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the Escrow Agreement and the documents contemplated hereby and thereby
(with or without the giving of notice, the lapse of time, or both): (i) do not
require the consent of any third party; (ii) will not conflict with the
Articles of Incorporation or Bylaws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's 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 and required to make any statement made herein or therein not
misleading.
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4.6 Oualification as Licensee. To the best of Buyer's knowledge,
Buyer is not aware of any facts which would, under present law (including the
Communications Act of 1934, as amended, and present rules, regulations,
policies and practices of the FCC), form the basis for a determination by the
FCC that Buyer is not qualified to become the licensee of the Station, the
assignee of the FCC Licenses, and the owner and/or operator of the Station's
Assets, and Buyer will not take, or unreasonably fail to take, any action which
would cause non-qualification. In the event Buyer becomes aware of any facts
or circumstances which might cause such non-qualification, it will promptly
notify Seller in writing thereof and use its commercially reasonable efforts to
prevent and/or cure any such non-qualification or disqualification.
SECTION 5. CONSTRUCTION AND OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall (i) take all actions required to
complete, as expeditiously as possible, the construction of the Station in
accordance with the terms of the Licenses, pursuant to the Construction Permit
of the Station (FCC File No. BPCT-951005KF, granted June 12, 1996) as modified
pursuant to Amendment dated September 10, 1996 of Application for New Auxiliary
Transmitter/Antenna Facility (FCC File No. BPCT-96071OKK) which Amendment is
attached hereto as Schedule 5.2 (the "Modified Construction Permit") and (ii)
operate the Station diligently in the ordinary course of business (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; provided, that Seller shall not be obligated to construct or
operate the Station except to the extent such construction or operation is at
the expense of Buyer.
5.2 Contracts. Seller will not enter into any contract or
commitment relating to the Station or the Assets, or amend or terminate any
Contract (or waive any material right thereunder), or incur any obligation
(including obligations relating to the borrowing of money or the guaranteeing
of indebtedness) that will be binding on Buyer after Closing. 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.
5.3 Disposition of Assets. Seller shall not sell, assign, lease,
or otherwise transfer or dispose of any of the Assets, except where no longer
used or useful in the construction, business or operations of the Station or in
connection with the acquisition of replacement property of equivalent kind and
value.
5.4 Encumbrances. Seller shall not create, assume or permit to
exist any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets, except for (i) liens
disclosed on Schedule 3.5 and Schedule 3.6, which shall
<PAGE> 21
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be removed prior to the Closing Date, (ii) liens for current taxes not yet due
and payable, and (iii) mechanics' liens and other similar liens, which shall be
removed prior to the Closing Date.
5.5 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. The parties hereto recognize that under
Section 312(g) of the Communications Act of 1934, as amended, the FCC Licenses
will automatically expire if the Station is not on the air by February 9, 1997.
The parties further recognize that Buyer has the right to terminate this
Agreement under Section 9.2(g) if the Station has not resumed broadcast
operations prior to February 9, 1997. Seller shall prosecute with due
diligence any applications made to any governmental agencies for the
Bridgewater Site and the West Bridgewater Site and any other applications to
any governmental authority made in connection with the construction or
operation of Station.
5.6 Rights. Seller shall not waive any right relating to the
Station or any of the Assets. Seller shall not cause, by any act or failure to
act, any cable system located within the Station's Area of Dominant Influence
to refuse to carry the Station's signal. At the expense of Buyer, Seller shall
demand prior to October 1, 1996 or prior to the date the Station begins on-air
operation mandatory carriage of the Station's signal on all cable systems
located within the Station's Area of Dominant Influence. Buyer shall provide
Seller with letters to such cable systems that Seller shall use to make such
demand.
5.7 No Inconsistent Action. Seller shall not take any action that
is inconsistent with its obligations under this Agreement or that could hinder
or delay the consummation of the transactions contemplated by this Agreement.
5.8 Access to Information. Seller shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives
reasonable access to the Assets and to all other properties, equipment, books,
records, Contracts, and documents relating to the Station for the purpose of
audit and inspection, including inspections incident to the environmental study
described in Section 6.5 and the engineering study described in Section 6.6,
and will furnish or cause to be furnished to Buyer or its authorized
representatives all information with respect to the affairs and business of the
Station that Buyer may reasonably request (including any financial reports and
operations reports produced with respect to the affairs and business of the
Station). Without limiting the generality of the foregoing, Seller shall give
Buyer and its counsel, accountants and other authorized representatives
reasonable access to Seller's financial records and Seller's employees,
counsel, accountants and other representatives for the purpose of preparing and
auditing such financial statements as Buyer determines, in its sole judgment,
are required or advisable to comply with federal or state
<PAGE> 22
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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.
5.9 Maintenance of Assets. Seller shall use its best efforts and
take all reasonable actions to maintain all of the Assets in the condition in
which said Assets exist as of the date of this Agreement (ordinary wear and
tear excepted), and use, operate, and maintain all of the Assets in a
reasonable manner and in accordance in all material respects with the terms of
the FCC Licenses, all rules and regulations of the FCC and generally accepted
standards of good engineering practice. 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 condition as of the date of
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.
Notwithstanding any other provisions of this Agreement, Seller makes no express
or implied warranty of fitness for use, merchantability or condition of any of
the Assets except for the representations and warranties set forth in Section 3
of this Agreement.
5.10 Insurance. Seller shall maintain the existing insurance
policies on the Station and the Assets.
5.11 Consents. Seller shall obtain the Consents and shall use
commercially reasonable efforts to obtain the estoppel certificates described
in Section 8.2(b), in each case without any change in the terms or conditions
of any Contract or License that would be materially less advantageous to the
Station than those pertaining under the Contract or License as in effect on the
date of this Agreement. Seller shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon Buyer's request, Seller
shall cooperate with Buyer and use its commercially reasonable efforts to
obtain from the lessors under each Real Property lease such estoppel
certificates and consents to the collateral assignment of the lessee's interest
under each such lease as Buyer's senior lenders may reasonably request and
Seller shall execute and deliver any certificates and confirmations that
Buyer's senior lenders may reasonably request.
5.12 Books and Records. Seller shall maintain its books and
records relating to the Station in accordance with past practices.
5.13 Notification. Seller shall promptly notify Buyer in writing
of any unusual or material developments with respect to the construction,
business or operations of the Station, and of any material change in any of the
information contained in Seller's representations and warranties contained in
Section 3 of this Agreement.
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5.14 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
construction, ownership and operation of the Station.
5.15 Financing Leases. Except to the extent Buyer agrees to assume
in writing any such leases at Closing, Seller will satisfy at or prior to
Closing all outstanding obligations under any 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 Preservation of Business. Consistent with the representations
of Seller set forth in Section 3. 1, Seller shall use its best efforts to
preserve the business and organization of the Station, to the end that the
business, operations, and prospects of the Station shall be unimpaired at the
Closing Date.
5.17 Personnel Recommendations. In the event that personnel
positions become available at the Station, Seller shall promptly notify Buyer
as personnel vacancies occur at the Station and consider for employment all
personnel recommended by Buyer for such vacant positions.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with
the purchase and sale of the Assets pursuant to this Agreement shall be subject
to receipt of the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an
appropriate application for the FCC Consent and shall file the application with
the FCC within ten days of the execution of this Agreement. The parties shall
prosecute the application with all reasonable diligence and otherwise use their
best efforts to obtain a grant of the application as expeditiously as
practicable. Each party agrees to comply with any condition imposed on it by
the FCC Consent, except that no party shall be required to comply with a
condition if (1) the condition was imposed on it as the result of a
circumstance the existence of which does not constitute a breach by the party
of any of its representations, warranties, or covenants under this Agreement,
and (2) compliance with the condition would have a material adverse effect upon
it. Buyer and Seller shall oppose, to the extent that a reasonable basis for
objections exists in law or fact consistent with Rule 11 of the Federal Rules
of Civil Procedure, 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
<PAGE> 24
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request an extension of the effective period of the FCC Consent. No extension
of the FCC Consent shall limit the exercise by either party of its rights under
Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of Seller until the Closing.
6.3 Risk of Loss.
(a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing.
(b) If any damage or destruction of the Assets or any
other event occurs which (i) prevents the commencement of broadcast operation
of the Station prior to February 9, 1997 or (ii) following the Station's
commencement of broadcast operation, (A) causes the Station to cease
broadcasting operations for a period of three or more days or (B) prevents in
any material respect signal transmission by the Station in the normal and usual
manner and Seller fails to restore or replace the Assets so that normal and
usual transmission is resumed within seven days of the damage, destruction or
other event, Buyer, in its sole discretion, may (i) terminate this Agreement
forthwith without any further obligations hereunder upon written notice to
Seller, in which event all funds held by the Escrow Agent pursuant to the
Escrow Agreement, including all interest and other proceeds from the investment
of such funds, shall be immediately returned to Buyer, or (ii) proceed to
consummate the transaction contemplated by this Agreement and complete the
restoration and replacement of the Assets after the Closing Date, in which
event Seller shall deliver to Buyer all insurance proceeds received in
connection with such damage, destruction or other event.
6.4 Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Environmental Audit. Buyer may, at its option and expense,
retain an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey
<PAGE> 25
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of the properties of the Station. If the survey discloses any material
environmental hazard or material possibility of future liability for
environmental damages or clean-up costs, Buyer shall so notify Seller as soon
as practicable.
6.6 Engineering Study. Buyer may, at its option and expense,
retain an engineering firm to conduct a proof of performance study of the
Station and to prepare a report on the Station's compliance with customary
engineering practices and all applicable FCC rules, regulations, prescribed
practices, and technical standards. If the survey discloses any material
deficiencies in the construction, operations or equipment of the Station, Buyer
shall so notify Seller as soon as practicable.
6.7 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, Buyer shall have no obligation to agree to any
material adverse change in any License or Assumed Contract to obtain a Consent
required with respect thereto.
6.8 Bulk Sales Law. If applicable, the Bulk Sales law of the
State of Massachusetts shall be complied with by Seller. Any loss, liability,
obligation, or cost suffered by Seller or Buyer as the result of the failure of
Seller or Buyer to comply with the provisions of any bulk sales law applicable
to the transfer of the Assets as contemplated by this Agreement shall be borne
by Seller.
6.9 Tax Filings. Seller shall continue to file all applicable
Massachusetts tax returns with respect to the Station in accordance with
Seller's past practices and shall concurrently deliver copies of all such
returns to Buyer.
6.10 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 that are 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.
6.11 Appraisal. Buyer and Seller agree to allocate the Purchase
Price for tax and recording purposes in accordance with an appraisal to be
conducted by an appraisal firm selected and paid for by Buyer with experience
in the valuation and appraisal of television station assets.
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6.12 Noncompetition Agreement. At Closing, Buyer and Seller shall
enter into a Noncompetition Agreement in the form of Schedule 6.12 and $300,000
of the Purchase Price shall be allocated to the covenants of Seller set forth
therein on the Closing Date.
6.13 Commencement of Broadcast Operations.
(a) At the expense of Buyer, Seller shall take all
actions reasonably requested by Buyer for the Station to resume broadcast
operations on or prior to the Closing Date, including, without limitation,
entering into contracts, ordering and installing equipment and building and
constructing or causing to be built or constructed any necessary facilities or
structures. Seller shall consult with Buyer prior to taking any material
action in connection with the construction of the Station and shall consider
Buyer's recommendations in connection therewith. Buyer shall have access at
all times to the assets, properties and facilities of the Station in order to
inspect the construction and condition of the Station. Buyer shall cooperate
with Seller to enable the Station to resume broadcast operations.
(b) Seller shall use its best efforts to obtain all
Licenses necessary for the Station to resume broadcast operations and to
operate the Station from the West Bridgewater Site. Seller shall use its best
efforts to obtain prior to Closing any necessary consents to transfer such
Licenses to Buyer at Closing. Seller is a party to a lease with respect to
each of the West Bridgewater Site (the "West Bridgewater Site Lease") and the
Bridgewater Site (the "Bridgewater Site Lease" and together with the West
Bridgewater Site Lease, the "Leases") which are described more fully on
Schedule 3.6. Such leases are in full force and effect on the date hereof and
Seller shall keep such Leases in full force and effect at all times until the
Closing. Such Leases shall be included among the Assumed Contracts and Seller
shall deliver Consents and estoppel certificates with respect thereto.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing are subject at Buyer's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Seller contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Seller shall have
performed and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
it prior to or on the Closing Date.
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(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied
with by Buyer under Section 6.1 hereof, Seller shall have complied with any
conditions imposed on it by the FCC Consent, and the FCC Consent shall have
become a Final Order.
(e) Governmental Authorizations. Seller shall be the
holder of all Licenses and there shall not have been any modification of any
License that would have a material adverse effect on the Station or the conduct
of its business and operations. No proceeding shall be pending or threatened
the effect of which could be to revoke, cancel, fail to renew, suspend, or
modify adversely any License.
(f) Deliveries. Seller shall have made or stand willing
to make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change in the
business, assets, or properties of the Station, including any damage,
destruction, or loss affecting any assets used or useful in the conduct of the
business of the Station.
(h) Commencement of Broadcast Operations. Seller shall
have completed the construction of the Station pursuant to the Modified
Construction Permit and Seller shall have commenced broadcast operations
pursuant to Program Test Authority (provided that Seller shall not be required
to have obtained a License from the FCC to cover the Modified Construction
Permit). Seller shall have obtained all of the Licenses which are necessary
for the Station to resume such broadcast operations and for the Station to
transmit its programming from the West Bridgewater Site at the full power
authorized by the FCC's grant of licenses resulting from the application for
the Modified Construction Permit and Seller shall have obtained all necessary
Consents for the transfer of the Licenses to Buyer at Closing. The West
Bridgewater Site Lease shall be in full force and effect in accordance with its
terms and there shall be no default thereunder and Seller shall have obtained
any necessary consent for the transfer of such lease to Buyer at Closing.
7.2 Conditions to Obligations of Seller. All obligations of
Seller at the Closing are subject at Seller's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
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(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Buyer shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing
to make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00
a.m. on a date, to be set by Buyer on at least five days' written notice to
Seller, that is (1) not earlier than the first business day after the FCC
Consent is granted, and (2) not later than ten business days following the date
upon which the FCC Consent has become a Final Order, subject to satisfaction or
waiver of all other conditions precedent to the holding of the Closing. If
Buyer fails to specify the date for Closing prior to the fifth business day
after the date upon which the FCC Consent becomes a Final Order, the Closing
shall take place on the tenth business day after the date upon which the FCC
Consent becomes a Final Order.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson, 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 all claims, liabilities, security
interests, mortgages, liens, pledges, conditions, charges or encumbrances,
except for liens for current taxes not yet due and payable;
<PAGE> 29
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(b) Estoppel Certificates. To the extent required by
Section 5.11, estoppel certificates of the lessors of all leasehold and
subleasehold interests included in the Real Property, including, without
limitation, the Leases;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent (other than the FCC Consent) and evidence
reasonably satisfactory to Buyer that the FCC Consent has been obtained;
(d) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Seller by an officer of the managing
member 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) 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 Massachusetts as well as the records of those counties in
Massachusetts in which any of the Assets are located, such searches having been
made no earlier than fifteen days prior to the Closing Date;
(f) Licenses, Contracts, Business Records, Etc. Copies
of all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by
Seller in connection with its construction or operations;
(g) Qpinion of Counsel. An Opinion of Seller's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.2(g)
hereto; and
(h) Noncompetition Agreement. The Noncompetition
Agreement in the form of Schedule 6.12, duly executed on behalf of Seller.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in
Section 2.3;
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Seller's obligations under the Licenses and Assumed Contracts insofar as they
relate to the time on and after the Closing Date and arise out of events
related to Buyer's ownership of the Assets or its operation of the Station on
or after the Closing Date;
<PAGE> 30
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(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Buyer by an officer 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) Qpinion of Counsel. An opinion of Buyer's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3(d)
hereto.
(e) Noncompetition Agreement. The Noncompetition
Agreement in the form of Schedule 6.12 duly executed by Buyer.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Seller
set forth in this Agreement have not been satisfied or waived in writing by
Seller.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
by May 1, 1997.
(d) Breach. Without limiting Seller's rights under the
other provisions of this Section 9.1, if Buyer has failed to cure any material
breach of any of its representations, warranties or covenants under this
Agreement within fifteen days after Buyer received written notice of such
breach from Seller.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Station abandoned, if Buyer is not then
in material default, upon written notice to Seller, upon the occurrence of any
of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer
set forth in this Agreement have not been satisfied or waived in writing by
Buyer.
<PAGE> 31
- 26 -
(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 May 1, 1997.
(d) Environmental Hazards. Buyer shall have notified
Seller of material environmental hazards or the material possibility of
environmental damages or clean-up costs, as indicated in the environmental
study described in Section 6.5, at least 30 days prior to the Closing Date, and
the cause thereof shall not have been remedied prior to the Closing Date.
(e) Technical Deficiencies. Buyer shall have notified
Seller of material deficiencies in the proposed operations of the Station, as
indicated in the engineering study described in Section 6.6, at least 30 days
prior to the Closing Date, and the cause thereof shall not have been remedied
prior to the Closing Date.
(f) 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.
(g) If the Station has not commenced broadcast operations
by a date that makes it reasonably likely that the Station will be unable to
resume broadcast operations prior to February 9, 1997.
9.3 Rights on Termination. If this Agreement is terminated
pursuant to Section 9.1 or Section 9.2 and neither party is in material breach
of 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, then the payment to Seller of $250,000 pursuant to Section 9.4 below
shall be liquidated damages and shall constitute full payment and the exclusive
remedy for any damages suffered by Seller by reason of Buyer's material breach
of this Agreement. Seller and Buyer agree in advance that actual damages would
be difficult to ascertain and that the amount of $250,000 is a fair and
equitable amount to reimburse Seller for damages sustained due to Buyer's
material breach of this Agreement. If this Agreement is terminated by Buyer
due to Seller's material breach of this Agreement, Buyer shall have all rights
and remedies available at law or equity.
9.4 Escrow Deposit. Buyer has deposited with the Escrow Agent the
sum of $250,000 in accordance with the Escrow Agreement. All such funds
deposited with the
<PAGE> 32
- 27 -
Escrow Agent shall be held and disbursed in accordance with the terms of the
Escrow Agreement and the following provisions:
(a) At the Closing, all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, shall be disbursed to or at
the direction of Buyer.
(b) If this Agreement is terminated pursuant to Section 9.1 or
9.2 and Buyer is not in material breach of this Agreement, all amounts held by
the Escrow Agent pursuant to the Escrow Agreement, including any interest or
other proceeds from the investment of funds held by the Escrow Agent, shall be
disbursed to or at the direction of Buyer.
(c) If this Agreement is terminated by Seller due to
Buyer's material breach.of this Agreement, then $250,000 of the amount held by
the Escrow Agent pursuant to the Escrow Agreement shall be disbursed to or at
the direction of Seller as liquidated damages under Section 9.3 above and any
interest or other proceeds from the investment of funds held by the Escrow
Agent shall be disbursed by the Escrow Agent to or at the direction of Buyer.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
six months. Any investigations by or on behalf of any party hereto shall not
constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
Seller shall affect Buyer's right to rely on any representation or warranty
made by Seller or relieve Seller of any obligations under this Agreement as the
result of a breach of any of its representations and warranties.
10.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or
any information Buyer may have, Seller hereby agrees to indemnify and hold
Buyer harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Seller contained in this Agreement or in any certificate, document,
or instrument delivered to Buyer under this Agreement.
<PAGE> 33
- 28 -
(b) Any and all obligations of Seller not assumed by
Buyer pursuant to this Agreement, including any liabilities arising at any time
under any Contract not included in the Assumed Contracts.
(c) Any loss, liability, obligation, or cost resulting
from the failure of the parties to comply with the provisions of any bulk sales
law applicable to the transfer of the Assets.
(d) Any and all losses, liabilities, or damages resulting
from the operation, ownership or construction of the Station prior to the
Closing, including any liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring prior the Closing Date.
(e) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer hereby agrees to indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, document,
or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station on and after the Closing.
(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.
<PAGE> 34
- 29 -
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim. If the claim relates to an action, suit, or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant within five
business days after written notice of such action, suit, or proceeding was
given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnifications rights provided in Sections 10.2
and 10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant. Nothing
<PAGE> 35
- 30 -
contained in this Section 10.4(e) shall cause any party hereto to have recourse
directly against the shareholders, directors, officers, and representatives of
the other party.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other
remedies that may be available, including money damages, to obtain specific
performance of the terms of this Agreement. If any action is brought by Buyer
to enforce this Agreement, Seller shall waive the defense that there is an
adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either party
which results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing party shall be entitled to reimbursement from
the other party of its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Seller
to Buyer pursuant to this Agreement shall be paid by Seller. Buyer and Seller
shall each pay one-half of any fees payable to the Escrow Agent and all filing
fees required by the FCC in connection with 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. Each party shall be responsible for
all fees or commissions payable to any finder, broker, advisor, or similar
person retained by or on behalf of such party.
11.2 Arbitration. Except as otherwise provided to the contrary
below, any dispute arising out of or related to this Agreement that Seller and
Buyer are unable to resolve by themselves shall be settled by arbitration by a
panel of three (3) neutral arbitrators who shall be selected in accordance with
the procedures set forth in the commercial arbitration rules of the American
Arbitration Association. The persons selected as arbitrators shall have prior
experience in the broadcasting industry but need not be professional
arbitrators, and persons such as lawyers, accountants, brokers and bankers
shall be acceptable. Before undertaking to resolve the dispute, each
arbitrator shall be duly sworn faithfully and fairly to hear and examine the
matters in controversy and to make a just award according to the best of his or
her understanding. The arbitration hearing shall be conducted in accordance
with the commercial arbitration rules of the American Arbitration Association
in Washington, D.C. 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
<PAGE> 36
- 31 -
shall be set forth in the decision and award of the arbitrators. Judgment on
the award, if it is not paid within thirty days, may be entered in any court
having jurisdiction over the matter. No action at law or suit in equity based
upon any claim arising out of or related to this Agreement shall be instituted
in any court by Seller or Buyer against the other except (i) an action to
compel arbitration pursuant to this Section, (ii) an action to enforce the
award of the arbitration panel rendered in accordance with this Section, or
(iii) a suit for specific performance pursuant to Section 10.5.
11.3 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed
to have been given on the date of personal delivery or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
If to Seller: Massachusetts Redevelopment Limited Liability Company
22720 S.W. 410th Street
Enumclaw, Washington 98022
Attention: Micheal Parker, President
With a copies to: Irving Gastfreund, Esq.
Kaye, Scholer, Fierman, Hays & Handler, L.L.P.
901 15th Street, N.W.
Suite 1100
Washington, D.C. 20005
and
Nicholas LePore, Esq.
Schnaeder, Harrison, Segal & Lewis
1600 Market Street
Suite 3600
Philadelphia, PA 19103-4252
If to Buyer: Channel 46 of Boston, Inc.
14444 66th Street, North
Clearwater, Florida 34624
Attention: James L. West
<PAGE> 37
- 32 -
With a copy to: Jeffrey L. Timmons, Esq.
Irwin, Campbell & Tannenwald, P.C.
1730 Rhode Island Ave., N.W.
Suite 200
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;
provided, however, that Buyer may assign its rights and obligations under this
Agreement, in whole or in part, to one or more subsidiaries or commonly
controlled affiliates of Buyer without seeking or obtaining Seller's prior
approval in which event Buyer shall remain liable hereunder and Buyer may
collaterally assign its rights and interests hereunder to its senior lenders
without seeking or obtaining Seller's prior approval. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
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
<PAGE> 38
- 33 -
the subject matter hereof. This Agreement supersedes all prior negotiations
between the parties and cannot be amended, supplemented, or changed except by
an agreement in writing that makes specific reference to this Agreement and
which is signed by the party against which enforcement of any such amendment,
supplement, or modification is sought.
11.10 Waiver of Compliance, Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public, announcement or otherwise communicate with any news
media concerning this Agreement or the transactions contemplated hereby without
the prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in its judgement be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 39
- 34 -
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
BUYER:
CHANNEL 46 OF BOSTON, INC.
By: /s/ James L. West
---------------------------
Name: James L. West
Title: Chairman
GUARANTOR OF PERFORMANCE OF
BUYER:
PAXSON COMMUNICATIONS
CORPORATION
By: /s/ William L. Watson
---------------------------
Name:
Title:
SELLER:
MASSACHUSETTS REDEVELOPMENT
LIMITED LIABILITY COMPANY
By: /s/ Michael L. Parker
---------------------------
Name: Michael L. Parker
Title: Manager
<PAGE> 40
Schedule 2.2
Excluded Assets and Choses in Action
Massachusetts Redevelopment Limited Liability Company excludes the
following assets and choses in action from the Asset Purchase Agreement:
1. Townsend broadcast transmitter.
2. Cause of action against the City of Bridgewater and
certain individuals, sounding in tort and statutory violations, known as
Massachusetts Redevelopment Company v. Paul Sullivan, et al., Land Court
No. 225489.
<PAGE> 41
Schedule 3.4
Consents Required by Seller to Close
FCC Consent
Massachusetts Redevelopment Limited Liability Company requires no
other consents, within the meaning of Section 3.4 of the Asset Purchase
Agreement, in order to close the transaction, except for the grant by the FCC
of the pending application for renewal of license of WHRC(TV) and except for
the grant of the modification application (FCC file No. BPCT-960710KK)
described in Schedule 3.5
<PAGE> 42
Schedule 3.5
Licenses
Massachusetts Redevelopment Limited Liability Company holds the
following licenses and permits:
1. License to operate Commercial Television Station
WHRC(TV), Norwell, Massachusetts, issued by Federal Communications
Commission. However, the application for renewal of licenses of
Television Station WHRC(TV) is presently pending before the FCC.
2. Construction Permit No. BPCT-951005KF, issued June
12, 1996, by the Federal Communications Commission. However,
presently pending before the FCC is an application (FCC File No.
BPCT-960710KK) for modification of that construction permit.
<PAGE> 43
Schedule 3.6
Real Property Interests
Massachusetts Redevelopment Limited Liability Company has only the
following interests in real property:
1. Non-exclusive lease between Massachusetts
Redevelopment Limited Liability Company and Queensferry Realty Trust
to install, maintain and operate (a) transmission and antenna
equipment on television channel 46; (b) two microwave transmitters,
antennas and receivers operating at frequencies assigned pursuant to
Part 74 of the Federal Communications Commission ("FCC") Rules; and
(c) two receive-only earth stations receiving signals transmitted at
frequencies assigned by the FCC in the Domestic Satellite Service; and
transmitting equipment, an electrical generator mounted on a pad, and
other accessory equipment at the Trust's radio tower and/or building
and equipment shelter located in West Bridgewater, Plymouth County,
Massachusetts.
2. Non-exclusive tower license agreement between
Massachusetts Redevelopment Limited Liability Company and BDS/GATX
Limited Partnership I to install, maintain and operate a transmission
and antenna equipment on television channel 46 and accessories on a
1,049 AMSL tower in Bridgewater, Plymouth County, Massachusetts.
<PAGE> 44
Schedule 3.7
Tangible Personal Property
Massachusetts Redevelopment Limited Liability Company is conveying the
following tangible personal property pursuant to the Asset Purchase Agreement:
One (1) BASC Model SC-15 Channel 46 antenna
together with any additions to the tangible personal property between the date
of the Asset Purchase Agreement and the Closing Date.
<PAGE> 45
Schedule 3.8
Contracts
Massachusetts Redevelopment Limited Liability Company has no contracts
other than the real property interests set out in Schedule 3.6 and the policy
of insurance set out in Schedule 3.10. Buyer will assume at Closing the real
property interests set out in Schedule 3.6 but will not assume the policy of
insurance set out in Schedule 3.10.
<PAGE> 46
Schedule 3.10
Insurance Policies
Massachusetts Redevelopment Limited Liability Company has comprehensive
insurance coverage for its assets pursuant to a policy of insurance with Chubb
Group, through agent KDN/Lancaster Corp., Policy No. 35312679, issued April 5,
1996, and expiring April 5, 1997.
<PAGE> 47
Schedule 5.2
<PAGE> 48
<TABLE>
<S> <C> <C>
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
A New York Limited Liability Partnership
THE McPHERSON BUILDING
425 Park Avenue 901 Fifteenth Street N.W., Suite 1100 Nine Queen & Road Central
New York, NY 0022-3598 Washington, D.C. 20005-2327 852-2845-4949
Fax 212 836-6680 ------------------ Fax 852-2845-3662
---------- (202) 682-3500
999 Avenue of The Stars Fax (202) 682-3580 Irving Gastfreund
Suite 600 (202) 682-3526
Los Angeles, CA 90067-6048
758-1000 Internet E-Mail Address
Fax 01 788-1200 rvgQuxnetcomm.com
----------
</TABLE>
September 10, 1996
Mr. William F. Caton
Acting Secretary
Federal Communications Commission
1919 M Street, NW
Washington, D.C. 20534
Re: Television Station WHRC(TV)
Channel 46, Norwell, Massachusetts
Application for New Auxiliary Transmitter/
Antenna Facility
(FCC File No. BPCT-96071OKK)
Dear Mr. Caton:
Submitted herewith for filing, on behalf of our client Massachusetts
Redevelopment Company, licensee of Television Station WHRC(TV), Channel 46,
Norwell, Massachusetts, are an original and two copies of an amendment to its
above-referenced pending application (File No. BPCT-960710KK) to construct a
new auxiliary antenna/transmitter facility for Television Station WHRC(TV),
Norwell, Massachusetts.
Please direct any inquiries concerning this submission to the
undersigned.
Respectfully submitted,
KAYE, SCHOLER, FIERMAN, HAYS &
HANDLER, LLP
By: /s/ Irving Gastfreund
---------------------------------
Irving Gastfreund
Enclosures
<PAGE> 49
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
Mr. William F. Caton
September 10, 1996
Page 2
cc (w/encl.) Clay Pendarvis, Esq.
Chief, Television Branch
Video Services Division
Mass Media Bureau
Federal Communications Commission
1919 M Street, NW, Room 702
Washington, D.C. 20554
David Bennett
Supervisory Engineer
Television Branch
Video Services Division
Mass Media Bureau
Federal Communications Commission
1919 M Street, NW, Room 702
Washington, D.C. 20554
Roxanne Harris
Television Branch
Video Services Division
Mass Media Bureau
Federal Communications Commission
1919 M Street, NW, Room 702
Washington, D.C. 20554
Doris McGhee
Television Branch
Video Service Division
Mass Media Bureau
Mail Stop 1800E1
Federal Communications Commission
1919 M Street NW
Washington, D.C. 20554
<PAGE> 50
AMENDMENT
Mr. William F. Caton
Acting Secretary
Federal Communications Commission
1919 M Street, NW
Washington, D.C. 20554
Re: Television Station WHRC(TV)
Channel 46, Norwell, Massachusetts
Application for New Auxiliary Transmitter/
Antenna Facility
(FCC File No. BPCT-960710KK)
Dear Mr. Caton:
On July 10, 1996, an application, on FCC Form 301. for minor
modification of the authorized technical facilities of Television Station
WHRC(TV), Channel 46, Norwell, Massachusetts, to construct a new auxiliary
transmitter/antenna facility for the station, was tendered for filing with the
Commission on behalf of Massachusetts Redevelopment Company, licensee of
WHRC(TV). That application is hereby amended by submission of the annexed
materials.
Respectfully submitted,
MASSACHUSETTS REDEVELOPMENT COMPANY
By: /s/ Michael L. Parker
-----------------------------------
Michael L. Parker
President
Date: September 6, 1996
----------------------------
<PAGE> 51
AMENDMENT
The pending application (File No. BPCT-96071OKK) of Massachusetts
Redevelopment Company, licensee of Television Station WHRC(TV), Channel 465,
Norwell, Massachusetts, for a minor modification of the authorized technical
facilities of Television Station WHRC(TV) to construct a new auxiliary antenna
transmitter facility for the station is hereby amended as follows:
1. Amend the application in all respects to reflect that the
purpose of the application is no longer to seek authority to construct a new
auxiliary antenna transmitter facility but, rather, to seek authority for a
minor modification of the underlying WHRC(TV) construction permit (File No.
BPCT-951005KF, granted June 12, 1996). For convenience, a copy of that
construction permit is annexed hereto as Exhibit 1.
As explained in the August 12, 1996 amendment filed by Massachusetts
Redevelopment Company with respect to the instant application, Massachusetts
Redevelopment Company has been in the midst of attempting to obtain all local
zoning and other local regulatory approvals to expeditiously construct the
modified WHRC(TV) main antenna transmitter facility at the newly authorized
transmitter site specified in the annexed construction permit (File No.
BPCT-951005KF). However, as shown in the aforementioned amendment, the process
of obtaining local zoning and other local regulatory approvals has not yet been
completed and may yet take a significant amount of additional time.
<PAGE> 52
Unfortunately, however, Massachusetts Redevelopment Company simply
does not have an unlimited amount of time within which to restore broadcast
operations by WHRC(TV). On February 8, 1996, President Clinton signed into law
the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Scat. 56 (1996).
Section 403(1) of the Telecommunications Act of 1996 added a new Section 31
12(g) to the Communications Act of 1934, as amended, under which a broadcast
station's license will automatically expire upon the station's failure to
broadcast for a consecutive 12-month period, notwithstanding any provision,
term or condition of a license to the contrary.
In Implementation of Section 403(1) of the Telecommunications Act of
1996 (Silent Station Authorization - FCC Red ___, FCC 96-218 (released May 17,
1996), the Commission adopted rules to implement the new Section 312(g) of the
Communications Act. In this regard, the Commission held that, with respect to
stations which were off the air prior to February 8, 1996 (such as WHRC(TV)),
the commencement date of the 12-month period which triggers license expiration
under Section 312(g) of the Communications Act would be February 8, 1996. Id.,
slip op. at 2, p.5.
In short, under the rules and procedures adopted by the Commission in
Implementation of Section 403(1) of the Telecommunication Act of 1996 (Silent
Station Authorizations), supra the license for Television Station WHRC(TV) will
automatically expire as of February 9, 1997, by virtue of the force of new
Section 312(g) of the Communications Act, if, for any reason, WHRC(TV) has not
resumed broadcast operations by that date. Public Notice entitled,
2
<PAGE> 53
"Procedures Announced For Expedited Processing of Applications Filed By Silent
Broadcast Stations", -- FCC Red ___, DA 96-818 (released May 22, 1996).
In light of the delays which inevitably will occur in obtaining local
zoning and other local regulatory approvals to construct WHRC(TV)'s main
transmission facilities at the station's new transmitter site, it is by no
means certain that WHRC(TV) will be able to complete construction and resume
broadcast operations with program test authority with the station's main
transmission facilities by February 9, 1996. Moreover, since cold weather and
freezing conditions in the winter months in New England virtually preclude
construction of a new broadcast tower, in order for WHRC(TV) to have any hope
of completing construction and of resuming broadcast operations by February 9,
1997, construction of the station's new main transmission tower would have to
be completed by September or October. Unfortunately however, this is not a
realistically feasible timetable.
In light of the foregoing, Massachusetts Redevelopment Company had
concluded that the most expeditious way to restore broadcast operations by
WHRC(TV) (and thereby to avoid the possibility of automatic loss of the
station's license for failure to resume broadcast operations by February 9,
1997), was to construct an auxiliary antenna/transmitter facility on an
existing tower and to resume broadcast operations on WHRC(TV) from the
auxiliary technical facilities as expeditiously as possible, while proceeding
expeditiously to obtain all required local zoning and other regulatory
approvals in connection with the WHRC(TV) main antenna/transmitter facilities
and to construct and operationalize those facilities as expeditiously as
possible. Toward that end,
3
<PAGE> 54
Massachusetts Redevelopment Company Cited its instant application for a new
auxiliary antenna/transmitter facility on July 10, 1996.
However, based on informal discussions held recently with key members
of the Commission's staff. Massachusetts Redevelopment Company has now
concluded that the most expeditious way to restore broadcast operations by
WHRC(TV) (and thereby to avoid the possibility of automatic loss of the
station's license for failure to resume broadcast operations by February 9,
1997), is to amend its instant application so as to seek authority, not for a
new auxiliary antenna/transmitter facility, but, rather, to modify the annexed
WHRC(TV) construction permit (File No. BPCT-951005KF, granted June 12, 1996) so
as to seek authority to construct the main WHRC(TV) antenna/transmitter
facilities in accord with the technical specifications set forth in the instant
application. Immediately upon Want of this application, Massachusetts
Redevelopment Company intends to embark on the construction of the station's
main technical facilities at the new transmitter site as specified in the
instant application. Once the station has been constructed with the modified
technical facility, Massachusetts Redevelopment Company intends to
operationalize the station expeditiously pursuant to Program Test Authority.
Once the station is operational -- hopefully well before the February
9, 1997 statutory deadline under Section 312(g) of the Communications Act -
Massachusetts Redevelopment Company intends to apply for a modification of
license for WHRC(TV) to relocate the station's main antenna/transmitter
facility from the transmitter site specified in the instant application to
4
<PAGE> 55
the transmitter site specified in the annexed WHRC(TV) construction permit
(File No. BPCT-951005KF).
5
<PAGE> 56
EXHIBIT 1
<PAGE> 57
[ ? ]
FEDERAL COMMUNICATIONS COMMISSION
TELEVISION BROADCAST STATION
CONSTRUCTION PERMIT
Authorizing Official
Official Mailing Address:
- ------------------------ ---------------------
Clay C. Pancarvis
MASSACHUSETTS REDEVELOPMENT COMPANY Chief TV Branch
[?] 420TH STREET Video Services Division
ENEMCLAW, WA 98022 Mass Media Bureau
Grant Date: 6/12/96
Call Sign: WHRC This permit expires 3:00 a.m.
local time. 24 months after
grant date specified above.
Permit File No.: BPCT-951005KF
Subject to the provisions of the Communications Act of 1934, as amended,
subsequent acts and treaties, and all regulations heretofore or hereafter made
by this Commission, and further subject to the conditions set forth in this
permit, the permittee is hereby authorized to construct the radio transmitting
apparatus herein described. Installation and adjustment of equipment not
specifically set forth herein shall be in accordance with representations
contained in the permittee's application for construction permit except for
such modifications as are presently permitted, without application, by the
Commission's Rules.
This permit shall be automatically forfeited if the station is not ready for
operation within the time specified (date of expiration) or within such further
time as the Commission may allow, unless completion of the station is prevented
by causes not under the control of the permittee. See Sections 73.3598,
73.3599 and 73.3534 of the Commission's Rules.
Equipment and program tests shall be conducted only pursuant to Sections
73.1610 and 73.1620 of the Commission's Rules.
Name of Permittee:
MASSACHUSETTS REDEVELOPMENT COMPANY
Station Location:
Ma-Norwell
Frequency (MHz): 662.0-668.0
FCC Form 352-A October 21, 1985 Page 1
<PAGE> 58
[ ? ]
[ ? ]
[ ? ]
Transmitter Location Access or description
West side of Becirrd Street Rte. 23/23, 2.3 km south of Flagg Street.
Approximately 3.5 km south of Bridgewater, Paymounth County, MA.
Transmitter: Type Accepted. See Sections 73.1660, 73.1665 and 73.1655
of the Commission's Rules.
Antenna type: (directional or non-directional): Directional
Description: DIELECTRIC FLP32-B
Beam Tile: 0.50 Degrees Electrical
Major lobe directions (degrees true): 340.0
Antenna Coordinates: North Latitude: 41 56 55
West Longitude: 70 58 15
Transmitter output power..............: As required to achieve authorized ERP
Maximum effective radiated power (PEAK): 2450.0 kW
: 33.9 DBK
Height of radiation center above ground ........: 301 Meters
Height of radiation center above mean sea level.: 310 Meters
Height of radiation center above average terrain: 291 Meters
Overall height of antenna structure above ground
(including obstruction lighting if any)....: 311 Meters
Obstructions marking and lighting specifications for antenna structure:
It is to be expressly understood that the issuance of these specifications is
in no way to be considered as precluding additional or modified marking or
lighting as may hereafter be required under the provisions of Section 303(q) of
the Communications Act of 1934, as amended.
PARAGRAPH 03.0, FCC FORM 715 (APRIL 1985):
There shall be installed at the top of the structure one 300 m/m electric code
beacon equipped with two 620- or 700-watt lamps (PS-40, Code Beacon type), both
lamps to burn simultaneously, and equipped with aviation red color filters.
Where a rod or other construction of not more than 20 feet in height and
incapable of supporting this
FCC Form 352-A October 21, 1985 Page 2
<PAGE> 59
[ ? ]
PARAGRAPH , FCC FORM (APRIL 1985):
[ ? ]
PARAGRAPH 15.0, FCC FORM 715 (APRIL 1985):
On levels at approximately five-sixths, one-half and one-sixth of the average
height of the tower, at least one 116- or 125-watt lamp. All the enclosed in
an aviation red obstruction light globe shall be installed on each outside
corner of the structure.
PARAGRAPH A . . FCC FORM 715 (APRIL 1985):
All lighting shall burn continuously or shall be controlled by a light
sensitive service adjusted so that the lights will be turned on at a north
sky light intensity level of about 35 foot candles and turned off at a north
sky light intensity level of about 58 foot candles.
PARAGRAPH 22.0, FCC FORM 715 (APRIL 1985):
During construction of an antenna structure, for which obstruction lighting is
required, at least two 116- or 125-watt lamps (A21/TS) enclosed in aviation red
obstruction light globes, shall be installed at the uppermost point of the
structure. In addition, as the height of the structure exceeds each level at
which permanent obstruction lights will be required, two similar lights shall
be displayed nightly from sunset to sunrise until the permanent obstruction
lights have been installed and placed in operation, and shall be positioned so
as to ensure unobstructed visibility of at least one of the lights at any
normal angle of approach. In lieu of the above temporary warning lights, the
permanent obstruction lighting fixtures may be installed and operated at each
required level as each such level is exceeded in height during construction.
PARAGRAPH A. . FCC FORM 715-A (MAY 1985):
There shall be installed at the top of the antenna structure a white [?]
discharge non-directional light which conforms to FAA,FCC specifications L-956,
High Intensity Obstruction Lighting Systems. This light shall be mounted on
the highest point of the structure. If the antenna on other appurtanance at its
highest point is incapable of
FCC Form 352-A October 21, 1985 Page 3
<PAGE> 60
[ ? ]
PARAGRAPH , FCC FORM (MAY 19 ):
[ ? ] The complement of units shall admit a white [?]
intensity light and produce an effective intensity of not [ ? ]
daytime uniformly about the antenna structure in the additional plane. The
effective intensity shall be reduced to approximately 20,000 candelas at
twilight, and to approximately 4,000 candelas at night. The light units shall
be mounted in a manner to ensure unobstructed viewing from aircraft at any
normal angle of approach, so that the effective intensity of the full beam is
not impaired on any structural member of the skeletal framework. The units
will normally be adjusted so that the center of the beam is in the horizontal
plane.
PARAGRAPH D . , FCC FORM 715-A (MAY 1985):
At the approximate one-third and two-thirds levels of the skeletal tower there
shall be installed three or more high intensity light units when conform to
FAA/DOD Specficiations L-856, High Intensity Obstruction Lighting Systems. The
complement of units shall emit a white high intensity light and produce an
effective intensity of not less than 200,000 candelas (daytime) uniformly
about the antenna structure in the horizontal plane. The effective intensity
shall be reduced to approximately 20,000 candelas at twilight, and to
approximately 4,000 candelas at night. The light units shall be mounted in a
manner to ensure unobstructed viewing from aircraft at any normal angle of
approach, so that the effective intensity of the full beam is not impaired by
any structural member of the skeletal framework. The normal angular adjustment
of the beam canters above the horizontal shall be two degrees at the one-third
level and one degree at the two-thirds level.
PARAGRAPH 5. , FCC FORM 715-A (MAY 1985):
All lights shall be synchronized to flash simultaneously at 40 pulses per
minute. The light system shall be equipped with a light sensitive control
device which shall face the north sky and cause the intensity steps to change
automatically when the north sky illumination on a vertical surface is as
follows:
1. Day to Twilight: Shall not occur before the illumination drops to 60
footcandles, but shall occur before it drops to 30 footcandles.
2. Twilight to Night: Shall not occur before the illumination drops to 5
foot candles but shall occur before it drops to 2 footcandles.
3. Night to Day: The intensity changes listed in 1. and 2. above
FCC Form 352-A October 21, 1985 Page 4
<PAGE> 61
[ ? ]
[ ? ] NOTE: If battery operated, the batteries should be
replaced or recharged at regular intervals to preclude failure during
operations.
Above marking specifications in accordance to paragraphs A,B,C,H,I of FCC Form
715A (Day) and paragraphs 3,6,13,21,22 of FCC Form 715 (Night) - Dual Lighting.
Paragraph A modified to require use of L-865 medium intensity lights in lieu of
L-856.
Special operating conditions or restrictions:
None Required
*** END OF AUTHORIZATION ***
FCC Form 352-A October 21, 1985 Page 5
<PAGE> 62
SCHEDULE 6.12
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT is dated as of _____________ ____, 1996, by and
among Channel 46 of Boston, Inc., a Florida corporation ("Buyer"), Massachusetts
Redevelopment Limited Liability Company, a Delaware limited liability company
("Seller"), and Micheal L. Parker, an individual (the "Principal" and together
with Seller, individually, a "Restricted Party" and collectively, the
"Restricted Parties").
R E C I T A L S:
A. Buyer and Seller have entered into an Asset Purchase Agreement
dated as of September 1996 (the "Purchase Agreement"), pursuant to which Buyer
agreed to purchase from Seller substantially all of the assets (the "Assets")
that are used or useful in the business and operation of television station
WHRC(TV), Norwell, Massachusetts (the "Station").
B. The Principal is a principal of Seller and will derive
substantial benefit from the closing of the Purchase Agreement.
C. The agreement of the Restricted Parties to deliver this
Noncompetition Agreement was a material inducement to Buyer in entering into
the Purchase Agreement, and the delivery of this Noncompetition Agreement by
the Restricted Parties was a condition to Buyer's obligation to purchase the
Assets.
D. Buyer, as the owner of the Station, desires to preclude the
Restricted Parties from competing against it during the term of this Agreement.
AGREEMENT
In consideration of the above recitals and the covenants and
agreements set forth in this Agreement, the parties agree as follows:
SECTION 1. COVENANT
Each Restricted Party hereby covenants and agrees that for a period of
three years after the date of this Agreement, neither such Restricted Party nor
any entity controlled by such Restricted Party (an "Affiliate") will, without
the prior written consent of Buyer, directly or indirectly, own, manage,
operate, join, control, or engage or participate in the ownership, management,
operation, or control of, or be connected as a shareholder, director, officer,
agent, partner, joint venturer, consultant, advisor, or otherwise with, or
render any
<PAGE> 63
services to any business or organization any part of which engages in the
business of full power television broadcasting through any television
broadcasting station serving or proposing to serve all or any portion of the
counties served in whole or in part by the Station.
SECTION 2. COMPENSATION
As compensation for the covenant of the Restricted Parties not to
compete with Buyer, the parties have agreed to allocate $300,000 of the
Purchase Price payable under the Purchase Agreement to the covenant of the
Restricted Parties not to compete.
SECTION 3. ENFORCEABILITY; REMEDIES
3.1 Remedies. Each Restricted Party agrees that if such
Restricted Party or any Affiliate thereof engages or threatens to engage in any
activity that constitutes a violation of the provisions of this Agreement,
Buyer shall have the right and remedy to have the provisions of this Agreement
specifically enforced to the extent permitted by law by any court having
jurisdiction, it being acknowledged and agreed that any breach of this
Agreement would cause immediate irreparable injury to Buyer and that money
damages would not provide an adequate remedy at law for any breach. Such right
and remedy shall be in addition to, and not in lieu of, any other rights and
remedies available to Buyer at law or in equity.
3.2 Reformation. If any of the provisions or covenants contained
in this Agreement are held to be unenforceable in any jurisdiction because of
the duration or scope thereof, the court making such determination shall have
the power to reduce the duration and/or scope of the provision or covenant, and
the provision or covenant in its reduced form shall be enforceable; provided,
however, that the determination of such court shall not affect the
enforceability of this Agreement in any other jurisdiction.
SECTION 4. MISCELLANEOUS
4.1 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:
-2-
<PAGE> 64
If to the Restricted Parties: Micheal L. Parker
Massachusetts Redevelopment Limited
Liability Company
22720 S.W. 410th Street
Enumclaw, WA 98022
With a copies to: Irving Gastfreund, Esq.
Kaye, Scholer, Fierman, Hays & Handler, L.L.P.
901 15th Street, N.W.
Suite 1100
Washington, D.C. 20005
and
Nicholas LePore, Esq.
Schnaeder, Harrison, Segal & Lewis
1600 Market Street
Suite 3600
Philadelphia, PA 19103-4252
If to Buyer: Channel 46 of Boston, Inc.
14444 66 Street, North
Clearwater, Florida 34624
Attention: Mr. James West
With a copy to: Jeffrey L. Timmons, Esq.
Erwin, Campbell & Tannenwald, P.C.
1730 Rhode Island Ave., N.W.
Suite 200
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
4.1.
4.2 Benefit and Binding Effect. No party may assign this
Agreement without the prior written consent of the other party hereto. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.
4.3 Further Assurances. The parties shall execute any other
documents that may be necessary and desirable to the implementation and
consummation of this Agreement.
4.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
-3-
<PAGE> 65
STATE OF FLORIDA (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
4.5 Headings. The headings herein are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
4.6 Amendments. This Agreement 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.
4.7 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-4-
<PAGE> 66
IN WITNESS WHEREOF, the parties hereto have duly executed this
Noncompetition Agreement as of the day and year first above written.
CHANNEL 46 OF BOSTON, INC.
By:
----------------------------
Name:
Title:
MASSACHUSETTS REDEVELOPMENT
LIMITED LIABILITY COMPANY
By:
----------------------------
Name:
Title:
--------------------------------
Micheal L. Parker
<PAGE> 67
Schedule 8.2(g)
Opinion of Seller's Counsel
Massachusetts Redevelopment Limited Liability Company attaches the
following opinion of its counsel:
[H. MARVIN MERCER, ESQ. LETTERHEAD]
_____________, 1996
Channel 46 of Boston, Inc.
14444 66 Street, North
Clearwater, Florida 34624
Attention: Mr. James West
Re: Asset Purchase Agreement dated as of ______ ___, 1996 (the
"Purchase Agreement"), by and between Channel 46 of Boston,
Inc., a Florida corporation ("Buyer"), and Massachusetts
Redevelopment Limited Liability Company, a Delaware limited
liability company ("Seller").
Ladies and Gentlemen:
I have acted as counsel for Seller in connection with the transactions
contemplated by the Asset Purchase Agreement. This opinion is being delivered
to you pursuant to Section 8.2(g) of the Asset Purchase Agreement. All
capitalized terms not defined in this opinion shall have the meanings set forth
in the Asset Purchase Agreement.
In rendering this opinion, I have reviewed the following documents:
1. the Asset Purchase Agreement;
2. the Bill of Sale of even date herewith from Seller to
Buyer;
3. the Assignment and Assumption Agreement of even date
herewith by and between Buyer and Seller;
<PAGE> 68
Channel 46 of Boston, Inc.
[Date]
Page ____
4. the assignments of leasehold interest of even date
herewith, by and between Buyer and Seller; and
5. the Noncompetition Agreement of even date herewith by
and among Buyer, Seller and Michael Parker.
The documents listed in clauses 1 to 5 above shall be referred to herein as the
"Transaction Agreements."
In rendering this opinion, I have also reviewed such other documents,
certificates and records as I have deemed necessary or appropriate to render
this opinion. In my examination of documents and records I have assumed,
without investigation, the genuineness of all signatures, the legal capacity of
natural persons, the authenticity of all documents submitted to me as
originals, the conformity with originals of all documents submitted to me as
telecopied, certified, photostatic or reproduced copies and the authenticity of
all such documents.
With respect to questions of fact, I have relied, without independent
inquiry or verification by me, solely upon (a) the representations and
warranties set forth in the Asset Purchase Agreement, (b) representations of
officers of Seller and (c) certificates of public officials.
My opinion is limited to matters arising under the laws of the
Commonwealth of Pennsylvania, the Limited Liability Company Act of the State of
Delaware and the laws of the United States of America, including the
Communications Act of 1934 and the rules and regulations of the Federal
Communications Commission (the "FCC"), insofar as such laws apply. I note that
the Transaction Agreements by their terms provide that they are to be governed
by the laws of the State of Florida. My opinion in paragraph 3 is given as if
the Transaction Agreements were to be governed by the laws of Pennsylvania
rather than the laws of Florida. I express no opinion whatsoever as to any
other laws or regulations or as to laws relating to choice of law principles.
Based upon the foregoing, subject to the assumptions, limitations and
exceptions contained herein, I am of the opinion that:
1. Seller is a limited liability company duly organized,
validly existing and in good standing under the laws of Delaware, is
qualified to conduct business as a foreign limited liability company
in Massachusetts, and is in good standing under the laws of
Massachusetts. Seller has all requisite power and authority to
execute and deliver the Transaction Agreements and to perform and
comply with all of the terms, covenants, and conditions to be
performed and complied with by Seller thereunder.
<PAGE> 69
Channel 46 of Boston, Inc.
[Date]
Page ___
2. The execution, delivery and performance of the
Transaction Agreements by Seller have been duly and validly authorized
by all necessary actions on the part of Seller and its members.
3. The Transaction Agreements have been duly executed
and delivered by Seller and each Transaction Agreement constitutes
Seller's legal, valid and binding obligation, enforceable against
Seller in accordance with its terms, except that such enforcement may
be subject to bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and to limitations on
the availability of equitable remedies.
4. The execution, delivery and performance by Seller of
the Transaction Agreements and the transactions contemplated thereby
will not violate, conflict with or cause a default under: (a) any
provision of Seller's organizational documents; (b) any statute, law,
regulation or rule or any judgment, decree or order binding upon
Seller; or (c) to the best of my knowledge, any contract, agreement or
commitment to which Seller is a party or by which it is bound.
5. To my knowledge, there is no judgment, award, order,
writ, injunction, arbitration decision or decree materially and
adversely affecting the conduct of the business of the Station or the
Assets, or any litigation, proceeding or investigation pending or
threatened against Seller relating to the Station or to the
transactions contemplated by the Purchase Agreement, except as
specifically identified in Attachment A hereto and except for
proceedings of general applicability to the broadcast industry.
6. Based on my review of information publicly available
at the FCC and my internal files and records and inquiry to officers
of Seller, I conclude that (a) Seller is the holder of the FCC License
and Construction Permit listed in Schedule 3.5 of the Asset Purchase
Agreement; (b) said FCC License and Construction Permit are in full
force and effect; (c) said FCC License and Construction Permit
comprise all of the licenses, permits, and other authorizations
required by the FCC for the lawful conduct of the business and
operations of the Station in the manner and to the full extent they
must be conducted, and (d) the FCC License and Construction Permit are
not subject to any condition or requirement, other than conditions or
requirements that appear on the face of said authorizations or pertain
to the authorizations under generally applicable rules or policies of
the FCC. I am not aware of any act or omission by Seller that could
reasonably be expected to result in the refusal by the FCC to renew
the FCC License for a full term in the normal course upon the timely
filing of a complete and properly executed application for renewal and
the payment of any applicable filing fee.
<PAGE> 70
Channel 46 of Boston, Inc.
[Date]
Page ___
7. To the best of my knowledge based on my review of
information publicly available at the FCC and my internal files and
records and inquiry to the officers of Seller, the construction,
ownership and operation of the Station are in compliance in all
material respects with the FCC License and Construction Permit and
with applicable law.
8. All FCC Consents required to assign the aforesaid FCC
License and Construction Permit hereto from Seller to Buyer have been
obtained, are in full force and effect and have become Final Orders.
9. The Bill of Sale, assignments of leasehold interests
and the Assignment and Assumption Agreement delivered by Seller to
Buyer at Closing are in form sufficient to convey to Buyer good and
marketable title to the Assets free and clear of all claims,
liabilities, security interests, mortgages, liens and other
encumbrances.
The information set forth herein is as of the date hereof. I assume
no obligation to advise you of changes which thereafter may be brought to my
attention. My opinion is based on statutory and judicial decisions in effect
at the date hereof, and I do not opine with respect to any law, regulation,
rule or governmental policy which may be enacted or adopted after the date
hereof, nor assume any responsibility to advise you of future changes in my
opinion.
This letter is solely for your information in connection with the
consummation of the transactions contemplated by the Asset Purchase Agreement
and is not to be quoted in whole or in part or otherwise referred to in any of
your financial statements or public releases, nor is it to be filed with any
governmental agency or other person without the prior written consent of the
undersigned.
Very truly yours,
H. Marvin Mercer, III
Attorney at Law
<PAGE> 71
Schedule 8.3(d)
Opinion of Buyer's FCC Counsel
[IRWIN, CAMPBELL & TANNENWALD, P.C. LETTERHEAD]
_____________________, 1996
Massachusetts Redevelopment
Limited Liability Company
22720 S.W. 410th Street
Enumclaw, Washington 98022
Attn: Michael Parker, President
Re: Asset Purchase Agreement dated as of September __. 1996, by
and between Channel 46 of Boston, Inc. and
Massachusetts Redevelopment Limited Liability Company
Ladies and Gentlemen:
We have acted as communications counsel for Channel 46 of Boston,
Inc., a Florida corporation ("Buyer"), in connection with the Asset Purchase
Agreement dated September __, 1996, (the "Purchase Agreement"), by and between
Buyer and Massachusetts Redevelopment Limited Liability Company ("Seller"),
providing for the sale by Seller and the purchase by Buyer of the Assets of
Television Station WHRC(TV), Norwell, Massachusetts (the "Station"). This
opinion letter is provided to you in accordance with Section 8.3(d) of the
Purchase Agreement. Capitalized terms used but not defined herein have the
meanings given to them in the Purchase Agreement.
For purposes of this opinion, we have made such examination of the
Communications Act of 1934, as amended (the "Communications Act"), and the
published rules, regulations, orders and policies (collectively, the "Rules")
of the Federal Communications Commission (the "FCC") as we have deemed
necessary for this opinion. We have also examined copies of the following
documents:
1. An executed copy of the Purchase Agreement.
2. An executed copy of the Assignment and Assumption Agreement.
3. An executed copy of the Officer's Certificate of Buyer.
<PAGE> 72
Massachusetts Redevelopment
Limited Liability Company
__________________, 1996
Page 2
With respect to certain factual matters relating to this opinion, we
have relied upon the above-mentioned documents and certificates, an examination
on ________________________, 1996 of public files of the FCC available on that
date, and pertinent statements and representations of members of the staff of
the FCC relating to the Station. We have not, except as specifically mentioned
above, made any independent review or investigation of factual or other
matters, including the organization, existence, good standing assets, business
or affairs of the Buyer.
In our examination of the Purchase Agreement and the aforesaid
certificates, records, documents, and agreements, we have assumed the
genuineness of all signatures, the accuracy, completeness and authenticity of
all documents submitted to us, the conformity with the original documents of
all documents submitted to us as certified, telecopied, photostatic or
reproduced copies, and the authenticity of all such latter documents. We also
have assumed the accuracy, completeness and authenticity of the foregoing
certifications of corporate officers and statements of fact, on which we are
relying, and have made no independent investigations thereof. We have not
verified the manner in which the Station is now being operated, claim no
expertise in that area and, therefore, render no opinion with respect to
technical matters.
For purposes of this opinion letter, we have assumed that (i) the
Buyer has all requisite power and authority under all applicable laws,
regulations and governing documents to enter into, execute, deliver and perform
its obligations under the Purchase Agreement; (ii) the Buyer has duly
authorized, executed and delivered the Purchase Agreement; (iii) the Buyer is
validly existing and in good standing under the laws of the State of Florida
and is authorized to conduct business in the State of Massachusetts; and (iv)
the Purchase Agreement constitutes a valid and binding obligation of the Buyer,
enforceable against Buyer in accordance with its terms.
As used in this opinion letter, the phrase "to counsel's knowledge"
means the actual knowledge (that is, the conscious awareness of facts or other
information) of lawyers in the firm who have given substantive legal attention
to representation of the Buyer in connection with the Purchase Agreement. In
rendering the following opinions we have relied as to factual matters (but not
as to legal conclusions) without independent investigation, upon the
representations, warranties and certifications made by the Buyer in or pursuant
to the Purchase Agreement and upon the Officer's Certificate identified in
paragraph 3 above, and no information has come to our attention which would
give us knowledge of the inaccuracy of such facts. This opinion is based as to
matters of law solely on the Communications Act and the Rules, and we express
no opinion as to any other laws, statutes, rules, regulations or ordinances.
Our opinion does not address the effect, if any, of any pending legislation or
of any pending proceedings before the FCC, or any proceeding before a court to
which the Seller is not a party. This opinion is given, and all statements
herein are made, in the context of the foregoing.
<PAGE> 73
Massachusetts Redevelopment
Limited Liability Company
________________, 1996
Page 3
Based on the foregoing, and in reliance thereon, and subject to the
assumptions, limitations, qualifications and exceptions set forth herein, we
are of the opinion that:
1. The FCC has granted its consent to the assignment to Buyer of
the FCC Licenses set forth on Attachment A hereto and such
consent remains in full force and effect and has become a
Final Order.
We assume no obligation to advise you of any changes in the foregoing
subsequent to the delivery of this opinion. This opinion has been prepared
solely for use by Seller in connection with the closing under the Purchase
Agreement on the date of this letter, and should not be quoted in whole or in
part or otherwise be referred to, or be filed with or furnished to any
governmental agency or other person or entity, without the prior written
consent of this firm.
Very truly yours,
IRWIN, CAMPBELL & TANNENWALD, P.C.
By:
--------------------------------
Alan C. Campbell, Vice President
<PAGE> 74
Schedule 8.3(d)
Buyer's Opinion
_________________, 1996
Massachusetts Redevelopment
Limited Liability Company
22720 S.W. 410th Street
Enumclaw, Washington 98022
Attention: Micheal Parker, President
Re: Asset Purchase Agreement dated as of September 1996 (the
"Purchase Agreement"), by and between Channel 46 of Boston,
Inc., a Florida corporation ("Buyer"), and Massachusetts
Redevelopment Limited Liability Company ("Seller").
Ladies and Gentlemen:
We have acted as special counsel for Buyer in connection with the
transactions contemplated by the Purchase Agreement. This opinion is being
delivered to you pursuant to Section 8.3(d) of the Purchase Agreement. All
capitalized terms not defined in this opinion shall have the meanings set forth
in the Purchase Agreement.
In rendering this opinion, we have reviewed the following documents:
1. the Purchase Agreement;
2. the Assignment and Assumption Agreement, of even date
herewith, by and between Buyer and Seller (the "Assumption
Agreement" and collectively with the Purchase Agreement, the
"Transaction Agreements");
3. a certificate dated as of ______________, 1996 from the
Secretary of State of Florida relating to the good standing of
Buyer (the "Good Standing Certificate");
4. the Articles of Incorporation and the Bylaws of Buyer, each in
the form certified to us by the Secretary of Buyer to be true
and complete and in effect on the date of this opinion; and
<PAGE> 75
Massachusetts Redevelopment
Limited Liability Company
___________________1996
Page 2
5. resolutions of the Board of Directors of Buyer certified to us
by the Secretary of Buyer to be true and complete, to have
been duly adopted by the Board of Directors of Buyer, and to
be in full force and effect (without having been modified or
rescinded) on the date of this opinion.
In rendering this opinion, we have also reviewed such other documents,
certificates and records as we have deemed necessary or appropriate to render
this opinion. In our examination of documents and records, we have assumed,
without investigation, the genuineness of all signatures, the legal capacity of
natural persons, the authenticity of all documents submitted to us as
originals, the conformity with originals of all documents submitted to us as
telecopied, certified, photostatic or reproduced copies and the authenticity of
all such documents.
In rendering this opinion, we have also assumed that (i) that all
parties to the Transaction Agreements (other than Buyer) are duly organized,
validly existing, and in good standing under the laws of their respective
jurisdictions of organization and have the requisite power to enter into and
perform such Transaction Agreements, (ii) the execution and delivery of the
Transaction Agreements have been duty authorized by all necessary action and
proceedings on the part of all parties thereto other than Buyer, (iii) the
Transaction Agreements have been duly executed and delivered by all parties
thereto other than Buyer, and (iv) the Transaction Agreements constitute legal,
valid, binding and enforceable obligations of all parties thereto other than
Buyer.
With respect to questions of fact, we have relied, without independent
inquiry or verification by us, solely upon (a) the representations and
warranties set forth in the Purchase Agreement, (b) representations of officers
of Buyer and (c) certificates of public officials.
This opinion is limited to the law of the District of Columbia and the
Florida Business Corporation Act, insofar as such laws apply (collectively,
Applicable Law"), except that Applicable Law includes only those laws and
regulations that a lawyer exercising customary professional diligence would
reasonably recognize as being directly applicable to the transactions
contemplated by the Transaction Agreements and excludes those set forth in
Section 19 of the Legal Opinion Accord of the American Bar Association Section
of Business Law (1991). We do not purport to be experts in the laws of the
State of Florida, nor are we familiar with judicial
<PAGE> 76
Massachusetts Redevelopment
Limited Liability Company
_______________________1996
Page 3
interpretations of the laws of Florida or the Florida Business Corporation Act.
We have reviewed the text of the Florida Business Corporation Act and applied
it to the transactions described herein in light of our knowledge of the law of
other jurisdictions. We note that the Transaction Agreements by their terms
provide that they are to be governed by the laws of the State of Florida. Our
opinion in paragraph 3 is given as if the Transaction Agreements were to be
governed by the laws of the District of Columbia rather than the laws of the
State of Florida. We express no opinion as to conflicts of law rules, or the
laws of any states or jurisdictions other than as specified above. Additional
limitations are set forth in the text of the opinion.
Based upon the foregoing, subject to the assumptions, limitations and
exceptions contained herein, we are of the opinion that:
1. Based solely upon a review of the Good Standing Certificate,
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida. Buyer has all requisite corporate
power and authority under the Florida Business Corporation Act, its Articles of
Incorporation and its Bylaws to execute and deliver the Transaction Agreements
and to perform and comply with all of the terms, covenants, and conditions to
be performed and complied with by them.
2. The execution, delivery and performance of the Transaction
Agreements by Buyer have been duly and validly authorized by all corporate
actions required to be taken by Buyer under the Florida Business Corporation
Act, Buyer's Articles of Incorporation and Buyer's Bylaws.
3. The Transaction Agreements have been duly executed and
delivered by Buyer and constitute its legal, valid and binding obligation,
enforceable against Buyer in accordance with their terms, except that (a) such
enforcement may be subject to bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
4. The execution, delivery and performance by Buyer of the
Transaction Agreements and the transactions contemplated thereby will not
violate or conflict with any provision of Buyer's Articles of Incorporation and
By-Laws.
<PAGE> 77
Massachusetts Redevelopment
Limited Liability Company
_______________________, 1996
Page 4
The information set forth herein is as of the date hereof. We assume
no obligation to advise you of changes which may thereafter may be brought to
our attention. Our opinions are based on statutory provisions and judicial
decisions in effect at the date hereof, and we do not opine with respect to any
law, regulation, rule or governmental policy which may be enacted or adopted
after the date hereof, nor assume any responsibility to advise you of future
changes in our opinions.
This letter is solely for your information in connection with the
consummation of the transactions contemplated by the Purchase Agreement and is
not to be quoted in whole or in part or otherwise referred to in any of your
financial statements or public releases, nor is it to be filed with any
governmental agency or other person without the prior written consent of a
member of this firm. This opinion may not be relied upon by any person or
entity other than the person to whom it is addressed.
Very truly yours,
[Buyer's Counsel]
By:
-----------------------------------
<PAGE> 1
EXHIBIT 10.138
EASEMENT AGREEMENT
THIS EASEMENT AGREEMENT made and entered into this 9th day of October,
1996, by and between KARTWORLDS OF CENTRAL FLORIDA L.C., a Florida limited
liability company, hereinafter referred to as "Seller", and PAXSON OUTDOOR,
INC., a Florida corporation, hereinafter referred to as "Buyer."
W I T N E S S E T H:
WHEREAS, Seller is the owner of an outdoor advertising display
structure as described on Exhibit A attached hereto ("Billboard"), fee simple
title to the real property described on Exhibit B attached here to on which the
Billboard is located ("Land"), and Permits necessary for the ownership and
operation of the Billboard, and
WHEREAS, Seller desires to sell, transfer, assign and convey the
Billboard and Permits along with a perpetual real property easement to Buyer on
the Land subject to the terms, provisions and conditions of this Agreement, and
WHEREAS, Buyer desires to acquire from Seller said Billboard and
Permits along with a perpetual real property easement on the Land subject to the
terms, provisions and conditions of this Agreement.
NOW, THEREFORE, in exchange for mutually agreeable consideration, the
parties hereby agree as follows:
1. Sale and Grant of Easement. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to sell, transfer, assign and
deliver and Buyer agrees to buy, on the Closing Date, subject to the terms and
conditions set forth herein, the Billboard free and clear of all debts, liens,
encumbrances or other liabilities. Additionally, Seller shall grant and Buyer
shall accept an exclusive, perpetual easement in gross and not appurtenant, and
full right and privilege of use, over, upon and across the Land for the purpose
of erecting, maintaining, repairing, leasing and replacing the Billboard
including the right of pedestrian and/or vehicular egress and ingress in order
to allow Buyer and its agents access to the Land. This Easement Agreement
creates an exclusive easement in gross for the benefit of Buyer to use the Land
for all purposes set forth herein.
2. Price. The total purchase price for the Assets shall be Three
Hundred Eighty-Nine Thousand Four Hundred Dollars ($389,400).
3. Assets to be Purchased. The term "Assets," as used herein means all
right, title, and interest in and to all of the following:
A. The Billboard described on Exhibit A attached hereto;
B. A perpetual easement in gross for the construction,
maintenance, replacement, repair, replacement of an outdoor advertising monopole
and sign structure inclusive of electrical service, catwalk and lights over,
upon, under and above the real property described on Exhibit B attached hereto
(the "Land");
C. All licenses and permits necessary for the ownership and
operation of the Billboard (the "Permits");
<PAGE> 2
2
4. Existing Billboard Sign Lease. Seller previously entered into that
certain Billboard Sign Lease dated September 18, 1995 (the "Lease") with Lillie
Mae Tamney (the "Tenant") and Impact Communications of Central Florida, Inc.
("Impact"). Seller has provided directly to Buyer prior to execution of this
Agreement a true and correct copy of the aforesaid Lease. Seller and Buyer
hereby covenant and agree that the Lease shall be fully terminated at the time
of Closing under this Agreement and Buyer and Seller shall cause the aforesaid
Tenant to join into and effect such termination of the Lease at the time of
Closing. Pursuant to the provisions of the Lease, the Tenant did prepay directly
to Seller advance rental for the Lease in the amount of $100,000.00. Seller
covenants and agrees that Seller shall reimburse Tenant for the prorated portion
of the advance rental paid by Tenant to Seller due as the date of Closing
hereunder and full termination of the Lease in accordance with the foregoing
provisions. Seller warrants that the aforesaid Lease constitutes the only lease
or contract associated with the operation of the Billboard, and Seller has full
legal power and authority to terminate the Lease in accordance with the
foregoing provisions.
5. Permits. On or prior to the date of execution of this Agreement,
Seller has delivered to Buyer copies of all existing licenses and permits
obtained by Seller for the ownership and operation of the Billboard (the
"Permits"). Buyer shall be responsible during the Due Diligence Period described
in Paragraph 8 hereafter of this Agreement for investigating and ensuring that
the Permits delivered by Seller to Buyer constitute all licenses and permits
necessary for the ownership and operation of the Billboard; further, Buyer shall
be responsible for taking all action required by the applicable governmental
authorities for the assignment or other transfer of the Permits to Buyer at the
time of Closing under this Agreement. Seller covenants and agrees to execute and
deliver to Buyer at the time of Closing any and all documents which may
reasonably be required for the assignment or other transfer of the Permits to
Buyer. Buyer acknowledges specifically that the Billboard may be considered to
be a nonconforming sign under the applicable laws, rules and regulations of the
City of Orlando and other applicable governmental authorities; Buyer shall be
responsible for any actions which may be required by the City or other
governmental authorities regarding the continued presence and use of the
Billboard, if any.
6. Representations, Covenants and Warranties of Buyer. As a material
inducement to Seller to enter into this Agreement, Buyer makes the following
representations, covenants and warranties.
A. Buyer is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Florida. Buyer has all
requisite power and authority to execute and deliver this Agreement and the
documents contemplated hereby and to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by Buyer hereunder
and thereunder.
B. The execution, delivery and performance of this Agreement
by Buyer have been duly authorized by all necessary actions on the part of
Buyer. This Agreement has been duly executed and delivered by Buyer and
constitutes the legal, valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms except as the enforceability of this
Agreement may be affected by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally and by judicial discretion in the enforcement of
equitable remedies.
C. The execution, delivery and performance by Buyer of this
Agreement and the documents contemplated hereby (i) do not require the consent
of any third party; (ii) will not conflict with the Articles of Incorporation or
By-Laws of Buyer; (iii) will not conflict with, result in a breach of, or
constitute a default under, any law, judgment, order injunction, regulation or
ruling of any court of governmental instrumentality; or (iv) will not conflict
with, constitute grounds for termination of, result
<PAGE> 3
3
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.
D. No representation or warranty made by Buyer in this
Agreement or in any certificate or other document 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 that is required to make any statement
made herein or therein not misleading.
7. Representations, Covenants and Warranties of Seller. As a material
inducement to Buyer to enter into this Agreement, Seller makes the following
representations, covenants and warranties:
A. Seller is a limited liability company duly incorporated,
validly existing and in good standing under the laws of the State of Florida.
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 associated with the Assets 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.
B. The execution, delivery and performance of this Agreement
by Seller have been duly authorized by all necessary actions on the part of
Seller. This Agreement has been duly executed and delivered by Seller and
constitutes the legal, valid and binding obligation of Seller, enforceable
against it in accordance with its terms except as the enforceability of this
Agreement may be affected by bankruptcy, insolvency or similar laws affect
creditors' rights generally and by judicial discretion in the enforcement of
equitable remedies.
C. The execution, delivery, and performance by Seller of this
Agreement and the documents contemplated hereby (i) do not require the consent
of any third party (ii) will not conflict with, result in a breach of, or
constitute a default under the Seller's Articles of Organization or other
governing documents, any law, judgement, order, rules, regulation or ruling of
any court of governmental instrumentality, (iii) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under or accelerate or permit the acceleration of any performance
required by the terms of any agreement instrument license or permit to which
Seller is a party or by which Seller may be bound and (iv) will not create any
claim, liability, mortgage, lien, pledge condition charge or encumbrance of any
nature whatsoever upon any of the Assets.
D. Seller has good and marketable title to the Assets free and
clear of all liens and encumbrances. Immediately after consummation of the
transactions contemplated herein, Buyer will be entitled to use the Assets free
and clear of all liens and encumbrances.
E. Neither Seller nor any shareholder, employee, or agent of
Seller has incurred any obligation for any finder's, broker's, or agent's fee in
connection with the transactions contemplated hereby.
F. Seller owns and has good title to the Billboard and the
Billboard is not 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.
<PAGE> 4
4
G. There is no claim, legal action, 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 Seller with respect to its ownership or operation of
the Assets nor does Seller know or have reason to be aware of any basis for the
same.
H. Seller has complied with all laws, rules, and regulations
of all federal, state and local governments concerning the environment, public
health and safety and no complaint, charge or notice has been filed or commenced
against Seller in connection with its ownership or operation of the Assets
alleging any failure to comply with any such law, rule or regulation.
I. The Billboard is constructed within the boundaries of the
Land and the Land has access to and from a public road.
J. Seller is aware of no structural or latent defects in any
of the Assets.
K. 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
that is required to make any statement made herein or therein not misleading.
8. Due Diligence Period. Buyer shall have until October 9, 1996 (the
"Due Diligence Period"), to inspect the Assets and to conduct such other
inspections or investigations to confirm the feasibility and suitability of the
Assets for Buyer's purposes. If Buyer is dissatisfied, in its sole discretion,
with the results of such inspections and investigations for any reason, then
Buyer shall be entitled to terminate this Agreement prior to the expiration of
the Due Diligence Period and receive a return of any and all deposits paid
hereunder. Seller shall permit Buyer and Buyer's authorized representatives
full access to, and make available for inspection, all of the Assets and shall
furnish Buyer all documents, records, and information with respect to the Assets
as Buyer and its representatives may reasonably request, all for the purpose of
permitting Buyer to become familiar with the Assets. In connection therewith,
Buyer, its agents and representatives, shall have the right of access to the
Assets for purposes of conducting surveys, soil tests, market studies,
engineering tests, and such other tests, investigations, studies and inspection
as Buyer deems desirable, provided that all of the same shall be conducted at
Buyer's expense.
9. Prorations, Closing Expenses. All normal and customarily pro-ratable
items, including without limitation, real estate taxes and assessments, personal
property taxes and assessments, and utility bills shall be prorated as of the
date of Closing, Seller being charged and credited for all of the same up to
such date and Buyer being charged and credited for the same on and after such
date. If the actual amounts to be prorated are not known at the time of Closing,
the prorations shall be made on the basis of the best evidence then available,
and thereafter, when actual figures are received, a cash settlement will be made
between Seller and Buyer. Seller and Buyer shall be responsible one-half each
for the costs of the following: the premium for an owner's title insurance
policy insuring Buyer's interest in all real estate interests to be transferred
hereunder, all Florida documentary stamp taxes or other transfer or sales taxes
arising in connection with any deed, conveyance, or assignment relating to the
Assets, the costs of any surveys and all recording costs arising in connection
with the transaction contemplated herein (with the exception of recording costs
for title corrective documents, which shall be Seller's obligation).
<PAGE> 5
5
10. Buyers Conditions Precedent. Except as may be waived in writing by
Buyer, the obligations of Buyer hereunder are subject to the fulfillment at or
before the Closing of each of the following conditions:
A. Each representation and warranty of Seller contained in
this Agreement shall be true and correct in all material respects as of the
Closing;
B. Seller shall have performed and complied with all covenants
or conditions required by this Agreement to be performed and complied with by
Seller at or before Closing;
C. No suit, action, order, or other proceeding by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted, or entered to restrain or prohibit carrying of the transactions
contemplated by this Agreement;
D. No material, adverse, undisclosed condition or material,
adverse change in the Assets shall have occurred;
E. Seller shall have received all consents and approvals, if
any, necessary to consummate the transactions contemplated hereby;
12. Seller's Conditions Precedent. Except as may be waived in writing
by Seller, the obligations of Seller hereunder are subject to the fulfillment at
or before Closing of each of the following conditions:
A. Each representation and warranty of Buyer contained in this
Agreement shall be true and correct in all material respects as of Closing;
B. Buyer shall have performed and complied with all covenants
or conditions required by this Agreement to be performed and complied with by it
at or before Closing;
C. No order by any court or governmental body or agency shall
have been entered to restrain or prohibit the consummation of the transactions
contemplated herein.
13. Closing. The Closing hereunder shall occur on or before October 9,
1996, at the offices of Seller's attorney and the parties shall mutually agree
upon such date.
14. Documents for Closing. Upon the Closing hereof, Seller shall
deliver the following documents to Buyer:
A. Duly executed Easement in the form attached, Warranty Bill
of Sale in the form attached, Assignment of Permits and other transfer documents
which shall be sufficient to vest and fully warrant good and marketable title to
the Assets in the name of Buyer, free and clear of all mortgages, liens,
restrictions, encumbrances and obligations except for liens for current taxes
not yet due and payable;
B. All original Permits with regard to the Assets being sold
hereunder;
C. A certificate, dated as of the Closing Date, executed by
Seller, certifying 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 that Seller has in all
material
<PAGE> 6
6
respects performed and complied with all of its obligations, covenants and
agreement set forth in this Agreement to be performed and complied with on or
prior to the Closing Date;
D. Any other documents reasonably necessary for the
consummation of the transactions contemplated hereby.
15. Further Assurances. At any time before or after Closing, Seller
agrees to execute, acknowledge and deliver all instruments reasonably requested
by Buyer in order to consummate the transactions contemplated by this Agreement
and to fully vest in Buyer the ownership of the Assets from and after the
Closing.
16. Default. If Buyer shall breach any material representation,
warranty, or covenant contained herein, then the entire earnest money deposit
paid hereunder shall be paid to Seller, as liquidated damages and not as a
penalty, as Seller's exclusive remedy, and the parties thereafter shall be
relieved of any further liability or obligation hereunder. If Seller shall
breach any material representation, warranty, or covenant contained herein,
Buyer, in addition to obtaining a refund of its earnest money deposit, may
undertake a suit for specific performance. Seller acknowledges that a refusal by
Seller to consummate the transactions contemplated hereby will cause irrevocable
harm to Buyer, for which there may be no adequate remedy at law and for which
the ascertainment of damages would be difficult. Therefore, Buyer shall be
entitled to specific performance of this Agreement, as well as injunctive
relief.
17. Indemnification Provisions.
A. Indemnification by Sellers. After the Closing, Seller
hereby agrees to indemnify and hold Buyer and its officers, directors,
employees, and representatives harmless against and with respect to, and shall
reimburse Buyer and its officers, directors, employees, and representatives for:
(i) Any and all losses, liabilities, or damages resulting from
the ownership of the Assets prior to the Closing, or resulting from any other
obligations of Seller that are not assumed by Buyer pursuant to this Agreement,
including without limitation any liabilities arising at any time under any
contract that is not assumed hereunder.
(ii) Any loss, liability, obligation, or cost resulting from
any agreement with any finder, broker, advisor, or similar person retained by
or on behalf of Seller relating to the transactions contemplated by this
Agreement.
(iii) Any and all out-of-pocket costs and expenses, including
reasonable legal fees and expenses, incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
B. Indemnification of Buyer. After the Closing, Buyer hereby agrees to
indemnify and hold Seller and Seller's officers, directors, employees, and
representatives harmless against and with respect to, and shall reimburse Seller
and each Seller's officers, directors, employees, and representatives for:
(i) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
<PAGE> 7
7
(ii) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Assets after the Closing.
(iii) Any loss, liability, obligation, or cost resulting from
any agreement with any finder, broker, advisor, or similar person retained by or
on behalf of Buyer relating to the transactions contemplated by this Agreement.
(iv) Any and all out-of-pocket costs and expenses, including
reasonable legal fees and expenses, incident to any action, suit, proceeding,
claim, demand, assessment, or judgment incident to the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
C. Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(i) 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.
(ii) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree at
or prior to the expiration of the thirty-day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the claim. If the
Claimant and the Indemnifying Party do not agree within the thirty-day period
(or any mutually agreed upon extension thereof), the Claimant may seek
appropriate remedy at law or equity.
(iii) With respect to any claim by a third party as to which
the Claimant is entitled to indemnification under this Agreement, if the
Indemnifying Party notifies the Claimant in writing within ten days of its
receipt of notice from the Claimant of the third-party claim that the
Indemnifying Party acknowledges its potential liability to the Claimant under
this Agreement, the Indemnifying Party shall have the right, at its own expense,
to participate in or assume control of the defense of such claim, and the
Claimant shall cooperate fully with the Indemnifying Party, subject to
reimbursement for actual out-of-pocket expenses incurred by the Claimant as the
result of a request by the Indemnifying Party. If the Indemnifying Party elects
to assume control of the defense of any third-party claim, the Claimant shall
have the right to participate in the defense of such claim at its own expense.
If the Indemnifying Party fails timely to notify the Claimant in writing that
the Indemnifying Party acknowledges its potential liability to the Claimant
under this Agreement or if the Indemnifying Party does not elect to assume
control or otherwise participate in the defense of any third-party claim, the
Indemnifying Party shall be bound by the results obtained by the Claimant with
respect to such claim.
(iv) 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.
<PAGE> 8
8
(v) For the purpose of the procedures set forth in this
Section, any indemnification claim by any officer, director, employee, or
representative of Buyer shall be made by and through Buyer, and any
indemnification claim by any officer, director, employee, or representative of
any Seller shall be made by and through such Seller.
18. Survival. All representations, warranties and indemnifications
contained in this Agreement shall be deemed continuing representations,
warranties and indemnifications and shall survive the Closing.
19. Attorneys Fees. In the event of a default or breach hereunder 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,
including on appeals and bankruptcy proceedings.
20. Physical Condition. Except as expressly provided in this Agreement
to the contrary, Buyer and Seller agree that the Assets are being sold "as is"
as to their physical condition existing at the time of execution of this
Agreement.
21. Controlling Law. Any dispute which may arise concerning this
Agreement shall be resolved in accordance with the laws of the State of Florida
and parties agree to venue in Orange County, Florida.
22. Risk of Loss, Maintenance of Assets. 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 Closing. Seller shall
maintain all of the Assets in their condition as of the date of this Agreement
(ordinary wear and tear excepted), and use, operate and maintain all of the
Assets in a reasonable manner. Seller shall maintain inventories of parts and
supplies at levels consistent with past practices. If any insured or indemnified
loss, damage, impairment, confiscation, or condemnation of or to any of the
Assets occurs, Seller shall repair, replace, or restore such Assets to their
prior condition as soon thereafter as possible (and at Buyer's option, prior to
Closing), and Seller shall use the proceeds of any insurance or other recovery
solely to repair, replace, or restore such Assets. Seller shall maintain the
existing levels of insurance on the Assets. In the event of any loss, damage,
impairment, confiscation, or condemnation of any of the Assets, if restoration
or replacement has not occurred prior to Closing, Buyer shall be entitled to
elect to delay the Closing until such restoration or replacement is completed or
close the transaction and receive from Seller a transfer or assignment of all
insurance proceeds or other compensation applicable thereto.
23. Notices. All notices, demands, and requests required or permitted
to be given under this Agreement shall be in writing and shall be either (a)
personally delivered, (b) mailed by registered or certified mail, postage
prepaid with return receipt requested, (c) delivered by overnight express
delivery service or same day local courier service, or (d) delivered by telecopy
or facsimile transmission, to the address set forth below, or to such other
address as may be designated by the parties from time to time in accordance with
this section.
If to Seller: Kartworlds of Central Florida L.C.
5370 International Drive
Orlando, Florida 32819
ATTN: Robert R. Clark, Jr.
FAX: (407)
<PAGE> 9
9
With a copy to: Michael J. Sheahan, Esq.
Godbold, Downing, Sheahan & Battaglia
222 West Comstock Ave.
Winter Park, Florida 32789
FAX: (407) 647-2089
If to Buyer: Paxson Outdoor, Inc.
1460 33rd Street
Orlando, Florida 32839
ATTN: John Jennings
FAX: (407) 425-2264
With a copy to: William L. Watson, Esq.
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401-6233
FAX: (561) 655-9424
Notice delivered personally, by overnight express delivery service or
by local courier service shall be deemed given as of actual receipt. Mailed
notices shall be deemed given three business days after mailing. Notices
delivered by telecopy or facsimile transmission shall be deemed given upon
confirmation of the transmission.
24. Entire Agreement. This Agreement supersedes all prior agreements
and understandings relating to the subject matter hereof and cannot be amended,
supplemented or changed except by an Agreement in writing signed by the party
against which enforcement of any such amendment, supplement, or modification is
sought.
25. Binding Effect. This Agreement and the rights, interests and
obligations hereunder shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, personal representatives,
estates, devisees, successors, and assigns.
26. Severabili1y. If any portion of this Agreement is invalid, illegal
or unenforceable. the balance of this Agreement shall remain in full force and
effect and this Agreement shall be construed in all respects as if such invalid,
illegal or unenforceable provision were amended.
27. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which together shall constitute
one instrument.
<PAGE> 10
10
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the day and year first above written.
In the Presence of: KARTWORLDS OF CENTRAL FLORIDA L.C.
/s/ Michael J. Sheahan By: /s/ Robert R. Clark
- ------------------------------------ ---------------------------------
Robert R. Clark, Manager
Print Name: Michael J. Sheahan
-------------------------
/s/ John L. Jennings
- ------------------------------------
Print Name: John L. Jennings, Jr.
-------------------------
/s/ Michael J. Sheahan By: /s/ Timothy M. Clark
- ------------------------------------ ---------------------------------
Timothy M. Clark, Manager
Print Name: Michael J. Sheahan
-------------------------
/s/ John L. Jennings
- ------------------------------------
Print Name: John L. Jennings, Jr.
-------------------------
PAXSON OUTDOOR, INC.
/s/ Michael J. Sheahan
- ------------------------------------ By: /s/ William L. Watson
---------------------------------
Print Name: Michael J. Sheahan William L. Watson, Secretary
-------------------------
/s/ John L. Jennings
- ------------------------------------
Print Name: John L. Jennings, Jr.
-------------------------
<PAGE> 11
EXHIBIT A
---------
The parties acknowledge that the following is the Billboard to be transferred
from Seller to Buyer as part of this Easement Agreement. The Billboard is a
single steel mono-pole advertising structure having two faces each measuring
14'48', including all related equipment located above and below ground located
at 5370 International Drive, Orlando, Florida.
<PAGE> 12
EXHIBIT "B"
BILLBOARD SIGN PARCEL
LEGAL DESCRIPTION:
A portion of Lot 5, FLORIDA CENTER, UNIT 21, as recorded in Plat Book
7, Page 82, of the Public Records of Orange County, Florida; being more
particularly described as follows:
Commence at the Northeast corner of Lot 5, FLORIDA CENTER, UNIT 21, as
recorded in Plat Book 7, Page 82, of the Public Records of Orange
County, Florida; thence run South 00 degrees 06'53" East along the
East line of said Lot, a distance of 20.61 feet to the Point of
Beginning; thence continue South 00 degrees 06'53" East, a distance of
289.37 feet to a point; thence run North 49 degrees 08'27" West, a
distance of 156.33 feet to a point on curve; thence Northeasterly with
the arc of a curve to the left, having for its elements, a radius of
731.00 feet, a central angle of 17 degrees 23'24", a chord which bears
North 32 degrees 09'51" East, a chord distance of 221.02 feet, an arc
distance of 221.87 feet to the Point of Beginning.
Subject to easements, rights-of-way and restrictions of record, if any.
Containing 0.364 acres, more or less.
<PAGE> 1
EXHIBIT 10.139
CONTRACT FOR SALE AND PURCHASE
THIS CONTRACT FOR SALE AND PURCHASE is made as of this 22nd day of
October, 1996 (the "Effective Date", as defined in Section 26), between SOUTHERN
LAND INVESTORS, LTD., a Florida limited partnership (hereinafter referred to as
the "SELLER") and PAXSON OUTDOOR, INC., Florida corporation (hereinafter
referred to as the "PURCHASER").
R E C I T A L S
A. The SELLER is the fee simple owner of the real property described in
Exhibit "A" and attached hereto and incorporated herein by reference for all
purposes; said real property being hereinafter referred to as the "Property".
B. PURCHASER desires to purchase easement rights to three (3) 10 foot
by 10 foot parcels of land that are located on the Property and are described in
Exhibit "B" attached hereto and incorporated herein by reference to construct
and maintain a billboard on each such parcel of property (individually, a
"Billboard Site," and collectively, the "Billboard Sites").
C. The SELLER is willing to grant such easement rights to PURCHASER
concerning the Billboard Sites upon the terms and conditions of this Contract.
<PAGE> 2
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter made, and in consideration of the deposit hereinafter set forth, and
for other good and valuable considerations, the parties hereto agree as follows:
1. The above Recitals are hereby incorporated herein and made a part
hereof by reference.
2. EASEMENT RIGHTS. On the "Closing Date" (as defined in Section 8),
the SELLER agrees to grant certain easement rights to Purchaser in the Billboard
Sites and the PURCHASER agrees to purchase such easement rights in the Billboard
Sites.
3. PURCHASE PRICE.
3.1 The purchase price (the "Purchase Price") of the easement
rights in the Billboard Sites that is payable to the SELLER at Closing, shall be
ONE MILLION FIVE HUNDRED THOUSAND and 00/100 ($1,500,000.00) DOLLARS.
3.2 The Purchase Price for the easement rights in the
Billboard Sites shall be payable to SELLER through a reduction in the principal
balance outstanding under that certain promissory note of even date herewith
from SELLER in favor of PURCHASER in the principal amount of $4,460,000.00 (the
"Note").
3.3 In the event SELLER fails to have the Property annexed
into the City of Orlando (the "City") by May 31, 1997, or if the zoning of the
Property upon annexation does not permit City approval to allow the PURCHASER to
construct and maintain one monopole billboard structure as described on Exhibit
"C" attached
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<PAGE> 3
hereto (or other sign structure) on each of the Billboard Sites, the Purchase
Price shall be adjusted in accordance with this paragraph. If PURCHASER is able
to construct and maintain only one billboard on the Property, the purchase price
for such Billboard Site shall be $400,000.00. If PURCHASER is able to construct
and maintain two billboards on the Property, the purchase price for each such
Billboard Site shall be $450,000.00.
4. CONDITIONS OF PURCHASE.
4.1 PURCHASER'S obligation to purchase the easement rights in
the Billboard Sites pursuant to this Contract is contingent upon the annexation
of the Property into the City and the initial zoning of the Property to IG,
General Industrial District. If the Property is not annexed and rezoned by May
31, 1997, the purchase price shall be adjusted pursuant to paragraph 3.3 of this
Contract.
4.2 PURCHASER'S obligation to purchase the easement rights in
the Billboard Sites pursuant to this Contract is contingent upon SELLER
terminating all existing billboard leases of any part of the Property and SELLER
causing any billboards or improvements associated therewith to be removed from
the Property.
4.3 PURCHASER'S obligation to purchase the easement rights in
the Billboard Sites pursuant to this Contract is contingent upon SELLER
obtaining all required licenses, consents, permits, and approvals in the name of
PURCHASER from the City to construct and maintain, as a legal conforming use,* a
billboard *pursuant to the September 23, 1996 Pre-Annexation Agreement
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<PAGE> 4
structure on each of the Billboard Site that meets the requirements of this
Contract.
5. TITLE EVIDENCE. SELLER has delivered to PURCHASER a title insurance
commitment (the "Title Binder") issued by Commonwealth Land Title Insurance
Company (the "Title Company") agreeing to issue to the PURCHASER, upon
recording of the easement agreement to the PURCHASER, an ALTA Form "B" Owner's
policy of title insurance (the "Title Policy") in the amount of the Purchase
Price insuring the easement rights of PURCHASER to the Billboard Sites, subject
only to the matters described on Exhibit "D" to this Contact (the "Permitted
Exceptions"), and liens and other exceptions to be discharged by the SELLER at
or before the Closing. The cost of the Title Binder, Title Policy, and search
fees shall be borne by the SELLER.
6. CONVEYANCE. The easement rights to the Billboard Sites shall be
conveyed free and clear of all liens and encumbrances, save and excepting the
following:
6.1 Taxes for the year of closing and subsequent years.
6.2 Applicable zoning ordinances.
6.3 The Permitted Exceptions.
7. SURVEY. SELLER has delivered to the PURCHASER a copy of a survey
of the Property. During the term of this Contract, the SELLER shall not allow
any additional easements, encroachments, overlaps, or other matters normally
shown on a survey to be erected or created without the prior written consent of
PURCHASER.
8. CLOSING.
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<PAGE> 5
8.1 The closing or settlement ("Closing") of the transaction
contemplated hereby shall be held at the office of Shutts & Bowen (the "Closing
Agent"), on or before January 31, 1997 (the "Closing Date"). If the Closing
Date falls on a Saturday, Sunday or legal holiday (a day when the national banks
in Orange County, Florida, are closed) the Closing Date shall he the next
business day thereafter.
8.2 SELLER shall have the right to extend the Closing Date for
up to four (4) additional months. In the event SELLER elects to extend the
Closing Date, the Purchase Price for the Billboard Sites shall be reduced by
$15,000.00 per Billboard Site for each month in which the Closing Date is
extended by SELLER pursuant to this paragraph.
9. EXPENSES. Seller shall pay all real property taxes applicable to the
Property. The SELLER shall be required to pay for the State Documentary Stamps
on the easement agreement and the cost of the Title Insurance Policy. The
PURCHASER shall pay for recording the easement agreement.
10. THE SELLER'S REPRESENTATIONS AND WARRANTIES. As of the Effective
Date, the Closing Date and immediately after the Closing Date (unless the
representation would not be applicable immediately after the Closing Date), the
SELLER represents and warrants to the PURCHASER that:
10.1 The SELLER owns fee simple title to the Property and the
SELLER's execution, delivery and/or performance of this
-5-
<PAGE> 6
Contract is not prohibited by and will not cause a default under any other
agreement, covenant, document or instrument.
10.2 The Property consists of approximately 51.003 acres
located within Orange County, Florida, and is presently zoned "Industrial - IA".
10.3 The Property has access to "the proposed Holden Avenue
Extension", as described in and by virtue of a multi-party agreement by and
among the SELLER and adjacent Property owners, which agreement is one of the
Permitted Exceptions described in Exhibit "D" attached hereto. Otherwise the
Property has no direct access to a dedicated public right of way other than the
right of way for Holden Avenue.
10.4 To the best of SELLER's knowledge, there is no pending
condemnation affecting the Property, or any portion thereof, and the SELLER has
not received any written notice and has no knowledge that any such proceeding is
contemplated other than the proposed I-4 Conroy Road Interchange.
10.5 The SELLER has no actual knowledge of the violations of
any federal, state, county or municipal law, ordinance, order, regulation or
requirement, affecting any portion of the Property; and the SELLER has received
no written notice of any such violation issued by any governmental authority.
10.6 To the best of SELLER'S knowledge, no work has been
performed on, or materials delivered to the Property which might give rise to
mechanic's, materialman's or other liens against the Property.
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<PAGE> 7
10.7 The SELLER is not prohibited from consummating the
transactions contemplated in this Contract, by any law, regulation, agreement,
instrument, restriction, order or judgment.
10.8 Except as provided on Exhibit "D" attached hereto there
are no adverse parties in possession of the Property or of any part thereof, and
no party has been granted any license, lease, or other right relating to the use
or possession of the Property.
10.9 There are no attachments, executions, assignments for the
benefit of creditors, receiverships, conservatorships or voluntary or
involuntary proceedings in bankruptcy or pursuant to any other debtor relief
laws contemplated or filed by the SELLER or pending against the SELLER or the
Property.
10.10 Except as provided on Exhibit "D" attached hereto,
there are no contracts or other obligations outstanding for the sale, exchange
or transfer of the Property or any portion thereof.
10.11 There is no litigation or proceeding pending or, to the
SELLER's knowledge, threatened against or relating to any portion of the
Property, nor does the SELLER know or have reasonable grounds to know of any
basis for any such action other than the proposed I-4 Conroy Road Interchange.
10.12 As of the Effective Date, no assessments for public
improvements have been made against the Property that remain unpaid.
-7-
<PAGE> 8
10.13 The SELLER is not in material violation under any permit
or agreement obtained from any governmental body or agency in regards to
development of the Property.
10.14 To the best of SELLER's knowledge, there are no
violations of any environmental laws on the Property. For the purposes of
this Contract, the term "Environmental Laws" shall mean all Federal, State and
local laws including statutes, regulations, and requirements relating to the
environmental or hazardous substances of any kind.
10.15 To the best of the SELLER's knowledge, no hazardous
material, pollutant or contaminant has been released or discharged onto the
Property or into any water body on the Property.
10.16 There are no commitments, agreements or representations
entered into between any municipality or governmental agency and the SELLER not
specifically set forth herein which may obligate the PURCHASER. The SELLER
covenants that it will not make any commitment or representation, or enter any
agreement with any municipality or governmental agency which would affect the
Property without the prior written approval of the PURCHASER.
10.17 SELLER will send termination letters to all tenants
with billboard leases for any portion of the Property within two (2) days
from the date of this Contract.
11. BROKER AND BROKER'S COMMISSION.
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<PAGE> 9
11.1 The SELLER warrants and represents to the PURCHASER that
SELLER has not employed a real estate broker or agent in connection with the
transaction contemplated hereby. SELLER hereby covenants and agrees, to
indemnify the PURCHASER against any loss, liability, cost, claim, demand,
damages, action, cause of action, and suit arising out of or in any manner
relating to the alleged employment or use by SELLER of any real estate broker or
agent in connection with this transaction.
11.2 The PURCHASER warrants and represents to the SELLER that
PURCHASER has not employed a real estate broker or agent in connection with the
transaction contemplated hereby. PURCHASER hereby covenants and agrees, to
indemnify the SELLER against any loss, liability, cost, claim, demand, damages,
action, cause of action, and suit arising out of or in any manner relating to
the alleged employment or use by PURCHASER of any real estate broker or agent in
connection with this transaction.
12. NOTICES. All notices, demands, requests and other communications
required or permitted hereunder shall be in writing, and shall be deemed to be
delivered when actually received if delivered by hand, facsimile or overnight
courier (such as Federal Express) ; or, if mailed, three (3) business days after
being deposited in a regularly maintained receptacle for the United States mail,
registered or certified, postage fully prepaid addressed to the addressee at its
address set forth below or at such other address as such party may have
specified theretofore by notice delivered in accordance with this section:
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<PAGE> 10
12.1 SELLER: Southern Land Investors, Ltd.
c/o Southern Land Company
Attention: Michael J. Grindstaff
President
20 North Orange Avenue
Suite 1000
Orlando, Florida 32801
Telephone: (407) 423-3200
Fax: (407) 425-8316
12.2 PURCHASER: Paxson Outdoor, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Telephone: (561) 659-4122
Fax: (561) 655-9424
13. CONDITIONS OF PURCHASER'S OBLIGATION.
13.1 The obligations of the PURCHASER under this Contract are
subject to the satisfaction at the time of Closing of each of the following
conditions (any one of which may be waived in whole or in part by the PURCHASER
at or prior to Closing):
(a) All of the representations and warranties by the
SELLER set forth in this Contract shall be true and correct at and as of the
Closing Date in all respects; provided, however, if PURCHASER has actual
knowledge of the breach by SELLER of any representation or warranty and
nevertheless closes this transaction, then such breach shall be deemed to have
been waived.
(b) No representation or warranty by the SELLER
contained in this Contract shall contain any untrue statement or shall omit a
material fact that causes the representation or warranty to be misleading.
(c) The SELLER shall have performed all covenants
agreements and conditions required by this Contract to be performed by the
SELLER prior to or as of the Closing Date.
-10-
<PAGE> 11
13.2 In the event any of the conditions set forth in
subsection 13.1 are not satisfied as of the Closing Date, the PURCHASER shall
have the right (in addition to all other rights and remedies available to the
PURCHASER at law or equity or elsewhere in this Contract), at the PURCHASER's
sole option (by written notice to the SELLER) to terminate this Contract,
whereupon this Contract shall be and become null and void, and neither party
shall have any further rights or obligations under this Contract.
14. EVENTS OF CLOSING. At the Closing:
14.1 The SELLER shall deliver to the PURCHASER the following:
(a) a sign easement agreement in the form of Exhibit
"E", attached hereto duly executed and acknowledged by the SELLER, conveying to
the PURCHASER the easement rights to the Billboard Sites free and clear of any
lien, encumbrance or exception, except as expressly permitted hereby;
(b) an affidavit attesting to the absence, unless
otherwise provided for herein, of any claims of lien or potential lienors known
to the SELLER and further attesting that there have been no improvements to the
Property for ninety (90) days immediately preceding the Closing Date. If the
Property has been improved within said time, the SELLER shall deliver releases
or waivers of all mechanics' liens, executed by general contractors,
subcontractors, suppliers, and materialmen, in addition to the SELLER's lien
affidavit setting forth the names of all such general contractors,
subcontractors, suppliers and materialmen and further
-11-
<PAGE> 12
reciting that in fact all bills for work to the Property which could serve as a
basis for a mechanics' lien have been paid or will be paid at Closing;
(c) a "marked up" copy of the Title Binder for
purposes of insuring the "gap period" between the last effective date of the
Title Binder and the recording of the sign easement agreement;
(d) the FIRPTA certificate required in Section 1445
of the Internal Revenue Code and more particularly described in Section 15;
(e) possession of the Billboard Sites;
(f) a certificate from SELLER which states that all
representations and warranties that are contained in this Contract are true and
correct as of the Closing Date;
(g) an assignment of all of SELLER's rights under the
Annexation Agreement which relate to the Billboard Sites with the City; and
(h) documents evidencing and reflecting, in form and
substance satisfactory to the PURCHASER and its counsel, the authorization of
the transactions herein by the SELLER and the authority of its representative to
execute and deliver this Contract and the documents provided for hereunder.
14.2 The PURCHASER shall deliver to the Closing Agent the
consideration required pursuant to Section 3 above. The purchase price shall be
credited as a principal payment to the Note.
-12-
<PAGE> 13
15. REPURCHASE OF BILLBOARD SITE. In the event PURCHASER is required by
applicable governmental authorities to relocate the Billboard Site that is
described as Sign Easement Area No. 1 in Exhibit "B", PURCHASER shall have the
right to relocate such Billboard Site to another parcel of the Property that is
acceptable to PURCHASER. If PURCHASER is unable to relocate such Billboard Site
to another parcel of property upon the Property, SELLER agrees to repurchase
such Billboard Site from PURCHASER for a purchase price of $500,000.00 or such
lower amount that PURCHASER has paid to SELLER for such Billboard Site pursuant
to Section 3.3. SELLER agrees and acknowledges that the provisions of this
Section 15 shall survive the Closing and shall remain in force and effect for a
period of ten (10) years from the date of this Contract.
16. FIRPTA. Section 1445 of the Internal Revenue Code provides that a
transferee of a U.S. real property interest must withhold tax if the transferor
is a foreign person. To inform PURCHASER that withholding of tax is not required
upon the disposition of a U.S. real property interest by the SELLER, the SELLER
hereby certifies the following:
16.1 The SELLER is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations).
-13-
<PAGE> 14
16.2 The SELLER's U.S. Employer Identification Number
is Applied For.
16.3 The SELLER's office address is:
c/o Southern Land Company
Attention: Michael J. Grindstaff
President
20 North Orange Avenue
Suite 1000
Orlando, Florida 32801
The SELLER understands that this certification may he disclosed to the Internal
Revenue Service by the PURCHASER and that any false statement contained herein
could be punished by fine imprisonment, or both. The SELLER agrees to deliver to
the PURCHASER, at Closing, a restatement of the certification of the SELLER set
forth in this Section 16, updated to the Closing Date.
17. DEFAULT BY THE PURCHASER. In the event of a default by the
PURCHASER hereunder, SELLER shall be entitled to exercise any remedies available
to it under applicable Florida law. PURCHASER agrees that SELLER may setoff any
amounts awarded to SELLER in a final judgment by a court of competent
jurisdiction against the amounts outstanding under the Note.
18. DEFAULT BY THE SELLER. In the event of a default by SELLER
hereunder, PURCHASER at its option, shall have the right seek specific
performance of SELLER's obligations hereunder or to seek any other remedies
available to PURCHASER under applicable Florida law.
19. ATTORNEYS' FEES. In the event that either party finds it necessary
to employ an attorney to enforce any provision of this Contract, the prevailing
party shall be entitled to recover from
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<PAGE> 15
the other party its attorneys' fees and costs incurred in connection therewith,
at both trial and appellate levels; including bankruptcy proceedings, in
addition to any other performances or damages to which such party may be
entitled. The requirement to pay the prevailing party's attorneys' fees and
costs shall survive any termination of the Contract.
20. TIME OF ESSENCE. Time is of the essence for this Contract.
21. ENTIRE AGREEMENT. This Contract embodies and constitutes the
entire understanding of the parties with respect to the transactions
contemplated herein, and all prior or contemporaneous agreements,
understandings, representations, and statements, oral or written, are merged
into this Contract. Neither this Contract nor any provisions hereof may be
waived, modified, amended, discharged, or terminated except by an instrument in
writing signed by the party against whom the enforcement of such waiver,
modification, amendment, discharge, or termination is sought, and then only to
the extent set forth in such instrument.
22. HEADINGS. The section headings are inserted for convenience only
and are in no way intended to describe, interpret, define, or limit the scope
or content of this Contract or any provision hereof.
23. SURVIVING CLAUSES. The provisions of this Contract including,
without limitation, SELLER's representations and warranties set forth in
Section 10 hereof shall survive Closing for a period of twelve (12) months.
Except as set forth in the
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<PAGE> 16
preceding sentences or as otherwise expressly set forth herein, no other
provision of this Contract shall survive the Closing of this transaction or any
termination hereof by either party as a matter of right.
24. APPLICABLE LAW. This Contract shall be construed and interpreted in
accordance with the laws of the State of Florida.
25. ASSIGNABILITY. This Contract may not be assigned by the PURCHASER
without the prior written consent of the SELLER which written consent shall not
be unreasonably withheld or delayed.
26. OFFER, ACCEPTANCE AND CONTRACT. This document shall constitute an
offer by the PURCHASER that shall be open for acceptance by the SELLER until 5:
00 o'clock p.m., October 22, 1996. To accept this offer and create a binding
Contract, the SELLER must, prior to the acceptance time and date set forth
herein, sign this document and deliver an executed copy of it to the PURCHASER.
As used herein, the phrase "Effective Date" shall mean the date this Contract is
executed by the SELLER. The SELLER shall enter the date it executes the Contract
on the space provided below the signature line for the SELLER and enter that
date as the Effective Date at the top of the first page hereof.
27. CONTRACT NOT TO BE RECORDED. Neither this Contract nor any
memorandum hereof shall be recorded in the Public Records of Orange
County, Florida.
28. NOTICE OF DEFAULT. No default as to any provision of this Contract
shall be claimed or charged by either party against the other until notice
thereof is given to the defaulting party and
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<PAGE> 17
such default remains uncured for a period of ten (10) days after the defaulting
party has received such notice.
29. COUNTERPARTS. This Contract may be executed in counterparts. The
collective counterpart signatures of SELLER shall be deemed to be dated as of
the latest date of execution by the individuals executing this Contract on
behalf of the SELLER.
30. COST ALLOCATION. The parties acknowledge and agree that the
purchase price of the easement rights over the Billboard Sites represents a fair
market valuation of such easement rights and upon conveyance of such easement
rights to PURCHASER, the SELLER'S cost basis in the Property shall be reduced by
the purchase price.
IN WITNESS WHEREOF, the undersigned set their hands and seals or have
caused this instrument to be executed in their name(s) as of the day and
year indicated next to their signatures.
WITNESSES: SOUTHERN LAND INVESTORS, LTD.,
a Florida limited partnership
/s/ David Singleton
- ------------------------------- By: Southern Land Company, a
Print Name: David Singleton Florida corporation, as
-------------------- its general partner
/s/ James G. Willard
- -------------------------------
Print Name: James G. Willard By:
--------------------- -------------------------------
Michael J. Grindstaff,
as its President
(SEAL)
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<PAGE> 18
PAXSON OUTDOOR, INC., a
Florida corporation
/s/ David Singleton By: /s/ William L. Watson
- ---------------------------------- ----------------------------------
Print Name: DAVID SINGLETON WILLIAM L. WATSON, as its
----------------------------------
SECRETARY
----------------------------------
/s/ James G. Willard
- ----------------------------------
Print Name: JAMES G. WILLARD
-----------------------
(SEAL)
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<PAGE> 19
THE MORTGAGED PROPERTY
That part of Sections 8 and 9, Township 23 South, Range 29 east, Orange
County, Florida, described as follows:
Commence at the Southeast corner of Section 8, Township 23 South, Range
29 East, and run N 89 degrees 43'15" W along the South line of the
Southeast 1/4 of said Section 8 for a distance of 326.02 feet; thence run N
00 degrees 24'40" E along the West line of the East 1/4 of the Southeast
1/4 of said Section 8 for a distance of 33.00 feet to the POINT OF
BEGINNING; thence run N 89 degrees 43'15" W parallel with and 33.0 feet
Northerly of the South line of said Southeast 1/4 for a distance of 1672.67
feet to the Easterly Right-of-Way line of Interstate 4; thence run N 38
degrees 26'05" E along said Right-of-Way line for a distance of 3330.25
feet to the South line of the Northwest 1/4 of said Section 9; thence run S
89 degrees 42'01" E along said line for a distance of 158.92 feet; thence
run S 38 degrees 26'05" W parallel with and 125.00 feet Southeasterly of
said Right-of-way line for a distance of 815.50 feet to the North line of
the South 684.91 feet of the Northeast 1/4 of the Southeast 1/4 of said
Section 8; thence run S 89 degrees 47'51" E along said North line for a
distance of 293.40 feet to the East line of the Southeast 1/4 of said
Section 8; thence run S 89 degrees 37'49" E along the North line of the
South 684.91 feet of the Northwest 1/4 of the Southwest 1/4 of said
Section 9 for a distance of 94.54 feet; thence run S 00 degrees 29'15" W
along the East line of the West 94.54 feet of the Northwest 1/4 of the
Southwest 1/4 of said Section 9 for a distance of 706.92 feet; thence run
N 89 degrees 37'49" W along the South line of the North 22.00 feet of the
Southwest 1/4 of the Southwest 1/4 of said Section 9 for a distance of
94.54 feet to the East line of the Southeast 1/4 of said Section 8; thence
run N 89 degrees 47'51" W along the South line of the North 22.00 feet of
the East 1/4 of the Southeast 1/4 of the Southeast 1/4 of said Section 8
for a distance of 262.75 feet; thence run S 00 degrees 24'40" W along the
East line of the West 65.00 feet of the East 1/4 of the Southeast 1/4 of
the Southeast 1/4 of said Section 8 for a distance of 690.51 feet; thence
run N 89 degrees 43'15" W along the North line of the South 613.00 feet of
the Southeast 1/4 of the Southeast 1/4 of said Section 8 for a distance of
65.00 feet; thence run S 00 degrees 24'40" W along the West line of the
East 1/4 of the Southeast 1/4 of the Southeast 1/4 of said Section 8 for a
distance of 580.00 feet to the POINT OF BEGINNING.
Containing 51.003 acres more or less and being subject to any
rights-of-way, restrictions and easements of record.
TOGETHER WITH THE EASEMENT RIGHTS DESCRIBED IN THE FOLLOWING DESCRIBED
DOCUMENTS:
1. That certain Holden Avenue Extension, Declaration of Road Easements,
Covenants and Conditions, dated September 24, 1991 and recorded in Official
Records Book 4328, at Page 4655, of the Public Records of Orange County,
Florida; as amended by that certain
EXHIBIT "A"
Page 1 of 2
<PAGE> 20
THE MORTGAGED PROPERTY
Holden Avenue Extension Amendment to Declaration of Road Easements, Covenants
and Conditions, dated November 19, 1991 and recorded in Official Records Book
4349, at Page 3994, of the Public Records of Orange County, Florida
(collectively "Holden Avenue Extension Agreement");
2. That certain Declaration of Road Easements, Covenants and
Conditions, dated November 19, 1991 and recorded in Official Records Book 4349,
at Page 4037, of the Public Records of Orange Florida the "Access Road Easement
Agreement"), and
3. That certain Grant of Air Rights Easement dated October 21, 1996 by
Orlando Utilities Commission and the City of Orlando in favor of Southern Land
Investors, Ltd., and recorded simultaneously herewith (the "Air Rights Easement
Agreement") over the following described property:
That part of the Northwest 1/4 of Section 9, Township 23 South, Range
29 East, Orange County, Florida, described as follows:
Commence at the Southwest corner of the Norhtwest 1/4 of said Section 9
and run N 89 degrees 22'01" E along the South line of said Northwest
1/4 for a distance of 49.40 feet to the Easterly Right-of-Way line of
Interstate 4 and the POINT OF BEGINNING; thence continue N 89 degrees
22'01" E along said South line for a distance of 90.00 feet; thence
run N 00 degrees 37'59" W for a distance of 114.66 feet to said
Easterly Right-of-Way line; thence run S 37 degrees 29'43" W along said
Right-of-Way line for a distance of 145.77 feet to the POINT OF
BEGINNING.
EXHIBIT "A"
Page 2 of 2
<PAGE> 21
EXHIBIT "B"
SIGN EASEMENT AREA #1
(Revised 10/14/96)
DESCRIPTION:
That part of Section 8, Township 23 South, Range 29 East, Orange County,
Florida, describes as follows:
Commence at the Southeast corner of Section 8, Township 23 South, Range 29 East,
and run N 89 degrees 43'15" W along the South line of the Southeast 1/4 of said
Section 8 for a distance of 326.02 feet; thence run N 00 degrees 24'40" E along
the West line of the East 1/4 of the Southeast 1/4 of the Southeast 1/4 of said
Section 8 for a distance of 33.00 feet; thence run N 89 degrees 43'15" W
parallel with and 33.00 feet Northerly of the South line of said Southeast 1/4
for a distance of 1672.67 feet to the Easterly Right-of-Way line of Interstate
4; then run N 38 degrees 26'05" E along said Right-of-Way line for a distance
of 330.39 feet; thence run S 51 degrees 33'55" E for a distance of 26.00 feet
to the POINT OF BEGINNING; thence continue S 51 degrees 33'55" E for a distance
of 10.00 feet; thence run N 38 degrees 26'05" E for a distance of 10.00 feet;
thence run N 51 degrees 33'55" W for a distance of 10.00 feet; thence run S 38
degrees 26'05" W for a distance of 10.00 feet to the POINT OF BEGINNING.
Containing 100 square feet and being subject to any rights-of-way, restrictions
and easements of record.
SIGN EASEMENT AREA #2
(Revised 10/14/96)
DESCRIPTION:
That part of Section 8, Township 23 South, Range 29 East, Orange County,
Florida, described as follows:
Commence at the Southeast corner of Section 8, Township 23 South, Range 29
East, and run N 89 degrees 43'15" W along the South line of the Southeast 1/4
of said Section 8 for a distance of 326.02 feet; thence run N 00 degrees
24'40" E along the West line of the East 1/4 of the Southeast 1/4 of the
Southeast 1/4 of said Section 8 for a distance of 33.00 feet; then run N 89
degrees 43'15" W parallel with and 33.00 feet Northerly of the South line of
said Southeast 1/4 for a distance of 1672.67 feet to the Easterly Right-of-Way
line of Interstate 4; thence run N 38 degrees 26'05" E along said Right-of-Way
line for a distance of 1830.39 feet; thence run S 51 degrees 33'55" E for a
distance of 26.00 feet to the POINT OF BEGINNING; thence continue S 51 degrees
33'55" E for a distance of 10.00 feet; thence run N 38 degrees 26'05" E for a
distance of 10.00 feet; thence run N 51 degrees 33'55" W for a distance of
10.00 feet; thence run S 38 degrees 26'05" W for a distance of 10.00 feet to
the POINT OF BEGINNING.
Containing 100 square feet and being subject to any rights-of-way, restrictions
and easements of record.
<PAGE> 22
SIGN EASEMENT AREA #3
(Revised 10/14/96)
DESCRIPTION:
That part of Section 9, Township 23 South, Range 29 East, Orange County,
Florida, described as follows:
Commence at the Southeast corner of Section 8, Township 23 South, Range 29
East, and run N 89 degrees 43'15" W along the South line of the Southeast 1/4
of said Section 8 for a distance of 326.02 feet; thence run N 00 degrees 24'40"
E along the West line of the East 1/4 of the Southeast 1/4 of the Southeast 1/4
of said Section 8 for a distance of 33.00 feet; thence run N 89 degrees 43'15"
W parallel with and 33.00 feet Northerly of the South line of said Southeast
1/4 for a distance of 1672.67 feet to the Easterly Right-of-Way line of
Interstate 4; thence run N 38 degrees 26'05" E along said Right-of-Way line for
a distance of 3330.25 feet; thence run S 51 degrees 33'55" E for a distance of
26.00 feet to the POINT OF BEGINNING; thence continue S 51 degrees 33'55" E for
a distance of 10.00 feet; thence run N 38 degrees 26'05" E for a distance of
10.00 feet; thence run N 51 degrees 33'5" W for a distance of 10.00 feet;
thence run S 38 degrees 26'05" W for a distance of 10.00 feet to the POINT OF
BEGINNING.
Containing 100 square feet and being subject to any rights-of-way, restrictions
and easements of record.
<PAGE> 23
EXHIBIT "C"
A tri-vision double faced billboard that will have a face of 10.5 feet
by 36 feet. Each such billboard structure shall be 30 feet height and shall be
supported by a monopole with a 30 inch diameter.
<PAGE> 24
EXHIBIT "D"
1. Declaration of Road Easements, Covenants, and Conditions recorded
September 24, 1991, in Official Records Book 4328, Page 4655, as
amended by that certain Amendment to Declaration of Road Easements,
Covenants, and Conditions recorded December 2, 1991, in Official
Records Book 4349, Page 3994, all of the Public Records of Orange
County, Florida.
2. Lease Agreement dated June 15, 1992 between Robert Anderson, Trustee,
and POA Acquisitions Corporation, with Addendum to Lease and also
letter agreement dated June 15, 1992 attached thereto.
3. Sign Location Lease dated June 7, 1991 between Robert T. Anderson,
Trustee, and Whiteco Metrocom.
4 Existing drainage well facility immediately East of I-4 and near the
Southwest corner of the land described in aforesaid Exhibit A.
5. Memorandum of Agreement dated May 5, 1987 and filed May 5, 1987, in
Official Records Book 3884, Page 3953, Public Records of Orange County,
Florida; which refers to an unrecorded Agreement dated May 5, 1987,
between the Bond Group and the Anderson Group, as said Groups are
described therein, as amended by that certain Agreement (including
Easement and Restrictive Covenants) by and between the Bond Group (as
defined therein) and Southern Land Investors, ltd., to be entered into
at closing.
6. Right of Way for Holden Avenue.
7. Declaration of Road Easements, Covenants, and Conditions recorded
December 2, 1981 in Official Records Book 4349, Page 4037, Public
Records of Orange Country, Florida.
The following pertain only to the easement lights described in the Holden Avenue
Extension Agreement:
8. Reservations in favor of Board of Education of the State of Florida, as
contained in instrument, dated October 2, 1925, recorded December 17,
1925 in Deed Book 298, Page 507 of the Public Records of Orange County,
Florida (only as to the "Belam Parcel", as described in the Holden
Avenue Extension Agreement).
9. Right of Way Agreement in favor of the County of Orange recorded
February 5, 1957 in Deed Book 197, Page 67, Public Records of Orange
County, Florida (only as to the "Godbold Parcel", as described in the
Holden Avenue Extension Agreement).
10. Easement Agreement by and between Wesco, a Florida general partnership,
and John E. Florence and Peggy D. Florence, his wife recorded March 29,
1973 in Official Records Book 2389, Page 25 and amended by amendment
recorded in Official Records Book 4217, Page 3804, Public Records of
Orange County, Florida (Note: release from easement recorded in
Official Records Book 3675, Page 1619) (only as to the "Wesco Parcel",
as described in the Holden Avenue Extension Agreement).
11. Right of Way Agreement in favor of the County of Orange recorded
October 30, 1956 in Official Records Book 159, Page 601, Public Records
of Orange County, Florida (only as to the "Bond Group Parcel", as
described in the Holden Avenue Extension Agreement).
12 Easement contained in Warranty Deed recorded May 18, 1987 in Official
Records Book 3887, Page 2764, partially released by the Quit Claim Deed
recorded in official Records Book 4145, Page 2702, Public Records of
Orange County, Florida (only as to the "Bond Group Parcel", as
described in the Holden Avenue Extension Agreement).
13. Easement recorded December 28, 1989 in Official Records Book 4145, Page
2707, Public Records of Orange County, Florida (only as to the "Bond
Group Parcel", as described in the Holden Avenue Extension Agreement).
<PAGE> 25
EXHIBIT "E"
PREPARED BY AND RETURN TO:
RICHARD D. ECKHARD, ESQUIRE
HOLLAND & KNIGHT
P.O. BOX 1288
TAMPA, FLORIDA 33601-1288
SIGN EASEMENT AGREEMENT
SIGN EASEMENT AGREEMENT ("Agreement") made and entered into as of this
_______ day of October, 1996, by and between SOUTHERN LAND INVESTORS, LTD., a
Florida Limited Partnership ("Grantor") and PAXSON OUTDOOR, INC., a Florida
corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantor is the owner of certain land located in Orange County,
Florida, contiguous to the southeasterly right-of-way of Interstate 4 and more
particularly described on the attached Exhibit "A" (the "Property"); and
WHEREAS, Grantor desires to convey to Grantee the perpetual right to
construct, operate and maintain three (3) outdoor sign structures on portions of
the Property in accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the parties agree as
follows:
1. Grant of Easement. Grantor hereby grants and conveys to
Grantee an exclusive, perpetual easement for outdoor sign
purposes over and across those certain three (3) sign easement
areas (the "Easement Area (s)") more particularly described
in the attached Exhibit "B" and depicted on the sketch
attached hereto as Exhibit "C". Grantor hereby covenants and
warrants that the Easement Areas are free from all
encumbrances, subject only to those matters set forth on
attached Exhibit "D", that lawful seisin of title and good
right to convey the Easement Areas are vested in Grantor, and
that Grantor hereby fully warrants the title to the Easement
Areas and will defend the same against the claims of all
persons claiming by, through or under Grantor.
2. Use of Easement Areas. Each Easement Area may be used only for
the construction, maintenance and operation of one (1)
monopole outdoor advertising sign (or other sign structure)
and other outdoor advertising uses generally prevalent in the
industry given changes in technology over time, as reasonably
determined by Grantor
<PAGE> 26
(collectively, "Outdoor Advertising Use") , and other income
producing ancillary uses which do not materially and
substantially alter the appearance of the sign structure or
unreasonably and adversely affect the Property, including
without limitation, cellular or wireless antennas mounted on
the sign structure, and for no other purpose.
3. Improvements and Alterations.
A. Grantee, at its sole expense, shall construct and
provide all improvements, including sign structures,
antennas mounted on the sign structure and
facilities, as well as utilities, required to operate
the Easement Areas for their intended purposes. All
such signs, utilities and other improvements shall
hereinafter be called the "Improvements".
B. Prior to construction or substantial alteration
requiring a building permit, Grantor shall have the
right to approve design and construction plans for
the Improvements, which approval shall not be
unreasonably denied, delayed or conditioned.
Grantor's failure to advise Grantee in writing of the
specific grounds for its denial of such approval
within fifteen (15) days after receipt of design and
construction plans shall be conclusively deemed
Grantor's approval of such plans.
C. All Improvements shall be constructed, completed,
operated and maintained by Grantee in a good and
workmanlike manner, and shall at all times be in
compliance with all material requirements of
applicable laws, ordinances and regulations of any
local, state or federal agency having jurisdiction
thereof.
D. All Improvements constructed within the Easement
Areas shall be the property of Grantee.
E. Grantee shall indemnify, defend and save Grantor
harmless from and against any and all costs, damages,
claims and liabilities, including reasonable
attorneys' fees, incurred in connection with the
construction or alteration of any Improvements.
Grantee shall specifically indemnify and save Grantor
harmless from and against all mechanic's liens or
similar claims by any person claiming through or
under the Grantee. Under no circumstance shall the
fee interest of the Grantor
2
<PAGE> 27
be subjected to any claim or expense resulting from
Grantee's construction of the Improvements.
4. Easements for Air Rights, Access and Utilities. Grantor hereby
grants and conveys to Grantee, for the benefit of the Easement
Areas, the following nonexclusive, perpetual easements over
and across the Property:
A. An easement and right for each sign structure or
other portion of Improvements located within an
Easement Area to overhang and encroach into the air
rights of the adjoining Property.
B. An easement for vehicular ingress and egress across
the Property to and from the Easement Areas from a
dedicated public roadway for construction, operation
and maintenance of the Improvements.
C. An easement across and under the Property for the
installation and maintenance by Grantee, at its sole
cost, of underground power lines and other
underground utilities or services necessary or
desirable for operation of the Improvements to
service the Easement Areas.
D. An easement and right to trim trees and other foliage
located on the Property to create and maintain
visibility of the sign structures within the Easement
Areas from Interstate 4 and Conroy Road on and off
ramps. Any such tree removal or trimming shall be at
Grantee's expense and pursuant to all necessary
governmental approvals.
Upon development and/or redevelopment of the Property, Grantor
reserves the right to restrict said vehicular ingress and egress
easement and underground utility line easement to a reasonably located
and specifically described portion of the Property, and Grantor may,
in such event, amend this Agreement by unilaterally recording an
amendment showing the precise location of said vehicular ingress and
egress easement and underground utility line easement to the Easement
Areas. In the event that such relocation of the underground utility
line easement requires removal of existing utility lines and
installation of new utility lines within the relocated easement, such
removal and installation of utility lines shall be at Grantor's sole
cost, and without material interruption of such utilities to the
Easement Areas. Under no circumstances shall such ingress and egress
easement or underground utility line easement encroach upon any
buildings or other structural improvements placed upon the Property
from time to time.
3
<PAGE> 28
5. Visibility. Grantor shall not construct, operate or maintain
any structure, vegetation or other improvement which would
block or impair the visibility of the sign Improvements from
Interstate 4 or the Conroy Road on or off ramps.
6. Repairs and Maintenance. Grantee, at its sole expense, shall
maintain the Easement Areas and all Improvements therein and
shall keep them safe, neat, clean and in good order, condition
and repair.
7. Compliance with Laws. Grantee shall comply in all material
respects with all laws, statutes, ordinances and rules
established by local, state or federal governmental agencies
affecting the Easement Areas or the Improvements.
8. Taxes and Assessments. Grantee shall be solely responsible for
all taxes of any nature assessed by the taxing authority upon
the Improvements or the Easement Areas, including sales taxes
and real estate taxes. It is the intent of the parties that
Grantee shall be solely liable for all assessments and taxes
resulting from the construction and operation of the
Improvements within the Easement Areas.
9. Insurance. Grantee shall at all times maintain commercial
general public liability and property damage insurance against
claims for personal injury, death or property damage occurring
on or in the Easement Areas, with a combined single limit of
not less than Two Million Dollars ($2,000,000). Grantee
shall increase the foregoing coverage amount from time to time
as Grantor may reasonably require, not to exceed insurance
limits typically maintained by owners of comparable
Improvements. All policies of insurance hereby required shall
name Grantor as an additional insured and shall not be
canceled without at least ten (10) days prior written notice
to Grantor. All insurance shall be provided by insurers
licensed to do business in the State of Florida. Grantee shall
deliver to Grantor certificates of such insurance on the
annual anniversary of this Agreement.
10. Indemnification. To the extent (and only to the extent) of
contractual liability coverage under liability policies
maintained by Grantee, Grantee shall indemnify, defend and
save Grantor harmless from and against all claims, suits,
actions, damages, liabilities and expenses in connection with
loss of life, bodily or personal injury or property damage
occurring on or arising from or out of Grantee's use or
occupancy of the Easement Areas or any part of the Property,
or occasioned wholly or in
4
<PAGE> 29
part by any act or omission of Grantee, its agents, servants,
officers or invitees, whether occurring in or about the
Easement Areas or the Property. The foregoing obligation to
indemnify includes reasonable attorneys' fees and costs and
all other reasonable costs, expenses and liabilities incurred
by Grantor with respect to any claim or cause of action
related to the Easement Areas or Improvements.
11. Development of Property. Grantee acknowledges that Grantor
intends to develop the Property for such uses as may be
legally permitted. Accordingly, Grantee shall cooperate with
Grantor, at no cost to Grantee, to reasonably accommodate the
Property development plans of Grantor, provided that such
plans do not adversely affect the rights of Grantee under this
Agreement. Grantor shall not develop or use the Property in a
way which will cause the non-compliance of Grantee's permitted
use of the Easement Areas with any local, state or federal
laws, statutes, ordinances, or rules.
12. Relocation of Easement Area #1. Within ninety (90) days after
written notice from the City of Orlando, the parties agree to
relocate Easement Area #1 easterly to a point east of and
contiguous to the right-of-way of the proposed I-4 on-ramp
currently designed as part of the planned I-4/Conroy Road
interchange on the land on which Easement Area #1 is currently
located. The cost of relocation of the Improvements to the
relocated Easement Area #1 shall be evenly divided between the
Grantor and Grantee. Upon such relocation, the parties shall
amend this Agreement to reflect the relocated Easement Area
#1. If Grantor receives no condemnation award or other
consideration in connection with the transfer of the
right-of-way for the I-4/Conroy Road interchange to the
pertinent governmental authority, then Grantee shall have no
right to an award or other consideration in connection the
loss of Easement Area #1.
13. Holden Avenue Construction. Grantor warrants that Grantee
shall not be deemed an "Owner" under the Holden Avenue
Declaration of Road Easements, Covenants and Conditions made
September 24, 1991, recorded in Official Record Book 4328,
Page 4655, modified by amendments recorded in Official Record
Book 4349, Page 3994, and Official Record Book 4349, page
4037, all of the Public Records of Orange County, Florida.
Grantor shall indemnify, defend and hold Grantee harmless from
and against any claim for contribution to the cost of design
or construction of Holden Avenue asserted under such
instruments.
5
<PAGE> 30
14. Notices. All notices, demands or other communications
permitted or required to be given hereunder shall be in
writing and shall be delivered either (i) mailed postage
prepaid by certified or registered mail, return receipt
requested, (ii) by hand delivery, or (iii) overnight delivery
by a recognized national courier service, addressed to the
parties at the following addresses:
To Grantor: Southern Land Investors, Ltd.
c/o Southern Land Company
Attention: Michael J. Grindstaff, President
20 North Orange Avenue,
Suite 1000
Orlando, Florida 32801
Phone: 407/423-3200
Fax: 407/425-8316
To Grantee: Paxson Outdoor, Inc.
c/o John L. Jennings, III
1460 33rd Street
Orlando, Florida 32339
Phone: 407/425-2917
Fax: 407/425-2264
or such other addresses as may be requested by the parties from time to
time pursuant to written notice in accordance with this paragraph.
15. Successors and Assigns. The rights and obligations of the parties
hereunder shall run with the Easement Areas and the Property and shall be
binding upon the Grantor and Grantee, their successors and assigns.
16. General Matters. This Agreement shall be construed in accordance
with the laws of the State of Florida. In the event of any action or proceeding
by either Grantor or Grantee to enforce its respective rights hereunder, the
unsuccessful party agrees to pay all costs incurred by the prevailing party
therein, including reasonable attorneys' fees, both at trial and on appeal or in
any bankruptcy proceeding.
6
<PAGE> 31
IN WITNESS WHEREOF, Grantor and Grantee have executed this Agreement as
of the day and year first above written.
WITNESSES: SOUTHERN LAND INVESTORS, LTD.,
a Florida Limited Partnership
By: SOUTHERN LAND COMPANY, a
Florida corporation, its
sole General Partner
By:
------------------------------
Michael J. Grindstaff,
President
- -----------------------------
(signed name of witness one)
- -----------------------------
(printed name of witness one)
- -----------------------------
(signed name of witness two)
- -----------------------------
(printed name of witness two)
PAXSON OUTDOOR, INC., a
Florida corporation
By:
------------------------------
- -----------------------------
(signed name of witness one)
- -----------------------------
(printed name of witness one)
- -----------------------------
(signed name of witness two)
- -----------------------------
(printed name of witness two)
7
<PAGE> 32
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this _________
day of _____, 1996 by MICHAEL J. GRINDSTAFF, President of SOUTHERN LAND
COMPANY, a Florida corporation, on behalf of the corporation, as sole General
Partner of SouthernLand Investors, Ltd., a Florida Limited Partnership, on
behalf of the Limited Partnership. He/She is personally known to me or has
produced _________ as identification and who did (did not) take an oath.
----------------------------------
NOTARY PUBLIC
----------------------------------
Typed or Printed Name of Notary
My commission expires:
Serial No., if any:
--------------
STATE OF FLORIDA )
)
COUNTY OF ORANGE )
The foregoing instrument was acknowledged before me this ___ day of
______, 1996 by __________ of PAXSON OUTDOOR, INC., a Florida corporation, on
behalf of the corporation. He/She is personally known to me or has produced
__________ as identification and who did (did not) take an oath.
-------------------------------
NOTARY PUBLIC
-------------------------------
Typed or Printed Name of Notary
My commission expires:
Serial No., if any:
-----------
8
<PAGE> 1
EXHIBIT 10.139.1
PROMISSORY NOTE
$4,460,000.00 October 22, 1996
Orlando, Florida
FOR VALUE RECEIVED, SOUTHERN LAND INVESTORS, LTD., a Florida limited
partnership (the "Borrower") , whose address is c/o Southern Land Company,
Attention: Michael J. Grindstaff, President, 20 North Orange Avenue, Suite
1000, Orlando, Florida 32801, promises to pay to the order of PAXSON OUTDOOR,
INC., a Florida corporation ("Lender"), at 601 Clearwater Park Road, West Palm
Beach, Florida 33401, or at such other place as the holder of this Note may
from time to time designate, the principal sum of FOUR MILLION FOUR HUNDRED
SIXTY THOUSAND AND NO/100 DOLLARS ($4,460,000.00) in lawful money of the
United States of America, and to pay interest on the principal amount remaining
from time to time outstanding from the date hereof until due at the rate of ten
percent (10.0%) per annum. After the maturity or due date of this Note,
whether at the stated maturity, by acceleration, or otherwise, interest shall
accrue on the principal amount remaining unpaid at a rate equivalent to the
highest lawful rate or 25% per annum, whichever is less, until paid (the
"Default Rate").
Notwithstanding the foregoing, however, in no event shall the interest
charged exceed the maximum rate of interest allowed by applicable law, as
amended from time to time. Lender does not intend to charge any amount of
interest or other fees or charges in the nature of interest that exceeds the
maximum rate allowed by applicable law. If any payment of interest or in the
nature of interest hereunder, together with all other payments of interest or
in the nature of interest, would cause the foregoing interest rate limitation
to be exceeded, then such excess payment shall be credited as a payment of
principal unless Borrower notifies Lender in writing that Borrower wishes to
have such excess sum returned, together with interest at the rate specified in
Section 687.04(2), Florida Statutes, or any successor statute.
Interest shall be computed on the basis of a year of 360 days but
charged for the actual number of days elapsed.
Principal and accrued interest hereunder shall be due and payable in a
single payment on April 22, 1998 (the "Maturity
STATE OF FLORIDA DOCUMENTARY STAMPS IN THE AMOUNT
REQUIRED BY LAW HAVE BEEN PAID AND ARE AFFIXED TO
THE MORTGAGE SECURING THIS NOTE, AND CANCELLED PURSUANT TO LAW
Init. [sig]
<PAGE> 2
Date"). In the event that the entire principal balance plus any accrued
interest under this Note is not paid in full on or before October 22, 1997,
Borrower agrees that a financing fee shall accrue in favor of Lender in the
amount of $50,000.00 per month (for any portion of a monthly period beginning
on October 22, 1997) that any principal or accrued interest remains outstanding
under this Note through the Maturity Date. Any such financing fee that is due
and payable hereunder shall be payable on the Maturity Date.
Each payment and prepayment by Borrower of principal or interest
hereunder shall be made in such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debt. If any installment of principal or interest hereunder becomes due
and payable on a day other than a business day, the due date thereof shall be
extended to the next succeeding business day, and, in the case of principal,
interest shall be payable during the extension at the annual rate specified
herein for the payment of interest before maturity. If the date for such
payment is later than the last day of any month in which it is due, the date
for payment shall be the last day of such month.
Unless otherwise specified herein, payments of this Note shall be
applied by Lender first to interest and lawful charges then accrued, and then
to principal, unless otherwise determined by Lender in its sole discretion.
Borrower shall be entitled to prepay this Note in whole or in part, at
any time, without premium or penalty.
The payment of this Note and all other indebtedness of Borrower to
Lender, however and whenever incurred or evidenced, whether primary, secondary,
direct, indirect, absolute, contingent, sole, joint or several, due or to
become due, or which may be hereafter contracted or acquired, whether arising
in the ordinary course of business or otherwise (hereinafter with this Note,
collectively called "Liabilities"), is secured by a lien on or security
interest in certain real property of Borrower located in Orange County, Florida
and all proceeds thereof (the "Collateral"), as described more fully in real
estate mortgage of even date herewith from Borrower in favor of Lender (the
"Mortgage"). Failure to list any collateral or security documents shall not
affect Lender's rights in connection with such collateral or security
documents.
Additions to, releases, reductions, or exchanges of, or substitutions
for the Collateral, payments on account of the loan evidenced by this Note or
increases of the same, or other loans made partially or wholly upon the
Collateral, may from time to time
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<PAGE> 3
be made without affecting the provisions of this Note or the Liabilities.
The following constitute events of default ("Events of Default") under
this Note:
(a) Borrower fails to pay principal, interest, or any other amount
due under this Note or any of the other Loan Documents.
(b) Any representation or warranty made by Borrower under this
Note or in the Mortgage, or any report, certificate, financial statement, or
other information provided by Borrower to Lender in connection herewith, is
false or misleading in any material respect when made or deemed made.
(c) Borrower fails to fully and promptly perform when due any
agreement under this Note, the Mortgage, or otherwise a part of the loan
transaction evidenced hereby.
(d) A default or event of default occurs under the Mortgage.
(e) Borrower fails to pay any contractual obligation or principal
or interest on any other indebtedness in excess of $100,000.00 other than that
owed to Lender, if such failure, default, or event of default continues beyond
the expiration of any applicable grace or cure period, or Borrower fails to
fully and promptly perform any other obligation, agreement, term, or condition
related thereto or there is otherwise a default or event of default thereunder
if such failure, default, or event of default continues beyond the expiration
of any applicable grace or cure period.
(f) Borrower fails to fully and promptly perform when due any
agreement contained in any lease, contract, or other agreement to which it is a
party and which has a contract value in excess of $100,000.00, other than the
Loan Documents and other than those containing monetary obligations (as
described in (e) above), or there is otherwise a default or event of default
thereunder (and such failure, default, or event of default continues beyond the
expiration of any applicable grace or cure period).
(g) Borrower liquidates, dissolves, or becomes incompetent; the
business of Borrower is suspended; Borrower commences, or consents to or
acquiesces in, a voluntary proceeding in bankruptcy or insolvency; Borrower
applies for, or consents or acquiesces in the appointment of, a receiver for
all or a substantial part of its property; Borrower makes an assignment for the
benefit of creditors; or Borrower is unable to pay its debts as they mature or
admits in writing its inability to pay its debts as they mature.
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<PAGE> 4
(h) An involuntary proceeding in bankruptcy or insolvency is
commenced against Borrower; a receiver is involuntarily appointed for all or a
substantial part of the property of Borrower; or an order is entered for the
issuance of a warrant of attachment, execution, distraint, or similar process
against all or a substantial part of the property of Borrower; if any of the
foregoing continues for thirty (30) days without being vacated, discharged,
stayed, bonded, or dismissed.
(i) A judgment is entered against Borrower which is in an amount
in excess of $100,000.00, and which is not discharged or for which a writ of
execution or similar process is issued with respect thereto and is not stayed
within the time allowed by law for filing notice of appeal of the final
judgment.
(j) A writ of attachment or garnishment is issued against, or a
lien is imposed by operation of law on, any property of Borrower, if the amount
of the claim or value of the affected property is in excess of $100,000.00, if
the lien is not discharged within thirty (30) days after it has attached.
(k) Any security interest, mortgage, or other lien intended to
secure this Note is or becomes invalid, unenforceable, or unperfected, or
ceases to be or is not a first lien, subject to no other lien except as
expressly permitted herein, or any person granting such interest contests the
validity, enforceability, perfection, or priority thereof, or a security
interest in, mortgage, or lien is granted in such collateral (except in favor
of Lender) or the collateral covered thereby is transferred to another person
without the prior written consent of Lender.
Borrower agrees to pay or reimburse Lender for all of its costs and
expenses incurred in connection with the administration, supervision,
collection, or enforcement of, or the preservation of any rights under, this
Note or the obligation evidenced hereby, including without limitation,
attorneys' fees out of court, in trial, on appeal, in bankruptcy proceedings,
or otherwise. Borrower agrees to promptly pay, indemnify, and reimburse Lender
for, and hold Lender harmless against any liability for, any and all
documentary stamp taxes, nonrecurring intangible taxes, or other taxes,
together with any interest, penalties, or other liabilities in connection
therewith, that Lender now or hereafter determines are payable with respect to
this Note, the obligations evidenced by this Note, any advances under this
Note, any guaranties of this Note, or any mortgages or other security
instruments securing this Note.
All notices, requests, and demands to or upon the parties hereto, shall
be deemed to have been given or made when delivered
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<PAGE> 5
by hand, or when deposited in the mail, postage prepaid by registered or
certified mail, return receipt requested, addressed to the address shown above
or such other address as may be hereafter designated in writing by one party to
the other.
This Note shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Florida, excluding those laws
relating to the resolution of conflicts between laws of different
jurisdictions.
In any litigation in connection with or to enforce this Note, any
endorsement or guaranty of this Note, or any of the other Loan Documents,
Borrower irrevocably consents to and confers personal jurisdiction on the
courts of the State of Florida or the United States courts located within the
State of Florida, expressly waives any objections as to venue in any of such
courts, and agrees that service of process may be made on Borrower by mailing a
copy of the summons and complaint by registered or certified mail, return
receipt requested, to its address set forth herein (or otherwise expressly
provided in writing). Nothing contained herein shall, however, prevent Lender
from bringing any action or exercising any rights within any other state or
jurisdiction or from obtaining personal jurisdiction by any other means
available by applicable law.
In the event that any one or more of the provisions of this Note is
determined to be invalid, illegal, or unenforceable in any respect as to one or
more of the parties, all remaining provisions nevertheless shall remain
effective and binding on the parties thereto and the validity, legality, and
enforceability thereof shall not be affected or impaired thereby. If any such
provision is held to be illegal, invalid, or unenforceable, there will be
deemed added in lieu thereof a provision as similar in terms to such provision
as is possible, that is legal, valid, and enforceable. To the extent permitted
by applicable law, Borrower hereby waives any law that renders any such
provision invalid, illegal, or unenforceable in any respect.
No delay or omission on the part of Lender in exercising any right or
remedy hereunder shall operate as a waiver of such right or remedy or of any
other right or remedy and no single or partial exercise of any right or remedy
shall preclude any other or further exercise of that or any other right or
remedy. Presentment, demand, notice of nonpayment, notice of protest, protest,
notice of dishonor and all other notices are hereby waived by Borrower.
All rights and remedies of Lender under this Note and under any other
Loan Documents are cumulative, and are not exclusive of any rights and remedies
provided by law or in equity, and may be
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<PAGE> 6
pursued singularly, successively, together, and may be exercised as often as
the occasion therefor shall arise. The warranties, representations, covenants,
and agreements made herein and therein shall be cumulative except in the event
of irreconcilable inconsistency, in which case the provisions of the credit
agreement, or, if none, this Note, shall control.
This Note may not be modified or amended nor shall any provision of it
be waived except by a written instrument signed by the party against whom such
action is to be enforced.
This Note shall be binding upon and inure to the benefit of Lender,
its successors and assigns, and shall be binding upon Borrower and its
respective heirs, legal representatives, successors, and assigns; provided,
however, that no rights or obligations of Borrower shall be assigned without
the prior written consent of Lender. In the event Lender transfers or assigns
its obligations hereunder, Lender shall be relieved of all liability therefor.
Time is of the essence in the performance of this Note.
The principal balance of this Note may be reduced in accordance with
the terms and conditions of the Contract for Sale and Purchase of even date
herewith between Borrower and Lender.
Anything in this Note to the contrary notwithstanding, in the event of
a default under this Note, or upon the maturity of this Note, whether by
acceleration or the passage of time, Lender's recourse against Borrower under
this Note and the Mortgage shall be limited to the remedies set forth in the
Mortgage and the other instruments securing this Note, and the Borrower shall
not be personally liable for the payment of any amounts due under this Note or
the instruments securing this Note. Lender shall not seek a deficiency
judgment against the Borrower for amounts which remain due and owing after
Lender's exercise of its rights against the Collateral. However, nothing
contained in this paragraph shall prejudice the rights of Lender to recover
from Borrower or its general partner (a) any funds, damages, or costs incurred
by Lender as a result of fraud or intentional misrepresentation by Borrower,
(b) any condemnation or insurance proceeds, or other similar funds or payments
attributable to the Collateral which, under the terms of any instruments
securing this Note, should have been paid to Lender but which have been
misappropriated by the Borrower, or (c) any sums, losses, damages, fines,
assessments, penalties, costs, or other expenses arising from or in any way
related to actual or threatened damage to the environment, the cost of an
agency investigation, personal injury or death, or damage to property due to a
release or alleged release of hazardous or toxic material on
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<PAGE> 7
or under the Collateral or in the surface or groundwater of the Collateral, or
due to any other condition existing on the Collateral resulting from the
presence of hazardous or toxic materials. This limitation of personal
liability against the Borrower is not intended to be, shall not operate as, a
release of or impairment of any part of the indebtedness evidenced by this
Note, or of Lender's lien on any of the Collateral, nor shall it limit or other
prejudice in any way, the rights of Lender to exercise the remedies available
to it under the Mortgage or the rights of Lender to enforce any of its other
rights or remedies under this Note or any other instrument securing this Note.
Borrower and Lender (by its acceptance hereof) hereby knowingly,
irrevocably, voluntarily, and intentionally waive any right to a trial by jury
in respect of any litigation based on this Note, the Mortgage, or any other
document executed in connection with this Note, or arising out of, under, or in
connection therewith, or any course of conduct, course of dealing, statements
(whether oral or written), or actions of any party. This provision is a
material inducement for Lender to enter into the transaction evidenced hereby.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date
first written above.
SOUTHERN LAND INVESTORS, LTD.,
a Florida limited partnership
By: Southern Land Company, a Florida
corporation, as its general partner
By: /s/ Michael J. Grindstaff
------------------------------
Michael J. Grindstaff,
as its President
(CORPORATE SEAL)
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<PAGE> 1
EXHIBIT 10.139.2
This instrument prepared by:
David R. Singleton, of
HOLLAND & KNIGHT
Post Office Box 1288
Tampa, Florida 33601
REAL ESTATE MORTGAGE
Date: October 22, 1996
Mortgagor: Southern Land Investors, Ltd.
c/o Southern Land Company
Attention: Michael J. Grindstaff
President
20 North Orange Avenue
Suite 1000
Orlando, Florida 32801
Mortgagee: Paxson Outdoor, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Amount of initial indebtedness secured hereby:
$4,460,000.00
Maximum principal indebtedness, including future advances, that may be secured
hereby:
$8,920,000.00
Mortgaged Property:
See Exhibit "A" attached hereto and incorporated herein.
1. Mortgage. In consideration of Ten Dollars and other valuable
considerations received by Mortgagor (named above), Mortgagor hereby, on the
date stated above, mortgages to Mortgagee (named above) and grants a security
interest to Mortgagee in, the
<PAGE> 2
mortgaged property referred to above or otherwise described herein (the
"Mortgaged Property"), for the purposes identified below.
2. Liabilities Secured; Future Advances; Maximum Amount and Time.
(a) This Mortgage shall secure the payment and
performance of (i) the initial indebtedness of Mortgagor to Mortgagee, as
evidenced by a promissory note of even date herewith executed by Mortgagor and
payable to Mortgagee in the amount specified above, and all obligations under
any other loan documents executed now or in the future in connection therewith,
and all extensions, modifications, renewals, consolidations, or increases of
any of the foregoing (collectively, the "Note") , (ii) any future advances made
by Mortgagee to Mortgagor, and (iii) all other indebtedness, liabilities, and
obligations of Mortgagor to Mortgagee, however and wherever incurred or
evidenced, whether primary, secondary, direct, indirect, absolute, contingent,
sole, joint or several (a "Liability" or the "Liabilities").
(b) The total amount of Liabilities secured hereby may
decrease or increase from time to time, but the total unpaid balance so secured
at any one time shall not exceed the maximum principal amount specified above,
plus interest thereon, and any disbursements made for the payment of taxes,
levies, or insurance on the Mortgaged Property, and for maintenance, repair,
protection, and preservation of the Mortgaged Property, with interest on such
disbursements, all as provided in this Mortgage. This Mortgage shall not
secure any future advances made more than twenty years from the date hereof.
3. Payment of Liabilities. Mortgagor shall pay all Liabilities
and perform all obligations herein promptly when due. However, if Mortgagor
(or any of them) is not the Borrower or has not otherwise executed, endorsed,
or guaranteed any of the Liabilities, then such party shall have no personal
liability under or in connection with such Liabilities.
4. Title Covenants. Mortgagor covenants that the Mortgaged
Property is free from all liens, charges, and encumbrances other than this
Mortgage and those matters approved in writing by Mortgagee or as evidenced by
the mortgagee title insurance commitment for this Mortgage in the form accepted
by Mortgagee at the closing hereof (the "Permitted Encumbrances") , that lawful
seisin of and good right to encumber the Mortgaged Property are vested in
Mortgagor, and that Mortgagor hereby fully warrants the title to the Mortgaged
Property and will defend the same against the lawful claims of all persons
whomsoever.
5. Improvements, Fixtures, etc. This Mortgage extends to and
shall encumber, and Mortgagor hereby grants a security interest in, all
buildings, improvements, fixtures, and appurtenances now or
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<PAGE> 3
hereafter erected or existing or used upon the Mortgaged Property, including
all elevators and all gas, steam, electric, water, cooking, refrigerating,
lighting, plumbing, heating, air conditioning, ventilation, and power systems,
machines, appliances, fixtures, and appurtenances, even though they be detached
or detachable, all of which shall be deemed part of the Mortgaged Property.
Mortgagor agrees to execute such Uniform Commercial Code financing statements
as Mortgagee shall require to perfect the grant of the security interest
contained herein.
6. Maintenance and Repair. Mortgagor shall not permit, commit,
or suffer any waste, impairment, or deterioration of the Mortgaged Property.
Mortgagor shall maintain the Mortgaged Property in good condition and repair.
If Mortgagor fails to do so, then Mortgagee, without waiving the option to
foreclose, may take some or all measures that Mortgagee reasonably deems
necessary or desirable for the maintenance, repair, preservation, or protection
of the Mortgaged Property, and any expenses reasonably incurred by Mortgagee in
so doing shall become part of the Liabilities, shall, at the option of
Mortgagee, become immediately due and payable, and shall bear interest at the
highest lawful rate specified in any note evidencing any Liability. Mortgagee
shall have no obligation to care for and maintain the Mortgaged Property, or,
having taken some measures therefor, to continue the same or take other
measures.
7. Hazard Insurance. If any buildings now or hereafter
constitute part of the Mortgaged Property, Mortgagor shall keep the same
insured against loss or damage by fire and other hazards included within the
term "extended coverage," and against such other hazards as Mortgagee may
require, in the full insurable value thereof (or such lesser amount as
Mortgagee may authorize in writing) , with an insurer of high financial
reputation and to which Mortgagee has no reasonable objection. The policy or
policies of insurance shall contain a standard mortgagee clause, without
contribution, in favor of Mortgagee, shall prohibit cancellation or substantial
modification without at least thirty (30) days prior written notice to
Mortgagee, shall contain a provision to the effect that any waiver of
subrogation rights by the insured does not void the coverage, and shall be
delivered to Mortgagee. Mortgagor shall pay all premiums and charges for the
maintenance and renewal of the insurance, and shall furnish Mortgagee with
receipts and proofs thereof not less than ten (10) days before the expiration
thereof, without notice or demand from Mortgagee. if Mortgagor fails to do so,
then Mortgagee, without waiving the option to foreclose, may obtain such
insurance for the protection of Mortgagee, and any expenses reasonably incurred
by Mortgagee in so doing shall become part of the Liabilities, shall, at the
option of Mortgagee, become immediately due and payable, and shall bear
interest at the highest lawful rate specified in any note evidencing any
Liability. In the event of loss, the insurance proceeds shall be applied by
Mortgagee to the reduction of the
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<PAGE> 4
Liabilities, or to the restoration and repair of the Mortgaged Property, at the
option of Mortgagee. Mortgagee shall have the full power to settle or
compromise claims under all policies and to demand, receive, and receipt for
all monies becoming payable thereunder. In the event of foreclosure of this
Mortgage or transfer of the Mortgaged Property in full or partial satisfaction
of the Liabilities, all interest of Mortgagor in the policy or policies of
insurance (including any claim to proceeds attributable to losses theretofore
occurring but not yet paid to Mortgagor) shall pass to the purchaser, grantee,
or transferee.
8. Liability Insurance. Mortgagor shall at all times maintain,
or cause its tenant to maintain, comprehensive public liability insurance
insuring Mortgagor and its tenant, if any, in an amount of at least
$1,000,000.00 and issued by an insurer of high financial reputation to which
Mortgagee has no reasonable objection. Mortgagor or its tenant shall pay all
premiums and charges for the maintenance and renewal of the insurance, and
shall furnish Mortgagee with receipts and proofs thereof not less than ten (10)
days before the expiration thereof, without notice or demand from Mortgagee.
9. Rents and Profits. This Mortgage shall extend to and encumber
all rents, issues, profits, proceeds, and revenues derived from the Mortgaged
Property, but Mortgagor may receive the same while this Mortgage is not in
default.
10. Direct Payments; Receiver; No Liability for Leases. If this
Mortgage falls into default, Mortgagee is authorized and empowered to direct
all tenants of the Mortgaged Property to make all payments required of them
under their lease agreements directly to Mortgagee. At its option, Mortgagee
shall be entitled to the appointment of a receiver to take charge of the
Mortgaged Property, and the rents, issues, profits, proceeds, and revenues
arising therefrom, and hold the same subject to the direction of a court of
competent jurisdiction, regardless of the solvency of Mortgagor or the adequacy
of the security. Mortgagee is not obligated to perform any of Mortgagor's
obligations under the lease agreements and is not otherwise liable thereunder,
unless and only to the extent that Mortgagee elects in writing to assume any of
such obligations.
11. Taxes, Assessments, and liens. Mortgagor shall pay all taxes,
assessments, liens, charges, and encumbrances upon or with respect to the
Mortgaged Property before the same become delinquent, and shall furnish
Mortgagee with receipts and proofs thereof at least ten days before the last
day allowed for payment free from penalty, without notice or demand from
Mortgagee. If Mortgagor fails to do so, then Mortgagee, without waiving the
option to foreclose, may pay the same, together with any penalty that may have
accrued thereon, and with any expense attending the same, including the
reasonable charge for services of counsel, or
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<PAGE> 5
for any person employed to aid in the discharge or in the matter of the
adjustment thereof, or for advice in respect thereto, and any amounts so paid
shall become part of the Liabilities, shall, at the option of Mortgagee, become
immediately due and payable, and shall bear interest at the highest lawful rate
specified in any note evidencing any Liability.
12. Inspection. Mortgagee and Mortgagee's representatives may
enter upon the Mortgaged Property for inspection at all reasonable times and in
a reasonable manner, both before and after default.
13. Condemnation. This Mortgage extends to and shall encumber,
and Mortgagor hereby grants a security interest to Mortgagee in, any judgments,
awards, damages, and settlements hereafter rendered or paid and resulting from
condemnation proceedings with respect to the Mortgaged Property or the taking
of the Mortgaged Property or any part thereof under the power of eminent
domain, and Mortgagee may require that any sums payable to Mortgagor and
arising out of the power of eminent domain with respect to the Mortgaged
Property shall be applied to the Liabilities. Mortgagee at its option may
commence, appear in, and prosecute in its own name or in the name of Mortgagor,
any action or proceedings, or make any compromise or settlement, in connection
with such proceedings.
14. Events of Default. The following shall constitute events of
default ("Events of Default") hereunder:
(a) Any Liability is not paid when due.
(b) Any representation or warranty made by Mortgagor
under this Mortgage or any report, certificate, financial statement, or other
information provided by Mortgagor to Mortgagee in connection herewith is false
or misleading in any material respect when made or deemed made.
(c) Mortgagor fails to fully and promptly perform when
due any agreement or covenant under this Mortgage.
(d) Any other default or event of default occurs under
any of the Liabilities, or any loan document evidencing, securing,
guaranteeing, or otherwise relating to any of the Liabilities or this Mortgage.
(e) The sale or transfer of the Mortgaged Property in the
manner described in Section 16 of this Mortgage.
15. Rights and Remedies. (a) Mortgagee shall have, in addition to
the rights and remedies contained in this Mortgage and any other loan documents
now or hereafter evidencing, securing, guaranteeing, or otherwise relating to
any of the Liabilities, all
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<PAGE> 6
of the rights and remedies of a secured party and, to the extent applicable, of
a creditor at law or in equity. Mortgagee may, at its option, exercise any one
or more of such rights and remedies individually, partially, or in any
combination from time to time, including, to the extent applicable, before an
Event of Default. No right, power, or remedy conf erred upon Mortgagee by the
Loan Documents shall be exclusive of any other right, power, or remedy referred
to therein or now or hereafter available at law or in equity.
(b) Without limiting the generality of the foregoing, if
an Event of Default shall occur: (i) Mortgagee may declare any or all of the
Liabilities, whether direct or indirect, contingent or certain, to be
accelerated and due and payable at once, whereupon any such Liability, together
with interest thereon, shall forthwith become due and payable, all without
presentment, demand, protest, or other notice of any kind from Mortgagee, all
of which are hereby expressly waived; (ii) Mortgagee may foreclose this
Mortgage and exercise any other rights available to a mortgagee under
applicable Florida law; and (iii) Mortgagee may proceed to do all other things
provided by law, equity, or contract to enforce its rights under the
Liabilities and under this Mortgage and to collect all amounts owing to
Mortgagee.
16. Acceleration Upon Transfer of Mortgaged Property. If all or
any part of the Mortgaged Property or an interest therein is sold or
transferred by Mortgagor in any manner whatsoever without Mortgagee's prior
written consent, Mortgagee may, at Mortgagee's option, declare this Mortgage to
be in default and declare all of the Liabilities to be accelerated and
immediately due and payable. Mortgagee's right to accelerate this Mortgage
upon any sale or transfer of the Mortgaged Property or any interest therein is
included in this Mortgage as a material inducement to Mortgagee's making the
loan or loans secured hereby and has been relied upon by Mortgagee in
establishing the terms and conditions thereof; accordingly, the limitations
contained in this Section shall be strictly construed against Mortgagor and
Mortgagor's successor(s) in interest and in favor of Mortgagee. Mortgagee may
deal with any successor or successors in interest without in any way
discharging or reducing the liability for the Liabilities secured hereby.
17. Waiver of Appraisement, Valuation, Stay, etc. In
consideration of the Liabilities secured hereby, Mortgagor agrees that neither
Mortgagor nor anyone claiming through or under Mortgagor will set up, claim, or
seek to take advantage of any moratorium, reinstatement, forbearance,
appraisement, valuation, stay, cash collateral, extension, homestead,
exemption, or redemption laws now or hereafter in force, in order to prevent or
hinder the enforcement or foreclosure of this Mortgage, the absolute sale of
the Mortgaged Property, or the delivery of possession thereof immediately after
such sale to the purchaser at such sale. Mortgagor for itself and all who may
at any time claim
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<PAGE> 7
through or under it, hereby waives to the full extent that it may lawfully do
so, the benefit of all such laws, and any and all right to have the Mortgaged
Property marshalled upon any foreclosure or sale.
18. Hazardous Waste Materials. Mortgagor represents and warrants
to Mortgagee that, to the best of Mortgagor's knowledge, the Mortgaged Property
does not presently contain any hazardous wastes, hazardous substances or
materials, toxic materials, or the like, as defined or designated in any
federal, state, or local law or environmental statute, regulation, or
ordinance, presently in effect, as amended from time to time, and as enacted in
the future, including asbestos (collectively, the "hazardous or toxic
materials"), nor does the Mortgaged Property, to the best of Mortgagor's
knowledge, constitute an environmental hazard under any local, state, or
federal laws or regulations directly or indirectly applicable to the Mortgaged
Property, and, until the Liabilities are paid in full, Mortgagor covenants that
Mortgagor shall not make, store, use, treat, or dispose of any hazardous or
toxic materials on the Mortgaged Property, or permit any tenant to do so.
Mortgagor agrees to indemnify, defend, and save Mortgagee harmless from and
against any and all claims, demands, suits, losses, damages, assessments,
fines, penalties, costs, and expenses, including the costs of inspection,
audit, cleanup, and detoxification, and including attorneys' fees whether or
not suit is filed and if suit is filed, through all appellate proceedings,
arising from or in any way related to personal injury or death, or to damage to
property, or to a claim by any person that hazardous or toxic materials or
trash, refuse, or the like, are located on or under the Mortgaged Property or
in the surface water or ground water on or under the Mortgaged Property, or
related to a claim by any person that the Mortgaged Property constitutes an
environmental hazard, whether the claim proves to be true or false. This
indemnification shall survive the repayment of all sums directly or indirectly
secured by this Mortgage and shall continue for so long as Mortgagee may incur
liability for hazardous or toxic materials, or trash, refuse, or the like
contained in or located on or about the Mortgaged Property.
19. Other Enviro=ental Laws. Mortgagor represents and warrants to
Mortgagee that, to the best of Mortgagor's knowledge, there is no violation of
any federal, state, or local environmental law or regulation, including but not
limited to Florida Department of Environmental Protection (DEP) and United
States Environmental Protection Agency (EPA) regulations pertaining to
underground and above ground storage tanks; DEP and EPA surface water quality
standards; DEP and EPA ground water quality standards; DEP and Army Corps of
Engineers dredge and fill regulations; EPA and DEP storm water and surface
water management regulations; DEP and EPA hazardous waste regulations and state
and federal superfund regulations. In the event Mortgagor is cited for
violating any of the above laws or regulations, Mortgagor agrees to indemnify
and
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<PAGE> 8
hold harmless Mortgagee from any and all fines, penalties, and cleanup costs
associated with such violations or necessary corrective action. This
indemnification shall survive the repayment of all sums directly or indirectly
secured by this Mortgage.
20. Notice of Limitation on Future Advances. Mortgagor shall not
file a notice of limitation on future advances for this Mortgage in the public
records of the county where the Mortgaged Property is located without
Mortgagee's prior written consent, which consent Mortgagee may refuse for any
reason whatsoever.
21. No Subordinate Liens. Until the Note and all other
Liabilities are paid in full, Mortgagor shall maintain the title to the
Mortgaged Property (including all after-acquired property, additions, and
replacements) free and clear of all liens and encumbrances other than this
Mortgage.
22. Extensions, Leniencies, and Releases. Mortgagee may grant
extensions of time for payment and other leniencies with respect to any
Liabilities, and may waive or fail to enforce any of Mortgagee's rights
hereunder, and may release a portion or portions of the Mortgaged Property from
the lien hereof, without releasing or diminishing the obligation or liability
of any person constituting Mortgagor, or any guarantor or endorser.
23. Release or Satisfaction. Whenever there are no Liabilities
and no commitment to make advances, Mortgagee shall on written demand by
Mortgagor give a release hereof, in recordable form.
24. Costs and Expenses; Taxes.
(a) Mortgagor agrees to pay or reimburse Mortgagee for
all of its costs and expenses incurred in connection with the administration,
supervision, collection, or enforcement of, or the preservation of any rights
under, this Mortgage, including without limitation, the fees and disbursements
of counsel for Mortgagee, including attorneys' fees out of court, in trial, on
appeal, in bankruptcy proceedings, or otherwise.
(b) Mortgagor agrees to promptly pay and reimburse
Mortgagee for, and indemnify and hold Mortgagee harmless against any liability
for, any and all documentary stamp taxes, nonrecurring intangible taxes, or
other taxes, together with any interest, penalties, or other liabilities in
connection therewith, that Mortgagee now or hereafter determines are payable
with respect to this Mortgage. The foregoing obligations shall survive the
satisfaction of this Mortgage.
The foregoing amounts shall become part of the Liabilities
secured hereby, shall, at the option of Mortgagee,
8
<PAGE> 9
become immediately due and payable, and shall bear interest at the highest
lawful rate specified in any note evidencing any of the Liabilities.
25. Notices. Unless otherwise expressly agreed herein, all
notices, requests, and demands to or upon the parties hereto shall be deemed to
have been given or made when delivered by hand or by courier service, when
provided to a nationally recognized overnight delivery service for overnight
delivery, when transmitted to a receiving telecopier, or three days after
deposit in the mail, postage prepaid by registered or certified mail, return
receipt requested, addressed to the address shown above or such other address
as may be hereafter designated in writing by one party to the other.
26. Miscellaneous.
(a) This Mortgage shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Florida, excluding
those laws relating to the resolution of conflicts between laws of different
jurisdictions.
(b) In any litigation in connection with or to enforce
this Mortgage, Mortgagor irrevocably consents to and confers personal
jurisdiction on the courts of the State of Florida or the United States courts
located within the State of Florida, expressly waives any objections as to
venue in any of such courts, and agrees that service of process may be made on
Mortgagor by mailing a copy of the summons and complaint by registered or
certified mail, return receipt requested, to its address set forth herein (or
otherwise expressly provided in writing). Nothing contained herein shall,
however, prevent Mortgagee from bringing any action or exercising any rights
within any other state or jurisdiction or from obtaining personal jurisdiction
by any other means available by applicable law.
(c) In the event that any one or more of the provisions
of this Mortgage is determined to be invalid, illegal, or unenforceable in any
respect as to one or more of the parties, all remaining provisions nevertheless
shall remain effective and binding on the parties thereto and the validity,
legality, and enforceability thereof shall not be affected or impaired thereby.
If any such provision is held to be illegal, invalid, or unenforceable, there
will be deemed added in lieu thereof a provision as similar in terms to such
provision as is possible, that is legal, valid, and enforceable. To the extent
permitted by applicable law, Mortgagor hereby waives any law that renders any
such provision invalid, illegal, or unenforceable in any respect.
(d) The singular shall include the plural, the plural
shall include the singular, and any gender shall be applicable to all genders
when the context permits or implies. If more than one
9
<PAGE> 10
party constitutes Mortgagor, their obligations under this Mortgage shall be
joint and several and the term "Mortgagor" shall mean all such parties and any
one or more of them. If more than one party constitutes Borrower, the term
"Borrower" shall mean all such parties and any one or more of them.
(e) Any party executing this Mortgage shall be bound by
the terms hereby without regard to execution by any other party and the failure
of any party to execute this Mortgage shall not release or otherwise affect the
obligations of the party or parties who do sign this Mortgage.
(f) No action which Mortgagee, or Borrower with the
consent of Mortgagee, may take or refrain from taking with respect to the
Liabilities, any note or notes representing the same, any collateral therefor,
or any agreement or agreements (including guaranties), in connection
therewith, shall affect this Mortgage or the obligations of Mortgagor
hereunder.
(g) No delay or omission by Mortgagee in exercising any
right or remedy under this Mortgage or otherwise afforded by law or equity
shall operate as a waiver of that right or remedy or of any other right or
remedy and no single or partial exercise of any right or remedy shall preclude
any other or further exercise of that or any other right or remedy.
(h) All rights and remedies of Mortgagee hereunder and
under any other loan documents are cumulative, and are not exclusive of any
rights or remedies provided by law or in equity, and may be pursued singularly,
successively, or together, and may be exercised as often as the occasion
therefor shall arise. The warranties, representations, covenants, and
agreements made herein and therein shall be cumulative, except in the case of
irreconcilable inconsistency, in which case the provisions of the credit
agreement, or if none, the promissory note or notes secured hereby, shall
control.
(i) This Mortgage may not be modified or amended nor
shall any provision of it be waived except by a written instrument signed by
the party against whom such action is to be enforced.
(j) The headings preceding the text of sections of this
Mortgage have been included solely for convenience of reference and shall
neither constitute a part of this Mortgage nor affect its meaning,
interpretation, or effect.
(k) This Mortgage shall be binding upon and inure to the
benefit of Mortgagee, its successors and assigns, and shall be binding upon
Mortgagor and its respective heirs, legal representatives, successors, and
assigns; provided, however, that no rights or obligations of Mortgagor
hereunder shall be assigned without the prior written consent of Mortgagee.
10
<PAGE> 11
(1) Any agreement hereafter made by Mortgagor and
Mortgagee pursuant to this Mortgage shall be superior to the rights of any
intervening lien or encumbrance.
(m) TIME IS OF THE ESSENCE IN THE PERFORMANCE OF THIS
MORTGAGE AND THE LIABILITIES.
27. Waiver of Trial by Jury. Mortgagor and Mortgagee (by its
acceptance hereof) hereby knowingly, irrevocably, voluntarily, and
intentionally waive any right to a trial by jury in respect of any litigation
based on this Mortgage, the Liabilities, or any other document executed in
connection with this Mortgage or the Liabilities, or arising out of, under, or
in connection therewith, or any course of conduct, course of dealing,
statements (whether oral or written), or actions of either party. This
provision is a material inducement for Mortgagee to enter into the transactions
evidenced hereby.
28. Limitation on Recourse Against Mortgagor. Anything in this
Mortgage or the Note to the contrary notwithstanding, in the event of a default
under the Note, or upon maturity of the Note, whether by acceleration or the
passage of time, Mortgagee's recourse against Mortgagor hereunder and under the
Note shall be limited to the remedies set forth in this Mortgage and the other
instruments securing the Note, and the Mortgagor shall not be personally liable
for the payment of any amounts due under this Note or the instruments securing
the Note. Mortgagee shall not seek a deficiency judgment against the Mortgagor
for amounts which remain due and owing after Mortgagee's exercise of its rights
against the security for the Note. However, nothing contained in this
paragraph shall prejudice the rights of Mortgagee to recover from Mortgagor or
its general partner (a) any funds, damages, or costs incurred by Mortgagee as a
result of fraud or intentional misrepresentation by Mortgagor, (b) any
condemnation or insurance proceeds, or other similar funds or payments
attributable to the Mortgaged Property which, under the terms of this Mortgage
should have been paid to Mortgagee but which have been misappropriated by the
Mortgagor, or (c) any sums, losses, damages, fines, assessments, penalties,
costs, or other expenses arising from or in any way related to an actual or
threatened damage to the environment, the cost of an agency investigation,
personal injury or death, or damage to property due to release or alleged
release of hazardous or toxic material on or under the Mortgaged Property or in
the surface or groundwater of the Mortgaged Property, or due to any other
condition existing on the Mortgaged Property resulting from the presence of
hazardous or toxic materials. This limitation of personal liability against
the Mortgagor is not intended to be, and shall not operate as, a release of or
impairment of any part of the indebtedness evidenced by the Note, or of
Mortgagee's lien on any of the security for the Note, nor shall it limit or
otherwise prejudice in any way, the rights of Mortgagee to exercise the
11
<PAGE> 12
remedies available to it under this Mortgage or the rights of Mortgagee to
enforce any of its other rights or remedies under the Note or any other
instrument securing the Note.
IN WITNESS WHEREOF, Borrower has executed this Mortgage as of the date
first written above.
WITNESSES: SOUTHERN LAND INVESTORS, LTD.,
a Florida limited partnership
/s/ Serena M. Williams By: Southern Land Company, a
- ------------------------------ Florida corporation, as its
Print Name: Serena M. Williams general partner
/s/ David Singleton
- ------------------------------ By: /s/ Michael J. Grindstaff
Print Name: David Singleton ----------------------------
Michael J. Grindstaff
as its President
(SEAL)
STATE OF FLORIDA
COUNTY OF ORANGE
Execution of the foregoing instrument was acknowledged before me this
22nd day of October 1996, by Michael J. Grindstaff, as President, of Southern
Land Company, a Florida corporation, as general partner of Southern Land
Investors, Ltd., a Florida limited partnership, on behalf of the partnership
and the Corporation. He is either personally known to me or has produced
____________ as identification.
/s/ Serena M. Williams
---------------------------------
Notary Public
(AFFIX NOTARIAL SEAL) (Name) Serena M. Williams
---------------------------
Commission No. My Commission Expires:
------------------
12
<PAGE> 13
THE MORTGAGED PROPERTY
That part of Sections 8 and 9, Township 23 South, Range 29 East,
Orange County, Florida, described as follows:
Commence at the Southeast comer of Section 8, Township 23
South, Range 29 East, and run N 89(degrees)43'15" W along the South
line of the Southeast 1/4 of said Section 8 for a distance of 326.02
feet; thence run N 00(degrees)24'40" E along the West line of the East
1/4 of the Southeast 1/4 of the Southeast 1/4 of said Section 8 for a
distance of 33.00 feet to the POINT OF BEGINNING; thence run N
89(degrees)43'15" W parallel with and 33.00 feet Northerly of the
South line of said Southeast 1/4 for a distance of 1672.67 feet to the
Easterly Right-of-Way line of Interstate 4; thence run N
38(degrees)26'05" E along said Right-of-Way line for a distance of
3330.25 feet to the South line of the Northwest 1/4 of said Section 9;
thence run S 89(degrees)42'01" E along said Line for a distance of
158.92 feet; thence run S 38(degrees)26'05" W parallel with and 125.00
feet Southeasterly), of said Right-of-Way line for a distance of
815.50 feet to the North line of the South 684.91 feet of the
Northeast 1/4 of the Southeast 1/4 of said Section 8; thence run S
89(degrees)47'51" E along said North line for a distance of 293.40
feet to the East line of the Southeast 1/4 of said Section 8; thence
run S 89(degrees)37'49" E along the North line of the South 684.91
feet of the Northwest 1/4 of the Southwest 1/4 of said Section 9 for a
distance of 94.54 feet; thence run S 00(degrees)29'15" W along the
East line of the West 94.54 feet of the Northwest 1/4 of the Southwest
1/4 of said Section 9 for a distance of 706.92 feet, thence run N
89(degrees)37'49" W along the South line of the North 22.00 feet of
the Southwest 1/4 of the Southwest 1/4 of said Section 9 for a
distance of 94.54 feet to the East line of the Southeast 1/4 of said
Section 8; thence run N 89(degrees)47'51" W along the South line of
the North 22.00 feet of the East 1/4 of the Southeast 1/4 of the
Southeast 1/4 of said Section 8 for a distance of 262.75 feet; thence
run S 00(degrees)24'40" W along the East line of the West 65.00 feet
of the East 1/4 of the Southeast 1/4 of the Southeast 1/4 of said
Section 8 for a distance of 690.51 feet; thence run N
89(degrees)43'15" W along the North line of the South 613-00 feet of
the Southeast 1/4 of the Southeast 1/4 of said Section 8 for a
distance of 65.00 feet; thence run S 00(degrees)24'40" W, along the
West line of the East 1/4 of the Southeast 1/4 of the Southeast 1/4 of
said Section 8 for a distance of 580.00 feet to the POINT OF
BEGINNING.
Containing 51.003 acres more or less and being subject to any,
rights-of-way, restrictions and casements of record.
TOGETHER WITH THE EASEMENT RIGHTS DESCRIBED IN THE FOLLOWING DESCRIBED
DOCUMENTS:
1. That certain Holden Avenue Extension, Declaration of Road
Easements, Covenants and Conditions, dated September 24, 1991 and recorded in
official Records Book 4328, at Page 4655, of the Public Records of Orange
County, Florida; as amended by that certain
EXHIBIT "A"
Page 1 of 2
<PAGE> 14
THE MORTGAGED PROPERTY
Holden Avenue Extension Amendment to Declaration of Road Easements, Covenants
and Conditions, dated November 19, 1991 and recorded in Official Records Book
4349, at Page 3994, of the Public Records of Orange County, Florida
(collectively "Holden Avenue Extension Agreement");
2. That certain Declaration of Road Easements, Covenants and
Conditions, dated November 19, 1991 and recorded in official Records Book 4349,
at Page 4037, of the Public Records of Orange Florida the "Access Road Easement
Agreement"), and
3. That certain Grant of Air Rights Easement dated October 21,
1996 by Orlando Utilities Commission and the City of Orlando in favor of
Southern Land Investors, Ltd., and recorded simultaneously herewith (the "Air
Rights Easement Agreement") over the following described property:
That part of the Northwest 1/4 of Section 9, Township 23 South,
Range 29 East, Orange County, Florida, described as follows:
Commence at the Southwest corner of the Northwest 1/4 of said
Section 9 and run N 89(degrees)22'01" E along the South line of said
Northwest 1/4 for a distance of 49.40 feet to the Easterly
Right-of-Way line of Interstate 4 and the POINT OF BEGINNING; thence
continue N 89(degrees) 22'01" E along said South line for a distance
of 90.00 feet thence run N 00(degrees) 37'59" W for a distance of
111.66 feet to said Easterly Right-of-Way line; thence run S
37(degrees) 29'43" W along said Right-of-Way line for a distance of
145.77 feet to the POINT OF BEGINNING.
EXHIBIT "A"
Page 2 of 2
<PAGE> 1
EXHIBIT 10.139.3
This Instrument Prepared by:
Laura B. Belflower
Holland & Knight
Post Office Box 1288
Tampa, Florida 33601
ASSIGNMENT OF RIGHTS UNDER PRE-ANNEXATION AGREEMENT
This Assignment of Lease (the "Assignment") made as of this 22nd day
of October, 1996, is by and between MICHAEL J. GRINDSTAFF, as Trustee, with an
address of 20 North Orange Avenue, Suite 1000, Orlando, Florida 32801
("Assignor"), and Southern Land Investors, Ltd., a Florida limited partnership,
with an address of c/o Southern Land Company, 20 North Orange Avenue, Suite
1000, Orlando, Florida 32801 ("Assignee").
BACKGROUND
The Assignor is the Developer under a certain Pre-Annexation Agreement
dated September 23, 1996, by and between Michael J. Grindstaff, Trustee, as
Developer and the City of Orlando (the "Pre-Annexation Agreement" or the
"Agreement") , which granted certain rights to the Developer for the Property
described in Exhibit "A," attached hereto. Assignor now desires to assign to
Assignee and Assignee desires to accept and assume Assignor's right, title and
interest under the Pre-Annexation Agreement.
OPERATIVE PROVISIONS
In consideration of the mutual obligations of this Assignment, Assignor
and Assignee hereby agree as follows:
1. Assignor hereby assigns to Assignee all of its right, title and
interest in the Pre-Annexation Agreement, effective the date set forth above.
2. Assignor warrants that the Pre-Annexation Agreement is in full force
and effect, that there are no amendments, modifications, extensions or renewals
to the Agreement, that Assignor is not in default of its obligations under the
Agreement, that Assignor has performed all obligations due as of the date of
this Assignment, that no event has occurred which, with the passage of time or
service of notice, or both, would constitute a default under the Agreement, that
the Agreement maybe so assigned without permission of the City of Orlando and
without impacting the rights granted in
<PAGE> 2
the Agreement, and that Assignor has the full right to execute and deliver this
Assignment.
3. Assignee hereby accepts Assignor's assignment and assumes all of
Assignor's obligations under the Agreement accruing from and after the effective
date of this Assignment.
4. This Assignment may be signed in counterparts with the same effect
as if the signature on each counterpart were upon the same instrument.
5. Assignee has executed this Assignment only in his capacity as
Trustee. No personal liability is assumed by nor shall be asserted or
enforceable against Michael J. Grindstaff, individually, resulting from his
execution of this Assignment, only in his capacity as Trustee and not
individually.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
to be executed the date set forth above.
Signed in the presence of "ASSIGNOR"
two witnesses:
(1) /s/ David Singleton
--------------------- /s/ Michael J. Grindstaff
David Singleton ---------------------------
- ------------------------- Michael J. Grindstaff,
(Print name signed above) as Trustee
(2) /s/ William L. Watson
- -------------------------
William L. Watson
- -------------------------
(Print name signed above)
"ASSIGNEE"
(1) /s/ David Singleton
--------------------- SOUTHERN LAND INVESTORS, LTD.,
David Singleton a Florida limited partnership
- -------------------------
(Print name signed above)
(2) /s/ William L. Watson By: /s/ Michael J. Grindstaff
- ------------------------- ------------------------------
William L. Watson As its: President
- ------------------------- Michael J. Grindstaff
(Print name signed above) ---------------------------------
(Print name signed above)
2
<PAGE> 3
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this 22nd day of
October, 1996, by Michael J. Grindstaff, as Trustee. He is personally known to
me or has produced ___________ as __________identification.
(affix notarial seal) /s/ Serena M. Williams
-------------------------------
(Official Notary Signature)
Notary Public--State of Florida
Serena M. Williams
-------------------------------
My commission expires: (Printed, Typed or Stamped Name
of Notary)
Commission Number:
STATE OF FLORIDA
COUNTY OF ORANGE
Execution of the foregoing instrument was acknowledged before me this
22nd day of October 1996, by Michael J. Grindstaff, as President, of Southern
Land Company, a Florida corporation, as general partner of Southern Land
Investors, Ltd., a Florida limited partnership, on behalf of the partnership
and the corporation. He is either personally known to me or has produced ______
as identification.
/s/ Serena M. Williams
---------------------------------
Notary Public
(AFFIX NOTARIAL SEAL) (Name) Serena M. Williams
Commission No.__________ My Commission Expires:
3
<PAGE> 4
THE MORTGAGED PROPERTY
That part of Sections 8 and 9, Township 23 South, Range 29 East, Orange
County, Florida, described as follows:
Commence at the Southeast corner of Section 8, Township 23 South, Range 29
East, and run N 89 degrees 43'15" W along the South line of the Southeast 1/4
of said Section 8 for a distance of 326.02 feet; thence run N 00 degrees
24'40" E along the West line of the East 1/4 of the Southeast 1/4 of the
Southeast 1/4 of said Section 8 for a distance of 33.00 feet to the POINT OF
BEGINNING; thence run N 89 degrees 43'l5" W parallel with and 33.00 feet
Northerly of the South line of said Southeast 1/4 for a distance of 1672.67
feet to the Easterly Right-of-Way line of Interstate 4; thence run N 38
degrees 26'05" E along said Right-of-Way line for a distance of 3330.25 feet
to the South line of the Northwest 1/4 of said Section 9; thence run S 89
degrees 42'01" E along said line for a distance of 158.92 feet; thence run
S 38 degrees 26'05" W parallel with and 125.00 feet Southeasterly of said
Right-of-Way line for a distance of 815.50 feet to the North line of the
South 684.91 feet of the Northeast 1/4 of the Southeast 1/4 of said Section
8; thence run S 89 degrees 47'51" E along said North line for a distance of
293.40 feet to the East line of the Southeast 1/4 of said Section 8; thence
run S 89 degrees 37'49" E along the North line of the South 684.91 feet of the
Northwest 1/4 of the Southwest 1/4 of said Section 9 for a distance of 94.54
feet; thence run S 00 degrees 29'15" W along the East line of the West 94.54
feet of the Northwest 1/4 of the Southwest 1/4 of said Section 9 for a
distance of 706.92 feet; thence run N 89 degrees 37'49" W along the South
line of the North 22.00 feet of the Southeast 1/4 of the Southeast 1/4 of
said Section 9 for a distance of 94.54 feet to the East line of the
Southeast 1/4 of said Section 8; thence run N 89 degrees 47'51" W along the
South line of the North 22.00 feet of the East 1/4 of the Southeast 1/4 of
the Southeast 1/4 of said Section 8 for a distance of 262.75 feet; thence run
S 00 degrees 24'40" W along the East line of the West 65.00 feet of the East
1/4 of the Southeast 1/4 of the Southeast 1/4 of said Section 8 for a
distance of 690.51 feet; thence run N 89 degrees 43'15" W along the North
line of the South 613.00 feet of the Southeast 1/4 of the Southeast 1/4 of
said Section 8 for a distance of 65.00 feet; thence run S 00 degrees 24'40" W
along the West line of the East 1/4 of the Southeast 1/4 of the Southeast 1/4
of said Section 8 for a distance of 580.00 feet to the POINT OF BEGINNING.
Containing 51.003 acres more or less and being subject to any rights-of-way,
restrictions and easements of record.
TOGETHER WITH THE EASEMENT RIGHTS DESCRIBED IN THE FOLLOWING DESCRIBED
DOCUMENTS:
1. That certain Holden Avenue Extension, Declaration of Road
Easements, Covenants and Conditions, dated September 24, 1991 and recorded in
Official Records Book 4328, at Page 4655, of the Public Records of Orange
County, Florida; as amended by that certain
EXHIBIT "A"
Page 1 of 2
<PAGE> 5
THE MORTGAGED PROPERTY
Holden Avenue Extension Amendment to Declaration of Road Easements, Covenants
and Conditions, dated November 19, 1991 and recorded in Official Records Book
4349, at Page 3994, of the Public Records of Orange County, Florida
(collectively "Holden Avenue Extension Agreement");
2. That certain Declaration of Road Easements, Covenants and
Conditions, dated November 19, 1991 and recorded in Official Records Book 4349,
at Page 4037, of the Public Records of Orange Florida the "Access Road Easement
Agreement"), and
3. That certain Grant of Air Rights Easement dated October 21, 1996 by
Orlando Utilities Commission and the City of Orlando in favor of Southern Land
Investors, Ltd., and recorded simultaneously herewith (the "Air Rights Easement
Agreement) over the following described property:
That part of the Northwest 1/4 of Section 9, Township 23 South,
Range 29 East, Orange County, Florida, described as follows:
Commence at the Southwest corner of the Northwest 1/4 of said
Section 9 and run N 89 degrees 22'01" E along the South line of said Northwest
1/4 for a distance of 49.40 feet to the Easterly Right-of-Way line of
Interstate 4 and the POINT OF BEGINNING; thence continue N 89 degrees 22'01" E
along said South line for a distance of 9000 feet thence run N 00 degrees
37'59" W for a distance of 114.66 feet to said Easterly Right-of-Way line;
thence run S 37 degrees 29'43" W along said Right-of-Way line for a distance of
145.77 feet to the POINT OF BEGINNING.
EXHIBIT "A"
Page 2 of 2
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 34,372,721
<SECURITIES> 0
<RECEIVABLES> 23,887,578
<ALLOWANCES> 1,337,992
<INVENTORY> 0
<CURRENT-ASSETS> 61,065,991
<PP&E> 160,264,427
<DEPRECIATION> 31,618,676
<TOTAL-ASSETS> 445,739,853
<CURRENT-LIABILITIES> 27,625,154
<BONDS> 227,584,120
57,936,690
0
<COMMON> 46,984
<OTHER-SE> 127,780,259
<TOTAL-LIABILITY-AND-EQUITY> 445,739,853
<SALES> 109,501,522
<TOTAL-REVENUES> 109,501,522
<CGS> 0
<TOTAL-COSTS> 105,601,729
<OTHER-EXPENSES> 4,743,801
<LOSS-PROVISION> 799,753
<INTEREST-EXPENSE> 22,352,540
<INCOME-PRETAX> (13,708,946)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,708,946)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,708,946)
<EPS-PRIMARY> (.55)
<EPS-DILUTED> (.55)
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