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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 29, 1997
PAXSON COMMUNICATIONS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-13452 59-3212788
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(State or other (Commission IRS Employer
jurisdiction of File Number) Identification No.
incorporation)
601 Clearwater Park Road, West Palm Beach, Florida 33401-6233
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(Address of principal executive offices)(zip code)
Registrant's telephone number, including area code: (561) 659-4122
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N/A
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
Two wholly-owned subsidiaries of the Registrant owned and operated WPBF-TV, the
West Palm Beach, Florida ABC Network affiliate. On March 27, 1997, such
subsidiaries, Paxson Communications of West Palm Beach-25, Inc. ("WPBF-25") and
Paxson West Palm Beach License, Inc. ("Palm Beach License"), entered into an
asset purchase agreement (the "Asset Sale Agreement") with The Hearst
Corporation ("Hearst") pursuant to which the subsidiaries agreed to sell
substantially all of their assets to Hearst for $85 million. The Asset Sale
Agreement is expected to be consummated during the second half of 1997 after,
among other things, receipt of all necessary Federal Communications Commission
and other regulatory approvals.
On April 29, 1997, the Registrant sold its interests in WPBF-TV which
sale was consummated through a merger of WPBF-25 with and into WPBF Merger,
Inc. ("WPBF Merger"), and the merger of Palm Beach License with and into
WPBF License, Inc. ("WPBF License"), a wholly-owned subsidiary of WPBF Merger,
for consideration payable to Paxson Communications of Florida, Inc., a
wholly-owned subsidiary of the Registrant, of $85,000,000, consisting of $75
million cash and a subordinated promissory note (the "Note") in the principal
amount of $10 million (collectively, the "Merger"). The Note bears interest at
the Federal Funds Rate plus three percent and is payable upon the earlier of
(i) April 29, 2007 and (ii) or the closing of the sale of WPBF-TV to Hearst
under the Asset Sale Agreement. WPBF Merger is controlled by Lowell W. Paxson
("Mr. Paxson"), the Chairman of the Board and Chief Executive Officer of the
Registrant. WPBF Merger and WPBF License obtained a loan to finance the Merger
from Banque Paribas. Neither the Registrant nor any of its Subsidiaries is
liable for the repayment of such loan.
In connection with the Merger, the Registrant entered into a time
brokerage agreement with WPBF Merger pursuant to which the Registrant acquired
the right to sell substantially all of the air-time of WPBF-TV and agreed to
provide certain management and other services to WPBF Merger. The amounts
payable under such time brokerage agreement are expected to approximate
WPBF-TV's operating costs and the interest and fees payable in connection with
the aforementioned loan until the Asset Sale Agreement is closed. An effect of
the Merger was the Registrant received a majority of the consideration payable
in connection with the sale of WPBF-TV on April 29, 1997 rather than some time
in the second half of 1997 or later.
Item 7. Financial Statements and Exhibits.
(a) Pro Forma Financial Information.
Paxson Communications Corporation Unaudited Pro Forma Consolidated
Balance Sheet at December 31, 1996
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In February and March 1997, the Registrant entered into agreements to sell its
interest in WTVX-TV and WPBF-TV, respectively, and thus discontinue the
operations of the Paxson Network Affiliated Television segment. As a result of
the decision to sell both stations, the results of operations for the Paxson
Network Affiliated Television segment, net of applicable income taxes, were
reclassified and presented as discontinued operations for the years ended
December 31, 1996, 1995 and 1994. Accordingly, the Paxson Communications
Corporation Unaudited Pro Forma Consolidated Statement of Operations for the
year ended December 31, 1996 has not been presented with this Form 8-K. See
Paxson Communications Corporation Consolidated Statements of Operations and Note
2. Discontinued Operations in the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996, which was filed with the United States
Securities and Exchange Commission and is incorporated herein by reference.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description
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<S> <C>
2.1 Merger agreement, dated as of April 29, 1997 among WPBF
Merger, Inc. and WPBF License, Inc. and Paxson
Communications of West Palm Beach-25, Inc. and Paxson West
Palm Beach License, Inc.
2.2 Paxson Communications of West Palm Beach - 25, Inc. and
Paxson West Palm Beach License, Inc. Subordinated Promissory
Note, dated April 29, 1997
2.3 Time brokerage agreement, dated April 29, 1997 by and
between Paxson Communications of West Palm Beach - 25, Inc.,
and Paxson West Palm Beach License, Inc., and Paxson
Communications of Florida, Inc.
2.4 Asset purchase agreement, dated March 25, 1997, by and
between Paxson Communications of West Palm Beach-25, Inc.
and The Hearst Corporation, for television station WPBF(TV),
West Palm Beach, Florida (filed as exhibit 10.154 with the
Registrant's Annual Report on Form 10-K dated December 31,
1996)
</TABLE>
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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 hereunto duly authorized.
PAXSON COMMUNICATIONS
CORPORATION
(Registrant)
By: /S/ Arthur D. Tek
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Arthur D. Tek,
Vice President, Chief
Financial Officer, Director
Date: April 29, 1997
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PAXSON COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma balance sheet data gives effect to the above
events as if they had occurred on December 31, 1996.
The pro forma adjustments are based upon available information and certain
assumptions that the Registrant believes are reasonable under the circumstances.
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PAXSON COMMUNICATIONS CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(in thousands)
<TABLE>
<CAPTION>
At December 31, 1996
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WPBF-TV
Registrant Sale Pro Forma
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<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 61,749 $ 75,000 $134,749
(2,000)
Accounts receivable, net 29,861 29,861
Note receivable - 10,000 10,000
Prepaid expense and other current assets 2,713 (31) 2,682
Current program rights 1,512 (731) 781
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Total current assets 95,835 82,238 178,073
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Property and equipment, net 144,415 (11,843) 132,572
Intangible assets, net 220,409 (15,046) 205,363
Investment in broadcast properties 53,297 53,297
Program rights, net 1,076 (243) 833
Other assets, net 28,150 (345) 27,805
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Total assets $ 543,182 $ 54,761 $597,943
==========================================
LIABILITIES, REDEEMABLE SECURITIES AND COMMON STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 10,677 $ (497) $ 10,180
Accrued interest 6,684 6,684
Current portion of program rights payable 1,629 (730) 899
Current portion of long-term debt 645 645
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Total current liabilities 19,635 (1,227) 18,408
------------------------------------------
Program rights payable 1,000 (226) 774
Long-term debt 3,408 3,408
Senior subordinated notes, net 227,655 227,655
Redeemable Junior preferred stock 36,780 36,780
Redeemable Exchangeable preferred stock 147,929 147,929
Class A Common Stock 40 40
Class B Common Stock 8 8
Class A and B common stock warrants 6,863 6,863
Class C common stock warrants 2,336 2,336
Stock subscriptions notes receivable (1,873) (1,873)
Additional paid in capital 209,621 209,621
Deferred option plan compensation (6,398) (6,398)
Accumulated deficit (103,822) 56,214 (47,608)
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Total liabilities, redeemable securities and
stockholders' equity $ 543,182 $ 54,761 $597,943
==========================================
</TABLE>
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Paxson Communications Corporation
Notes to Unaudited Pro Forma Consolidated Balance Sheet
December 31, 1996
(in thousands)
The pro forma balance sheet at December 31, 1996 gives effect to: (i) the
merger of WPBF-25 and Palm Beach License into WPBF Merger and WPBF License,
respectively, for total consideration of $85,000,000, consisting of $75,000,000
in cash and $10,000,000 in the form of a note receivable. Certain assets and
liabilities of WPBF-TV were not included in the merger and as such, were not
included in the pro forma balance sheet adjustments, see discussion below.
The gain on the sale is based on the book value of certain assets and
liabilities of WPBF-TV at December 31, 1996. The actual gain upon consummation
of the sale may vary from the estimated gain at December 31, 1996. No tax effect
has been included related to the WPBF-TV sale, as the Registrant has sufficient
net operating loss carryforward's for utilization to offset the gain on sale of
WPBF-TV. The deferred tax assets associated with these net operating loss
carryforward's have been fully reserved for in the past as a result of prior
uncertainty surrounding their recoverability.
The assets and liabilities of WPBF-TV sold at December 31, 1996, excludes cash
and cash equivalents, accounts receivable, senior subordinated notes, the
related deferred loan origination costs and accrued interest payable which will
be retained by the Registrant.
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EXHIBIT 2.1
MERGER AGREEMENT
AMONG
WPBF MERGER, INC. AND WPBF LICENSE, INC.
AND
PAXSON COMMUNICATIONS OF WEST PALM BEACH-25, INC.
AND
PAXSON WEST PALM BEACH LICENSE, INC.
April 29, 1997
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
1. Definitions............................................................................................-1-
2. Basic Transaction......................................................................................-5-
(a) The Merger....................................................................................-5-
(b) The Closing...................................................................................-5-
(c) Deliveries at the Closing.....................................................................-5-
(d) Effect of Merger..............................................................................-5-
3. Representations and Warranties of Acquirors............................................................-6-
(a) Organization of Acquiror 1 and Acquiror 2.....................................................-6-
(b) Authorization of Transaction..................................................................-6-
(c) Noncontravention..............................................................................-6-
(d) Brokers' Fees.................................................................................-6-
(e) Investment....................................................................................-7-
4. Representations and Warranties of Targets..............................................................-7-
(a) Authorization of Transaction..................................................................-7-
(b) Capitalization................................................................................-7-
(c) Noncontravention..............................................................................-7-
(d) Brokers' Fees.................................................................................-8-
(e) Stock Ownership...............................................................................-8-
(f) Tax Matters...................................................................................-8-
(g) Employee Benefits.............................................................................-9-
(h) Incorporated Representations and Warranties...................................................-9-
(i) Disclosure...................................................................................-10-
5. Pre-Closing Covenants.................................................................................-10-
(a) General......................................................................................-10-
(b) Notices and Consents.........................................................................-10-
(c) Operation of Business........................................................................-11-
(d) Preservation of Business.....................................................................-11-
(e) Full Access..................................................................................-11-
(f) Notice of Developments.......................................................................-11-
(g) Shareholder Approval.........................................................................-11-
6. Post-Closing Covenants................................................................................-11-
(a) General......................................................................................-11-
(b) Transition...................................................................................-11-
(c) The Acquiror Note............................................................................-12-
(d) Employee Benefits............................................................................-12-
(e) Paramount Stations Group, Inc. Transaction...................................................-12-
(f) Consummation of Hearst Transactions..........................................................-13-
</TABLE>
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<TABLE>
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(g) Certain Tax Matters..........................................................................-13-
7. Conditions to Obligation to Close.....................................................................-14-
(a) Conditions to Obligation of Acquirors........................................................-14-
(b) Conditions to Obligation of Targets..........................................................-15-
8. Remedies for Breaches of This Agreement...............................................................-16-
(a) Survival of Representations and Warranties...................................................-16-
(b) Indemnification Provisions for Benefit of Acquirors..........................................-16-
(c) Indemnification Provisions for Benefit of Targets............................................-17-
(d) Matters Involving Third Parties..............................................................-17-
(e) Determination of Adverse Consequences........................................................-18-
(f) Recoupment Under the Acquiror Note...........................................................-18-
(g) Other Indemnification Provisions.............................................................-18-
9. Termination...........................................................................................-19-
(a) Termination of Agreement.....................................................................-19-
(b) Effect of Termination........................................................................-19-
10. Miscellaneous.........................................................................................-20-
(a) No Third-Party Beneficiaries.................................................................-20-
(b) Entire Agreement.............................................................................-20-
(c) Succession and Assignment....................................................................-20-
(d) Counterparts.................................................................................-20-
(e) Headings.....................................................................................-20-
(f) Notices......................................................................................-20-
(g) Governing Law................................................................................-21-
(h) Amendments and Waivers.......................................................................-21-
(i) Severability.................................................................................-21-
(j) Expenses.....................................................................................-21-
(k) Construction.................................................................................-21-
(l) Incorporation of Exhibits and Schedules......................................................-22-
(m) Specific Performance.........................................................................-22-
(n) Submission to Jurisdiction...................................................................-22-
</TABLE>
Exhibit A-1 - Plan of Merger regarding the Operating Merger
Exhibit A-2 - Plan of Merger regarding the License Merger
Exhibit B-1 - Articles of Merger regarding the Operating Merger
Exhibit B-2 - Articles of Merger regarding the License Merger
Exhibit C - Time Brokerage Agreement
Exhibit D - Acquirors' Controlling Shareholder Agreement
Disclosure - Exceptions to Representations and Warranties
Schedule
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MERGER AGREEMENT
This merger agreement (the "Agreement") is entered into to be effective
as of April 28, 1997, by and among WPBF MERGER, INC., a Florida corporation
("Acquiror 1") and WPBF LICENSE, INC., a Florida corporation ("Acquiror 2" and
collectively with Acquiror 1, "Acquirors"), PAXSON COMMUNICATIONS OF WEST PALM
BEACH-25, INC., a Florida corporation ("Target 1"), and PAXSON WEST PALM BEACH
LICENSE, INC., a Florida corporation ("Target 2" and collectively with Target 1,
"Targets"). Acquirors and Targets are referred to collectively herein as the
"Parties."
RECITALS
A. Paxson Communications of Florida, Inc., a Florida corporation
("Targets' Ultimate Shareholder"), owns all of the issued and outstanding
capital stock of Target 1. Target 1 owns all of the issued and outstanding
capital stock of Target 2. WPBF Exchange, Inc., a Florida corporation, owns all
of the issued and outstanding capital stock of Acquiror 1. Acquiror 1 owns all
of the issued and outstanding capital stock of Acquiror 2.
B. This Agreement contemplates two mergers, a merger of Target 1 with and
into Acquiror 1 and a merger of Target 2 with and into Acquiror 2, both pursuant
to Florida Business Corporation Act ss. 607.1101. Targets' Ultimate Shareholder
will receive cash and a promissory note (the "Acquiror Note") from Acquirors as
consideration in such mergers for the capital stock in Targets.
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
"Acquiror Note" has the meaning set forth in the preface above.
"Acquirors" has the meaning set forth in the preface above.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule of the regulations
promulgated under the Securities Exchange Act.
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"Applicable Rate" means the Federal Funds Rate plus 1% per annum.
"Articles of Merger" has the meaning set forth in ss.2(c) below.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday on which banks in New York, New York are open for the transaction of a
substantial part of their commercial banking business.
"Closing" has the meaning set forth in ss.2(b) below.
"Closing Date" has the meaning set forth in ss.2(b) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of Targets that is not already generally available to the
public.
"Controlled Group of Corporations" has the meaning set forth in Code Sec.
1563.
"Disclosure Schedule" has the meaning set forth in ss.4 below.
"Effective Time" has the meaning set forth in ss.2(d)(ii) below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation
or retirement plan or arrangement that is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement that is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement that is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"401(k) Plan" means the Paxson Communications Corp. 401(k) Plan, as it
may be amended from time to time by Paxson Communications Corporation.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action or actions by the FCC granting its consent, to
the extent required, to the transactions contemplated by this Agreement.
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"Federal Funds Rate," for any period, means a fluctuating interest rate
per annum (based on a 365 or 366 day year (as the case may be) equal for each
day during such period to the average of the rates of interest charged on
overnight federal funds transactions with member banks of the Federal Reserve
System only, as published for any day which is a Business Day by the Federal
Reserve Bank of New York (or, in the absence of such publication, as reasonably
determined by Acquirors.
"Florida Business Corporation Act" means the Florida Business Corporation
Act, as amended.
"Hearst" means the Hearst Corporation, a Delaware corporation.
"Hearst Agreement" means that certain Asset Purchase Agreement, dated
March 25, 1997, by and among Target 1, Target 2, and Hearst providing for the
sale of substantially all the assets of Target 1 and Target 2 to Hearst.
"Incorporated Definitions" means any term defined in the Hearst Agreement
which is contained in the Incorporated Representations and Warranties.
"Incorporated Representations and Warranties" means the representations
and warranties made by either of Targets in the Hearst Agreement.
"Indemnified Party" has the meaning set forth in ss.8(d) below.
"Indemnifying Party" has the meaning set forth in ss.8(d) below.
"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Merger" has the meaning set forth in ss.2(a) below.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
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"Parent" has the meaning set forth in ss.6(h)(ii) below.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Plan of Merger" has the meaning set forth in ss.2(c) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Surviving Corporations" has the meaning set forth in ss.2(a) below.
"Target 1 Share" means any share of the common stock, $0.01 par value per
share, of Target 1.
"Target 2 Share" means any share of the common stock, $0.01 par value per
share, of Target 2.
"Targets" has the meaning set forth in the preface above.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss.59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
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"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in ss.8(d) below.
2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, Target 1 will merge with and into Acquiror 1 (the "Operating Merger")
and Target 2 will merge with and into Acquiror 2 (the "License Merger" and
collectively with the Operating Merger, the "Merger") simultaneously at the
Effective Time. Acquiror 1 shall be the corporation surviving the Operating
Merger and Acquiror 2 shall be the corporation surviving the License Merger
(collectively, the "Surviving Corporations").
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at a place and time designated by
Acquirors following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will take
at the Closing itself) or such other date as the Parties may mutually determine
(the "Closing Date").
(c) Deliveries at the Closing. At the Closing, (i) Targets will
deliver to Acquirors the various certificates, instruments, and documents
referred to in ss.7(a) below, (ii) Acquirors will deliver to Targets the various
certificates, instruments, and documents referred to in ss.7(b) below, and (iii)
Acquirors and Targets will file with the Secretary of State of Florida Articles
of Merger substantially in the forms of Exhibits "B-1" and "B-2," as applicable,
hereto (collectively, the "Articles of Merger").
(d) Effect of Merger.
(i) Plan of Merger. The plan of merger regarding the Operating
Merger, substantially in the form of Exhibit "A-1" hereto, and the plan
of merger regarding the License Merger, substantially in the form of
Exhibit "A-2" hereto (collectively, the "Plan of Merger") are
incorporated herein by reference.
(ii) General. The Merger shall become effective at the time (the
"Effective Time") Acquirors and Targets file the Articles of Merger with
the Secretary of State of Florida. The Surviving Corporations may, at any
time after the Effective Time, take any action (including executing and
delivering any
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document) in the name and on behalf of any of Acquirors or Targets in
order to carry out and effectuate the transactions contemplated by this
Agreement.
(iii) Articles of Incorporation. The Articles of Incorporation of
Acquirors in effect at and as of the Effective Time will remain the
Articles of Incorporation of the Surviving Corporations without any
modification or amendment in the Merger, except as stated in the Plan of
Merger.
(iv) Bylaws. The Bylaws of Acquirors in effect at and as of the
Effective Time will remain the Bylaws of the Surviving Corporations
without any modification or amendment in the Merger, other than to
reflect the name changes of the Acquirors referenced in the Articles of
Merger.
(v) Directors and Officers. The directors and officers of
Acquirors in office at and as of the Effective Time will remain the
directors and officers of the Surviving Corporations (retaining their
respective positions and terms of office).
3. Representations and Warranties of Acquirors. Each of Acquiror 1 and
Acquiror 2 represents and warrants to Targets that the statements contained in
this ss.3 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
ss.3).
(a) Organization of Acquiror 1 and Acquiror 2. Each of Acquiror 1 and
Acquiror 2 is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation.
(b) Authorization of Transaction. Each of Acquiror 1 and Acquiror 2
has full power and authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of Acquiror
1 and Acquiror 2, enforceable in accordance with its terms and conditions. Other
than the FCC Consent, neither Acquiror 1 nor Acquiror 2 need give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Acquiror 1 or Acquiror 2 is subject or
any provision of its charter or bylaws or (B) conflict with, result in a breach
of, constitute a default under, result in the
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acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which either Acquiror 1 or Acquiror 2 is a
party or by which it is bound or to which any of its assets is subject.
(d) Brokers' Fees. Neither Acquiror 1 nor Acquiror 2 has Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which either of
Target 1 or Target 2 could become liable or obligated.
(e) Investment. Neither Acquiror 1 nor Acquiror 2 is acquiring Target
1 Shares or Target 2 Shares with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act.
4. Representations and Warranties of Targets. Target 1 and Target 2
represent and warrant to Acquirors that the statements contained in this ss.4
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
ss.4), except as set forth in the disclosure schedule delivered by Targets to
Acquirors on the date hereof and attached hereto (the "Disclosure Schedule") or
as disclosed in the Hearst Agreement. The Disclosure Schedule will be arranged
in paragraphs corresponding to the lettered and numbered paragraphs contained in
this ss.4.
(a) Authorization of Transaction. Each of Target 1 and Target 2 has
full corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and in which it
presently proposes to engage and to own and use the properties owned and used by
it. Each of Target 1 and Target 2 has delivered to Acquirors correct and
complete copies of its charter and bylaws (as amended to date). The minute books
(containing the records of meetings of the shareholders, the board of directors,
and any committees of the board of directors), the stock certificate books, and
the stock record books of each of Target 1 and Target 2 are correct and
complete.
(b) Capitalization. The entire authorized capital stock of Target 1
consists of 10,000 Target 1 Shares, of which 100 Target 1 Shares are issued and
outstanding. All of the issued and outstanding Target 1 Shares have been duly
authorized, are validly issued, fully paid, and nonassessable. The entire
authorized capital stock of Target 2 consists of 10,000 Target 2 Shares, of
which 100 Target 2 Shares are issued and outstanding. All of the issued and
outstanding Target 2 Shares have been duly authorized, are validly issued, fully
paid, and nonassessable. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could
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require either Target 1 or Target 2 to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to Target 1 or Target 2. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
Target 1 or Target 2.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which either of Target 1 or Target 2 is subject
or any provision of the charter or bylaws of either of Target 1 or Target 2 or
(ii) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which either of Target 1 or Target
2 is a party or by which either is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). Other than the FCC Consent, neither Target 1 nor Target 2 needs to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. Neither Target 1 nor Target 2 has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(e) Stock Ownership. Target 2 is the sole subsidiary of Target 1.
Target 2 has no subsidiaries. Target 1 holds of record and owns beneficially all
of the outstanding shares of Target 2, free and clear of any restrictions on
transfer (other than restrictions under the Securities Act and state securities
laws), Taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. Targets' Ultimate Shareholder holds
of record and owns beneficially all of the outstanding shares of Target 1, free
and clear of any restrictions on transfer (other than restrictions under the
Securities Act and state securities laws), Taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. Neither Target 1 nor Target 2 controls directly or indirectly or has
any direct or indirect equity participation in any other corporation,
partnership, trust, or other business association.
(f) Tax Matters.
(i) Each of Target 1 and Target 2 has filed all Tax Returns that
it was required to file. All such Tax Returns were correct and complete
in all
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material respects. All Taxes owed by either of Target 1 or Target 2
(whether or not shown on any Tax Return) have been paid.
(ii) Targets are not the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where any of Targets do not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are
no Security Interests on any of the assets of any of Targets that arose
in connection with any failure (or alleged failure) to pay any Tax.
(iii) Targets have withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder, or other third
party.
(iv) No Target shareholder or director or officer (or employee
responsible for Tax matters) of either of Targets expects any authority
to assess any additional Taxes for any period for which Tax Returns have
been filed. There is no dispute or claim concerning any Tax Liability of
Targets either (A) claimed or raised by any authority in writing or (B)
as to which either Targets' shareholders and the directors and officers
(and employees responsible for Tax matters) of Targets have knowledge
based upon personal contact with any agent of such authority.
(g) Employee Benefits.
(i) Each Employee Benefit Plan (and each related trust,
insurance contract, or fund) maintained by Target 1 or Target 2 or to
which a contribution on behalf of either of them is made complies in form
and in operation in all respects with the applicable requirements of
ERISA, the Code, and other applicable laws.
(ii) All contributions (including all employer contributions and
employee salary reduction contributions) that are due have been paid to
each such Employee Benefit Plan that is an Employee Pension Benefit Plan
and all contributions for any period ending on or before the Closing Date
that are not yet due have been paid to each such Employee Pension Benefit
Plan or accrued in accordance with the past custom and practice of Target
1 and Target 2. All premiums or other payments for all periods ending on
or before the Closing Date due or owing have been paid with respect to
each such Employee Benefit Plan that is an Employee Welfare Benefit Plan.
(iii) None of Target 1 or Target 2, and the other members of the
Controlled Group of Corporations, which includes Target 1 and Target 2,
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contributes to, ever has contributed to, or ever has been required to
contribute to any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan. Neither Target 1 nor
Target 2 maintains or ever has maintained or contributes, ever has
contributed, or ever has been required to contribute to any Employee
Pension Benefit Plan subject to Title IV of ERISA.
(h) Incorporated Representations and Warranties.
(i) Targets have delivered to Acquirors a true and complete
copy of the Hearst Agreement (together with all exhibits and schedules
thereto), as in effect on the date hereof. Targets represent and warrant
that each of the Incorporated Representations and Warranties is true and
correct in all material respects on and as of the date hereof, with the
same force and effect as if each of such representations and warranties
were set forth at length herein and made directly to Acquirors on and as
of the date hereof and as if each schedule thereto referred to therein
and attached thereto were attached to and a part of this Agreement.
(ii) If any Incorporated Definitions contained in the Hearst
Agreement incorporated by reference into this ss.4(h)(ii) is also defined
elsewhere in this Agreement, then for the purposes of this ss.4(h)(ii)
(but not for the purpose of any other provision of this Agreement) such
term shall have the meaning assigned to it in the Hearst Agreement as in
effect on the date of this Agreement (notwithstanding any subsequent
termination, amendment, or modification thereof, unless consented to in
writing by Target 1 and Target 2), except: (a) all references to Buyers
in the Hearst Agreement shall be deemed to be references to Acquirors (as
defined in this Agreement); (b) all references to Owner in the Hearst
Agreement shall be deemed to be references to Target 1 (as defined in
this Agreement); (c) all references to Licensee in the Hearst Agreement
shall be deemed to be references to Target 2 (as defined in this
Agreement); and (d) all references in the Hearst Agreement to a Seller or
the "Sellers" shall be deemed to be references to Target 1 and Target 2
as reasonably appropriate.
(i) Disclosure. The representations and warranties contained in
this ss.4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this ss.4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
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(a) General. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
ss.7 below).
(b) Notices and Consents. Each of Target 1 and Target 2 will give any
notices to third parties, that Acquirors may request in connection with the
matters referred to in ss.4(c) above. Each of the Parties will give any notices
to, make any filings with, and use its best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
in connection with the matters referred to in ss.3(b), ss.4(a), and ss.4(c)
above.
(c) Operation of Business. Except as contemplated or permitted hereby,
without the consent of each of the Acquirors, neither Target 1 nor Target 2 will
engage in any practice, take any action, or enter into any transaction outside
the Ordinary Course of Business.
(d) Preservation of Business. Each of Target 1 and Target 2 will keep
its business and properties substantially intact.
(e) Full Access. Each of Target 1 and Target 2 will permit
representatives of Acquirors to have full access to all premises, properties,
personnel, books, records (including Tax records), contracts, and documents of
or pertaining to each of Target 1 and Target 2.
(f) Notice of Developments. Each of Target 1 and Target 2 will give
prompt written notice to Acquirors of any material adverse development causing a
breach of any of the representations and warranties in ss.4 above. Each Party
will give prompt written notice to the others of any material adverse
development causing a breach of any of its own representations and warranties in
ss.3 above. No disclosure by any Party pursuant to this ss.5(f), however, shall
be deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
(g) Shareholder Approval. Each of Target 1 and Target 2 will obtain
the written consent of its shareholders approving the Merger in accordance with
the Florida Business Corporation Act. Each of Acquiror 1 and Acquiror 2 will
obtain the written consent of its shareholders approving the Merger in
accordance with the Florida Business Corporation Act.
6. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing.
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(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under ss.8 below). Each
of Target 1 and Target 2 acknowledges and agrees that from and after the
Closing, Acquirors will be entitled to possession of all documents, books,
records (including Tax records), agreements, and financial data of any sort
relating to Targets.
(b) Transition. Neither Target 1 nor Target 2 will take any action
that is designed or intended to have the effect of breaching the Hearst
Agreement.
(c) The Acquiror Note. The Acquiror Note will be imprinted with a
legend substantially in the following form:
The payment of principal and interest on this Note is subject to
certain recoupment provisions set forth in a Merger Agreement
dated as of April 29, 1997 (the "Merger Agreement") among the
issuer of this Note and the person to whom this Note originally
was issued and others. This Note was originally issued on April
29, 1997, and has not been registered under the Securities Act of
1933, as amended. The transfer of this Note is subject to certain
restrictions set forth in the Merger Agreement. The issuer of this
Note will furnish a copy of these provisions to the holder hereof
without charge upon written request.
Any holder of the Acquiror Note desiring to transfer the Acquiror Note first
must furnish Acquirors with (A) a written opinion reasonably satisfactory to
each of Acquirors in form and substance from counsel reasonably satisfactory to
each of Acquirors by reason of experience to the effect that the holder may
transfer the Acquiror Note as desired without registration under the Securities
Act and (B) a written undertaking executed by the desired transferee reasonably
satisfactory to each of Acquirors in form and substance agreeing to be bound by
the recoupment provisions and the restrictions on transfer contained herein. The
Acquiror Note shall be subject to a subordination agreement made by one or more
of the Parties in favor of one or more lenders of Acquirors.
(d) Employee Benefits. To the extent permitted by applicable law, and
in accordance with the terms and conditions of the 401(k) Plan, Targets'
Ultimate Shareholder shall cause its Affiliates to permit employees of each of
Targets to
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continue to participate in the 401(k) Plan to the same extent as employees of
Targets' Ultimate Shareholder and its Affiliates. At such time (if any) prior to
the Closing under the Hearst Agreement either Target ceases to be a member of
the Controlled Group of Corporations that includes Targets' Ultimate
Shareholder, either (i) Acquirors and Targets' Ultimate Shareholder shall (and
shall each cause its Affiliates to the extent applicable or necessary) enter
into appropriate employee leasing arrangements to provide for the leasing of the
then employees of Targets to Targets' Ultimate Shareholder or Affiliate of
Targets' Ultimate Shareholder designated by Targets' Ultimate Shareholder, or
(ii) Targets shall become participating employers in the 401(k) Plan in
accordance with the terms and conditions thereof.
(e) Paramount Stations Group, Inc. Transaction. The Parties
acknowledge that Target 1 has certain television programming rights and related
rights that are currently being used in connection with the operation of WTVX-TV
and that substantially all of the assets used in the operation of such station
are being sold by an Affiliate of Targets' Ultimate Shareholder to an assignee
of Paramount Stations Group, Inc. and that such Affiliate of Targets' Ultimate
Shareholder has agreed to ensure that such assets of Target 1 are transferred
free and clear of all Security Interests to the proposed assignee thereof
pursuant to such Agreement. The Parties agree to take such further action as may
be necessary or desirable to accomplish the foregoing. In addition, the Parties
acknowledge that an Affiliate of Targets' Ultimate Shareholder has certain
television programming rights that are required to be transferred to Hearst free
and clear of all Security Interests pursuant to the Hearst Agreement and
Targets' Ultimate Shareholder agrees to take such action (or cause any Affiliate
of it to take such action) as may be necessary or desirable to carry out the
foregoing. Each Party agrees that such acts shall be taken at the sole cost and
expense of the Party needing such action to be taken. If requested, prior to
Closing, Target 1 shall declare and pay at or before Closing a dividend of the
programming rights in kind to its sole shareholder.
(f) Consummation of Hearst Transactions. Each of the Parties agrees to
take all actions determined necessary or desirable by the other Parties to
timely comply with all obligations necessary or desirable to consummate the
transactions contemplated by the Hearst Agreement and fulfill all of their
respective obligations thereunder.
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(g) Certain Tax Matters.
(i) Targets are members of an affiliated group of corporations
filing a consolidated federal income tax return with their ultimate
parent corporation, Paxson Communications Corporation ("Parent"). For
federal income tax purposes, the Merger will be treated as though each of
Targets have sold all of its assets to the respective Acquirors and then
liquidated. Parent will include the income derived from the deemed sale
of assets by Targets (including any deferred income triggered into income
by Reg. ss.1.1502-13 and Reg. ss.1.1502-14) on Parent's consolidated
federal income Tax Returns for all periods through the Closing Date and
pay any federal income Taxes attributable to such transactions. Acquirors
will furnish such Tax information to Parent as may be required for
inclusion in Parent's federal consolidated income Tax Return for the
period that includes the Closing Date in accordance with Targets' past
custom and practice.
(ii) Parent will allow either of Targets and its counsel to
participate in any audits of Parent's consolidated federal income Tax
Returns to the extent that such returns relate to such Target. Parent
will not settle any such audit in a manner which would adversely affect
the Acquirors after the Closing Date unless Parent pays such of
Acquirors' costs (including tax, penalty and interest) associated
therewith.
(iii) Parent will pay any Tax attributable to the treatment of the
Merger as an asset sale, and will indemnify Acquirors, against any
Adverse Consequences arising out of any failure to pay such Tax. Parent
will also pay any state, local, or foreign Tax (and indemnify Acquirors
against any Adverse Consequences arising out of any failure to pay such
Tax) attributable to the treatment of the Merger as an asset sale,
hereunder regardless of the state, local or foreign tax jurisdiction
characterization of the Merger.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of Acquirors. The obligation of each of
Acquirors to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.4 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) Each of Target 1 and Target 2 shall have performed and
complied with all of its covenants hereunder in all material respects
through the Closing;
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(iii) Target 1 and Target 2 shall have procured all of the
third party consents specified in ss.5(b) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement,
(B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, (C) affect adversely the right of
either of Acquirors to own either Target 1 Shares or Target 2 Shares and
to control Targets, or (D) affect adversely the right of either of Target
1 or Target 2 to own its assets and to operate its businesses (and no
such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(v) Each of Target 1 and Target 2 shall have delivered to
each of Acquirors a certificate to the effect that each of the conditions
specified above in ss.7(a)(i)-(vi) is satisfied in all respects;
(vi) the relevant parties shall have entered into the time
brokerage agreements in form and substance as set forth in Exhibit "C"
attached hereto and the same shall be in full force and effect;
(vii) Each of Acquirors shall have obtained on terms and
conditions reasonably satisfactory to it all of the financing it needs in
order to consummate the transactions contemplated hereby and fund the
working capital requirements of Target 1 and Target 2 after the Closing;
(viii) all actions to be taken by Targets in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to each of Acquirors; and
(ix) Targets shall have delivered to Acquirors a
controlling shareholder agreement substantially in the form of Exhibit
"D" hereto.
Either of Acquirors may waive any condition specified in this ss.7(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Targets. The obligation of each of
Targets to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
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(i) the representations and warranties set forth in ss.3 above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) each of Acquirors shall have performed and complied with all
of its covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement or
(B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);
(iv) each of Acquirors shall have delivered to Targets a
certificate to the effect that each of the conditions specified above in
ss.7(b)(i)-(iv) is satisfied in all respects;
(v) the relevant parties shall have entered into a time
brokerage agreement in form and substance as set forth in Exhibit "C"
attached hereto and the same shall be in full force and effect;
(vi) all actions to be taken by Acquirors in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to both Target 1 and Target 2.
Either of Targets may waive any condition specified in this ss.7(b) if it
executes a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect forever thereafter (subject to any applicable
statutes of limitations).
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(b) Indemnification Provisions for Benefit of Acquirors.
(i) In the event either of Target 1 or Target 2 breaches (or in
the event any third party alleges facts that, if true, would mean either
of Target 1 or Target 2 has breached) any of its representations,
warranties, and covenants contained herein, then each of Target 1 and
Target 2 agrees to indemnify Acquirors from and against the entirety of
any Adverse Consequences Acquirors may suffer through and after the date
of the claim for indemnification (including any Adverse Consequences
Acquirors may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused
by the breach (or the alleged breach.
(ii) Each of Target 1 and Target 2 agrees to indemnify each of
Acquirors from and against the entirety of any Adverse Consequences
Acquirors may suffer resulting from, arising out of, relating to, in the
nature of, or caused by any Liability of either of Target 1 or Target 2
for the unpaid Taxes of any Person (other than either of Target 1 or
Target 2) under Treas. Reg. ss.1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract,
or otherwise.
(iii) Each of Target 1 and Target 2 agrees to indemnify each of
Acquirors from and against the entirety of any Adverse Consequences
Acquirors, Target 1 and Target 2 may suffer resulting from, arising out
of, relating to, or connected with the fulfillment of the obligation of
Target 1 and Target 2 under the Hearst Agreement, including any
post-closing obligation or requirement to indemnify any party thereunder
or in connection therewith.
(c) Indemnification Provisions for Benefit of Targets. In the event
either of Acquirors breaches (or in the event any third party alleges facts
that, if true, would mean either of Acquirors has breached) any of its
representations, warranties, and covenants contained herein, then each of
Acquiror 1 and Acquiror 2 agrees to indemnify both Target 1 and Target 2 from
and against the entirety of any Adverse Consequences either Target 1 or Target 2
may suffer through and after the date of the claim for indemnification
(including any Adverse Consequences Target 1 or Target 2 may suffer after the
end of any applicable survival period) resulting from, arising out of, relating
to, in the nature of, or caused by the breach (or the alleged breach).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") that may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this ss.8, then the Indemnified Party shall
promptly notify each
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Indemnifying Party thereof in writing; provided, however, that no delay
on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless
(and then solely to the extent) the Indemnifying Party thereby is
prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying Party notifies the Indemnified Party in writing within
30 days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party
from and against the entirety of any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim, (B) the Indemnifying Party
provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (C) the Third Party Claim involves
only money damages and does not seek an injunction or other equitable
relief, (D) settlement of, or an adverse judgment with respect to, the
Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice materially
adverse to the continuing business interests of the Indemnified Party,
and (E) the Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with ss.8(d)(ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (B) the
Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably), and (C) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in ss.8(d)(ii) above is
or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (B) the Indemnifying Parties will reimburse the
Indemnified Party promptly and
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periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (C) the
Indemnifying Parties will remain responsible for any Adverse Consequences
the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this ss.8.
(e) Determination of Adverse Consequences. The Parties shall take
into account the time cost of money (using the Applicable Rate as the discount
rate) in determining Adverse Consequences for purposes of this ss.8.
(f) Recoupment Under the Acquiror Note. Each of Acquirors shall have
the option of recouping all or any part of any Adverse Consequences it may
suffer (in lieu of seeking any indemnification to which it is entitled under
this ss.8) by notifying both Target 1 and Target 2 that it is reducing the
principal amount outstanding and other amounts payable under the Acquiror Note.
This shall affect the timing and amount of payments required under the Acquiror
Note in the same manner as if Acquirors had made a permitted prepayment (without
premium or penalty) thereunder.
(g) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of representation,
warranty, or covenant.
9. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate
this Agreement as provided below:
(i) Acquirors and Targets may terminate this Agreement with the
prior authorization of their board of directors (whether before or after
shareholder approval) by written consent of all the Parties at any time
prior to the Closing;
(ii) Either of Acquirors may terminate this Agreement by giving
written notice to each of Target 1 or Target 2 at any time prior to the
Closing (A) in the event either of Target 1 and Target 2 has breached any
material representation, warranty, or covenant contained in this
Agreement in any material respect, such Acquiror has notified Target 1
and Target 2, as appropriate, of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach or (B) if
the Closing shall not have occurred on or before December 31, 1997, by
reason of the failure of any condition precedent under ss.7(a) hereof
(unless the failure results primarily from
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<PAGE> 23
either of Acquirors itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(iii) Either Target 1 or Target 2 may terminate this Agreement
by giving written notice to each of Acquiror 1 and Acquiror 2 at any time
prior to the Closing (A) in the event either of Acquirors has breached
any material representation, warranty, or covenant contained in this
Agreement in any material respect, such Target has notified Acquiror 1 or
Acquiror 2, as appropriate, of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach or (B) if
the Closing shall not have occurred on or before December 31, 1997, by
reason of the failure of any condition precedent under ss.7(b) hereof
(unless the failure results primarily from either of Targets itself
breaching any representation, warranty, or covenant contained in this
Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to ss.9(a) above, all rights and obligations of the Parties hereunder
shall terminate without any Liability of any Party to any other Party (except
for any Liability of any Party then in breach).
10. Miscellaneous.
(a) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(b) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
(c) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of each of Acquirors and each of Targets; provided, however,
that either of Acquirors may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one or more of
its Affiliates to perform its obligations hereunder (in any or all of which
cases such Acquiror shall no longer remain responsible for the performance of
any of its obligations hereunder).
-20-
<PAGE> 24
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(e) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Target 1: Paxson Communications of West Palm Beach-25, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
If to Target 2: Paxson West Palm Beach License, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
If to Acquiror 1: WPBF Merger, Inc.
3970 RCA Boulevard, Suite 7007
Palm Beach Gardens, FL 33410
If to Acquiror 2: WPBF License, Inc.
3970 RCA Boulevard, Suite 7007
Palm Beach Gardens, FL 33410
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
facsimile, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
-21-
<PAGE> 25
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of Florida without giving effect to any
choice or conflict of law provision or rule (whether of Florida or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than Florida.
(h) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by each
of Acquirors and each of Targets. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(i) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(j) Expenses. Targets' Ultimate Shareholder will bear costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(k) Construction. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) that the Party
has not breached shall not detract from or mitigate the fact that the Party is
in breach of the first representation, warranty, or covenant.
(l) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(m) Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions
-22-
<PAGE> 26
of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the Parties and the matter (subject
to the provisions set forth in ss.10(n) below), in addition to any other remedy
to which they may be entitled, at law or in equity.
(n) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Florida, in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding may be heard and determined in any
such court. Each Party also agrees not to bring any action or proceeding arising
out of or relating to this Agreement in any other court. Each of the Parties
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety, or other security that might
be required of any other Party with respect thereto. Any Party may make service
on any other Party by sending or delivering a copy of the process to the Party
to be served at the address and in the manner provided for the giving of notices
in ss.10(f) above. Nothing in this ss.10(n), however, shall affect the right of
any Party to serve legal process in any other manner permitted by law or at
equity. Each Party agrees that a final judgment in any action or proceeding so
brought shall be conclusive and may be enforced by suit on the judgment or in
any other manner provided by law or at equity.
-23-
<PAGE> 27
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
effective as of the date first above written.
WPBF MERGER, INC.
By: /s/ Anthony L. Morrison
--------------------------------------
Title: Vice President
------------------------------------
WPBF LICENSE, INC.
By: /s/ Anthony L. Morrison
--------------------------------------
Title: Vice President
------------------------------------
PAXSON COMMUNICATIONS OF WEST
PALM BEACH-25, INC.
By: /s/ Arthur Tek
--------------------------------------
Title: Vice President
------------------------------------
PAXSON WEST PALM BEACH LICENSE,
INC.
By: /s/ Arthur Tek
--------------------------------------
Title: Vice President
------------------------------------
-24-
<PAGE> 1
EXHIBIT 2.2
THIS PROMISSORY NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF A SUBORDINATION
AGREEMENT OF EVEN DATE HEREWITH MADE BY THE DEBTORS, CREDITOR AND WPBF EXCHANGE,
INC., IN FAVOR OF BANQUE PARIBAS, AS AGENT FOR THE FINANCIAL INSTITUTIONS OR
ENTITIES WHO ARE OR BECOME LENDERS UNDER A CREDIT AGREEMENT RELATING THERETO OF
EVEN DATE HEREWITH. ALL OF DEBTORS' OBLIGATIONS HEREUNDER AND THE RIGHTS OF
CREDITOR AND ITS SUCCESSORS AND ASSIGNS HEREUNDER ARE SUBJECT TO THE TERMS,
CONDITIONS AND LIMITATIONS SET FORTH IN SUCH SUBORDINATION AGREEMENT.
THE PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS SUBJECT TO CERTAIN
RECOUPMENT PROVISIONS SET FORTH IN A MERGER AGREEMENT DATED APRIL 29, 1997 (THE
"MERGER AGREEMENT") AMONG THE ISSUER OF THIS NOTE, THE PERSON TO WHOM THIS NOTE
ORIGINALLY WAS ISSUED AND OTHERS. THIS NOTE WAS ORIGINALLY ISSUED ON APRIL 29,
1997, AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE
MERGER AGREEMENT. THE ISSUER OF THIS NOTE WILL FURNISH A COPY OF THESE
PROVISIONS TO THE HOLDER HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST.
PAXSON COMMUNICATIONS OF WEST PALM BEACH - 25, INC.
AND PAXSON WEST PALM BEACH LICENSE, INC.
SUBORDINATED PROMISSORY NOTE
$10,000,000.00 April 29, 1997
FOR VALUE RECEIVED, PAXSON COMMUNICATIONS OF WEST PALM BEACH - 25, INC.,
formerly known as WPBF Merger, Inc. and PAXSON WEST PALM BEACH LICENSE, INC.,
formerly known as WPBF License, Inc., each a Florida corporation ("Debtors"),
whose addresses are 601 Clearwater Park Road, West Palm Beach, FL 33401, jointly
and severally, promises to pay to the order of PAXSON COMMUNICATIONS OF FLORIDA,
INC., a Delaware corporation ("Creditor"), whose address is 601 Clearwater Park
Road, West Palm Beach, Florida 33401, at the offices of Creditor at such
address, or at such other place as the holder of this Note may from time to
<PAGE> 2
time designate, the principal sum of TEN MILLION AND NO/100 DOLLARS
($10,000,000), or so much thereof as may be advanced, 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 rates
provided for herein.
This note shall mature and all principal and other amounts due and owing
hereunder shall be due and payable on the earlier of (i) ten years from the date
hereof or (ii) the sale of either substantially all of the assets comprising
television station WPBF-TV, Channel 25, Tequesta, Florida or the sale (whether
by or as a result of a sale, by operation of law or otherwise) of a majority of
the capital stock of Borrower.
Interest shall accrue on the principal hereunder at a rate equal to the
"Federal Funds Rate" plus 3% per annum, and shall be due and payable in arrears
monthly on the last day of each calendar month during the term hereof. "Federal
Funds Rate", for any period, means a fluctuating interest rate per annum (based
on a 365 or 366 day year, as the case may be) equal for each day during such
period to the average of the rates of interest charged on overnight federal
funds transactions with member banks of the Federal Reserve System only, as
published for any day which is a "Business Day" by the Federal Reserve Bank of
New York (or, in the absence of such publication, as reasonably determined by
the Agent). A "Business Day" means any day other than a Saturday, Sunday or
legal holiday on which banks in New York, New York are open for the transaction
of a substantial part of their commercial banking business. 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 18% 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. Creditor 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 Debtor notifies Creditor in writing that Debtor 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.
If any payment of principal or interest or both is more than ten (10)
days late, Debtor agrees to pay Creditor a late charge equal to five percent
(5.0%) of the payment (the "Late Fee"). The provisions of this Note establishing
a Late Fee shall not be deemed to extend the time for any payment due or to
constitute a "grace period" giving Debtor a right to cure such default.
Each payment and prepayment by Debtor 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
2
<PAGE> 3
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 Creditor first to interest and lawful charges then accrued on such payments
of principal, and then to principal, unless otherwise determined by Creditor in
its sole discretion.
This Note is being issued by Debtors, jointly and severally, to Creditor
as partial consideration in connection with a merger between Debtors former
wholly-owned subsidiaries of Creditor, and others pursuant to a merger agreement
of even date herewith.
Debtor shall be entitled to prepay this Note in whole or in part, at any
time, without premium or penalty. Debtor shall designate which portion of
principal it is intending to prepay. Each partial payment shall be applied by
Creditor first to interest and lawful charges then accrued on such principal,
and then to principal, and shall not postpone the due date or charge the amount
of any subsequent installment, except in the inverse order of maturity thereof.
The following constitute events of default ("Events of Default") under
this Note:
(a) Debtor fails to pay principal, interest, or any other amount due
under this Note.
(b) Any representation or warranty made by Debtor or any other person
under this Note, or any report, certificate, financial statement, or other
information provided by Debtor or any other person to Creditor in connection
herewith, is false or misleading in any material respect when made or deemed
made.
(c) Debtor or any other person fails to fully and promptly perform
when due any agreement under this Note.
(d) Debtor liquidates, dissolves, dies, or becomes incompetent; the
business of Debtor is suspended; Debtor commences, or consents to or acquiesces
in, a voluntary proceeding in bankruptcy or insolvency; Debtor applies for, or
consents or acquiesces in the appointment of, a receiver for all or a
substantial part of its property; Debtor makes an assignment for the benefit of
creditors; or Debtor is unable to pay its debts as they mature or admits in
writing its inability to pay its debts as they mature.
(e) An involuntary proceeding in bankruptcy or insolvency is
commenced against Debtor; a receiver is involuntarily appointed for all or a
substantial part of the property of Debtor; 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 Debtor; if any of the
foregoing continues for thirty (30) days without being vacated, discharged,
stayed,
3
<PAGE> 4
bonded, or dismissed.
Upon the occurrence of any Event of Default, Creditor is hereby
authorized at any time and from time to time, without notice to Debtor, to set
off, appropriate, and apply any or all items hereinabove referred to against all
indebtedness of Debtor owed to Creditor, whether hereunder, or otherwise,
whether now existing or hereafter arising. Without limiting the generality of
the foregoing, upon the occurrence of an Event of Default, Creditor shall be
entitled to set off against indebtedness owed to Creditor any obligations to
honor stock options, warrants, or the like. Creditor shall be deemed to have
exercised such right of set-off and to have made a charge against such items
immediately upon the occurrence of such default although made or entered on its
books subsequent thereto.
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 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 or any
endorsement or guaranty of this Note, Debtor 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 Debtor 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 Creditor 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, Debtor hereby waives any law that renders any such provision
invalid, illegal, or unenforceable in any respect.
The singular shall include the plural and any gender shall be applicable
to all genders when the context permits or implies. If more than one party
constitutes Debtor, their obligations hereunder shall be joint and several and
the term "Debtor" as used herein shall
4
<PAGE> 5
mean Debtor or any one or more of them.
Debtor hereby expressly consents to any and all extensions,
modifications, and renewals, in whole or in part, including but not limited to
changes in payment schedules and interest rates, and all delays in time of
payment or other performance which Creditor may grant or permit at any time and
from time to time without limitation and without any notice to or further
consent of Debtor. Debtor shall also be bound by each of the foregoing terms
deemed to be a part of this Note, without the requirement that Creditor first go
against any security interest otherwise held by Creditor.
No delay or omission on the part of Creditor 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 Debtor.
All rights and remedies of Creditor under this Note and under any other
documents related hereto are cumulative, and are not exclusive of any rights and
remedies provided by law or in equity, and may be 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 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 Creditor, its
successors and assigns, and shall be binding upon Debtor and its respective
heirs, legal representatives, successors, and assigns; provided, however, that
no rights or obligations of Debtor shall be assigned without the prior written
consent of Creditor. In the event Creditor transfers or assigns its obligations
hereunder, Creditor shall be relieved of all liability therefor.
Time is of the essence in the performance of this Note. This Note has
been made, executed and delivered outside of the State of Florida.
EACH OF THE DEBTORS AND CREDITOR (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, 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 CREDITOR TO ENTER INTO THE TRANSACTION EVIDENCED HEREBY.
5
<PAGE> 6
IN WITNESS WHEREOF, the Debtors have executed this Note as of the date
first written above.
WITNESSES:
PAXSON COMMUNICATIONS OF
WEST PALM BEACH, - 25, INC.
- ----------------------------------- By: /s/ Anthony L. Morrison
-------------------------------
Name Anthony L. Morrison
- -----------------------------------
Title Vice President
PAXSON WEST PALM BEACH
LICENSE, INC.
By: /s/ Anthony L. Morrison
-------------------------------
Name Anthony L. Morrison
Title Vice President
6
<PAGE> 1
EXHIBIT 2.3
================================================================================
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF WEST PALM BEACH - 25, INC.,
PAXSON WEST PALM BEACH LICENSE, INC.,
AND
PAXSON COMMUNICATIONS CORPORATION
FOR
TELEVISION STATION WPBF-TV
WEST PALM BEACH, FLORIDA
* * *
APRIL 29, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. LEASE OF STATION AIR TIME.......................................................................1
1.1 Representations.................................................................................1
1.2 Effective Date; Term............................................................................1
1.3 Scope...........................................................................................2
1.4 Option to Renew.................................................................................2
1.5 Consideration...................................................................................2
1.6 Licensee Operation of the Station...............................................................2
1.7 Licensee Representations and Warranties.........................................................3
1.8 Programmer Responsibility.......................................................................3
1.9 Contracts.......................................................................................4
SECTION 2. STATION OBLIGATION TO ITS COMMUNITY OF LICENSE..................................................4
2.1 Licensee Authority..............................................................................4
2.2 Additional Licensee 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 Licensee Control of Programming.................................................................5
3.3 Programmer Compliance with Copyright Act........................................................6
3.4 Sales...........................................................................................6
3.5 Payola..........................................................................................6
3.6 Cooperation on Programming......................................................................6
3.7 Staffing Requirements...........................................................................7
3.8 Accounts Receivable.............................................................................7
3.9 Trade and Barter................................................................................8
3.10 Children's Television Advertising...............................................................8
SECTION 4. INDEMNIFICATION.................................................................................8
4.1 Programmer's Indemnification....................................................................8
4.2 Licensee's Indemnification......................................................................9
4.3 Limitation......................................................................................9
4.4 Procedure for Indemnification...................................................................9
4.5 Time Brokerage Challenge.......................................................................10
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE
..............................................................................................10
5.1 Confidential Review............................................................................10
5.2 Political Advertising..........................................................................11
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT..........................................................11
6.1 Termination....................................................................................11
6.2 Force Majeure..................................................................................12
6.3 Other Agreements...............................................................................12
SECTION 7. MISCELLANEOUS..................................................................................12
7.1 Assignment.....................................................................................12
7.2 Call Letters...................................................................................12
7.3 Counterparts...................................................................................13
7.4 Entire Agreement...............................................................................13
7.5 Taxes..........................................................................................13
7.6 Headings.......................................................................................13
7.7 Governing Law..................................................................................13
7.8 Notices........................................................................................13
7.9 Severability...................................................................................14
7.10 No Joint Venture...............................................................................14
</TABLE>
- ii -
<PAGE> 4
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this 29th day of April, 1997, by and
between PAXSON COMMUNICATIONS OF WEST PALM BEACH - 25, INC., and PAXSON WEST
PALM BEACH LICENSE, INC., each a Florida corporation (collectively, the
"Licensee") and PAXSON COMMUNICATIONS CORPORATION, a Delaware corporation (the
"Programmer").
WHEREAS, Licensee is the owner and operator of Television Station
WPBF-25, Tequesta, Florida, serving the West Palm Beach, Florida market (the
"Station") pursuant to authorizations issued by the Federal Communications
Commission ("FCC").
WHEREAS, Programmer is involved in television station ownership and
operation and, pending the completion of the sale of Station by Licensee to The
Hearst Corporation pursuant to an Asset Purchase Agreement dated as of March 25,
1997, is willing to provide programming for the Station on the terms and
conditions contained herein;
WHEREAS, the Licensee wishes to retain Programmer to provide
programming for the Station that is in conformity with the Station's policies
and procedures, FCC policies for time brokerage arrangements, and the provisions
hereof.
WHEREAS, Programmer agrees to use the Station to broadcast such
programming of its selection that is in conformity with all rules, regulations
and policies of the FCC, subject to Licensee's full authority to manage and
control the operation of the Station.
WHEREAS, Programmer and Licensee agree to cooperate to make this
Time Brokerage Agreement work to the benefit of the public and both parties and
as contemplated in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be legally
bound, agree as follows:
SECTION 1. LEASE OF STATION AIR TIME
1.1 Representations. Both Licensee and Programmer represent that
they are legally qualified, empowered and able to enter into this Agreement and
that the execution, delivery, and performance hereof shall not constitute a
breach or violation of any material agreement, contract or other obligation to
which either party is subject or by which it is bound.
<PAGE> 5
- 2 -
1.2 Effective Date; Term. The effective date of this Agreement shall
be April 29, 1997 and it shall continue in force from that date until December
31, 1997, unless otherwise extended or terminated as set forth below.
1.3 Scope. During the term of this Agreement and any renewal
thereof, Licensee shall make available to Programmer broadcast time upon the
Station as set forth in this Agreement. Programmer shall program the broadcast
time on the Station utilizing Licensee's existing programming or Programer's own
programming. Programmer shall cause such programming to be delivered to the
Station's transmitter facilities or other authorized remote control points as
reasonably designated by Licensee. Programmer shall have the right to produce
its programming (including commercial amounts and related production activities)
from the Licensee's existing studio and production facilities. Subject to
Licensee's reasonable approval, as set forth in this Agreement, Programmer shall
provide programming of Programmer's selection complete with commercial matter,
news, public service announcements and other suitable programming to the
Licensee. Licensee, at its discretion, may program the Station at other times
and the Licensee may designate such additional time as it may require for the
broadcast of programming necessary for the Station to broadcast news, public
affairs, religious and non-entertainment programming as required by the FCC all
at such times to be mutually agreed to by Licensee and Programmer. All program
time not reserved by or designated for Licensee shall be available for use by
Programmer and no other party.
1.4 Option to Renew. Subject to the termination provisions of
Section 6 hereof, this Agreement may be renewed for an additional term as
mutually agreed upon by the Licensee and the Programmer and consistent with FCC
requirements.
1.5 Consideration. As consideration for the air time made available
hereunder Programmer shall make payments to Licensee as set forth in Attachment
I.
1.6 Licensee Operation of the Station. Licensee will have full
authority, power and control over the management and operations of the Station
during the term of this Agreement and during any renewal of such term. Licensee
will bear all responsibility for the Station's compliance with all applicable
provisions of the Communications Act of 1934, as amended, (the "Act") the rules,
regulations and policies of the FCC and all other applicable laws. Licensee
shall be solely responsible for and pay in a timely manner all customary
operating costs of the Station, including but not limited to maintenance of the
studio and transmitting facility and costs of electricity, except that Licensee
shall be entitled to reimbursement pursuant to Attachment I hereof and
Programmer shall be responsible for the costs of its programming and its
personnel, if any, as provided in Sections 1.8 and 2.3 hereof.
<PAGE> 6
- 3 -
Licensee shall employ at its expense management level and other employees
consisting of a General Manager who will direct the day-to-day operations of the
Station and such other personnel as required by the FCC, and who will report to
and be accountable to the Licensee. Licensee shall be responsible for the
salaries, taxes, insurance and related costs for all personnel employed by the
Station and shall maintain insurance reasonably satisfactory to Programmer
covering the Station's transmission facilities.
1.7 Licensee Representations and Warranties. Licensee represents and
warrants as follows:
(a) Licensee owns and holds or will hold all licenses and other
permits and authorizations necessary for the current operation of the Station,
and such licenses, permits and authorizations are and will be in full force and
effect throughout the term of this Agreement. There is not now pending, or to
Licensee's best knowledge, threatened, any action by the FCC or by any other
party to revoke, cancel, suspend, refuse to renew or modify adversely any of
such licenses, permits or authorizations. Licensee is not in material violation
of any statute, ordinance, rule, regulation, policy, order or decree of any
federal, state or local entity, court or authority having jurisdiction over it
or the Station, which would have a material effect upon the Licensee, the
Station or upon Licensee's ability to perform this Agreement. Licensee shall not
take any action or omit to take any action which would have a material impact
upon the Licensee, the Station or upon Licensee's ability to perform this
Agreement. All reports and applications required to be filed with the FCC or any
other governmental body have been, and during the course of the term of this
Agreement or any renewal thereof, will be filed in a timely and complete manner.
During the term of this Agreement and any renewal thereof, Licensee shall not
dispose of, transfer, assign or pledge any of Licensee's assets and properties
without the prior written consent of the Programmer which consent shall not be
unreasonably withheld, if such action would have a materially adverse affect on
Licensee's performance hereunder or the business and operations of Licensee or
the Station permitted hereby.
(b) Licensee shall pay, in a timely fashion, all of the expenses
incurred in operating the Station including salaries and benefits of Licensee's
employees, lease payments, utilities, taxes, programming expenses, etc., as set
forth in Attachment I (except those for which a good faith dispute has been
raised with the vendor or taxing authority), and shall provide Programmer with a
schedule of such timely payments (including invoices) within twenty (20) days
following the end of each month and Programmer shall reimburse Licensee for
those payments pursuant to the procedures set forth in Attachment I hereof
within five (5) days of Programmer's receipt of Licensee's schedule (including
invoices).
<PAGE> 7
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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 and shall employ and be responsible for the
salaries, commission, taxes, insurance and all other related expenses for all
personnel, if any, involved in the production and broadcast of its Programs.
Such payments by Programmer shall be in addition to any other payments to be
made by Programmer under this Agreement.
1.9 Contracts. Programmer will enter into no third-party contracts,
leases or agreements which will bind Licensee in any way except with Licensee's
prior written approval. Without limiting the foregoing, Licensee shall not,
without the prior written consent of the Programmer, amend, or consent to any
waiver or modification of the terms and conditions of that certain Asset Sale
Agreement dated as of March 25, 1997, by and among Licensee and The Hearst
Corporation, in each case to the extent any such amendment, modification or
waiver could reasonably be expected to have an adverse effect on Programmer's
rights and obligations hereunder, including, Programmer's reimbursement
obligations under Section 1.5 hereof, or the rights of Programmer's subsidiary,
Paxson Communications of Florida, Inc., under the terms of that certain
Subordinated Note dated as of April 29, 1997, issued by Licensees.
SECTION 2. STATION OBLIGATION TO ITS COMMUNITY OF LICENSE
2.1 Licensee Authority. Notwithstanding any other provision of this
Agreement, Programmer recognizes that Licensee has certain obligations to
broadcast programming to meet the needs and interests of viewers in Tequesta,
Florida, the Station's community of license. From time to time the Licensee may
air specific programming on issues of importance to the local community. Nothing
in this Agreement shall abrogate the unrestricted authority of the Licensee to
discharge its obligations to the public and to comply with the Act and the rules
and policies of the FCC.
2.2 Additional Licensee Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the Station, Licensee
shall also retain the right to interrupt Programmer's programming in case of an
emergency or for programming which, in the good faith judgment of Licensee, is
of greater local or national public importance. Licensee shall also coordinate
with Programmer the Station's hourly Station identification and any other
announcements required to be aired by FCC rules. Licensee shall continue to
maintain a main studio, as that term is defined by the FCC, within the Station's
principal community contour, shall maintain its local public inspection file in
accordance with FCC rules, regulations and policies, and shall prepare and place
in such inspection file or files in a
<PAGE> 8
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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.
Programmer shall, upon request by Licensee, provide Licensee with such
information concerning Programmer's programs and advertising as is necessary to
assist Licensee in the preparation of such information. Licensee shall also
maintain the Station's 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. Licensee will provide
and be responsible for the Station's personnel necessary for the broadcast
transmission of the Station's programs and will be responsible for the salaries,
taxes, benefits, insurance and related costs for all the employees used in the
broadcast transmission of its programs and necessary to other aspects of the
Station operation. Whenever on the Station's premises, all personnel shall be
subject to the overall supervision of Licensee's General Manager.
SECTION 3. STATION PROGRAMMING POLICIES
3.1 Broadcast Station Programming Policy Statement. Licensee has
adopted and will enforce a Broadcast Station Programming Policy Statement (the
"Policy Statement"), a copy of which appears as Attachment II hereto and which
may be amended in a reasonable manner from time to time by Licensee upon notice
to Programmer. Programmer agrees and covenants to comply in all material
respects with the Policy Statement, to all rules and regulations of the FCC, and
to all changes subsequently made by Licensee or the FCC. Programmer shall
furnish or cause to be furnished the artistic personnel and material for the
programs as provided by this Agreement and all programs shall be prepared and
presented in conformity with the rules, regulations and policies of the FCC and
with the Policy Statement set forth in Attachment II hereto. All advertising
spots and promotional material or announcements shall comply with applicable
federal, state and local regulations and policies and shall be produced in
accordance with quality standards established by Programmer. If Licensee
determines that a program supplied by Programmer is for any reason, within
Licensee's sole discretion, unsatisfactory or unsuitable or contrary to the
public interest, or does not comply with the Policy Statement it may, upon prior
written notice to Programmer (to the extent time permits such notice), suspend
or cancel such program without incurring liability to Programmer. Licensee will
use reasonable efforts to provide such written notice to Programmer prior to the
suspension or cancellation of such program.
3.2 Licensee Control of Programming. Programmer recognizes that the
Licensee has full authority to control the operation of the Station. The parties
agree that Licensee's authority includes but is not limited to the right to
reject or refuse such portions of the Programmer's programming which Licensee
believes to be unsatisfactory, unsuitable or
<PAGE> 9
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contrary to the public interest. Programmer shall have the right to change the
programming supplied to Licensee and shall give Licensee at least twenty-four
(24) hours notice of substantial and material changes in such programming,
provided that such programming is consistent with the Policy Statement and FCC
regulations.
3.3 Programmer Compliance with Copyright Act. Programmer represents
and warrants to Licensee that Programmer has full authority to broadcast its
programming on the Station, and that Programmer shall not broadcast any material
in violation of the Copyright Act. All music supplied by Programmer or Licensee
shall be: (i) licensed by ASCAP, SESAC or BMI; (ii) in the public domain; or
(iii) cleared at the source by Programmer or Licensee. Licensee will maintain
ASCAP, BMI and SESAC licenses as necessary.
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, and
all revenues from the sale of advertising time within the programming it
provides to the Licensee. Programmer shall be responsible for payment of all
expenses attributable thereto, including, but not limited to, the commissions
due to any national sales representative engaged by it for the purpose of
selling national advertising which is carried during the programming it provides
to Licensee. Unless otherwise agreed between the parties, Licensee shall retain
all revenues from the sale of Station's advertising during the hours each week
in which the Licensee airs its own programming pursuant to Section 1.3 hereof.
3.5 Payola. Programmer agrees that it and its employees will not
accept any consideration, compensation, gift or gratuity of any kind whatsoever,
regardless of its value or form, including, but not limited to, a commission,
discount, bonus, material, supplies or other merchandise, services or labor
(collectively "Consideration"), whether or not pursuant to written contracts or
agreements between Programmer and merchants or advertisers, unless the payer is
identified in the program for which Consideration was provided as having paid
for or furnished such Consideration, in accordance with the Act and FCC
requirements. Programmer agrees to annually, or more frequently at the request
of the Licensee, execute and provide Licensee with a Payola Affidavit from each
of its employees involved with the Station substantially in the form attached
hereto as Attachment III.
3.6 Cooperation on Programming. Programmer and Licensee mutually
acknowledge their interest in ensuring that the Station serve the needs and
interests of listeners in Tequesta and the surrounding service area and agree to
cooperate to provide such service. Licensee shall, on a regular basis, assess
the issues of concern to residents of Tequesta and the surrounding area and
address those issues in its public service programming. Programmer, in
<PAGE> 10
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cooperation with Licensee, will endeavor to ensure that programming responsive
to the needs and interests of the community of license and surrounding area is
broadcast, in compliance with applicable FCC requirements and will assist
Licensee, if requested, in the production of Licensee-provided programming.
Licensee will describe those issues and the programming that is broadcast in
response to those issues and place issues/programs lists in the Station's public
inspection file as required by FCC rules. Further, Licensee may request, and
Programmer shall provide, information concerning such of Programmer's programs
as are responsive to community issues so as to assist Licensee in the
satisfaction of its public service programming obligations. Programmer shall
also provide Licensee upon request such other information necessary to enable
Licensee to prepare records and reports required by the Commission or other
local, state or federal government entities.
3.7 Staffing Requirements. Licensee will be in full compliance with
the main studio staff requirements as specified by the FCC.
3.8 Accounts Receivable. As soon as practicable after the Effective
Date, Licensee shall deliver to Programmer a complete and detailed list of all
the Accounts Receivable of the Station. The accounting for the Accounts
Receivable shall follow the same method and practices as now employed by
Licensee for the Station, using where reasonable, the computer now being used by
Licensee, with Licensee's software programs, Licensee's General Manager shall
have the right to review and audit the Accounts Receivable record keeping and
collection process to verify the accuracy of the amount(s) collected by
Programmer.
3.9 Trade and Barter. Programmer shall be entitled to any goods,
services, or other items to be received after the Effective Date under trade or
barter agreement, and shall be obligated to include in its programming and to
air the advertising as required under the trade, barter, or similar arrangement.
3.10 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.
SECTION 4. INDEMNIFICATION
<PAGE> 11
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4.1 Programmer's Indemnification. Programmer shall indemnify and
hold harmless Licensee from and against any and all claims, losses, costs,
liabilities, damages, forfeitures and expenses (including reasonable legal fees
and other expenses incidental thereto) of every kind, nature and description
(collectively, "Damages") resulting from (i) Programmer's breach of any
representation, warranty, covenant or agreement contained in this Agreement, or
(ii) any action taken by Programmer or its employees and agents with respect to
the Station, or any failure by Programmer or its employees and agents to take
any action with respect to the Station, including, without limitation, damages
relating to violations of the Act or any rule, regulation or policy of the FCC,
slander, defamation or other claims relating to programming provided by
Programmer and Programmer's broadcast and sale of advertising time on the
Station.
4.2 Licensee's Indemnification. Licensee shall indemnify and hold
harmless Programmer from and against any and all claims, losses, consents,
liabilities, damages, FCC forfeitures and expenses (including reasonable legal
fees and other expenses incidental thereto) of every kind, nature and
description, arising out of Licensee's operations and broadcasts to the extent
permitted by law and any action taken by the Licensee or its employees and
agents with respect to the Station, or any failure by Licensee or its employees
and agents to take any action with respect to the Station.
4.3 Limitation. Neither Licensee nor Programmer shall be entitled to
indemnification pursuant to this section unless such claim for indemnification
is asserted in writing delivered to the other party.
4.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) 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. If the claim relates to an action, suit, or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant no later than
five (5) business days after written notice of such action, suit, or proceeding
was given to Claimant provided that the failure to timely give notice shall not
extinguish the Claimant's right to indemnification unless such failure
materially adversely affects the Indemnifying Party's rights.
(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> 12
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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 or its authorized representatives the
information relied upon by the Claimant to substantiate the claim. If the
Claimant and the Indemnifying Party agree in writing 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 or such amount as
agreed to by the parties. 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 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 indemnification rights provided herein shall extend to the
shareholders, directors, officers, employees, representatives and successors and
assigns of any Claimant although for the purpose of the procedures set forth in
this Section 4.4, any indemnification claims by such parties shall be made by
and through the Claimant.
4.5 Time Brokerage Challenge. If this Agreement is challenged at the
FCC, whether or not in connection with the Station's license renewal
application, counsel for the Licensee and counsel for the Programmer shall
jointly defend the Agreement and the parties' performance thereunder throughout
all FCC proceedings at the sole expense of the Programmer. If portions of this
Agreement do not receive the approval of the FCC Staff, then the parties shall
reform the Agreement as necessary to satisfy the FCC Staff's concerns or, at
Programmer's option and expense, seek reversal of the Staff's decision and
approval from the full Commission or a court of law.
<PAGE> 13
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SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE
5.1 Confidential Review. Prior to the commencement of any
programming by Programmer under this Agreement, Programmer shall acquaint the
Licensee with the nature and type of the programming to be provided. Licensee
shall be entitled to review at its discretion from time to time on a
confidential basis any of Programmer's programming material it may reasonably
request. Programmer shall promptly provide Licensee with copies of all
correspondence and complaints received from the public (including any telephone
logs of complaints called in), and copies of all program logs and promotional
materials. However, nothing in this section shall entitle Licensee to review the
internal corporate or financial records of the Programmer.
5.2 Political Advertising. Programmer shall cooperate with Licensee
to assist Licensee in complying with all rules of the FCC regarding political
broadcasting. Licensee shall promptly supply to Programmer, and Programmer shall
promptly supply to Licensee, such information, including all inquiries
concerning the broadcast of political advertising, as may be necessary to comply
with FCC rules and policies, including the lowest unit rate, equal
opportunities, reasonable access, political file and related requirements of
federal law. Licensee, in consultation with Programmer, shall develop a
statement which discloses its political broadcasting policies to political
candidates, and Programmer shall follow those policies and rates in the sale of
political programming and advertising. In the event that Programmer fails to
satisfy the political broadcasting requirements under the Act and the rules and
regulations of the FCC and such failure inhibits Licensee in its compliance with
the political broadcasting requirements of the FCC, then to the extent
reasonably necessary to assure such compliance, Programmer shall either provide
rebates to political advertisers or release broadcast time and/or advertising
availabilities to Licensee at no cost to Licensee.
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT
6.1 Termination.
A. In addition to other remedies available at law or equity, this
Agreement may be terminated as set forth below by either Licensee or Programmer
by written notice to the other if the party seeking to terminate is not then in
material default or material breach hereof, upon the occurrence of any of the
following:
(a) subject to the provisions of Section 7.9, this Agreement is
declared invalid or illegal in whole or substantial part by an order or decree
of an
<PAGE> 14
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administrative agency or court of competent jurisdiction and such order or
decree has become final and no longer subject to further administrative or
judicial review;
(b) the other party is in material breach of its
obligations hereunder and has failed to cure such breach within thirty (30) days
of notice from the non-breaching party;
(c) the mutual consent of both parties;
(d) there has been a material change in FCC rules,
policies or precedent that would cause this Agreement to be in violation thereof
and such change is in effect and not the subject of an appeal or further
administrative review and this Agreement cannot be reformed, in a manner
acceptable to Buyer and Seller, to remove and/or eliminate the violation;
(e) upon the sale of the Station to the Hearst
Corporation by Licensee; or
(f) upon the occurrence of an Event of Default.
B. During any period prior to the effective date of any
termination of this Agreement, Programmer and Licensee agree to cooperate in
good faith to ensure that Station's 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.
C. For purposes of this Section 6, "Event of Default" shall
mean any Event of Default under and as defined in the PCC Credit Agreement,
provided that (A) any such Event of Default arising under any provision of
Section 7 of the PCC Credit Agreement other than paragraphs (a), (g), (h), (i),
(k) or (p) thereof shall not constitute an Event of Default for purposes hereof
if it shall have been waived in writing within five (5) days after its
occurrence and the Agent shall have received a true and complete copy of such
waiver, (B) any such Event of Default arising under Section 7 other than
paragraphs (a), (g), (h), (i), (k) or (p) shall not constitute an Event of
Default for purposes hereof if it shall have been waived in writing within
thirty (30) days after its occurrence and the Agent shall have received a true
and complete copy of such waiver.
6.2 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
<PAGE> 15
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facilities, in whole or in part, for broadcast, due to Acts of God, strikes,
lockouts, material or labor restrictions by any governmental authority, civil
riot, floods and any other cause not reasonably within the control of Licensee,
or for power reductions necessitated for maintenance of the Station or for
maintenance of other Station located on the tower from which the Station will be
broadcasting, shall not constitute a breach of this Agreement and Licensee will
not be liable to Programmer for reimbursement or reduction of the consideration
owed to Licensee.
6.3 Other Agreements. During the term of this Agreement or any
renewal hereof, Licensee will not enter into any other agreement with any third
party that would conflict with or result in a material breach of this Agreement
by Licensee.
SECTION 7. MISCELLANEOUS
7.1 Assignment.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
(b) 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.
7.2 Call Letters. Upon request of Programmer, subject to the consent
of the Licensee, Licensee shall apply to the FCC for authority to change the
call letters of the Station (with the consent of the FCC) to such call letters
that Programmer shall reasonably designate. Licensee must coordinate with
Programmer any such 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 (including 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.
<PAGE> 16
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7.5 Taxes. Licensee and Programmer shall each pay its own ad valorem
taxes, if any, which may be assessed on such party's respective personal
property for the periods that such items are owned by such party. Programmer
shall pay all taxes, if any, to which the consideration specified in Section 1.5
herein is subject, provided that Licensee is responsible for payment of its own
income taxes.
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
7.7 Governing Law. The obligations of Licensee and Programmer are
subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Act and the Rules and Regulations of the FCC.
The construction and performance of the Agreement will be governed by the laws
of the State of Florida with the exception of its conflicts of law provision.
Both parties hereby waive their right to a trial by jury. The parties agree to
the exclusive jurisdiction and venue of the state or federal district court for
the district including West Palm Beach, 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 Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Mr. Lowell W. Paxson
To Licensee:
Paxson Communications of
West Palm Beach - 25, Inc., and Paxson
West Palm Beach License, Inc.
3970 RCA Boulevard, Suite 7007
Palm Beach Gardens, Florida 33401
Attention: Mr. Lowell W. Paxson
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
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remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law. In the event that the FCC alters or
modifies its rules or policies in a fashion which would raise substantial and
material question as to the validity of any provision of this Agreement, the
parties hereto shall negotiate in good faith to revise any such provision of
this Agreement with a view toward assuring compliance with all then existing FCC
rules and policies which may be applicable, while attempting to preserve, as
closely as possible, the intent of the parties as embodied in the provision of
this Agreement which is to be so modified.
7.10 No Joint Venture. Nothing in this Agreement shall be deemed to
create a joint venture between the Licensee and the Programmer.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Time
Brokerage Agreement the day and year first above written.
LICENSEE: PAXSON COMMUNICATIONS OF WEST
PALM BEACH - 25, INC.
PAXSON WEST PALM BEACH LICENSE, INC.
By: /s/ Anthony L. Morrison
-------------------------------------
Name: Anthony L. Morrison
Title: Vice President
PROGRAMMER: PAXSON COMMUNICATIONS
CORPORATION
By: /s/ Lowell W. Paxson
---------------------------------------
Name: Lowell W. Paxson
Title: Chairman and CEO
<PAGE> 19
ATTACHMENT I
Station's Expenses
Programmer shall reimburse Licensee for Licensee's payment of
the Station expenses included in Reimbursable Expenses as defined below.
The reimbursement payments shall be made delivery of checks to
Licensee at the address specified in Section 7.8 hereof, covering the expenses
included in the following categories.
(1) Lease and Utility Payments
(2) Employee Salaries and Benefits (WPBF
employees, as of April 29, 1997)
(3) Property Insurance and Taxes
(4) Business and Regulatory Fees and Licenses
(5) Miscellaneous Station Expenses
(6) Equipment Maintenance, and Repair
(7) Interest payments (including, without
limitation, interest payable at a default
rate) due under (i) the Credit Agreement
dated as of April 29, 1997, between the
Licensee, WPBF Exchange, Inc. And Banque
Paribas, individually and as Agent, as
originally executed and delivered and as
amended, restated, renewed, replaced or
otherwise modified hereafter, provided that
any such modification that would materially
increase the amounts payable by Programmer
under Section 1.5 hereof shall be null and
void as to Programmer unless such
modification is approved by Programmer and
(ii) that certain Subordinated Note dated
April 29, 1997, by and among Licensee and
Paxson Communications of Florida, Inc.
<PAGE> 20
ATTACHMENT II
Broadcast Station Programming Policy Statement
<PAGE> 21
BROADCAST STATION PROGRAMMING POLICY STATEMENT
The following sets forth the policies generally applicable to the
presentation of programming and advertising over Television Station WPBF-TV,
Tequesta, Florida. 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; followed immediately
by (2) the station's city of license.
Broadcast of Telephone Conversations
Before recording a telephone conversation for broadcast or broadcasting such a
conversation simultaneously with its occurrence, any party to the call must be
informed that the call will be broadcast or will be recorded for later
broadcast, and the party's consent to such broadcast must be obtained. This
requirement does not apply to calls initiated by the other party which are made
in a context in which it is customary for the station to broadcast telephone
calls.
Sponsorship Identification
When money, service, or other valuable consideration is either directly or
indirectly paid or promised as part of an arrangement to transmit any
programming, the station at the time of broadcast shall announce (1) that the
matter is sponsored, either whole or in part; and (2) by whom or on whose behalf
the matter is sponsored. Products or services furnished to the station in
consideration for an identification of any person, product, service, trademark
or brand name shall be identified in this manner.
In the case of any political or controversial issue broadcast for which any
material or service is furnished as an inducement for its transmission, an
announcement shall be made at the beginning and conclusion of the broadcast
stating (1) the material or service that has been furnished; and (2) the
person(s) or association(s) on whose behalf the programming is transmitted.
However, if the broadcast is 5 minutes duration or less, the required
announcement need only be made either at its beginning or end.
Prior to any sponsored broadcast involving political matters or controversial
issues, the station shall obtain a list of the chief executive officers, members
of the executive committee or board of directors of the sponsoring organization
and shall place this list in the station's public inspection file.
<PAGE> 22
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Payola/Plugola
The station, its personnel, or its programmers shall not accept or agree to
accept from any person any money, service, or other valuable consideration for
the broadcast of any matter unless such fact is disclosed to the station so that
all required station identification announcements can be made. All persons
responsible for station programming must, from time to time, execute such
documents as may be required by station management to confirm their
understanding of and compliance with the FCC's sponsorship identification
requirements.
Rebroadcasts
The station shall not rebroadcast the signal of any other broadcast station
without first obtaining such station's prior written consent to such
rebroadcast.
Fairness
Station shall seek to afford coverage to contrasting viewpoints concerning
controversial issues of public importance.
Personal Attacks
The station shall not air attacks upon the honesty, character, integrity or like
personal qualities of any identified person or group. If such an attack should
nonetheless occur during the presentation of views on a controversial issue of
public importance, those responsible for programming shall submit a tape or
transcript of the broadcast to station management and to the person attacked
within 48 hours, and shall offer the person attacked a reasonable opportunity to
respond.
Political Editorials
Unless specifically authorized by station management, the station shall not air
any editorial which either endorses or opposes a legally qualified candidate for
public office.
Political Broadcasting
All "uses" of the station by legally qualified candidates for elective office
shall be in accordance with the Act and the FCC's Rules and policies, including
without limitation, equal opportunities requirements, reasonable access
requirements, lowest unit charge requirements and similar rules and regulations.
<PAGE> 23
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Obscenity and Indecency
The station shall not broadcast any obscene material. Material is deemed to be
obscene if the average person, applying contemporary community standards in the
local community, would find that the material, taken as a whole, appeals to the
prurient interest; depicts or describes in a patently offensive way sexual
conduct specifically defined by applicable state law; and taken as a whole,
lacks serious literary artistic, political or scientific value.
The station shall not broadcast any indecent material outside of the periods of
time prescribed by the Commission. Material is deemed to be indecent if it
includes language or material that, in context, depicts or describes, in terms
patently offensive as measured by contemporary community standards for the
broadcast medium, sexual or excretory activities or organs.
Billing
No entity which sells advertising for airing on the station shall knowingly
issue any bill, invoice or other document which contains false information
concerning the amount charged or the broadcast of advertising which is the
subject of the bill or invoice. No entity which sells advertising for airing on
the station shall misrepresent the nature or content of aired advertising, nor
the quantity, time of day, or day on which such advertising was broadcast.
Contests
Any contests conducted on the station shall be conducted substantially as
announced or advertised. Advertisements or announcements concerning such
contests shall fully and accurately disclose the contest's material terms. No
contest description shall be false, misleading or deceptive with respect to any
material term.
Hoaxes
The station shall not knowingly broadcast false information concerning a crime
or catastrophe.
Emergency Information
Any emergency information which is broadcast by the station shall be transmitted
both aurally and visually or only visually.
<PAGE> 24
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Lottery
The station shall not advertise or broadcast any information concerning any
lottery (except the Florida State Lottery and any other state lottery). The
station may advertise and provide information about lotteries conducted by
non-profit groups, governmental entities and in certain situations, by
commercial organizations, if and only if there is no state or local restriction
or ban on such advertising or information and the lottery is legal under state
or local law. Any and all lottery advertising must first be approved by station
management.
Advertising
Station shall comply with all federal, state and local laws concerning
advertising, including without limitation, all laws concerning misleading
advertising, and the advertising of alcoholic beverages.
Programming Prohibitions.
Knowing broadcast of the following types of programs and announcements is
prohibited:
False Claims. False or unwarranted claims for any product or
service.
Unfair Imitation. Infringements of another advertiser's rights
through plagiarism or unfair imitation of either program idea or
copy, or any other unfair competition.
Commercial Disparagement. Any unfair disparagement of competitors or
competitive goods.
Profanity. Any programs or announcements that are slanderous,
obscene, profane, vulgar, repulsive or offensive, as evaluated by
station management.
Violence. Any programs which are excessively violent.
Unauthenticated Testimonials. Any testimonials which cannot be
authenticated.
<PAGE> 25
ATTACHMENT III
Payola Statement
<PAGE> 26
FORM OF PAYOLA AFFIDAVIT
City of _____________ )
)
County of____________ ) SS:
)
State of_____________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
________________________, being first duly sworn, deposes and says as follows:
1. He is _____________________ for _____________________.
Position
2. He has acted in the above capacity since ____________.
3. No matter has been broadcast by Station for which service, money or
other valuable consideration has been directly or indirectly paid,
or promised to, or charged, or accepted, by him from any person,
which matter at the time so broadcast has not been announced or
otherwise indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station ___
for which service, money, or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or accepted
by Station ____ or by any independent contractor engaged by
Station _____ in furnishing programs, from any person, which matter
at the time so broadcast has not been announced or otherwise
indicated as paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation of presentation of
broadcast matter on Station ____.
6. Nothing contained herein is intended to, or shall prohibit receipt
or acceptance of anything with the expressed knowledge and approval
of my employer, but henceforth any such approval must be given in
writing by someone expressly authorized to give such approval.
7. He, his spouse and his immediate family do ___ do not ___have any
present direct or indirect ownership interest in (other than an
investment in a corporation
<PAGE> 27
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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 Station;
5. The wholesale or retail sale of records intended for
public purchase;
6. Advertising on Station ____, or any other station owned
by its licensee (excluding nominal stockholdings in
publicly owned companies).
8. The facts and circumstances relating to such interest are none ___as
follows _________:
___________________________________________________________________
______________________________________________________________
---------------------------------
Affiant
Subscribed and sworn to before me
this________day of _______________, 19___.
- -------------------------
Notary Public
My Commission expires:
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