<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ___________
Commission File Number 1-13452
PAXSON COMMUNICATIONS CORPORATION
--------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 59-3212788
------------------------------- ------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401
------------------------------- ---------------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (561) 659-4122
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
proceeding 12 months (or for shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of August 5, 1997:
CLASS OF STOCK NUMBER OF SHARES
- --------------------------- -----------------------
COMMON STOCK-CLASS A, $0.001
PAR VALUE PER SHARE --------------------- 49,604,750
COMMON STOCK-CLASS B, $0.001
PAR VALUE PER SHARE ---------------------- 8,311,639
<PAGE> 2
PAXSON COMMUNICATIONS CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Part I - Financial Information
Item 1. Financial Statements
--------------------
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations
Six Months Ended June 30, 1997 and 1996 4
Consolidated Statements of Operations
Three Months Ended June 30, 1997 and 1996 5
Consolidated Statements of Changes in
Common Stockholders' Equity 6
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996 7-8
Notes to Consolidated Financial Statements 9-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12-20
Part II - Other Information
Item 1. Legal Proceedings 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 6. Exhibits and Reports on Form 8-K 21-22
Signatures 23
</TABLE>
2
<PAGE> 3
PAXSON COMMUNICATIONS CORPORATION
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------- -------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 35,270,986 $ 61,748,788
Accounts receivable, less allowance for doubtful
accounts of $1,234,648 and $1,576,593 respectively 27,769,670 29,860,998
Note receivable from related party 10,000,000 --
Prepaid expenses and other current assets 4,026,706 2,713,565
Current program rights 697,235 1,512,019
------------- -------------
Total current assets 77,764,597 95,835,370
Property and equipment, net 149,668,039 144,415,412
Intangible assets, net 319,788,909 220,409,421
Investments in broadcast properties 93,560,555 53,297,022
Program rights, net 491,307 1,075,536
Other assets, net 59,115,445 28,149,699
------------- -------------
Total assets $ 700,388,852 $ 543,182,460
============= =============
LIABILITIES, REDEEMABLE SECURITIES AND COMMON STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 15,693,028 $ 10,676,692
Accrued interest 8,077,327 6,684,373
Current portion of program rights payable 812,878 1,628,959
Current portion of long-term debt 650,969 644,509
------------- -------------
Total current liabilities 25,234,202 19,634,533
Program rights payable 381,211 1,000,260
Deferred gain 12,100,000 --
Long-term debt 108,052,762 3,407,688
Senior subordinated notes, net 227,799,903 227,655,096
Redeemable Cumulative Compounding Junior preferred
stock, $0.001 par value; 12% dividend rate per annum,
33,000 shares authorized, issued and outstanding 39,620,366 36,780,496
Redeemable Exchangeable Preferred stock, $0.001 par value;
12.5% dividend rate per annum, 440,000 shares authorized,
150,000 shares issued and outstanding 157,737,583 147,929,150
Class A common stock, $0.001 par value; one vote per share;
150,000,000 shares authorized, 42,621,629 shares issued
and outstanding 42,621 40,442
Class B common stock, $0.001 par value; ten votes per
share, 35,000,000 shares authorized, 8,311,639 shares
issued and outstanding 8,312 8,312
Class C common stock, $0.001 par value; non-voting;
12,500,000 shares authorized, 0 shares issued and
outstanding -- --
Class A & B common stock warrants 6,862,647 6,862,647
Class C common stock warrants -- 2,335,528
Stock subscription notes receivable (2,813,250) (1,873,139)
Additional paid-in capital 212,969,799 209,621,241
Deferred option plan compensation (5,147,429) (6,397,916)
Accumulated deficit (82,459,875) (103,821,878)
------------- -------------
Commitments and contingencies
Total liabilities, redeemable securities and
common stockholders' equity $ 700,388,852 $ 543,182,460
============= =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
3
<PAGE> 4
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
----------------------------
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Revenue:
Local and national advertising $ 36,344,260 $ 27,068,544
Other 1,079,164 878,946
Trade and barter 50,915 99,561
------------ ------------
Total revenue 37,474,339 28,047,051
Operating expenses:
Direct 6,716,577 4,572,686
Programming 1,962,192 1,048,609
Sales and promotion 1,595,906 1,481,821
Technical 4,065,445 1,774,248
General and administrative 11,970,586 8,428,075
Trade and barter 51,743 1,849
Time brokerage agreement fees 2,400,695 1,240,911
Option plan compensation 1,431,837 2,037,666
Depreciation and amortization 8,933,749 4,971,998
------------ ------------
Total operating expenses 39,128,730 25,557,863
------------ ------------
Operating (loss) income (1,654,391) 2,489,188
Other income (expense):
Interest expense (17,931,024) (15,047,085)
Interest income 2,693,274 4,033,464
Other expense, net (621,827) (614,563)
------------ ------------
Loss from continuing operations (17,513,968) (9,138,996)
Discontinued operations:
Income (loss) from discontinued operations, net of
applicable income taxes (631,186) 1,133,667
Gain on sale, net of applicable income taxes 52,204,780 --
------------ ------------
Income from discontinued operations 51,573,594 1,133,667
------------ ------------
Net income (loss) 34,059,626 (8,005,329)
Dividends and accretion on preferred stock and common stock
warrants (12,697,623) (7,414,034)
------------ ------------
Net income (loss) attributable to common stock and common
stock equivalents $ 21,362,003 $(15,419,363)
============ ============
Income (loss) per common share:
Loss from continuing operations $ (0.31) $ (0.23)
Income from discontinued operations 0.92 0.03
------------ ------------
Net income (loss) 0.61 (0.20)
Dividends and accretion on preferred stock and
common stock warrants (0.23) (0.18)
------------ ------------
Net income (loss) attributable to common stock and
common stock equivalents $ 0.38 $ (0.38)
============ ============
Weighted average common stock and common stock equivalents
outstanding 56,017,672 40,566,865
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of the consolidated financial
statements.
4
<PAGE> 5
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
----------------------------
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Revenue:
Local and national advertising $ 17,920,364 $ 14,420,955
Other 591,560 511,777
Trade and barter 25,075 61,910
------------ ------------
Total revenue 18,536,999 14,994,642
Operating expenses:
Direct 3,378,818 2,461,996
Programming 980,312 556,062
Sales and promotion 750,561 781,962
Technical 2,029,279 994,257
General and administrative 5,616,193 4,504,936
Trade and barter 39,583 --
Time brokerage agreement fees 1,375,191 762,364
Option plan compensation 717,832 312,702
Depreciation and amortization 4,854,019 2,636,273
------------ ------------
Total operating expenses 19,741,788 13,010,552
------------ ------------
Operating (loss) income (1,204,789) 1,984,090
Other income (expense):
Interest expense (9,195,582) (7,348,429)
Interest income 1,377,392 3,202,568
Other expense, net (767,569) (607,424)
------------ ------------
Loss from continuing operations (9,790,548) (2,769,195)
Discontinued operations:
Income from discontinued operations, net of applicable
income taxes
104,390 1,382,526
Gain on sale, net of applicable income taxes 52,204,780 --
------------ ------------
Income from discontinued operations 52,309,170 1,382,526
------------ ------------
Net income (loss) 42,518,622 (1,386,669)
Dividends and accretion on preferred stock and common stock
warrants (6,425,984) (2,466,085)
------------ ------------
Net income (loss) attributable to common stock and common stock equivalents
$ 36,092,638 $ (3,852,754)
============ ============
Income (loss) per common share:
Loss from continuing operations $ (0.17) $ (0.06)
Income from discontinued operations 0.93 0.03
------------ ------------
Net income (loss) 0.76 (0.03)
Dividends and accretion on preferred stock and
common stock warrants (0.11) (0.05)
------------ ------------
Net income (loss) attributable to common stock and
common stock equivalents $ 0.65 $ (0.08)
============ ============
Weighted average common stock and common stock equivalents
outstanding 56,188,787 46,570,794
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
5
<PAGE> 6
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Changes in Common Stockholders' Equity
<TABLE>
<CAPTION>
Common Stock ClassA&B Class Stock
Common C Subscription
Class Class Class Stock Common Stock Notes
A B C Warrants Warrants Receivable
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 26,227 $8,312 $-- $ -- $ 5,338,952 $ (115,714)
Release of Put option on Class A&B
common stock warrants 9,116,399
Issuance of common stock, net of
issuance costs 10,300
Exercise of Class A,B&C common stock
warrants 3,623 (2,253,752) (3,003,424)
Stock issued for Todd Communications
acquisition 139
Deferred option plan compensation
Option plan compensation
Increase in stock subscription notes
receivable (1,873,139)
Stock options exercised 153
Repayment of stock subscription note
receivable 115,714
Dividends on redeemable preferred
stock
Accretion on Senior redeemable
preferred stock
Accretion on Series B preferred stock
Accretion on Junior preferred stock
Accretion on Redeemable Exchangeable
preferred stock
Accretion on Class A & B common
stock warrants
Net loss
------- ------ --- ----------- ----------- -----------
Balance at December 31, 1996 40,442 8,312 - 6,862,647 2,335,528 (1,873,139)
Deferred option plan compensation
(unaudited)
Option plan compensation (unaudited)
Exercise of Class C common stock
warrants (unaudited) 2,123 (2,335,528)
Stock options exercised (unaudited) 56
Increase in stock subscription
receivable (unaudited) (940,111)
Dividends on redeemable
preferred stock (unaudited)
Accretion on Junior preferred stock
(unaudited)
Accretion on Redeemable Exchangeable
preferred stock (unaudited)
Net loss (unaudited)
------- ------ --- ----------- ----------- -----------
Balance at June 30, 1997 (unaudited) $42,621 $8,312 $ - $ 6,862,647 $ - $(2,813,250)
======= ====== === =========== =========== ===========
<CAPTION>
Additional Deferred Option
Paid-in Plan Accumulated
Capital Compensation Deficit
------------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1995 $ 34,342,086 $(1,384,267) $(55,694,393)
Release of Put option on Class A&B
common stock warrants
Issuance of common stock, net of
issuance costs 154,789,700
Exercise of Class A,B&C common stock
warrants 5,253,548
Stock issued for Todd Communications
acquisition 1,534,967
Deferred option plan compensation 12,932,506 (12,932,506)
Option plan compensation 7,918,857
Increase in stock subscription notes
receivable
Stock options exercised 768,434
Repayment of stock subscription note
receivable
Dividends on redeemable preferred
stock (13,223,227)
Accretion on Senior redeemable
preferred stock (1,805,599)
Accretion on Series B preferred stock (3,418,615)
Accretion on Junior preferred stock (650,084)
Accretion on Redeemable Exchangeable
preferred stock (159,977)
Accretion on Class A & B common
stock warrants (2,651,082)
Net loss (26,218,901)
------------ ----------- ------------
Balance at December 31, 1996 209,621,241 (6,397,916) (103,821,878)
Deferred option plan compensation
(unaudited) 823,362 (823,362)
Option plan compensation (unaudited) 2,073,849
Exercise of Class C common stock
warrants (unaudited) 2,333,390
Stock options exercised (unaudited) 191,806
Increase in stock subscription
receivable (unaudited)
Dividends on redeemable
preferred stock (unaudited) (12,029,325)
Accretion on Junior preferred stock (332,770)
(unaudited)
Accretion on Redeemable Exchangeable
preferred stock (unaudited) (335,528)
Net loss (unaudited) 34,059,626
------------ ----------- -------------
Balance at June 30, 1997 (unaudited) $212,969,799 $(5,147,429) $ (82,459,875)
============ =========== =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
6
<PAGE> 7
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
------------------------------
1997 1996
--------- -------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 34,059,626 $ (8,005,329)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 18,090,587 11,736,929
Option plan compensation 2,073,849 2,291,917
Program rights amortization 603,277 721,802
Provision for doubtful accounts 789,636 427,256
Loss on sale or disposal of assets 1,342,012 13,651
Gain on sale of television station (52,204,780) --
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 1,301,692 (2,055,044)
Increase in prepaid expenses and other current
assets (1,391,823) (1,516,165)
Increase in other assets (3,999,847) (1,863,879)
Increase in accounts payable and accrued
liabilities 310,833 1,806,130
Increase (decrease) in accrued interest 1,392,954 (202,292)
------------- -------------
Net cash provided by operating activities 2,368,016 3,354,976
------------- -------------
Cash flows from investing activities:
Acquisitions of broadcast properties (130,364,496) (61,965,301)
Increase in deposits on broadcast properties (27,525,000) (6,907,000)
Increase in investments in broadcast properties (25,263,534) (17,695,363)
Purchases of property and equipment (24,664,492) (13,936,104)
Deposits made on buildings and equipment (136,027) --
Proceeds from sale of television station 75,000,000 --
Proceeds from sale of fixed assets 911,644 228,279
------------- -------------
Net cash used in investing activities (132,041,905) (100,275,489)
------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net -- 154,911,521
Proceeds from long-term debt 105,000,000 17,700,000
Payments of long-term debt (348,466) (27,930,270)
Proceeds from exercise of common stock options, net 191,862 465,893
Increase in stock subscription notes receivable (940,111) --
Repayments of stock subscription notes receivable -- 98,214
Payments for program rights (707,198) (818,706)
------------- -------------
Net cash provided by financing activities 103,196,087 144,426,652
------------- -------------
(Decrease) increase in cash and cash equivalents (26,477,802) 47,506,139
------------- -------------
Cash and cash equivalents at beginning of period 61,748,788 68,070,990
------------- -------------
Cash and cash equivalents at end of period $ 35,270,986 $ 115,577,129
============= =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
7
<PAGE> 8
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
------------------------
1997 1996
----------- ----------
(Unaudited)
<S> <C> <C>
Supplemental disclosures of cash flow
information:
Cash paid for interest $15,498,665 $14,478,551
=========== ===========
Cash paid for income taxes $ - $ -
=========== ===========
Non-cash operating and financing activities:
Accretion of discount on senior subordinated notes $ 144,807 $ 132,544
=========== ===========
Issuance of common stock for Todd Communications
acquisition $ - $ 1,535,106
=========== ===========
Note payable incurred for WOCD-TV Acquisition $ - $ 1,650,000
=========== ===========
Dividends accreted on redeemable preferred stock $12,029,325 $ 4,062,482
=========== ===========
Accretion on redeemable securities $ 668,298 $ 3,351,552
=========== ===========
Trade and barter revenue $ 2,301,511 $ 1,767,993
=========== ===========
Trade and barter expense $ 2,257,659 $ 1,357,018
=========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
8
<PAGE> 9
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Paxson Communications Corporation's (the "Company") financial information
contained in the financial statements and notes thereto as of June 30, 1997 and
for the six and three month periods ended June 30, 1997 and 1996, are unaudited.
In the opinion of management, all adjustments necessary for the fair
presentation of such financial information have been included. These adjustments
are of a normal recurring nature. There have been no changes in accounting
policies since the period ended December 31, 1996. The composition of accounts
has significantly changed since December 31, 1996 to reflect the operations of
acquisitions discussed elsewhere herein and as a result of operations sold or to
be sold as discussed below.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. Certain reclassifications have been made to the
prior year's financial statements to conform with the 1997 presentation. These
financial statements, footnotes, and discussions should be read in conjunction
with the December 31, 1996 financial statements and related footnotes and
discussions contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, the definitive proxy statement for the annual meeting of
stockholders held May 2, 1997, and Forms 8-K dated January 10, 1997 and
April 29, 1997, all of which were filed with the United States Securities and
Exchange Commission.
2. Discontinued Operations
On June 23, 1997, the Company announced that it entered into a letter of intent
to sell its radio segment, including radio stations currently under acquisition
contracts, to Clear Channel Communications, Inc. ("Clear Channel"), subject to,
among other things, the negotiation and execution of definitive documentation
and the receipt of various regulatory approvals. The Company and Clear Channel
are currently negotiating definitive agreements to provide for the sale
of substantially all of the radio segment. In order to comply with certain
regulatory requirements, and other considerations, it is currently contemplated
that the Company will retain ownership of a limited amount of assets included
in the radio segment located in Miami, Tampa, West Palm Beach and Pensacola
markets. The sale is being structured in part as a tax free exchange,
permitting the Company to defer a portion of the gain on the radio sale for tax
purposes. If a definitive agreement with Clear Channel is entered into, the
radio segment sale would be 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. The Company does not
anticipate an operating loss during the phase-out period of this segment. If a
definitive agreement is not entered into with Clear Channel, the Company
currently expects to discuss the potential sale of its radio segment with other
potential buyers. Because of the decision to sell substantially all of the
radio segment, the results of operations for Paxson Radio, net of applicable
income tax, have been presented as discontinued operations in the accompanying
Consolidated Statements of Operations for all periods presented. There can be
no assurance that an agreement will be reached with Clear Channel or that the
Company will reach an agreement with another potential buyer on terms
acceptable to the Company.
The Paxson Radio operations generated revenues of approximately $51,212,000 and
$31,627,000, and $27,074,000 and $17,091,000, for the six and three month
periods ended June 30, 1997 and 1996, respectively.
On February 19, 1997, the Company entered into a definitive agreement to sell
its interests in WTVX-TV. In addition, on March 25, 1997, the Company entered
into a definitive agreement to sell WPBF-TV. Because of the decision to sell
both stations, the results of operations for the Paxson Network Affiliated
Television operations, net of applicable income tax, have been reclassified and
presented as discontinued operations in the accompanying Consolidated
Statements of Operations for all periods presented. The assets comprising the
Paxson Network Affiliated Television segment were sold as of July 31, 1997 for
aggregate consideration of approximately $119 million. The sale of the
Company's interest in WTVX-TV was consummated on July 31, 1997 and resulted in
a pre-tax gain of approximately $13 million. The Company sold WPBF-TV as
discussed in the following paragraphs. The Company did not experience an
operating loss during the phase-out period of this segment.
Two wholly-owned subsidiaries of the Company 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" and together with
WPBF-25, "WPBF Sellers"), 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 relating to
WPBF-TV to Hearst for $85 million.
On April 29, 1997, the Company transferred, by merger, its interests in WPBF
Sellers to WPBF Exchange, Inc. ("WPBF Exchange"), for consideration payable to
Paxson Communications of Florida, Inc., a wholly-owned subsidiary of the
Company, of $85 million, consisting of $75 million cash and a subordinated
promissory note (the "Note") in the principal amount of $10 million
(collectively, the "Merger"). WPBF Exchange is controlled by Lowell W. Paxson
("Mr. Paxson"),
9
<PAGE> 10
the Chairman of the Board and Chief Executive Officer of the
Company. WPBF Merger and WPBF License obtained a loan to finance the Merger from
Banque Paribas. Neither the Company nor any of its Subsidiaries were liable for
the repayment of such loan.
As a result of the Merger, the Company received a majority of the consideration
payable in connection with the sale of WPBF-TV on April 29, 1997 rather than
July 31, 1997. This sale resulted in a pre-tax gain to the Company of
approximately $52 million. No tax effect has been included related to the
WPBF-TV sale gain as the Company has sufficient net operating loss
carryforwards for utilization to offset the taxable income generated by the gain
on the sale of WPBF-TV in its entirety. The Company used approximately $52
million of such net operating loss carryforwards to offset the gain on the sale
of WPBF-TV (and the Company has reversed a portion of its valuation allowance on
its deferred tax asset related to the net operating losses to be used to offset
such taxable gain) leaving approximately $11.8 million of net operating loss
carryforwards remaining. Because the utilization of the net operating loss
resulted from the gain on discontinued operations, the deferred tax benefit
arising from the reversal of the valuation allowance has been included in the
calculation of such gain. A portion of the net operating losses remaining,
amounting to approximately $7.9 million, were acquired in the acquisition of
The American Network Group, Inc. ("ANG") and are limited to annual utilization
as a result of the change in ownership. The deferred tax assets associated with
these net operating loss carryforwards have been fully reserved in the past as
a result of prior uncertainty surrounding their recoverability. The Company
anticipates utilizing the remaining non-ANG loss carryforwards to reduce the
tax liability from the WTVX-TV sale gain in the third quarter of 1997. The
deferred tax benefit arising from the reversal of the valuation allowance on
the deferred tax asset resutling from such net operating losses will be
included in the calculation of the gain on the sale of WTVX-TV when such gain
is realized.
The Asset Sale Agreement between WPBF Sellers and Hearst was consummated on
July 31, 1997. Upon consummation of this transaction, WPBF Sellers paid the
$10 million note to the Company using proceeds from the asset sale. Mr. Paxson
realized no direct financial benefit from this transaction.
The Paxson Network Affiliated Television operations generated revenues of
approximately $10,779,000 and $9,696,000, and $5,495,000 and $5,156,000 for the
six and three month periods ended June 30, 1997 and 1996, respectively.
The components of net assets of discontinued operations (both Radio and
Television) included in the consolidated balance sheets at June 30, 1997 and
December 31, 1996, are as follows:
<TABLE>
1997 1996
----- ----
<S> <C> <C>
Current assets $ 20,995,995 $ 23,017,001
Noncurrent assets 237,313,241 180,194,830
------------ ------------
Total assets 258,309,236 203,211,831
============ ============
Current liabilities 7,124,012 8,344,163
Noncurrent liabilities 854,864 1,576,467
------------ ------------
Total liabilities 7,978,876 9,920,630
------------ ------------
Total net assets $250,330,360 $193,291,201
============ ============
</TABLE>
Net assets of discontinued operations at June 30, 1997 and December 31, 1996
excludes cash and cash equivalents and accounts receivable of Paxson Network
Affiliated Television which will be retained by the Company. Additionally,
Senior Subordinated Notes, the related deferred loan origination costs and
accrued interest payable have been excluded from the net assets of the
discontinued operations as the Senior Subordinated Notes will not be assumed by
the buyers of the discontinued operations.
3. Common Stock Warrants
During the quarter ended June 30, 1997 2,123,243 Class C common stock warrants
were exercised for approximately 2,123,047 shares of Class A common stock. At
June 30, 1997 no Class C common stock warrants are outstanding.
In July 1997, the holders of the Company's Class A and B common stock warrants
exercised 32.5083 warrants for 900,000 shares of Class A common stock. The
Company has 65.6373 redeemable common stock warrants still outstanding which
entitle the holders to purchase 1,363,883 Class A common shares and 454,627
Class B common shares.
10
<PAGE> 11
4. Income (Loss) Per Share Data
Computations of the weighted average common stock and common stock equivalents
outstanding are as follows:
<TABLE>
<CAPTION>
.................... FOR THE SIX MONTHS FOR THE THREE MONTHS
.................... ENDED JUNE 30, ENDED JUNE 30,
------------------------- --------------------
.................... 1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average Class A and
Class B common stock outstanding 49,641,437 40,566,865 50,495,490 46,570,794
Weighted average of options
outstanding assumed exercised 2,385,100 * 2,550,147 *
Weighted average of common stock
warrants outstanding assumed
exercised 3,991,135 * 3,143,150 *
---------- ---------- ---------- ----------
Weighted average common stock and
common stock equivalents
outstanding 56,017,672 40,566,865 56,188,787 46,570,794
========== ========== ========== ==========
</TABLE>
* In accordance with Accounting Principles Board Opinion No.15, the Company does
not present fully diluted EPS in the Consolidated Statements of Operations
because the Company's common stock equivalents were anti-dilutive or resulted in
a less than 3% dilution for the periods presented.
5. New Financial Accounting Standards
In February 1997, the Financial Accounting Standards Board ("FASB") adopted
Statement of Financial Standards ("SFAS") No.128, "Earnings per Share". The
Statement establishes standards for computing and presenting earnings per share
and applies to entities with publicly held common stock or potential common
stock. The Statement is effective for financial statements issued for periods
ending after December 15, 1997 and earlier application is not permitted. The
adoption of SFAS No. 128 is not expected to have a material effect on the
Company's earnings per share computation.
In February 1997, the FASB adopted SFAS No.129, "Disclosure of Information about
Capital Structure". The Statement establishes standards for disclosing
information about an entity's capital structure. The Statement is effective for
periods ending after December 15, 1997 and earlier application is not permitted.
The adoption of SFAS No. 129 is not expected to affect the Company's capital
structure disclosure.
In June 1997, the FASB adopted SFAS No.130, "Reporting Comprehensive Income".
The Statement establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains, and losses) in a full set
of general-purpose financial statements. The Statement is effective for fiscal
years beginning after December 15, 1997. Reclassification of financial
statements for earlier periods provided for comparative purposes is required.
The adoption of SFAS No. 130 will not affect the Company's financial statements.
In June 1997, the FASB adopted SFAS No.131, "Disclosures about Segments of an
Enterprise and Related Information". The Statement establishes standards for the
way that a public business enterprise reports information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim reports issued
to shareholders. The Statement is effective for periods beginning after December
31, 1997. Restatement of earlier periods provided for comparative purposes is
required in the year of application. The adoption of SFAS No. 131 will not
affect the Company's segment reporting disclosure.
11
<PAGE> 12
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Since its inception in 1991, the Company has grown primarily through the
acquisition or management of radio and television broadcast stations and radio
networks, as well as the subsequent improvement of these properties' operations.
Certain of the Company's television stations were and continue to be operated
pursuant to time brokerage agreements for various periods. Under time brokerage
agreements, the stations' operating revenues and expenses are controlled by the
Company and are included in the consolidated statements of operations. The
Company currently operates two business segments: (1)Paxson Television, a
nationwide network of owned, operated or affiliated television stations carrying
its proprietary network, which presently broadcasts long form paid programming
consisting primarily of infomercials; and (2) The Travel Channel, a 24 hour per
day cable television network dedicated to travel related programming acquired
by the Company on July 11, 1997. Two other business segments, Paxson Radio and
Paxson Network-Affiliated Television have been classified as discontinued
operations for financial reporting purposes as a result of the Company's
decision made during 1997 to sell these segments. See Note 2 of the Notes to
Consolidated Financial Statements incorporated by reference herein.
The Company's operating results throughout the periods discussed have been
affected significantly by the timing of television acquisitions and sales.
Operating revenues are derived from the sale of advertising to local and
national advertisers. The operation of these stations involves low operating
expenses relative to traditional television station operation and does not vary
significantly with revenue, with the exception of costs associated with sales
commissions and agency fees. As such, upon obtaining a certain level of revenue
sufficient to cover fixed costs, additional revenue levels have a significant
impact on the operating results of an individual station.
The Company's past results are not necessarily indicative of future performance
due to various risks and uncertainties which may significantly reduce revenues
and increase operating expenses. For example, a reduction in expenditures by
national or local television advertisers in the Company's markets may result in
lower revenues. The Company may be unable to reduce expenses, including certain
variable expenses, in an amount sufficient in the short term to offset lost
revenues caused by poor market conditions. The broadcasting industry continues
to undergo rapid technological change which may increase competition within the
Company's markets as new delivery systems, such as direct broadcast satellite
and computer networks, attract customers. The changing nature of audience tastes
and viewing habits may affect the continued attractiveness of the Company's
broadcasting stations to advertisers, upon whom the Company is dependent for its
revenue. The concentration of the Company's assets in its television stations
operations increases the Company's exposure to the above risks and
uncertainties.
The Company currently expects to continue acquiring additional television
stations which may have similar effects on the comparability of revenues,
operating expenses, interest expense and operating cash flow as those described
above. Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount (contingent or otherwise) of assets and liabilities
at the date of the financial statements and the reported amount of revenues and
expenses during the reporting period. The fair values of the Company's long-term
debt and the senior subordinated notes were estimated based on market rates and
instruments with similar risks and maturities. The fair value estimates
presented are based on pertinent information available to management as of June
30, 1997. As a result of the foregoing, the estimates presented in the Company's
financial statements are not necessarily indicative of the amounts that the
Company could realize in a current market exchange and have not been
comprehensively revalued for purposes of the Company's financial statements.
The Company believes that its network of television stations comprise a valuable
national television broadcasting distribution infrastructure, the value of which
could potentially be greater if employed to air programming other than, or in
addition to, the long form paid programming which is currently being aired. The
Company is presently negotiating strategic alternatives with respect to these
television stations, including the creation of a new television network in
tandem with a major broadcast television network, Hollywood television and movie
studio, television programming syndicator or cable network programmer, who would
purchase time on and provide their programming to Paxson television. The Company
has not entered into any binding agreements or commitments relating to a change
in the use or character of its group of television stations.
This report contains forward-looking statements which are made pursuant to the
safe harbor provisions of the Securities Litigation Reform Act of 1995.
Statements as to what the Company "believes", "intends", "expects" or
"anticipates", and other similarly anticipatory expressions, are generally
forward-looking and are made only as of the date of this Report. Readers of this
Report are cautioned not to place undue reliance on such
12
<PAGE> 13
forward-looking statements, as they are subject to risks and uncertainties which
could cause actual results to differ materially from those discussed in the
forward-looking statements and from historical results of operations. Among the
risks and uncertainties which could cause such a difference are those relating
to the Company's high level of indebtedness and the restrictions placed on the
Company's business and operations by the terms of its indebtedness and its
outstanding preferred stock, the risks relating to the comprehensive
governmental regulation of the Company's businesses, including the restrictions
on multiple broadcast property ownership, the broadcast licensing renewal
requirements, the risks of industry and economic conditions which could
adversely affect the Company's business operations, the risk that the radio sale
is not consummated and the other factors described in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
The following table lists those television properties that the Company owns,
operates or is affiliated with, and those properties which the Company has
agreements to acquire or operate, as identified under "Announced TV
Acquisitions" below. (Television and cable households in thousands.)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
NATIONAL STATION CURRENT TOTAL CURRENT
TV COMMENCEMENT CABLE STATION MARKET STATION TOTAL
MARKET OF CARRIAGE AT CABLE CABLE CABLE MARKET TV
MARKET (1) RANK STATION CH OPERATIONS COMMENCEMENT(2) CARRIAGE(3) HOUSEHOLDS CARRIAGE%(3) HOUSEHOLDS
- ------ ---- ------- -- ---------- ------------ -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OWNED OR OPERATED
New York, NY* 1 WPXN TV 31 7/97 4,141 4,170 4,663 89.4% 6,712
New York, NY 1 WHAI TV 43 3/96 626 790 4,663 16.9% 6,712
Los Angeles, CA 2 KZKI TV 30 5/95 1,453 2,457 3,049 80.6% 4,942
Philadelphia, PA 4 WTGI TV 61 2/95 1,225 1,689 2,015 83.8% 2,654
San Francisco, CA 5 KLXV TV 65 6/95 650 1,309 1,620 80.8% 2,279
Boston, MA 6 WGOT TV 60 5/95 604 997 1,665 59.9% 2,150
Boston, MA* 6 WHRC TV(5) 46 4/97 0 30 1,665 1.8% 2,150
Washington, D.C. 7 WVVI TV 66 7/97 940 940 1,301 72.2% 1,909
Dallas, TX 8 KINZ TV 68 12/96 0 667 954 69.9% 1,849
Atlanta, GA 10 WTLK TV 14 4/94 300 971 1,089 89.1% 1,625
Atlanta, GA* 10 WNGM TV 34 4/96 182 312 1,089 28.6% 1,625
Houston, TX 11 KTFH TV 49 3/95 647 845 894 94.5% 1,595
Cleveland, OH 13 WAKC TV 23 3/96 560 729 1,001 72.8% 1,461
Cleveland, OH* 13 WOAC TV(10) 67 10/95 332 369 1,001 36.8% 1,461
Minneapolis, MN 14 KXLI TV 41 10/96 605 664 722 92.0% 1,428
Tampa, FL* 15 WFCT TV 66 8/94 0 968 1,014 95.5% 1,411
Miami, FL* 16 WCTD TV 35 4/94 396 1,014 1,014 100.0% 1,363
Phoenix, AZ 17 KWBF TV 13 3/96 23 26 694 3.8% 1,213
Phoenix, AZ 17 KAJW 51 12/97 0 0 694 0.0% 1,213
TV(4)(8)
Denver, CO 18 KUBD TV 59 8/95 430 472 725 65.1% 1,185
Sacramento, CA* 20 KCMY TV 29 7/95 624 640 711 90.0% 1,116
St. Louis, MO 21 WCEE 13 1/96 23 67 583 11.4% 1,110
TV(6)(10)
Orlando, FL* 22 WIRB TV 56 12/94 468 757 779 97.2% 1,022
Hartford, CT* 27 WTWS TV(5) 26 3/95 661 778 790 98.5% 916
Milwaukee, WI 31 WHKE TV 55 7/96 257 329 468 70.3% 787
Kansas City, MO 32 KINB TV 50 5/97 397 397 515 77.1% 787
Salt Lake City, UT 36 KOOG TV 30 7/97 200 200 372 53.7% 671
Grand Rapids, MI 37 WILV 43 9/96 0 303 404 74.9% 648
TV(6)(10)
Oklahoma City, OK 43 KMNZ TV 62 10/96 0 94 367 25.6% 588
Greensboro, NC 46 WAAP TV 16 7/96 323 338 357 94.7% 568
Providence, RI 47 WOST 69 12/97 0 0 423 0.0% 558
TV(4)(7)
Birmingham, AL* 51 WNAL TV 44 10/96 31 88 347 25.3% 526
Albany, NY 52 WOCD TV 55 5/96 251 272 368 74.0% 507
Dayton, OH 53 WTJC TV 26 10/95 298 310 349 88.9% 503
Fresno, CA* 55 KKAG TV 61 6/97 195 222 265 83.9% 491
Little Rock, AR* 57 KVUT 42 8/97 0 0 298 0.0% 480
TV(4)(8)
Tulsa, OK* 58 KGLB TV(8) 44 7/97 0 0 288 0.0% 461
Cedar Rapids, IA* 86 KTVC TV 48 5/97 0 0 199 0.0% 307
San Sebastian, PR NR WJWN TV 38 2/96 0 0 0 0.0% 0
Ponce, PR NR WKPV TV 20 2/96 0 0 0 0.0% 0
</TABLE>
13
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
San Juan, PR NR WSJN TV(11) 24 2/96 285 285 298 95.6% 1,064
--- ---- ---- ---- -----
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL OWNED OR OPERATED(9) 17,127 24,496 30,602 80.0% 46,886
- ---------------------------------------------------------------------------------------------------------------------------
AFFILIATES
Philadelphia, PA 4 WTVE TV 51 10/96 414 644 2,015 32.0% 2,654
Washington, D.C. 7 WSHE TV 60 10/96 0 122 1,301 9.4% 1,909
Indianapolis, IN 25 WIIB TV 63 1/96 401 424 606 69.9% 939
Hartford, CT 27 WHCT TV 18 7/97 0 0 790 0.0% 916
Raleigh, NC 29 WRMY TV 47 6/96 0 313 505 61.9% 815
Norfolk, VA 40 WJCB TV 49 8/95 343 404 467 86.5% 632
Fresno, CA 55 KGMC TV 43 1/96 179 164 265 61.9% 491
---- ---- ---- ----- ----
TOTAL AFFILIATES 1,336 2,070 5,949 34.8% 8,355
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL OWNED, OPERATED AND AFFILIATES(9) 18,050 26,566 32,180 82.6% 49,271
- ---------------------------------------------------------------------------------------------------------------------------
ANNOUNCED TV ACQUISITIONS
San Fransisco, CA 5 KWOK 68 1,620 2,279
TV(4)(6)
Detroit, MI 9 WBSX TV 31 1,174 1,772
Seattle, WA 12 KBCB TV(4) 24 1,071 1,492
Pittsburgh, PA 19 Channel 40 40 987 1,149
Nashville, TN 33 WKZX TV 28 483 783
Buffalo, NY 39 WAQF TV(4) 51 464 633
West Palm Beach, FL 44 WHBI TV 67 486 587
Albuquerque, NM 48 Channel 14 14 327 554
Wilkes Barre, PA 49 WSWB TV(4) 64 444 553
Roanoke, VA 67 WEFC TV 38 255 399
Honolulu, HI 69 KAPA TV(4) 66 331 383
Green Bay, WI 70 WSCO TV 14 216 376
Santa Barbara, CA 115 KADY TV 63 183 214
---- ----
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL ANNOUNCED TV STATIONS(9) 6,238 8,681
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL TV NETWORK(9) 38,418 57,952
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Operated or to be operated pursuant to a time brokerage agreement; except as
noted, the Company has an agreement and/or option to acquire a 100% ownership
interest.
(1) Each station is licensed by the FCC to serve a specific community, which is
included in the listed market.
(2) Cable households reached at commencement of station's operations.
(3) Cable households reached at 7/97, to be billed in 8/97, and as a percentage
of the total market cable households.
(4) Station is currently under construction or not operating commercially.
(5) No option to acquire.
(6) Pending affiliate.
(7) 50% ownership interest.
(8) 49% ownership interest with remaining 51% to be acquired.
(9) Market Household totals do not double count markets where the Company has
more than one station.
(10)Under contract to sell.
(11)Includes the household numbers for the three markets in Puerto Rico.
Purchases of Broadcast Properties:
During May 1997, the Company completed its purchase of KINB-TV (formerly
KYFC-TV) for cash consideration of $16,400,000 and also acquired a 50% interest
in WOST-TV for cash consideration of $1,000,000.
During May 1997, the Company entered into agreements to purchase radio stations
WKGR-FM, WOLL-FM, WBZT-AM and WEAT-AM serving the West Palm Beach, Florida
market for aggregate cash consideration of $33,000,000. The Company also
entered into agreements to purchase television stations WEFC-TV and KAPA-TV
serving the Roanoke, Virginia and Honolulu, Hawaii markets for $5,500,000 and
$5,000,000, respectively.
During June 1997, the Company completed its purchases of KOOG-TV for cash
consideration of $7,500,000. The Company also acquired 49% interests in WSWB-TV
and KGLB-TV for $52,000 and $421,000, respectively. The Company entered into an
agreement to purchase television station WIRB-TV from The Christian Network,
Inc. ("CNI") for $13,162,000. As part of the purchase consideration for WIRB-TV
outstanding loans owed by CNI to the Company aggregating approximately
$4,058,000 at June 30, 1997, shall be applied against the purchase price. The
Company financed the
14
<PAGE> 15
CNI acquisition of television station WHRC-TV for $15,000,000 and has entered
into a seven year time brokerage agreement to operate the station. The Company
began operating WHRC-TV in April 1997 pursuant to a time brokerage agreement
with the prior owner. The Company began operating WPXN-TV (formerly WBIS-TV) in
New York, New York pursuant to a time brokerage agreement on June 30, 1997
pending completion of its acquisition.
During June 1997, the Company entered into an agreement to purchase The Travel
Channel from Landmark Communications, Inc. ("Landmark") for aggregate
consideration of $75,000,000, including $55,000,000 in the Company's class A
common stock (4,773,097 shares issued at closing) and $20,000,000 in cash. The
Company consummated the Travel Channel acquisition on July 11, 1997. The
Company also issued 97,632 shares to Communications Equity Associates, Inc.
("CEA") in connection with their role as financial advisor in the Travel
Channel transaction. The Chairman of the Board and Chief Executive Officer of
CEA has been a director of the Company since February 1995. The shares issued
to Landmark and CEA are entitled to piggyback registration rights in the event
of certain offerings of shares to the public.
Also during June 1997, the Company entered into agreements to purchase
television stations KADY-TV and WKZX-TV and a construction permit for
television station Channel 14 serving, respectively, the Santa Barbara,
California, Nashville, Tennessee and Albuquerque, New Mexico markets for,
respectively, $8,000,000, $4,200,000 and $4,900,000.
During July, the Company completed the purchase of radio station WKES-FM for
$35,323,000 and television station WVVI-TV from ValueVision International for
$40,000,000, including $10,000,000 in the Company's class A common stock
(1,197,892 shares issued at closing). The shares issued to ValueVision
International are entitled to piggyback registration rights in the event of
certain offerings of shares to the public.
Sales of Broadcast Properties:
During March 1997, the Company entered into an agreement to sell its interests
in television stations WOAC-TV and WNGM-TV, each of which is currently operated
under time brokerage agreements with Whitehead Media, Inc., for aggregate
consideration of $73,500,000, in separate agreements with the same buyer. The
buyer did not make the required escrow deposit for the WNGM-TV sale, and
accordingly, the Company terminated the WNGM-TV contract. The buyer subsequently
declared bankruptcy.
During May 1997, the Company completed the sale of WSHE-TV (formerly WYVN-TV)
to DP Media, Inc. ("DP Media"), a company beneficially owned by members of
Mr. Paxson's family, for $2,470,000 in the form of a promissory note, which
note was repaid with interest from the proceeds of the bank financing secured
by DP Media and described below. The station became a Company affiliate upon
its sale to DP Media.
During July 1997, the Company entered into contracts to sell its interests in
television stations WCEE-TV and WILV-TV, serving the St. Louis, Missouri and
Grand Rapids, Michigan markets, for $4,800,000 and $7,000,000 respectively, to
DP Media. The Company plans to continue including these stations in its
nationwide broadcast TV network pursuant to affiliation agreements.
Other:
During June 1997, the Company financed DP Media's purchase of WRMY-TV from
Roberts Broadcasting through a loan to DP Media of approximately $10,000,000 (of
which approximately $7,500,000, which was assumed by DP Media, had been advanced
to Roberts Broadcasting through the date of closing). The station became a
Company affiliate upon its sale to DP Media.
The DP Media loans for WSHE-TV, WRMY-TV and WEBZ-FM were repaid to the Company
on July 30, 1997, using proceeds of third party financing obtained from Banque
Paribas, an affiliate of a holder of the Company's Junior preferred stock.
15
<PAGE> 16
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected financial
information as a percentage of revenues.
Statements of Operations
<TABLE>
<Caotion>
For the six months For the three months
ended June 30, ended June 30,
---------------- ------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Operating Expenses:
Direct 17.9 16.3 18.2 16.4
Programming 5.2 3.7 5.3 3.7
Sales and promotion 4.3 5.3 4.1 5.2
Technical 10.9 6.3 10.9 6.6
General and administrative 31.9 30.1 30.3 30.1
Trade and barter 0.1 -- 0.2 --
Time brokerage agreement fees 6.4 4.4 7.4 5.1
Option plan compensation 3.8 7.3 3.9 2.1
Depreciation and amortization 23.9 17.7 26.2 17.6
----- ----- ----- -----
Total operating expenses 104.4 91.1 106.5 86.8
----- ----- ----- -----
Operating income (loss) (4.4) 8.9 (6.5) 13.2
Other income (expense):
Interest expense (47.8) (53.6) (49.6) (49.0)
Interest income 7.2 14.4 7.4 21.4
Other expense, net (1.7) (2.2) (4.1) (4.1)
----- ----- ----- -----
Loss from continuing operations (46.7) (32.5) (52.8) (18.5)
Income from discontinued operations 137.6 4.0 282.2 9.2
----- ----- ----- -----
Net income (loss) 90.9 (28.5) 229.4 (9.3)
===== ===== ===== =====
</TABLE>
16
<PAGE> 17
The following sets forth, for the periods indicated, selected information for
the Company's business segments:
<TABLE>
<CAPTION>
As of and for the six As of and for the three
months ended June 30, months ended June 30,
-------------------------- ----------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
PAXSON TELEVISION
Total revenue $ 36,685,852 $ 27,327,040 $ 18,161,197 $ 14,611,120
Operating expenses, less
depreciation, amortization
and option plan compensation 23,131,245 14,482,609 11,597,230 7,848,987
Depreciation and amortization 8,089,044 4,438,053 4,342,389 2,367,123
Option plan compensation 170,112 7,238 80,151 3,675
------------ ------------ ------------ ------------
Operating income $ 5,295,451 $ 8,399,140 $ 2,141,427 $ 4,391,335
============ ============ ============ ============
Operating cash flow $ 15,956,000 $ 13,988,000 $ 7,954,000 $ 7,463,000
============ ============ ============ ============
Total identifiable assets $356,253,335 $173,354,366 $356,253,335 $173,354,366
============ ============ ============ ============
Capital expenditures $ 17,644,464 $ 6,537,552 $ 8,890,161 $ 5,016,886
============ ============ ============ ============
PAXSON RADIO
Total revenue $ - $ - $ - $ -
Operating expenses, less
depreciation, amortization
and option plan compensation - - - -
Depreciation and amortization - - - -
Option plan compensation - - - -
------------ ------------ ------------ ------------
Operating loss $ - $ - $ - $ -
============ ============ ============ ============
Operating cash flow $ - $ - $ - $ -
============ ============ ============ ============
Total identifiable assets $234,651,739 $ 84,284,513 $234,651,739 $ 84,284,513
============ ============ ============ ============
Capital expenditures $ 5,708,565 $ 1,445,034 $ 3,013,843 $ 701,677
============ ============ ============ ============
PAXSON NETWORK-AFFILIATED
TELEVISION
Total revenue $ - $ - $ - $ -
Operating expenses, less
depreciation, amortization
and option plan compensation - - - -
Depreciation and amortization - - - -
Option plan compensation - - - -
------------ ------------ ------------ ------------
Operating income $ - $ - $ - $ -
============ ============ ============ ============
Operating cash flow $ - $ - $ - $ -
============ ============ ============ ============
Total identifiable assets $ 11,684,777 $ 37,930,692 $ 11,684,777 $ 37,930,692
============ ============ ============ ============
Capital expenditures $ 284,973 $ 881,759 $ 135,413 $ 761,818
============ ============ ============ ============
CORPORATE AND OTHER
Total revenue $ 788,487 $ 720,011 $ 375,802 $ 383,522
Operating expenses, less
depreciation, amortization
and option plan compensation 5,631,899 4,065,590 2,572,707 2,212,590
Depreciation and amortization 844,705 533,945 511,630 269,150
Option plan compensation 1,261,725 2,030,428 637,681 309,027
------------ ------------ ------------- ------------
Operating loss $ (6,949,842) $ (5,909,952) $ (3,346,216) $ (2,407,245)
============ ============ ============ ============
Operating cash flow $ (6,491,000) $ (3,346,000) $ (3,497,000) $ (1,829,000)
============ ============ ============ ============
Total identifiable assets $ 97,799,001 $141,879,080 $ 97,799,001 $141,879,080
============ ============ ============ ============
Capital expenditures $ 1,026,490 $ 5,071,759 $ 518,669 $ 4,816,340
============ ============ ============ ============
CONSOLIDATED
Total revenue $ 37,474,339 $ 28,047,051 $ 18,536,999 $ 14,994,642
Operating expenses, less
depreciation, amortization
and option plan compensation 28,763,144 18,548,199 14,169,937 10,061,577
Depreciation and amortization 8,933,749 4,971,998 4,854,019 2,636,273
Option plan compensation 1,431,837 2,037,666 717,832 312,702
------------ ------------ ------------ ------------
Operating (loss) income $ (1,654,391) $ 2,489,188 $ (1,204,789) $ 1,984,090
============ ============ ============ ============
Operating cash flow $ 9,465,000 $ 10,642,000 $ 4,457,000 $ 5,634,000
============ ============ ============ ============
Total identifiable assets $700,388,852 $437,448,651 $700,388,852 $437,448,651
============ ============ ============ ============
Capital expenditures $ 24,664,492 $ 13,936,104 $ 12,558,086 $ 11,296,721
============ ============ ============ ============
</TABLE>
"Operating cash flow" is defined as net income excluding non-cash items,
non-recurring items including terminated operations, interest, other income,
income taxes and time brokerage fees, less scheduled program rights payments.
The Company has included operating cash flow data because the financial
performance of broadcast companies is frequently evaluated based on some measure
of cash flow from operations. Operating cash flow is not, and should not be used
as an indicator or alternative to operating income, net income or cash flow as
reflected in the Consolidated Financial Statements as it is not a measure of
financial performance under generally accepted accounting principles.
17
<PAGE> 18
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Consolidated revenues for the six months ended June 30, 1997 increased 34% (or
$9.5 million) to $37.5 million from $28.0 million for the six months ended June
30, 1996. This increase was primarily due to television station acquisitions and
new time brokerage operations.
Operating expenses for the six months ended June 30, 1997 increased 53% (or
$13.5 million) to $39.1 million from $25.6 million for the six months ended June
30, 1996. The increase was primarily due to higher direct expenses such as
commissions which rise in proportion to revenues ($2.1 million), other
non-direct costs of operating new television stations ($5.2 million), higher
depreciation and amortization primarily related to assets acquired ($4.0
million), and increased time brokerage agreement fees ($1.2 million), all of
which were partially offset by lower option plan compensation costs ($0.6
million).
Operating cash flow for the six months ended June 30, 1997 decreased 11% (or
$1.2 million) to $9.5 million, from $10.6 million for the six months ended June
30, 1996. The decrease in operating cash flow was primarily a result of
increased corporate overhead and other costs which offset the increase in
television cash flows resulting from station acquisitions and new time brokerage
operations.
Interest expense for the six months ended June 30, 1997 increased to $17.9
million from $15.0 million for the six months ended June 30, 1996, an increase
of 19% primarily due to a greater level of debt throughout the period. As a
result of acquisitions, at June 30, 1997, total long-term debt and senior
subordinated notes were $336.5 million, compared with the balance of $231.8
million outstanding a year prior.
Interest income for the six months ended June 30, 1997 decreased to $2.7 million
from $4.0 million, primarily due to lower levels of cash and cash equivalents
invested throughout the period.
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
Consolidated revenues for the three months ended June 30, 1997 increased 24% (or
$3.5 million) to $18.5 million from $15.0 million for the three months ended
June 30, 1996. This increase was primarily due to television station
acquisitions and new time brokerage operations.
Operating expenses for the three months ended June 30, 1997 increased 52% (or
$6.7 million) to $19.7 million from $13.0 million for the three months ended
June 30, 1996. The increase was primarily due to higher direct expenses such as
commissions which rise in proportion to revenues ($0.9 million), other
non-direct costs of operating new television stations ($2.2 million), higher
depreciation and amortization primarily related to assets acquired ($2.2
million), increased time brokerage agreement fees ($0.6 million), and increased
option plan compensation costs ($0.4 million).
Operating cash flow for the three months ended June 30, 1997 decreased 20% (or
$1.1 million) to $4.5 million, from $5.6 million for the three months ended June
30, 1996. The decrease in operating cash flow was primarily a result of
increased corporate overhead and other costs which offset the increase in
television cash flows resulting from station acquisitions and new time brokerage
operations.
Interest expense for the three months ended June 30, 1997 increased to $9.2
million from $7.3 million for the three months ended June 30, 1996, an increase
of 25% primarily due to a greater level of debt throughout the period. As a
result of acquisitions, at June 30, 1997, total long-term debt and senior
subordinated notes were $336.5 million, compared with the balance of $231.8
million outstanding a year prior.
Interest income for the three months ended June 30, 1997 decreased to $1.4
million from $3.2 million, primarily due to lower levels of cash and cash
equivalents invested throughout the period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at June 30, 1997 and December 31, 1996 was $52.5
million and $76.2 million, respectively, and the ratio of current assets to
current liabilities was 3.08 :1 and 4.88:1 on such dates, respectively. Working
capital decreased primarily due to the acquisitions previously discussed.
Cash provided by operations of $2.4 million and $3.4 million for the six months
ended June 30, 1997 and 1996, respectively, reflects the improvement in
operating results of existing properties, acquisitions and time brokerage
properties net of increased corporate overhead, interest expense and increases
in other assets. Cash used for investing activities primarily reflects the
acquisitions and investments discussed above, and purchases of equipment for
these and existing properties net of the proceeds from the sale of network
affiliated television. Cash provided by financing activities primarily reflects
the proceeds from the long term debt borrowings net of debt repayments. In
addition, the
18
<PAGE> 19
Company has advanced $1,020,000 to CNI during the six months ended
June 30, 1997 under a demand note bearing interest at the prime rate (currently
8.50%). At June 30, 1997 the Company had total advances to CNI outstanding of
approximately $4,013,000 million, which has been included in investments in
broadcast properties. Non-cash activity relates to option plan compensation,
reciprocal trade and barter advertising revenue and expense and accretion of
discount on senior subordinated notes, as well as dividends and accretion on the
redeemable preferred stock. The sale of WTWS-TV during the first quarter of 1997
was a non cash transaction and accordingly, the statement of cash flows does not
reflect the increase in investments in broadcast properties of $15 million for
the note receivable from the sale, the sale of property and equipment of
approximately $2.5 million, the accrual of transaction expenses of $0.4 million
or the deferred gain on sale of broadcast property of approximately $12.1
million. Additionally, at June 30, 1997, the Company had accrued approximately
$4.8 million for transaction expenses related to the network affiliated
television sale which is not reflected in the statement of cash flows.
The Company's primary capital requirements are for the acquisition of
broadcasting properties and related capital expenditures and interest and
principal payments on indebtedness. The Company's outstanding Senior
subordinated notes require semi-annual interest payments at a fixed rate. The
Company presently has $110 million ($105 million at June 30, 1997) of
outstanding borrowings under its $200 million senior secured revolving credit
facility ("Senior Facility"). Borrowings under the Senior Facility bear
interest at floating rates and require interest payments on varying dates, but
at least quarterly, depending on the interest rate option selected by the
Company.
The Company believes that the net proceeds from the network affiliated
television and radio segment sales will be sufficient to complete the
investments discussed below (including the expected capital expenditures
associated therewith), and to meet its anticipated short term and long term
working capital requirements for its existing properties. The Company believes
it will be able to pursue its business acquisition strategy using cash flow from
operations and the proceeds from segment sales discussed above. However, should
the Company suffer a significant impairment to its cash flow from operations due
to the occurrence of one or more adverse events, or should a radio segment
sale not occur, the Company could have insufficient resources to repay
indebtedness under the Senior Facility or the senior subordinated notes when due
or to make required payments on its preferred stock. Unless the Company enters
into a definitive agreement with Clear Channel or another party to sell its
radio segment and consummates such sale as currently contemplated, the Company
would require additional financing to enable it to complete its acquisition
strategy, capital expenditures and working capital requirements discussed
above. There can be no assurance that the Company would be able to obtain the
additional financing which could adversely affect the Company's ability to
complete its acquisition strategy.
INVESTMENT COMMITMENTS
The completion of each of the acquisitions discussed below is subject to a
variety of factors and to the satisfaction of various conditions, and there can
be no assurance that any of such investments will be completed. The Company has
agreements to purchase significant assets of, or to enter into time brokerage
and financing arrangements with respect to, the following properties, which are
subject to various conditions, including the receipt of regulatory approvals:
<TABLE>
<CAPTION>
Property Market Served * Purchase Price
- --------------------------------------------------------------------------------
<S> <C> <C>
Television:
WPXN-TV New York City, NY (1) $257,500,000
WVVI-TV Washington, DC (2)(13) $ 40,000,000
WBSX-TV Detroit, MI $ 35,000,000
Channel 40 Pittsburgh, PA $ 35,000,000
KCMY-TV Sacramento, CA (3) $ 17,000,000
WIRB-TV Orlando, FL (4) $ 13,162,000
WNAL-TV Birmingham, AL (5) $ 10,000,000
KBCB-TV Seattle, WA $ 8,000,000
KADY-TV Santa Barbara, CA $ 8,000,000
KKAG-TV Fresno, CA (6) $ 7,960,000
WHBI-TV West Palm Beach, FL (7) $ 7,000,000
KAJW-TV Phoenix, AZ (8) $ 6,600,000
WSWB-TV Wilkes-Barre, Scranton, PA (8) $ 6,160,000
WEFC-TV Roanoke, VA $ 5,500,000
KAPA-TV Honolulu, HI $ 5,000,000
KTVC-TV Cedar Rapids, IA (9) $ 5,000,000
Channel 14 Albuquerque, NM $ 4,900,000
WSCO-TV Green Bay, WI $ 4,750,000
KWOK-TV San Francisco, CA (7) $ 4,500,000
WKZX-TV Nashville, TN $ 4,200,000
WAQF-TV Buffalo, NY (10) $ 3,000,000
WHCT-TV Hartford, CT (11) $ 3,000,000
KVUT-TV Little Rock, AR (12) $ 1,250,000
WFCT-TV, WCTD-TV Tampa and Miami, FL $ 801,000
</TABLE>
19
<PAGE> 20
<TABLE>
<S> <C> <C>
KGLB-TV Tulsa, OK (8) $ 421,000
Paxson Radio:
WILV-FM formerly (WKES-FM) Tampa, FL (13) $35,323,000
WKGR-FM, WOLL-FM West Palm Beach, FL $33,000,000
WBZT-AM, WEAT-AM
Other:
Travel Channel Atlanta, GA (13)(14) $75,000,000
</TABLE>
* Each station is licensed by the FCC to serve a specific community,
which is included in the listed market.
(1) The purchase price includes $7,500,000 of Class A Common Stock.
(2) The purchase price included $10,000,000 of Class A Common Stock.
(3) The Company has loaned an aggregate of $8,500,000 to KCMY-TV and began
operating the station pursuant to a time brokerage agreement on October
1, 1996, pending completion of the acquisition of the station. The loan
will be applied to the purchase price at the date of closing.
(4) The Company has outstanding loans at June 30, 1997 aggregating
approximately $4,058,000 which will be applied against the purchase
price at the date of closing. The Company is currently operating this
station pursuant to a time brokerage agreement.
(5) In September 1996, the Company loaned $8,000,000 to WNAL-TV and began
operating the station pursuant to a time brokerage agreement pending
completion of the acquisition of the station. The loan amount of
$8,000,000 will be applied to the purchase price at the date of
closing.
(6) The Company began operating the station pursuant to a time brokerage
agreement on June 1, 1997 pending completion of the acquisition of the
station.
(7) The Company has committed to loan up to $7,000,000, and $4,500,000 to
Cocola Broadcasting ("Cocola") to finance the construction and
acquisition of stations WHBI-TV and KWOK-TV , respectively. At June 30,
1997, the Company had advanced approximately $5,654,000 to Cocola. The
Company plans to provide programming for the stations pursuant to
affiliation agreements upon Cocola's acquisitions and commencement of
operations.
(8) The Company has acquired a 49% interest in this property; commitment
represents purchase price for the remaining 51%.
(9) On May 3, 1997, the Company began operating the station pursuant to
a TBA. The purchase reflects cash portion only and does not include
600,000 shares of Class A Common Stock consideration.
(10) Includes the purchase of two low power television stations, W69CS and
W63BM.
(11) Pending affiliate.
(12) Station is currently under construction. The Company purchased a 49%
interest during 1996 with an option to acquire the remaining 51%.
(13) The Company completed the purchase in July 1997.
(14) The purchase price included $55,000,000 of Class A Common Stock.
20
<PAGE> 21
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No material legal proceedings are pending to which the Company or any of its
property is subject. To the knowledge of the Company, no such legal proceedings
are contemplated by any governmental authority.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company's Annual Meeting of Stockholders was held on May 2, 1997. At the
meeting, all seven of the Company's existing directors were re-elected for one
year terms. The appointment of Price Waterhouse LLP as the Company's independent
certified public accountants was also ratified.
The number of Class A common stock votes cast for, cast against and withheld, as
well as the number of broker nonvotes with respect to the election of directors
is set forth below:
<TABLE>
<CAPTION>
Director For Withheld Broker Nonvotes Abstain
<S> <C> <C> <C> <C>
Lowell W. Paxson 34,164,764 8,500
James B. Bocock 34,160,469 12,795
Arthur D. Tek 34,164,764 8,500
J. Patrick Michaels, Jr. 32,845,869 1,327,395
S. William Scott 34,165,264 8,000
Bruce L. Burham 34,166,264 7,000
James L. Greenwald 34,163,764 9,500
</TABLE>
There were no votes cast against the election of the above 7 directors.
The number of Class A common stock votes cast for, cast against and abstaining
as well as the number of broker nonvotes with respect to the appointment of
Price Waterhouse LLP as the Company's independent certified public accountants
is set forth below:
<TABLE>
<CAPTION>
For Against Withheld Broker Nonvotes Abstain
<S> <C> <C> <C> <C> <C>
Accountant Appointment 34,162,173 5,596 5,795
</TABLE>
The Company's 8,311,639 Class B common stock (83,116,390 votes) are owned by Mr.
Lowell W. Paxson, the Chairman of the Board and Chief Executive Officer of the
Company. Mr. Paxson cast all his Class B votes for the election of each of the
directors nominated and to retain Price Waterhouse as the Company's independent
certified public accountants.
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits:
Exhibit No. Description
3.1.1 Certificate of Incorporation of the Company**
3.1.2 The Company's Certificate of Designations of the Company's
Junior Cumulative Compounding Redeemable Preferred Stock**
3.1.3 The Company's Certificate of Designations of the Company's
12 1/2% Cumulative Exchangeable Preferred Stock ****
3.1.4 Bylaws of the Company***
4.1 Form of Stock Certificate of Class A Common Stock*
4.2 Third Amendment, dated May 30, 1997, with respect to the
Amended and Restated Credit Agreement, dated as of November
19, 1996, among Paxson Communications Corporation, the Lenders
named therein and Union Bank of California, N.A., as Agent
10.168 Construction Agreement, dated December 23, 1996, between WHCT
Broadcasting, Inc., and Paxson Communications of Hartford-18,
Inc. for WHCT(TV), Channel 18, Hartford, Connecticut
10.169 Asset Purchase Agreement, dated April 11, 1997, by and between
Roberts Broadcasting of Cookeville, L.L.C. and Paxson
Communications of Nashville-28, Inc.
21
<PAGE> 22
10.170 Amended and Restated Asset Purchase Agreement, dated April 15,
1997, by and among Paxson Communications of Buffalo-51, Inc.,
Fant Broadcasting Company of New York, L.L.C., Anthony Fant
and Paxson Communications Corporation
10.171 Asset Purchase Agreement, dated May 14, 1997, by and between
Paxson Communications of West Palm Beach, Inc. and American
Radio Systems Corporation
10.172 Option Agreement, dated May 20, 1997, by and between Paxson
Communications of Honolulu-66, Inc. and Dove Broadcasting
Company of Hawaii, Inc. for television station KAPA(TV),
Kaneohe, Hawaii
10.172.1 Loan Agreement, dated May 20, 1997, by and among Paxson
Communications of Honolulu-66, Inc., and Dove Broadcasting
Company of Hawaii
10.173 Asset Purchase Agreement, dated May 28, 1997, by and among
Paxson Communications of Roanoke-38, Inc., Vine and Branch,
Inc. and Evangel Foursquare Church for television station
WEFC, Roanoke, Virginia
10.174 Loan Agreement, dated June 10, 1997, by and between Paxson
Communications of Boston-46, Inc. and Channel 46 of Boston,
Inc. for television station WHRC(TV), Norwell, Massachusetts
10.175 Asset Acquisition Agreement, dated June 13, 1997, by and among
Landmark Communications, Inc., The Travel Channel, Inc., and
Paxson Communications
10.176 Asset Purchase Agreement, dated June 23, 1997, by and between
Paxson Communications of Orlando-56, Inc. and Channel 56 of
Orlando, Inc.
10.177 Loan Agreement, dated June 30, 1997, by and between Roberts
Broadcasting Company of Albuquerque and Paxson Communications
of Albuqurque-14, Inc. relating to television station
(Channel 14), Albuquerque, New Mexico
10.178 Asset Purchase Agreement, dated June 25, 1997, by and between
John W. Hyde, as Chapter 11 Trustee of the Chapter 11 Debtor
Estate of Riklis Broadcasting Corporation, AKA KADY-TV, AKA
Pacific Rim Video and Paxson Communications of Los Angeles-63,
Inc.
27 Financial Data Schedule (for SEC use only)
- ---------------
* Filed with the Company's Registration Statement on Form S-4,
filed September 26, 1994, Registration No. 33-84416 and
incorporated herein by reference.
** Filed with the Company's Annual Report on Form 10-K, dated
March 31, 1995 and incorporated herein by reference.
*** Filed with the Company's Registration Statement on Form S-1,
as amended, filed January 26, 1996, Registration No. 333-473
and incorporated herein by reference.
**** Filed with the Company's Registration Statement on Form S-3,
as amended, filed August 15, 1996, Registration No. 333-10267
and incorporated herein by reference.
(b) Reports on Form 8-K.
The Company filed a Form 8-K, dated April 29, 1997, under Item 2. Acquisition or
Disposition of Assets in connection with the Company's sale of WPBF-TV 25 in
West Palm Beach, Florida. The Form 8-K included pro forma financial information
of the Company and exhibits required under Item 7. Financial Statements and
Exhibits.
22
<PAGE> 23
PAXSON COMMUNICATIONS CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAXSON COMMUNICATIONS CORPORATION
Date: August 14, 1997 By: /s/ James B. Bocock
-------------------------------
James B. Bocock
President, Chief Operating
Officer, Director
Date: August 14, 1997 By: /s/ Arthur D. Tek
-------------------------------
Arthur D. Tek
Vice President, Chief
Financial Officer, Director
23
<PAGE> 1
EXHIBIT 4.2
WAIVER AND THIRD AMENDMENT dated as of May 30, 1997 (this "Third
Amendment"), to the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November
19, 1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among PAXSON COMMUNICATIONS CORPORATION, a Delaware
corporation (the "Borrower"), the lenders from time to time party thereto (the
"Lenders"), THE UNION BANK OF CALIFORNIA, N.A., as Agent.
WITNESSETH:
WHEREAS, on the terms set forth herein the parties hereto wish to waive
and amend certain negative covenants and other provisions contained in the
Credit Agreement (but not subsection 2.6 of the Credit Agreement) to permit the
sale by certain subsidiaries of the Borrower to DP Media of Martinsburg, Inc.
of television station WSHE(TV) pursuant to an Asset Purchase Agreement dated as
of December 12, 1996, as amended (the "Martinsburg Transaction"), which
transaction is described in further detail in Exhibit A attached hereto;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the
Credit Agreement shall be used as so defined.
2. Waivers of Credit Agreement. Subsections 6.4 and 6.7 of the Credit
Agreement are hereby waived in respect of the Martinsburg Transaction.
3. Amendments to Credit Agreement.
A. Schedule 1.1D of the Credit Agreement is hereby amended by
replacing the information with respect to WSHE(TV) as follows:
<TABLE>
<CAPTION>
=================================================================================================
Station Type Owner License
Subsidiary
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WSHE(TV) inTV Affiliated Paxson Communications of n/a
Television Washington-60, Inc. (DP
Media of Martinsburg, Inc.)
=================================================================================================
</TABLE>
B. Schedule 3.1(e) of the Credit Agreement is hereby amended by
replacing the information with respect to WSHE (TV) as follows:
Licensee: DP Media of Martinsburg, Inc.
<PAGE> 2
2
C. Schedule 3.1(f) of the Credit Agreement is hereby amended by
replacing the information with respect to WSHE(TV) as follows:
<TABLE>
<CAPTION>
===================================================================================
Station Type Owner License
Subsidiary
- -----------------------------------------------------------------------------------
<S> <C> <C>
WSHE(TV) inTV Affiliated DP Media of Martinsburg, n/a
Television Inc.
===================================================================================
</TABLE>
4. Effective Date. This Third Amendment will become effective as of the
date hereof upon its execution by the Borrower and the Lenders in accordance
with the terms of the Credit Agreement.
5. Representations and Warranties. The Borrower represents and warrants
to each Lender that as of the effective date of this Third Amendment (a) this
Third Amendment constitutes the legal, valid and binding obligation of the
Borrower, enforceable against it in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, fraudulent conveyances,
reorganization, moratorium or similar laws affecting creditors' rights
generally, by general equitable principles (whether enforcement is sought by
proceedings in equity or at law) and by an implied covenant of good faith and
fair dealing, (b) the representations and warranties made by the Loan Parties
in the Loan Documents are true and correct in all material respects on and as
of the date hereof (except to the extent that such representations and
warranties are expressly stated to relate to an earlier date, in which case
such representations and warranties shall have been true and correct in all
material respects on and as of such earlier date) and (c) no Default or Event
of Default shall have occurred and be continuing as of the date hereof.
6. Continuing Effect. Except as expressly waived or amended hereby, the
Credit Agreement shall continue to be and shall remain in full force and effect
in accordance with its terms.
7. GOVERNING LAW. THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8. Counterparts. This Third Amendment may be executed by the parties
hereto in any number of separate counterparts and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
9. Payment of Expenses. The Borrower agrees to pay and reimburse the
Agent for all of its out-of-pocket costs and reasonable expenses incurred in
connection with this Third Amendment, including, without limitation, the
reasonable fees and disbursements of counsel to the Agent.
<PAGE> 3
3
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be duly executed and delivered by their properly and duly authorized officers
as of the day and year first above written.
PAXSON COMMUNICATIONS
CORPORATION
By: /s/ Arthur Tele
-------------------------------
Title: Treasurer
UNION BANK OF CALIFORNIA, N.A., as
Agent
By: /s/ Christine P. Ball
--------------------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/ Catherin G. Goff
---------------------------------
Title: AVP
CIBC, INC.
By: /s/ Wood Gundy
---------------------------------
Title: Director, CIBC Wood Gundy
Securities Corp., as Agent
Bank Boston, N.A.
By: /s/ John A. Rogers
---------------------------------
Title: Asst. VP
<PAGE> 4
4
FIRST UNION BANK OF NORTH
CAROLINA
By: /s/
---------------------------------
Title: SVP
ABN-AMRO BANK, N.V.
ABN AMRO NORTH AMERICA, INC.
By: /s/
---------------------------------
Title: VP GVP
BANK OF AMERICA ILLINOIS
By: /s/ Carl F. Salas
---------------------------------
Title: Carl F. Salas
Vice President
BANK OF MONTREAL
By: /s/
---------------------------------
Title: Director
BARNETT BANK, N.A.
By: /s/
---------------------------------
Title: Executive Vice President
<PAGE> 5
5
FLEET NATIONAL BANK
By: /s/ Mark Bunier
---------------------------------
Title: Assistant Vice President
LTCB TRUST COMPANY
By: /s/
---------------------------------
Title: Executive Vice President
THE SUMITOMO BANK, LIMITED
By: /s/ Allen L. Harvell, Jr.
---------------------------------
Title: Allen L. Harvell, Jr.
Vice President & Mgr.
By: M. Phillip Freeman
---------------------------------
Title: Vice President
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By: /s/ Janet P. Sammons
---------------------------------
Title: V.P.
<PAGE> 6
EXHIBIT A
TO: Christine Ball
FROM: Anthony Morrison
DATE: May 28, 1997
SUBJECT: Sale of WSHE(TV)
As we discussed, this memorandum summarizes the circumstances surrounding the
sale by Paxson Communications Corporation (the "Company") of WSHE(TV) and the
pending acquisition of WVVI-TV. Subsidiaries of the Company acquired the FCC
authorization for WSHE(TV) and certain other assets of the station for
$1,951,000 in October of 1995, WSHE(TV) is licensed to Martinsburg, West
Virginia, a community of approximately 14,000 that is located 65 miles from
Washington, D.C. At the time of the acquisition, WSHE(TV) had ceased broadcast
operations. The Company spent approximately $519,000 for the broadcast
equipment and construction expenses required to rebuild the station's
transmission facilities. WSHE(TV)'s broadcast operations were resumed in
September of 1996.
In contrast, WWVI-TV is an operating station licensed to Manassas, Virginia.
Manassas is located 26 miles from Washington, D.C., the nation's 7th largest
market, and has a population of more than 28,0000. WVVI-TV's proximity to
downtown Washington and the Northern Virginia and Maryland suburbs will greatly
enhance the Company's broadcast presence in the Washington metropolitan area.
WVVI-TV also provides a stronger over-the-air signal to more cable television
systems, thereby enhancing the Company's must-carry rights in the greater
Washington, D.C. market.
Under certain restrictions contained in the FCC's multiple ownership rules, the
Company cannot simultaneously own controlling interests in WSHE(TV) and
WVVI-TV. Consequently, the Company has agreed to sell WSHE(TV) to DP Media of
Martinsburg, Inc. ("DP Media") for a purchase price of $2,470,000, which
represents the sum of the Company's acquisition costs and capital expenditures
devoted to WSHE(TV). The purchase price is to be funded by a fully secured note
by DP Media to Paxson Communications of Washington-60, Inc. In addition, DP
Media will enter into an Affiliation Agreement with the Company's Infomall
TV Network pursuant to which WSHE(TV) will carry the Company's inTV program
service. The Affiliation Agreement provides that DP Media will broadcast the
Company's inTV programming in its entirety generally from 7 a.m. to 10 p.m. in
exchange for a monthly payment from the Company.
The closing of this sale is scheduled for Friday, May 30. Thank you for your
attention to this matter.
<PAGE> 1
EXHIBIT 10.168
===============================================================================
CONSTRUCTION AGREEMENT
BETWEEN
WHCT BROADCASTING, INC.,
AND
PAXSON COMMUNICATIONS OF HARTFORD-18, INC.
FOR
WHCT(TV), CHANNEL 18, HARTFORD, CONNECTICUT
===============================================================================
<PAGE> 2
CONSTRUCTION AGREEMENT
This Construction Agreement is made as of this ____ day of December,
1996, by and between WHCT Broadcasting, Inc., a Delaware corporation
(hereinafter referred to as "Broadcaster"), and Paxson Communications of
Hartford-18, Inc., a Florida corporation (the "Contractor").
WITNESSETH
WHEREAS, Broadcaster has contracted to acquire the assets and
licenses used in the operation of WHCT, Channel 18, Hartford, Connecticut
(hereinafter "the Station"), and has an application pending before the Federal
Communications Commission ("FCC") for consent to acquire the license, known as
File No. BALCT-930922KE; and
WHEREAS, the Broadcaster must return the Station to operation prior
to February 9, 1997; and
WHEREAS, the Contractor and Broadcaster intend to enter into a Time
Brokerage Agreement providing for Contractor to program the Station consistent
with applicable law and regulations; and
WHEREAS, Contractor has experience in television station
construction; and
WHEREAS, Contractor has agreed to purchase all materials and
equipment required in order to construct the Station facilities authorized in
its license and to undertake the construction of the Station, in exchange for
regular lease payments by Broadcaster to Contractor;
NOW THEREFORE, in consideration of the above and of the mutual
promises covenants contained herein, Broadcaster and Contractor, intending to
be legally bound, agree as follows:
1. DEFINITIONS
In addition to the terms which are elsewhere defined in this Agreement,
the following terms shall have the respective meanings hereinafter set forth:
(a) "Budget" shall mean the preliminary budget as agreed to by
Broadcaster and Contractor, as described in Exhibit A, attached hereto, as such
Budget may be amended in accordance with Paragraph 5 of this agreement.
(b) "Contract Documents" shall mean this Agreement, all
authorizations issued to the Licensee for the Station's operation and
construction, the Plans and Specifications and the Budget.
(c) "Plans and Specifications" shall mean the plans and
specifications for the construction of the facilities authorized by the FCC, as
supplemented by specifications for the Work as agreed to by Contractor and
Broadcaster, as described in Exhibit B attached hereto.
<PAGE> 3
-2-
(d) "Work" shall mean all labor, materials and equipment necessary or
appropriate for the construction of the Station in accordance with the Plans
and Specifications set forth in Exhibit B and the Construction Permit
Application.
2. THE WORK
(a) Contractor has done or agrees to do the following during the term
of this Agreement:
(1) In consultation with Broadcaster, specify the equipment, supplies
and materials necessary or appropriate for the construction and
installation of the facilities authorized by the FCC;
(2) Construct and/or install the facilities of the Station with the
concurrence of the Broadcaster's Chief Engineer as authorized by the FCC
in accordance with the Plans and Specifications and all applicable zoning,
building or other governmental laws, ordinances or regulations, including,
without limitation, all permits, regulations and directions of the FCC;
and
(3) Purchase all equipment necessary to the construction of the
Station and pay the entire cost of the work,
(b) Broadcaster has done or agrees to do the following during the
term of this Agreement:
(1) Prosecute any applications or authorizations at the FCC required
to construct and return to operation the Station prior to February 9,
1997;
(2) Cooperate with Contractor in timely filing and obtaining any
zoning, building and other permits, State, County or municipal, that are
required in connection with the Plans and Specifications and the Work and
execute the necessary documents and agreements provided by Contractor in
accordance with his obligations hereunder, and
(3) Obtain and maintain in effect a lease for the Station's tower
site.
(4) Notwithstanding any other provision of this Agreement, the
parties acknowledge that Broadcaster does not presently possess the right
to control the licenses of WHCT until such a time as the FCC grants
Broadcaster's pending application for assignment of licensee to
Broadcaster from the Trustee in Bankruptcy presently holding said license.
Broadcaster does not represent that it possesses the power to take any
steps with respect to the Station
<PAGE> 4
-3-
other than those which it lawfully may take prior to the grant by the FCC
of said application for assignment of license.
3. TIME
(a) The Work shall be commenced promptly upon the Broadcaster's
acquisition of the Station following FCC approval and shall be
substantially completed as promptly as possible, providing, however, that
the parties agree that date shall be extended by reason of strikes, labor
troubles, inability to procure material, failure of power, governmental
actions or inactions, riots, insurrection, war or other reasons beyond the
control of the parties. Upon substantial completion of the Work, the
Contractor shall lease the facilities to Broadcaster pursuant to a Lease
Agreement in the Form of Exhibit C. If the FCC has not granted
Broadcaster's application for consent to acquire the Station by _______ ,
then this Agreement may be terminated by Contractor without liability to
Contractor.
(b) The date of substantial completion of the Work is the date when
(I) construction is sufficiently complete, in accordance with the Contract
Documents, so that the Station may begin operating pursuant to Program
Test Authority under FCC rules using the constructed facilities and (ii)
all permits, modifications of permits, authorizations and licenses
necessary to operate such facilities have been obtained. Any Work required
by the Contract Documents which remains to be completed after the date of
substantial completion shall, if reasonably feasible, be completed by
Contractor within ninety (90) days after the date of substantial
completion.
4. PAYMENTS FOR THE WORK
Contractor shall be responsible for the entire cost of the Work not
to exceed the sum of Three Million Dollars ($3,000,000) (hereinafter "the
Cost"). The Lease Agreement between Contractor and Broadcaster shall provide
for monthly lease payments which represent not more than Three Percent of the
Cost.
5. BUDGET
Broadcaster and Contractor acknowledge and agree that the Budget
represents the estimated cost of the Work. Promptly after the date hereof,
Contractor shall obtain firm bids from responsible manufacturers, suppliers,
and contractors approved by Broadcaster for the performance of the Work or
portions thereof, and shall supply copies of all bids to Broadcaster.
Upon receipt of the bids and upon the agreement by Broadcaster and
Contractor to accept those bids, Contractor shall accept the bids and the
Budget shall be adjusted to conform to the bids.
<PAGE> 5
-4-
6. CONTRACTOR'S CONSTRUCTION OBLIGATIONS
(a) Contractor shall supervise and direct the Work, using its best
skill and attention and, subject to the concurrence of Broadcaster, shall
be responsible for all construction means, methods, techniques, sequences
and procedures and for coordinating all portions of the Work under this
Agreement.
(b) Contractor shall be responsible to the Broadcaster for the
acts and omissions of Contractor's employees, contractors, subcontractors,
and their agents and employees, and other persons providing or performing
any of the Work.
(c) Unless otherwise provided in the Contract Documents,
Contractor shall provide all labor, materials, equipment, tools,
construction, equipment and machinery, water, heat, utilities,
transportation and other facilities and services necessary for the proper
execution and completion of the Work, whether temporary or permanent and
whether or not incorporated or to be incorporated in the Work.
(d) Contractor shall at all times enforce strict discipline and
good order among any person working at the construction site and shall not
employ on the Work any unfit person or anyone not skilled in the task
assigned to him.
(e) Contractor warrants to Broadcaster that all materials and
equipment furnished under this Contract will be new, unless otherwise
specified in Exhibit A, and that all Work will be of good quality, free
from faults and defects and in conformance with the Contract Documents.
(f) Contractor shall give all material notices and comply in all
material respects with all laws, ordinances, rules, regulations and lawful
orders of any public authority bearing on the performance of the Work.
(g) Contractor shall prepare and submit to Broadcaster an
estimated progress schedule for the Work. The progress schedule shall be
related to the entire project to the extent required by the Contract
Documents and shall provide for expeditious and practicable completion of
the Work.
(h) Contractor at all times shall keep the construction site free
from accumulation of waste material or rubbish caused by the Work. At the
completion of the Work, at Broadcaster's expense, Contractor shall remove
or cause to be removed all waste materials and rubbish from and about the
construction site and tools, construction equipment, machinery and surplus
materials.
<PAGE> 6
-5-
(i) Contractor shall not suffer or permit any mechanics or similar
statutory liens to be filed on property of Broadcaster as a result of the
work that is not removed or for which adequate bond has not been provided
within 30 days of such filing.
7. SUBCONTRACTORS
By an appropriate written agreement, Contractor shall require each
Subcontractor, to the extent of the Work to be performed by the Subcontractor,
to be bound to Contractor by the terms of these Contract Documents, and to
assume toward Contractor all the obligations and responsibilities which
Contractor, by these documents, assumes toward Broadcaster.
8. PROTECTION OF PERSONS AND PROPERTY
(a) Contractor shall take all reasonable precautions for the
safety of, and shall provide all reasonable protection to prevent damage,
injury or loss to:
(1) all employees on the Work and all other persons who may be
affected thereby,
(2) all the Work and all materials and equipment to be
incorporated therein, whether in storage on or off the site, under
the care, custody or control of Contractor or any of his
subcontractors, and
(3) other property at the site or adjacent thereto.
(b) Contractor shall give all material notices and comply in all
material respects with all applicable laws, ordinances, rules, regulations
and lawful orders of any public authority bearing on the safety of persons
or property or their protection from damage, injury or loss. There shall
be a waiver of subrogation except to the extent covered by insurance.
9. INSURANCE
(a) Contractor shall purchase and maintain or cause to be
purchased and maintained such insurance as will protect Contractor and
Broadcaster from claims set forth below which may arise out of or result from
the Work or operations under the Contract, whether such operations be by
Contractor or by any subcontractor or by anyone directly or indirectly employed
by any of them, or by anyone for whose acts any of them may be liable:
<PAGE> 7
-6-
(1) claims under workers' or workmen's compensation, disability
benefit and other similar employee benefit acts;
(2) claims for damages because of bodily injury, occupational
sickness or disease, or death of its employees;
(3) claims for damages because of bodily injury, sickness or
disease, or death of any person other than its employees;
(4) claims for damages insured by usual personal injury liability
coverage which are sustained (1) by any person as a result of an
offense directly or indirectly related to the employment of such
person by Contractor, or (2) by any other person;
(5) claims for damages, other than to the Work itself, because of
injury to or destruction of tangible property; and
(6) claims for damages because of bodily injury or death or any
person or property damage arising out of the Broadcaster's,
maintenance or use of any motor vehicle in respect of the Work.
(b) The insurance required by this Paragraph shall be written for not
less than the limits of liability agreed to by Contractor and Broadcaster
or required by law, whichever is greater.
(c) Certificates of Insurance acceptable to Broadcaster and
Contractor shall be delivered to Broadcaster prior to commencement of the
Work. These Certificates shall contain a provision that coverage afforded
under the policies will not be canceled until at least thirty (30) days'
prior written notice has been given to the Broadcaster.
(d) Broadcaster shall purchase and maintain property insurance upon
the entire Work to the full insurable value thereof. This insurance shall
insure against the perils of fire and extended coverage, shall include
"all risk" insurance for physical loss or damage including, without
duplication of coverage, theft, vandalism and malicious mischief and shall
provide that all proceeds from such insurance shall go to Contractor.
10. DAMAGES
In the event of a default by Contractor of its obligations under this
Agreement or the failure of Contractor to complete the Work, Contractor shall
not be liable to Broadcaster for any consequential damages as a result of such
delay, including without limitation, any loss suffered by Broadcaster because
construction is not completed by February 9, 1996.
<PAGE> 8
-7-
11. MISCELLANEOUS PROVISIONS
(a) This Agreement and the exhibits hereto embodies the entire agreement
and understanding of the parties relating to the construction and leasing of
equipment for 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.
(b) The headings are for convenience only and will not control or affect
the meaning or construction of the provisions of this Agreement.
(c) The obligations of Broadcaster and Contractor are subject to
applicable federal, state and local law, rules and regulations. The
construction and performance of the Agreement will be governed by the laws of
the State of Florida.
(d) 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 Broadcaster: Michael L. Parker, President
WHCT Broadcasting, Inc.
1729 North 11th Street
Reading, Pennsylvania 19604
To Contractor: Paxson Communications of Hartford-18, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Dean Goodman, President-Television
or to any such other or additional persons and addresses as the parties may
from time to time designate in a writing delivered in accordance with this
Paragraph 11(d).
(e) If any provision of this Agreement or the application thereof to any
person or circumstances shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law. In the event that the FCC alters or
modifies its rules or policies in a fashion which would raise substantial and
material question as to the validity of any provision of this Agreement, the
parties hereto shall negotiate in good faith to revise any such
<PAGE> 9
-8-
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.
(f) Waiver of Default: Either party may waive any default or remedy any
default in any manner without waiving such default remedied and without waiving
any other prior or subsequent default and may waive or delay the exercise of
any right or remedy under this Agreement without waiving that right or remedy
or any other right or remedy hereunder. No waiver of any of the terms,
provisions or conditions hereof shall be effective against any party unless the
same is in writing and signed by both parties.
(g) Broadcaster and Contractor each binds itself and its successors,
assigns and legal representatives to the other party hereto and to the
successors, assigns and legal representatives of such other party with respect
to all covenants, agreements and obligations contained in the Contract
Documents, provided that in the event of an assignment by Contractor, it shall
not relieve Contractor of its obligations hereunder.
(h) The parties hereto agree to cooperate fully with each other in
preparing, filing, prosecuting, advocating grant, and taking any other actions
necessary with respect to any applications or actions which are or may be
necessary to obtain the consent of the FCC or of any other governmental
instrumentality, or any third party to, or are or may be necessary or helpful
in order to accomplish the transactions contemplated by this Agreement.
(i) If the Contract Documents, laws, ordinances, rules, regulations or
orders or any public authority having jurisdiction require any portion of the
Work to be inspected, tested or approved, Contractor shall give Broadcaster
timely notice of its readiness so Broadcaster may observe such inspection,
testing or approval.
(j) Broadcaster's and Contractor's respective obligations hereunder are
unique and valuable and not readily subject to compensation by money damages
alone. Accordingly, in the event either party should breach its obligations
under this Agreement, the other party shall be entitled to an order directing
specific performance from a court of competent jurisdiction, in addition to all
other remedies at law or in equity.
12. COUNTERPARTS
This Agreement may be signed in any number of counterparts with the same
effect as if the signatures on all counterparts were upon the same instrument.
IN WITNESS WHEREOF, Broadcaster and Contractor have executed this
Agreement as of the date first above written.
<PAGE> 10
BROADCASTER:
WHCT BROADCASTING, INC.
CONTRACTOR:
By: /s/
-----------------------------------------[SEAL]
Title:
CONTRACTOR:
PAXSON COMMUNICATIONS OF HARTFORD-18, INC.
By: /s/ Lowell W. Paxson
----------------------------------------[SEAL]
Title:
<PAGE> 11
EXHIBIT A
BUDGET
<PAGE> 12
EXHIBIT B
PLANS AND SPECIFICATIONS
CONSTRUCTION PERMIT APPLICATION
<PAGE> 13
EXHIBIT C
LEASE AGREEMENT
<PAGE> 1
EXHIBIT 10.169
================================================================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
ROBERTS BROADCASTING OF COOKEVILLE, L.L.C.
AND
PAXSON COMMUNICATIONS OF NASHVILLE-28, INC.
* * *
APRIL 11, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Accounts Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assumed Contracts". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Consents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Escrow Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Consent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Final Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Intangibles" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Permitted Liens" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Manner of Determining Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Organization, Standing and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Title to and Condition of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Title to and Condition of Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.11 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.12 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Employees and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.14 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.17 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Organization, Standing and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Buyer Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5. OPERATIONS OF THE ASSETS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.5 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.6 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.7 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.8 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.9 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.10 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.11 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.12 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Control of the Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.6 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.7 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.8 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(e) Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(f) Modification Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(g) Tower Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(h) Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(i) Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(j) Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Closing Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Transfer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Estoppel Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(d) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(e) Licenses, Contracts, Business Records, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 18
(f) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(g) Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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(h) Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Assumption Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(f) Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Upset Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(c) Upset Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.3 Escrow Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.4 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.5 Certain Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.6 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.7 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.12 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
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LIST OF SCHEDULES
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Schedule 2.2 - Excluded Assets
Schedule 3.3 - Consents
Schedule 3.4 - Licenses
Schedule 3.5 - Real Property and Liens
Schedule 3.6 - Personal Property
Schedule 3.7 - Contracts
Schedule 3.9 - Intangibles
Schedule 3.10 - Insurance
Schedule 3.12 - Personnel
Schedule 3.14 - Claims and Legal Actions
Schedule 4.4 - Buyer's Qualifications
Schedule 6.8 - Noncompetition Agreement
Schedule 8.2(f) - Opinion of Counsel
Schedule 8.3(d) - Opinion of Counsel
Schedule 9.3 - Escrow Agreement
</TABLE>
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<PAGE> 8
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of April 11, 1997, by
and among Roberts Broadcasting of Cookeville, L.L.C. a Delaware limited
liability company, ("Seller"), and Paxson Communications of Nashville-28,
Inc., a Florida corporation ("Buyer").
RECITALS
A. Seller is the licensee of television station WKZX-TV, Cookeville,
Tennessee (the "Station"), pursuant to authorizations issued by the Federal
Communications Commission ("the FCC").
B. Seller owns personal property and real property necessary for the
operation of the Station.
C. Seller desires to sell, and Buyer wishes to buy, substantially all
the assets that are owned by Seller or in which Seller has a transferable
interest and which are used or useful in the business or operations of the
Station, for the price and on the terms and conditions set forth in this
Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Seller, intending to be
bound legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of advertising time run on the Station by Seller prior to the Closing
Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1 and 2.2.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7
that are to be assumed by Buyer upon its purchase of the Station, (ii) all
Contracts entered into by Seller in the ordinary course of business which
comply with the provisions of Section 5.2 hereof; and (iii) any other Contracts
entered into by Seller between the date of this Agreement and the Closing Date
that Buyer agrees in writing to assume.
<PAGE> 9
"Closing" means the consummation of the purchase and sale of the
Assets pursuant to this Agreement in accordance with the provisions of Section
8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer
or otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including any amendments and other
modifications thereto) to which Seller is a party or which are binding upon
Seller and which relate to or affect the Assets or the business or operations
of the Station, and (i) which are in effect on the date of this Agreement or
(ii) which are entered into by Seller between the date of this Agreement and
the Closing Date.
"Escrow Agreement" means First Union National Bank of Florida.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses and/or Construction Permits issued
by the FCC to Seller in connection with the business or operations of the
Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by Seller or under which Seller is licensed or franchised and which are used or
useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
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"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local government authorities to Seller in connection with the conduct
of the business or operations of the Station, together with any additions
thereto between the date of this Agreement and the Closing Date.
"Permitted Liens" means liens for taxes not yet due and payable.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, or any
governmental entity.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means Seller's interests in real property, leaseholds
and subleaseholds, purchase options, easements, licenses, rights to access, and
rights of way, and all buildings and other improvements thereon, which are used
or useful in the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
furniture, leasehold improvements, office equipment, plant, inventory, spare
parts, and other tangible personal property which is owned by the Seller or in
which Seller has an interest and which is used or useful in the conduct of the
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date, but excluding any
Tangible Personal Property consumed in the ordinary course of business between
the date hereof and the Closing Date.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
set forth in this Agreement, Seller hereby agrees to sell, transfer, assign and
deliver to Buyer on the Closing Date, and Buyer agrees to purchase and accept,
all of the Assets and property interests owned by Seller or in which Seller has
a property interest which are used or useful in connection with the conduct of
the business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date, but excluding the
assets described in Section 2.2, free and clear of any claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever (except for Permitted Liens), including
the following:
(a) The Tangible Personal Property;
(b) The Licenses;
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<PAGE> 11
(c) The Assumed Contracts;
(d) The Intangibles, including the
goodwill of the Station, if any;
(e) All proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station, which belong to
Seller and is within its possession and control;
(f) All choses in action of Seller
relating to the Station that are assignable to Buyer as provided herein;
(g) The Accounts Receivable; and
(h) All records required by the FCC to be
kept by the Station and copies of all other books and records which belong to
Seller and are within its possession and control relating to the business or
operations of the Station (exclusive of corporate, financial and accounting
records), including executed copies of the Assumed Contracts.
2.2 Excluded Assets. The Assets shall exclude the following assets.
(a) Seller's cash on hand as of the
Closing and all other cash in any of Seller's bank or savings accounts; any
insurance policies, letters of credit, or other similar items and cash
surrender value in regard thereto; and any stocks, bonds, certificates of
deposit and similar securities or other investments;
(b) All corporate and accounting records
of Seller and copies of all other books and records relating to the business
and operations of the Station; and
(c) All property listed on Schedule 2.2
hereto.
2.3 Purchase Price.
(a) Purchase Price. The Purchase Price for
the Assets shall be Four Million Three Hundred Thousand Dollars ($4,300,000)
(the "Purchase Price").
(b) Prorations. Any expenses or income
relating to the Assets shall be prorated in accordance with the principle that
Seller shall be responsible for all expenses, costs and liabilities and
entitled to all income allocable to the period prior to the Closing Date and
Buyer shall be responsible for all expenses, costs and liabilities and entitled
to all income allocable to the period on and after the Closing Date. The
Purchase Price shall be increased or decreased as required to effectuate such
proration of expenses and Income.
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<PAGE> 12
(c) Manner of Determining Adjustments. Any
adjustments to the Purchase Price required under Section 2.3(b) will, insofar
as feasible, be determined and paid on the Closing Date, with final settlement
and payment by the appropriate party occurring no later than ninety (90) days
after the Closing Date or such other date as the parties shall mutually agree
upon.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer at
least two (2) days prior to the Closing Date. At the option of Seller, some or
all of the Purchase Price may be paid by Buyer by delivery of a Promissory Note
(due and payable one year after the Closing), based upon written instructions
delivered to Buyer at least ten (10) days prior to the Closing.
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of Seller that (i) relate to the Assets insofar as
they relate to the time on and after the Closing Date, (ii) arise out of events
relates to Buyer's ownership of the Assets or its operation of the Station on
or after the Closing Date and (iii) relate to the period prior to the Closing
which Buyer agrees to assume pursuant to the prorations and adjustments to the
Purchase Price under Section 2.3(b) hereof. Buyer shall not assume any other
obligations or liabilities of Seller. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or
proceedings relating to the operation of the Station prior to the Closing, (iv)
any obligations or liabilities arising under agreements entered into other than
in the ordinary course of business, (v) any obligation to any employee of the
Station for severance benefits, vacation time, or sick leave accrued prior to
the Closing Date relating to any employee of Seller who is not employed or
offered employment by Buyer within the 90-day adjustment period, or (vi) any
obligations or liabilities caused by, arising out of, or resulting from any
action or omission of Seller prior to the Closing, and all such obligations and
liabilities shall remain and be the obligations and liabilities solely of
Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a limited
liability company organized under the laws of Delaware. Seller has all
requisite power and authority (i) to own, lease, and use the Assets as now
owned, leased, and used, (ii) to conduct the business operations of the Station
as now conducted, and (iii) to execute and deliver this Agreement and the
documents contemplated hereby, and to perform and comply with all of the terms,
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<PAGE> 13
covenants, and conditions to be performed and complied with by Seller hereunder
and thereunder.
3.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement by Seller have been duly authorized by all
necessary corporate actions on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller, enforceable against it in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally, and by
judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery and performance of
this Agreement and the documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both): (i) do not require the consent
of any third party; (ii) will not conflict with, result in a breach of, or
constitute a default under, any law, judgment, order, ordinance, injunction,
decree, rule, regulation, or ruling of any court or governmental
instrumentality in a proceeding involving Seller; (iii) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to
which Seller is a party or by which Seller may be bound; (iv) will not create
any Lien upon any of the Assets; and (v) will not conflict with any provision of
Seller's Operating Agreement.
3.4 Governmental Licenses. To the best of Seller's knowledge and
except as set forth on Schedule 3.4, (i) Schedule 3.4 includes a true and
complete list of the material Licenses and lists pending applications affecting
the Licenses; (ii) Seller has delivered to Buyer true and complete copies of
the Licenses listed on such Schedule (including any amendment and other
modifications thereto), (iii) the Licenses have been validly issued, and Seller
is the authorized legal holder thereof, (iv) the Licenses listed on Schedule
3.4 comprise all of the material licenses, permits, and other authorizations
required from any governmental or regulatory authority for the lawful conduct
of the business and operations of the Station in the manner and to the full
extent they are now conducted, (v) none of the Licenses is subject to any
restriction or condition that would limit the full operation of the Station as
now operated, (vi) the Licenses are in full force and effect, in all material
respects, and the conduct of the business and operations of the Station is in
material accordance therewith, and (vii) Seller has no reason to believe that
any of the Licenses would not be renewed by the FCC or other granting authority
in the ordinary course.
3.5 Title to and Condition of Real Property. Schedule 3.5
contains a complete and accurate description of all the Real Property and
Seller's interests therein (including street address, legal description, owner,
and use and the location of all improvements thereon).
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<PAGE> 14
The Real Property listed on Schedule 3.5 comprises all real property interests
necessary to conduct the business ant operations of the Station as now
conducted. With respect to each leasehold or subleasehold interest included in
the Real Property being conveyed under this Agreement, so long as Seller
fulfills its obligations under the lease therefor, Seller has enforceable
rights to nondisturbance and quiet enjoyment, and no third party holds any
interest in the leased premises with the right to foreclose upon Seller's
leasehold or subleasehold interest. Seller has full legal and practical access
to the Real Property. All easements, rights-of way, and real property licenses
relating to the Real Property have been properly recorded in the appropriate
public recording offices. Seller is not conveying the Real Property to Buyer
but will mane the Real Property available to Buyer pursuant to the Studio L
ease as required in Section 7. l(h) hereof.
3.6 Title to and Condition of Tangible Personal Property. Schedule
3.6 lists all material items of Tangible Personal Property. The Tangible
Personal Property listed on Schedule 3.6 comprises all material items of
tangible personal property used to conduct the business and operations of the
Station as now conducted exclusive of motor vehicles. Except as described in
Schedule 3.6, Seller owns and has good title to each item of Tangible Personal
Property and none of the Tangible Personal Property owned by Seller is subject
to any security interest, mortgage, pledge, conditional sales agreement, or
other lien or encumbrance, except Permitted Liens.
3.7 Contracts. Schedule 3.7 is a true and complete list of all
Assumed Contracts except contracts with advertisers for the sale of advertising
time on the Station for cash at prevailing rates and which may be canceled by
the Station without penalty on not more than ninety days' notice. Seller has
delivered to Buyer true and complete copies of all written Assumed Contracts,
true and complete memoranda of all material oral Assumed Contracts (including
any amendments and other modifications to such Assumed Contracts), and a
schedule summarizing Seller's obligations under trade and barter agreements
relating to the Station, To the of Seller's knowledge all of the Assumed
Contracts are in full force and effect, ad are valid, binding, and enforceable
in accordance with their terms and there is not under any Assumed Contract any
default by a" party thereto or any event that, after notice or lapse of time or
both, could constitute a default Except for the need to obtain the Consents
listed in Schedule 3.3, Seller has full legal power and authority to assign its
rights under the Assumed Contracts to Buyer in accordance with this Agreement,
and such assignment will not affect the validity, enforceability, or
continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided in Section
6.1 and the other Consents described in Schedule 3.3, to the best of Seller's
knowledge, no consent, approval, permit, or authorization of, or declaration to
or filing with any governmental or regulatory authority, or any other third
party is required (i) to consummate this Agreement and the transactions
contemplated hereby, (ii) to permit Seller to assign or transfer the Assets to
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Buyer, or (iii) to enable Buyer to conduct the business and operations of the
Station in essentially the same manner as such business and operations are now
conducted.
3.9 Intangibles. To the best of Seller's knowledge, Schedule 3.9 is a
true and complete list of all material Intangibles (exclusive of those listed
in Schedule 3.4), all of which are valid and in good standing and uncontested.
Seller has delivered to Buyer copies of all documents establishing or
evidencing all intangibles.
3.10 Insurance. Schedule 3.10 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the
business of the Station. All policies of insurance listed in Schedule 3.10 are
in full force and effect.
3.11 Reports. To the best of Seller's knowledge and except as set
forth in Schedule 3.4, all returns, reports, and statements that the Station is
currently required to file with the FCC or place in its Public File or file
with any other governmental agency have been filed, and all reporting
requirements of the FCC and other governmental authorities having jurisdiction
over Seller and the Station have been complied with in all material respects
and all of such returns, reports, and statements are substantially complete and
correct as filed.
3.12 Personnel.
(a) Employees and Compensation. Schedule 3.12 contains a true
and complete list of all employees of the Station, their job description, date
of hire, salary and amount and date of last salary increase. Schedule 3.12 also
contains a true and complete list as of the date of this Agreement of all
employee benefit plans or arrangements applicable to the employees of the
Station and all fixed or contingent liabilities or obligations of Seller with
respect to any person now or formerly employed by Seller at the Station,
including pension or thrift plans, individual or supplemental pension or
accrued compensation arrangements, contributions to hospitalization or other
health or life insurance programs, incentive plans, bonus arrangements, and
vacation, sick leave, disability and termination arrangements or policies,
including workers' compensation policies, and a description of all fixed or
contingent liabilities or obligations of Seller with respect to any person now
or formerly employed at the Station or any person now or formerly retained as
an independent contractor at the Station.
(b) Labor Relations. Seller is not a party to or subject to any
collective bargaining agreements with respect to the Station. Seller has no
written or oral contracts of employment with any employee of the Station, other
than those listed in Schedule 3.12.
(c) Liabilities. Seller has no liability of any kind to or in
respect of any employee benefit plan, including withdrawal liability under
Section 4201 of ERISA. Seller has not incurred any accumulated funding
deficiency within the meaning of ERISA or Section
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4971 of the Internal Revenue Code. Seller has not failed to make any required
contributions to any employee benefit plan. The Pension Benefit Guaranty
Corporation has not asserted that Seller has incurred any liability in
connection with any such plan. No lien has been attached and no person has
threatened to attach a lien on any property of Seller as a result of a failure
to comply with ERISA.
3.13 Taxes. To the best of the Seller's knowledge, (i) Seller has
filed or caused to be filed all federal income tax returns and all other
federal, state, county, local, or city tax returns which are required to be
filed, and it has paid or caused to be paid all taxes shown on those returns or
on any tax assessment received by it to the extent that such taxes have become
due, and (ii) there are no governmental investigations or other legal,
administrative, or tax proceedings pursuant to which Seller is or could be made
liable for any taxes, penalties, interest, or other charges, the liability for
which could extend to Buyer as transferee of the business of the Station, and
no event has occurred that could impose on Buyer any transferree liability for
any taxes, penalties, or interest due or to become due from Seller.
3.14 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry, and except as set
forth on Schedule 3.14, to the best of Seller's knowledge, there is no claim,
legal action, counterclaim, nor any order, decree or judgment, in progress or
pending, or to the knowledge of Seller threatened, against or relating to
Seller with respect to its ownership or operation of the Station or otherwise
relating to Seller with respect to its ownership or operation of the Station or
otherwise relating to the Assets or the business or operations of the Station,
nor does Seller know or have reason to be aware of any basis for the same. In
particular, but without limiting the generality of the foregoing, and except as
forth on Schedule 3.14, to the best of Seller's knowledge, there are no
applications, complaints or proceedings pending or, to the best of its
knowledge, threatened (i) before the FCC relating to the business or operations
of the Station other than rule making proceedings which affect the radio
industry generally, (ii) before any federal or state agency relating to the
business or operations of the Station involving charges of illegal
discrimination under any federal or state employment laws or regulations, or
(iii) before any federal, state, or local agency relating to the business or
operations of the Station involving zoning issues under any federal, state,
or local zoning law, rule, or regulation.
3.15 Environmental Matters.
(a) Seller has complied in all material respects with all laws,
rules, and regulations of all federal, state, and local governments (and all
agencies thereof) concerning the environment, public health and safety, and
employee health and safety, and no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been filed or commenced
against Seller in connection with its ownership or operation of the Station
alleging any failure to comply with any such law, rule, or regulation.
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(b) To the best of Seller's knowledge, Seller has no liability
relating to its ownership and operation of the Station (and there is no basis
related to the past or present operations, properties, or facilities of Seller
for any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand against Seller giving rise to any such
liability) under any law, rule, or regulation of any federal, state, or local
government (or agency thereof) concerning release or threatened release of
hazardous substances, public health and safety, or pollution or protection of
the environment.
(c) To the best of Seller's knowledge, Seller has no liability
relating to its ownership and operation of the Station (and Seller has not
handled or disposed of any substance, arranged for the disposal of any
substance, or owned or operated any property or facility in any manner that
could form the basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand (under the common law or
pursuant to any statute) against Seller giving rise to any such liability) for
damage to any site, location, or body of water (surface of subsurface) or for
illness or personal injury.
(d) To the best of Seller's knowledge, Seller has no liability
relating to its ownership and operation of the Station (and there is no basis
for any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand against Seller giving rise to any such
liability) under any law, rule, or regulation of any federal, state, or local
government (or agency thereof) concerning employee health and safety.
(e) In connection with its ownership or operation of the Station,
Seller has obtained and been in material compliance with all of the terms and
conditions of all permits, licenses, and other authorizations which are
required under, and has complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all federal,
state, and local laws, rules, and regulations (including all codes, plans,
judgments, orders, decrees, stipulations, injunctions, and charges thereunder)
relating to public health and safety, worker health and safety, and pollution
or protection of the environment, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
(f) To the best of Seller's knowledge, all properties and
equipment used in the business of the Station are and have been free of
asbestos and asbestos-related products, PCB's, dioxins, and Extremely Hazardous
Substances (as defined in Section 302 of the Emergency Planning and Community
Right-to-Know Act.)
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(g) No pollutant, containment, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by Seller in
connection with its ownership and operation of the Station or, to the best of
Seller's knowledge, after due investigation, by any other party on any Real
Property.
3.16 Compliance with Laws. To the best Seller's knowledge and except
as set forth on Schedule 3.4, Seller has complied in all material respects with
the Licenses and all federal, state, and local laws, rules, regulations, and
ordinances applicable or relating to the ownership and operation of the
Station. To the best of Seller's knowledge, neither the ownership or use of
the properties of the Station nor the conduct of the business or operations of
the Station conflicts with the rights of any other person or entity.
3.17 Full Disclosure. no representation or warranty made by Seller
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will
knowingly contain any untrue-statement of a material fact.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida and at Closing will be duly qualified to conduct business as a
foreign corporation in the State of Tennessee. buyer has all requisite power
and authority to execute and deliver this Agreement and the documents
contemplated hereby, and to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by Buyer hereunder
and thereunder.
4.2 Absence of Conflicting Agreements. Subject to obtaining the FCC
Consent, the execution, delivery, and performance by Buyer of this Agreement
and the documents contemplated hereby (with or without the giving of notice,
the lapse of time, or both): (i) do not require the consent of any third party;
(ii) will not conflict with the Certificate of Incorporation of Bylaws of
Buyer; (iii) will not conflict with, result in a breach of, or
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constitute a default under, any law, judgment, order, injunction, decree, rule,
regulation, or ruling of any court or government instrumentality; (iv) will not
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license, or
permit to which Buyer is a party or by which Buyer may be bound, such that
Buyer could not acquire the Assets.
4.4 Buyer Qualifications. Except as set forth on Schedule 4.4, buyer
is legally, financially and otherwise qualified to acquire the Licenses under
the Communications Act of 1934, as amended, and the rules, regulations and
policies of the FCC. Buyer knows of now fact that would, under existing law
and the existing rules, regulations, policies and procedures of the FCC
disqualify Buyer as assignee of the Licenses or as the owner and operator of
the Station.
SECTION 5. OPERATIONS OF THE ASSETS PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall operate the Station in the
ordinary course of business in accordance with its past practices (except where
such conduct would conflict with the following covenants or with Seller's other
obligations under this Agreement), and in accordance with the other covenants
in this Section 5.
5.2 Contracts. Seller will not enter into any contract or commitment
which is not terminable on 90-days notice relating to the Station or the
Assets, or amend or terminate any Contract (or waive any material right
thereunder), or incur any obligation (including obligations relating to the
borrowing of money or the guaranteeing of indebtedness) that will be binding on
Buyer after Closing, except for cash time sales agreements made in the ordinary
course of business and other contracts or commitments involving less than
$5,000. Prior to the Closing Date, Seller shall deliver to Buyer a list of all
Contracts entered into between the date of this Agreement and the Closing
Date, together with copies of such Contracts.
5.3 Disposition of Assets. Seller shall not sell, assign, lease, or
otherwise transfer or dispose of any of the material Assets, except for (i)
liens which shall be removed prior to the Closing Date, (ii) liens for current
taxes not yet due and payable, and (iii) mechanics' liens and other similar
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liens, which shall be removed prior to the Closing Date either by payment or
posting an appropriate indemnity bond.
5.5 Licenses. Seller shall not cause or permit, by any act or
failure to act, any of the Licenses issued by the FCC to expire or to be
revoked, suspended, or modified, or take any action that could cause the FCC or
any other governmental authority to institute proceedings for the suspension,
revocation, or adverse modification of any of the Licenses. Seller shall not
fail to prosecute with due diligence any application to any governmental
authority in connection with the operation of the Station.
5.6 Rights. Seller shall not knowingly waive any material right
relating to Station or any of the Assets.
5.7 Access to Information. Seller shall give Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
during normal business hours to the Assets and to all other properties,
equipment, books, records, Contracts, and documents relating to the Station for
the purpose of audit and inspection and will furnish or cause to be furnished
to Buyer or its authorized representatives all material information with
respect to the affairs and business of the Station that Buyer may reasonably
request (including any operations reports produced with respect to the affairs
and business of the Station).
5.8 Insurance. Seller shall maintain substantially the same
insurance coverage provided by the existing insurance policies on the Station
and the Assets.
5.9 Consents. Seller shall use its best efforts to obtain the
Consents described in Section 8.2(c), without any material change in the terms
or conditions of any Contract or License as in effect on the date of this
Agreement. Seller shall advise Buyer of any communications it receives
concerning the Consents and of any conditions proposed, considered, or
requested for any of the Consents. Upon Buyer's request, Seller shall
cooperate with Buyer and use its best efforts to obtain from the lessors under
each Real Property lease such estoppel certificates and consents to the
collateral assignment of the lessee's interest under each such lease as Buyer's
lenders may request.
5.10 Books and Records. Seller shall maintain its books and records
relating to the Station in accordance with past practices.
5.11 Notification. Seller shall promptly notify Buyer in writing of
any material change in any of the information contained in Seller's
representations and warranties contained in Section 3 of this Agreement.
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5.12 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Station.
STATION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an appropriate
application for the FCC Consent and shall file the application with he FCC
within thirty (30) days of the execution of this Agreement. The parties shall
prosecute the application with all reasonable diligence and otherwise use
their reasonable commercial efforts to obtain a grant of the applications as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on it by the FCC Consent, except that no party shall be required to
comply with a condition if compliance with such condition would have a material
adverse effect upon it. Buyer and Seller shall oppose any requests for
reconsideration or judicial review of the FCC Consent, provided, however, that
the parties shall continue to have all rights available to them pursuant
Section 9 hereof. If the Closing shall not have occurred for any reason within
the original effective period of the FCC Consent, and neither party shall have
terminated this Agreement under Section 9, the parties shall jointly request
an extension of the effective period of the FCC Consent. No extension of the
FCC Consent shall limit the exercise by either party of its rights under
Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of Seller until the Closing.
6.3 Risk of Loss. The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing.
6.4 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
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connection with the transactions contemplated by this Agreement. Except as
provided in this Paragraph each party will refrain from disclosing any such
information to any third party. If this Agreement is terminated, each party
will return to the other party all copies of all documents and all other
information obtained by such party from the other party in connection with the
transaction contemplated by this Agreement.
6.5 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under
this Agreement, and Buyer and Seller shall execute such other documents as may
be necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their reasonable commercial efforts to consummate
the transaction contemplated hereby and to fulfill their obligations under this
Agreement.
6.6 Access to Books and Records. Seller shall provide Buyer access
and the right to copy for a period of two (2) years from the Closing Date any
books and records relating to the Assets but not included in the Assets. Buyer
shall provide Seller access and the right to copy for a period of two (2) years
from the Closing Date any books and records relating fees or commissions in
connection with the transactions contemplated by this Agreement.
6.8 Broker. Each of Buyer and Seller represents and warrants that
neither it nor any person or entity acting on its behalf has incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transactions contemplated by this Agreement.
6.8 Noncompetition Agreement. At Closing, Buyer and Seller shall
enter into a Noncompetition Agreement in the form of Schedule 6.8 and $84,000
of the Purchase Price shall be allocated to the covenants of Seller set forth
therein on the Closing Date.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at
the Closing are subject at Buyer's option to the fulfillment or waiver by Buyer
prior to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All material
representations and warranties of Seller contained in this Agreement shall be
true and complete in all material respects at and as of the Closing Date as
though made at and as of that time.
(b) Covenants and Conditions. Seller shall have performed and
complied in all material respects with all material covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
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(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any material adverse change in the terms or
conditions of any agreement or any governmental license, permit, or other
authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any material conditions that need not be
compiled with by Buyer under Section 6.1 hereof, Seller shall have complied with
any material conditions imposed on it by the FCC Consent, and the FCC Consent
shall have become a Final Order.
(e) Governmental Authorizations. Seller shall be the holder of
the Licenses and there shall not have been any modification of any License that
could have a material adverse effect on the Station or the conduct of its
business and operations. No proceeding shall be pending the effect of which
could be to revoke, cancel, fail to renew, suspend, or modify adversely any
License.
(f) Modification Application. The FCC shall have granted
Seller's pending application to modify the Station's facilities (File No.
BMPCT-960705KI) without changes, except as specifically acceptable to Buyer.
(g) Tower Construction. Seller shall have completed
construction of the new tower and transmitter building sufficient to
accommodate the Station's modified facilities authorized by the
above-referenced modification application, pursuant to design, equipment and
architectural plans and a building schedule approved in advance by Buyer
sufficient to accommodate the Station's analog and HDTV needs, access roads and
utility services.
(h) Leases. Seller and Buyer shall have entered into (i) a
Tower/Transmitter Site Lease with an initial term of fifteen years at a monthly
rental of $8,500 and with a renewal term of fifteen years at a negotiated
market rate and (ii) a Studio Lease covering the Station's existing buildings,
grounds, LPTV equipment and microwave tower for a five year term at a monthly
rate of $3,500 and further providing Buyer with termination rights on ninety
(90) days notice. The monthly rate of $3,500 and further providing Buyer with
termination rights on ninety (90) days notice. The monthly rental under both
Leases shall be modified annually to reflect increased property taxes and
insure costs attributable to the Leased Premises.
(i) Deliveries. Seller shall have made or stand willing to
make all deliveries to Buyer set forth in Section 8.2.
(j) Adverse Change. Between the date of this Agreement and the
Closing Date, there shall have been no material adverse change in the assets,
or properties of the Station, including any damage, destruction, or loss
affecting any assets used or useful in the conduct of the business Station.
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7.2 Conditions to Obligations of Seller. All obligations of Seller
at the Closing are subject at Seller's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representation and Warranties. All material
representations and warranties of Buyer contained in this Agreement shall be
true and complete in all material respects at and as of the Closing Date as
though made at and as of that time.
(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all material covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing to make
all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any material conditions that need not be
complied with by Seller under Section 6.1 hereof and Buyer shall have complied
with any conditions imposed on it by the FCC Consent.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing
(a) Closing Date. The Closing shall take place at 10:00 a.m.
on a date to be set by Buyer on at least five days' written notice to Seller,
that is (1) not earlier than January 16, 1998, and (2) not later than January
31, 1998. If Buyer fails to specify the date for Closing pursuant to the
preceding sentence prior to the fifth business day after the date upon which the
FCC Consent becomes a Final Order, the Closing shall take place on January 16,
1998.
(b) Closing Place. The Closing shall be held at the offices of
Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or such other place that is agreed upon by Buyer and
Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel;
(c) Transfer Documents. Subject to the provisions of this
Agreement, duly executed bills of sale, assignments, and other transfer
documents which shall be sufficient to vest good and marketable title to the
Assets in the name of Buyer, free and clear of all
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mortgages, liens, restrictions, encumbrances, claims, and obligations except
for Permitted Liens.
(b) Estoppel Certificate. An Estoppel Certificate of the Lessor of
the leasehold interests listed in Schedule 3.5.
(c) Consents. An executed copy of any instrument evidencing receipt
of any Consent;
(d) Certificates. Certificates, dated as of the Closing Date,
executed by Seller certifying (1) that the material representations and
warranties of Seller contained in this Agreement are true and complete in all
material respects as of the Closing Date as though made on and as of that date;
and (2) that Seller have in all material respects performed and complied with
all of its material obligations, covenants, and agreements set forth in this
Agreement to be performed and complied with on or prior to the Closing Date and
such additional Certificates and confirmations to Buyer's lenders as Buyer may
reasonably request in connection with obtaining financing for the performance of
its payment obligations hereunder.
(e) Licenses, Contracts, Business Records, Etc. Copies of all
Licenses and Assumed Contracts.
(f) Opinion of Counsel. Opinion of Seller's counsel dated as of the
Closing Date, substantially in the form of Schedule 8.2(f) hereto; and
(g) Noncompetition Agreement. The Noncompetition Agreement in the form
as Schedule 6.8, duly executed on behalf of Seller.
(h) Leases. The Tower/Transmitter Site Lease and Studio Lease duly
executed by Seller.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel;
(a) Purchase Price. The Purchase Price as provided in Sections 2.3
and 2.4.
(b) Assumption Agreements. Appropriate assumption agreements pursuant
to which Buyer shall assume and undertake to perform the obligations of Seller
required by Section 2.5 of this Agreement.
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(c) Officer's Certificate. A certificate, dated as of the Closing
Date, executed by an officer of Buyer certifying (1) that the representations
and warranties of Buyer contained in this Agreement are true and complete in
all material respects as of the Closing Date as though made on and as of that
date, and (2) that Buyer has in all material respects performed and complied
with all of its obligations, covenants, and agreements set forth in this
Agreement to be performed and complied with on or prior to the Closing Date.
(d) Opinion of Counsel. Opinion of Buyer's counsel dated as of the
Closing Date, substantially in the form of Schedule 8.3(d) hereto.
(e) Noncompetition Agreement. The Noncompetition Agreement in the
form of Schedule 6.8 duly executed by Buyer and the payment of $84,000 to
Seller thereunder.
(f) Leases. The Tower/Transmitter Site Lease and Studio Lease duly
executed by Buyer.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by Seller and
the purchase and sale of the Assets abandoned, if Seller is not then in
material default, upon written notice to Buyer, upon the occurrence of any of
the following:
(a) Conditions. If, on the date that would otherwise be the Closing
Date, any of the conditions precedent to the obligations of Seller set forth in
this Agreement have not been satisfied or waived in writing by Seller.
(b) Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree, or order, not caused by
Seller, that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by March 1,
1998.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer and
the purchase and sale of the Station abandoned, if Buyer is not then in
material default, upon written notice to Seller, upon the occurrence of any of
the following:
(a) Conditions. If on the date that would otherwise be the Closing
Date any of the conditions precedent to the obligations of Buyer set forth in
this Agreement have not been satisfied or waived in writing by Buyer.
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(b) Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree, or order, not caused by
Buyer, that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by March 1,
1998.
9.3 Escrow Deposit. Simultaneously with the execution and delivery of this
Agreement by Seller and Buyer, Buyer has deposited with the Escrow Agent the
amount of One Hundred Thousand Dollars ($100,000) in accordance with the Escrow
Agreement attached hereto as Schedule 9.3. All funds and documents deposited
with the Escrow Agent shall be held and disbursed in accordance with the terms
of the Escrow Agreement and the following provisions:
(a) At the Closing, all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, shall be disbursed to or at
the direction of Buyer.
(b) If this Agreement is terminated pursuant to Section 9.1
and 9.2 and Buyer is not in material breach of this Agreement, all amounts held
by the Escrow Agent pursuant to the Escrow Agreement, including any interest or
other proceeds from the investment of funds held by the Escrow Agent, shall be
disbursed to or at the direction of Buyer.
9.4 Rights on Termination. If this Agreement is terminated pursuant
to Section 9.1 or Section 9.2 and neither party is in material breach of any
provision of this Agreement, the parties hereto shall not have any further
liability to each other with respect to the purchase and sale of the Assets.
If this Agreement is terminated by Seller due to Buyer's material breach of any
provision of this Agreement, then Seller shall be entitled to the Escrow
Deposit of One Hundred Thousand Dollars ($100,000) as liquidated damages which
shall constitute full payment and the exclusive remedy for any damages suffered
by Seller by reason of Buyer's material breach of this Agreement. Seller and
Buyer agree in advance that actual damages would be difficult to ascertain and
that the amount of One Hundred Thousand ($100,000) is a fair and equitable
amount to reimburse Seller for damages sustained due to Buyer's material breach
of this Agreement. If prior to Closing, Seller is in material breach of its
obligations under this Agreement, Buyer's sole remedy shall be an action for
specific performance of this Agreement and Buyer expressly waives any right to
pursue a claim for monetary damages.
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SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the Closing for a period of twelve (12) months.
10.2 Indemnification by Seller. Seller hereby agrees to indemnify and
hold Buyer harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting from any
untrue representation, breach of warranty, or material omission or
nonfulfillment of any covenant by Seller contained in this Agreement or in any
certificate, document, or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by Buyer pursuant
to this Agreement.
(c) Any and all losses, liabilities, or damages contingent or
otherwise resulting from the operation or ownership of the Assets or the
Station prior to the Closing Date, including any liabilities arising under the
Licenses which relate to events occurring prior to the Closing Date.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees
and expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.3 Indemnification by Buyer. Buyer hereby agrees to indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting from any
untrue representation, branch of warranty, or material omission or
nonfulfillment of any covenant by Buyer contained in this Agreement or in any
certificate, document, or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer pursuant to
this Agreement.
(c) Any and all losses, liabilities, or damages contingent or
otherwise, resulting from the operation or ownership of the Assets or the
Station on and after the Closing.
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<PAGE> 29
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party against Claimant, such notice shall be given by Claimant as soon as
practicable after written notice of such action, suit, or proceeding was given
to Claimant.
(b) With respect to claims solely between the parties, following
receipt of notice from the Claimant of a claim, the Indemnifying Party shall
have thirty days to make such investigation of the claim as the Indemnifying
Party deems necessary or desirable. For the purposes of such investigation,
the Claimant agrees to make available to the Indemnifying Party and/or its
authorized representatives the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnifying Party agree at or
prior to the expiration of the thirty-day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the claim. If
the Claimant and the Indemnifying Party do not agree within such thirty-day
period (or any mutually agreed upon extension thereof), the Claimant may seek
appropriate remedy under the arbitration provisions set forth in Section 11.2
of this Agreement.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party subject to reimbursement for reasonable actual
out-of-pocket expenses incurred by the Claimant as the result of a request by
the Indemnifying Party. If the Indemnifying Party elects to assume control of
the defense of any third-party claim, the Claimant shall have the right to
participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate 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.
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<PAGE> 30
(e) The indemnification rights provided in Sections 10.2 and 10.3
shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Certain Limitations. Notwithstanding anything in this Agreement to
the contrary, neither party shall indemnify or otherwise be liable to the other
party for any breach of a representation or warranty, or for the breach of any
covenant contained in this Agreement, except to the extent the losses,
obligations, liabilities, costs and expenses of such party arising therefrom
exceed in the aggregate Twenty Five Thousand Dollars ($25,000).
10.6 Specific Performance. The parties recognize that if Seller breaches
this Agreement and refuses to perform under the provisions of this Agreement,
monetary damages alone would not be adequate to compensate Buyer for its
injury. Buyer shall therefore be entitled, as its sole and exclusive remedy,
to obtain specific performance of the terms of this Agreement. If any action
is brought by Buyer to enforce this Agreement, Seller shall waive the defense
that there is an adequate remedy at law.
10.7 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or transfer
tax arising in connection with the conveyance of the Assets by Seller to Buyer
pursuant to this Agreement shall be paid by Seller. Buyer and Seller shall
each pay one-half of the feel payable to the FCC in connection with the filing
of the application for the FCC Consent. Except as otherwise provided in this
Agreement, each party shall pay its own expenses incurred in connection with
the authorization, preparation, execution, and performance of this Agreement,
including all fees and expenses of counsel, accountants, agents, and
representatives, and each party shall be responsible for all fees or
commissions payable to any finder, broker, advisor, or similar person retained
by or on behalf of such party.
11.2 Arbitration. Except as otherwise provided to the contrary below,
any dispute arising out of or related to this Agreement that Seller and Buyer
are unable to resolve by themselves shall be settled by arbitration in the
District of Columbia by a panel of three arbitrators. Seller and Buyer shall
each designate one disinterested arbitrator, and the two arbitrators so
designated shall select the third arbitrator. Before undertaking to resolve
the dispute, each arbitrator shall be duly sworn faithfully and fairly to hear
and examine the matters in controversy and to make a just award according to
the best of his or her
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<PAGE> 31
understanding. The arbitration hearing shall be conducted in accordance with
the commercial arbitration rules of the American Arbitration Association. The
written decision of a majority of the arbitrators shall be final and binding on
Seller and Buyer. The costs and expenses of the arbitration proceeding shall be
assessed between Seller and Buyer in a manner to be decided by a majority of
the arbitrators, and the assessment shall be set forth in the decision and
award of the arbitrators. Judgment on the award, if it is not paid within
thirty days, may be entered in any court having jurisdiction over the matter.
No action at law or suit in equity based upon any claim arising out of or
related to this Agreement shall be instituted in any court by Seller or Buyer
against the other except (i) an action to compel arbitration pursuant to this
Section, (ii) an action to enforce the award of the arbitration panel rendered
in accordance with this Section, or (iii) a suit for specific performance
pursuant to Section 10.5.
11.3 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (a) in writing, (b)
sent by telecopy (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by commercial delivery service or registered or
certified mail, return receipt requested, (c) deemed to have been given on the
date of personal delivery or the date set forth in the records of the delivery
service or on the return receipt, and (d) addressed as follows:
If to Buyer: Mr. Lowell W. Paxson
Paxson Communications of Nashville-28, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Telecopy: (561) 655-9424
Telephone: (561) 659-4122
With a copy to: John R. Feore, Jr., Esquire
Dow, Lohnes & Albertson
A Professional Limited Liability Company
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
Telecopy: (202) 776-2222
Telephone: (202) 776-2786
-24-
<PAGE> 32
If to Buyer: Mr. Steven Roberts
Roberts Broadcasting of Cookesville, L.L.C.
1408 N. Kingshighway Blvd.
St. Louis, MO 63113
Telecopy: (314) 367-0174
Telephone: (314) 367-0090
With a copy to: Joseph von Kaenel, Esquire
Armstrong, Teasdale, Schlafly & Davis
One Metropolitan Square, Suite 2600
St. Louis, Missouri 63102
Telecopy: (314) 621-5065
Telephone: (314) 342-8067
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.3.
11.4 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement to one or more subsidiaries or commonly controlled affiliates of
Buyer without seeking or obtaining Seller's prior approval and may assign its
rights and obligations under this Agreement to an unrelated entity without
seeking or obtaining Seller's prior approval provided that Buyer guarantees that
entity's performance hereunder; and Buyer may collaterally assign its rights
and interests hereunder to its lenders without seeking or obtaining Seller's
prior approval. Upon any permitted assignment by Buyer os Seller in accordance
with this Section 11.4, all references to "Buyer" herein shall be deemed to be
references to Buyer's assignee and all references to "Seller" herein shall be
deemed to be reference to the Seller's assignee, as the case may be. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
Seller, any additional bills of sale, deeds, or other transfer documents that,
in the reasonable opinion of Buyer, may be necessary to ensure, complete, and
evidence the full and effective transfer of the Assets to Buyer pursuant to
this Agreement.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF FLORIDA (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISION THEREOF).
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<PAGE> 33
11.7 Headings. The headings in this Agreement are included for ease
of reference only and shall not control or affect the meaning or construction
of the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
11.12 Press Releases. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in its judgment, be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, in which case the other
party shall be first notified in writing.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
26
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
PAXSON COMMUNICATIONS OF
NASHVILLE-28, INC.
By: Lowell W. Paxson
-----------------
Name:
Title:
ROBERTS BROADCASTING OF
COOKEVILLE, L.L.C.
By: Michael V. Roberts
------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.170
================================================================================
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
BY AND AMONG
PAXSON COMMUNICATIONS OF BUFFALO-51, INC.,
FANT BROADCASTING OF NEW YORK, L.L.C.,
ANTHONY FANT
AND
PAXSON COMMUNICATIONS CORPORATION
* * *
APRIL 15, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
RECITALS..........................................................................................................1
AGREEMENTS........................................................................................................1
SECTION 1. DEFINITIONS...........................................................................................1
"Accounts Receivable"........................................................................................2
"Assets".....................................................................................................2
"Assumed Contracts"..........................................................................................2
"Business Day"...............................................................................................2
"Closing"....................................................................................................2
"Closing Date"...............................................................................................2
"Consents"...................................................................................................2
"Contracts"..................................................................................................2
"FCC"........................................................................................................2
"FCC Consent"................................................................................................2
"FCC Licenses"...............................................................................................2
"Final Order"................................................................................................3
"Intangibles"................................................................................................3
"Leasehold Interests"........................................................................................3
"Licenses"...................................................................................................3
"Permitted Liens"............................................................................................3
"Person".....................................................................................................3
"Purchase Price".............................................................................................3
"Stations"...................................................................................................3
"Tangible Personal Property".................................................................................3
SECTION 2. PURCHASE AND SALE OF ASSETS...........................................................................4
2.1 Agreement to Sell and Buy.............................................................................4
2.2 Excluded Assets......................................................................................5
2.3 Purchase Price........................................................................................5
(a) Prorations......................................................................................5
(b) Taxes...........................................................................................5
(c) Manner of Determining Adjustments...............................................................6
2.4 Payment of Purchase Price.............................................................................6
2.5 Assumption of Liabilities and Obligations.............................................................7
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER..............................................................7
3.1 Standing..............................................................................................7
3.2 Authorization and Binding Obligation..................................................................8
3.3 Absence of Conflicting Agreements.....................................................................8
</TABLE>
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3.4 Licenses........................................................................................8
3.5 Title to and Condition of Leasehold Interests...................................................8
3.6 Title to and Condition of Tangible Personal Property............................................9
3.7 Contracts.......................................................................................9
3.8 Insurance.......................................................................................9
3.9 Reports.........................................................................................9
3.10 Taxes...........................................................................................9
3.11 Claims and Legal Actions.......................................................................10
3.12 Environmental; Hazardous Materials.............................................................10
3.13 Compliance with Laws...........................................................................10
3.14 Full Disclosure................................................................................10
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER........................................................10
4.1 Organization, Standing and Authority...........................................................10
4.2 Authorization and Binding Obligation...........................................................11
4.3 Absence of Conflicting Agreements..............................................................11
4.4 Full Disclosure................................................................................11
4.5 Buyer Qualifications...........................................................................11
SECTION 5. OPERATIONS OF THE STATIONS PRIOR TO CLOSING....................................................11
5.1 Generally......................................................................................11
5.2 Contracts......................................................................................12
5.3 Disposition of Assets..........................................................................12
5.4 Encumbrances...................................................................................12
5.5 Licenses.......................................................................................12
5.6 Rights.........................................................................................12
5.7 Access to Information..........................................................................12
5.8 Maintenance of Assets..........................................................................12
5.9 Insurance......................................................................................13
5.10 Consents.......................................................................................13
5.11 Books and Records..............................................................................13
5.12 Notification...................................................................................13
5.13 Compliance with Laws...........................................................................13
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS...............................................................13
6.1 FCC Consent....................................................................................13
6.2 Control of the Stations........................................................................14
6.3 Risk of Loss...................................................................................14
6.4 Confidentiality................................................................................14
6.5 Cooperation....................................................................................14
6.6 Access to Books and Records....................................................................15
</TABLE>
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<TABLE>
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6.7 Broker.........................................................................................15
6.8 Parent Guaranty................................................................................15
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING.....................................................................................15
7.1 Conditions to Obligations of Buyer.............................................................15
(a) Representations and Warranties........................................................15
(b) Covenants and Conditions..............................................................15
(c) Consents..............................................................................15
(d) FCC Consent...........................................................................15
(e) Governmental Authorizations...........................................................15
(g) Deliveries............................................................................16
(h) Release of Liens......................................................................16
(i) Concurrent Closing....................................................................16
7.2 Conditions to Obligations of Seller............................................................16
(a) Representations and Warranties........................................................16
(b) Covenants and Conditions..............................................................16
(c) Deliveries............................................................................16
(d) FCC Consent...........................................................................16
(e) Concurrent Closing....................................................................17
SECTION 8. CLOSING AND CLOSING DELIVERIES.................................................................17
8.1 Closing........................................................................................17
(a) Closing Date..........................................................................17
(b) Closing Place.........................................................................17
8.2 Deliveries by Seller...........................................................................17
(a) Transfer Documents....................................................................17
(b) Consents..............................................................................17
(c) Certificates..........................................................................17
(d) Licenses, Contracts, Business Records, Etc............................................17
(e) Opinion of Counsel....................................................................18
(g) Noncompetition Agreement..............................................................18
8.3 Deliveries by Buyer............................................................................18
(a) Purchase Price........................................................................18
(b) Assumption Agreements.................................................................18
(c) Certificate...........................................................................18
(d) Opinion of Counsel....................................................................18
(f) Noncompetition Agreement..............................................................19
SECTION 9. TERMINATION....................................................................................19
9.1 Termination by Seller..........................................................................19
</TABLE>
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<TABLE>
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(a) Conditions............................................................................19
(b) Judgments.............................................................................19
(c) Upset Date............................................................................19
9.2 Termination by Buyer...........................................................................19
(a) Conditions............................................................................19
(b) Judgments.............................................................................19
(c) Upset Date............................................................................19
9.3 Rights on Termination..........................................................................19
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES..............................................................20
10.1 Representations and Warranties.................................................................20
10.2 Indemnification by Seller......................................................................20
10.3 Indemnification by Buyer.......................................................................20
10.4 Procedure for Indemnification..................................................................21
10.5 Limitation.....................................................................................22
SECTION 11. MISCELLANEOUS..................................................................................22
11.1 Attorneys' Fees................................................................................22
11.2 Fees and Expenses..............................................................................22
11.3 Arbitration....................................................................................22
11.4 Notices........................................................................................23
11.5 Benefit and Binding Effect.....................................................................24
11.6 Further Assurances.............................................................................24
11.7 GOVERNING LAW..................................................................................24
11.8 Headings.......................................................................................25
11.9 Gender and Number..............................................................................25
11.10 Entire Agreement...............................................................................25
11.11 Waiver of Compliance; Consents.................................................................25
11.12 Counterparts...................................................................................25
11.13 Press Releases.................................................................................25
</TABLE>
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LIST OF SCHEDULES
<TABLE>
<S> <C> <C>
Schedule 3.3 - Consents
Schedule 3.4 - Licenses
Schedule 3.5 - Leasehold Interests
Schedule 3.6 - Personal Property
Schedule 3.7 - Contracts
Schedule 3.8 - Insurance
Schedule 8.2(e) - Opinion of Seller's Counsel
Schedule 8.2(i) - Noncompetition Agreement
Schedule 8.3(d) - Opinion of Buyer's Counsel
</TABLE>
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<PAGE> 7
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
This AMENDED AND RESTATED ASSET PURCHASE AGREEMENT is dated as of April
15, 1997, by and among Paxson Communications of Buffalo-51, Inc., a Florida
corporation ("Buyer"), Fant Broadcasting Company of New York, L.L.C., an Alabama
limited liability company ("FBCNY"), Anthony Fant ("Fant" and, collectively with
FBCNY, the "Seller") and, for purposes of Section 6.8 hereof, Paxson
Communications Corporation, a Delaware corporation ("PCC").
RECITALS
A. Seller is the licensee of low power television station W69CS,
Channel 69, Buffalo, New York ("Buffalo LPTV") and W63BM, Rochester, New York
("Rochester LPTV" and, together with Buffalo LPTV, collectively the "Stations"),
pursuant to authorizations issued by the Federal Communications Commission (the
"FCC").
B. Seller is the FCC permittee of television station WAQF-TV, Batavia,
New York (the "Construction Permit").
C. Seller, Buyer and PCC have entered into an Asset Purchase Agreement
dated as of April 15, 1997 (the "Original Agreement"), pursuant to which Seller
has agreed to sell, and Buyer has agreed to buy, substantially all the assets
that are owned by Seller or in which Seller has a transferable interest and
which are used or useful in the business or operations of the Stations and the
Construction Permit, for the price and on the terms and conditions set forth in
the Original Agreement.
D. Seller and Buyer desire to amend and restate the Original Agreement
as set forth herein.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Seller, intending to be bound
legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
<PAGE> 8
"Accounts Receivable" means the right of Seller to payment for the sale
of advertising and/or programming time on the Station prior to the Closing Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under the Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) all Contracts that Buyer has marked with
an asterisk (*) on Schedule 3.7 to indicate that such Contract will be assumed
by Buyer upon its purchase of the Stations, and (ii) any other Contracts entered
into by Seller between the date of this Agreement and the Closing Date that
Buyer agrees in writing to assume.
"Business Day" means any day other than a Saturday, Sunday or legal
holiday.
"Closing" means the consummation of the purchase and sale of the Assets
pursuant to this Agreement in accordance with the provisions of Section 8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer or
otherwise to consummate the transactions contemplated by this Agreement.
"Construction Permit" shall have the meaning set forth in the Recitals
to this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses, and
other agreements (including leases for personal or real property and employment
agreements), written or oral (including any amendments and other modifications
thereto) to which Seller is a party or which are binding upon Seller and which
relate to or affect the Assets or the business or operations of the Stations,
and (i) which are in effect on the date of this Agreement or (ii) which are
entered into by Seller between the date of this Agreement and the Closing Date.
"FCC" shall have the meaning set forth in the Recitals to this
Agreement.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means the Construction Permit and all Licenses issued by
the FCC to Seller in connection with the business or operations of the Stations.
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<PAGE> 9
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by Seller
or under which Seller is licensed or franchised and which are used or useful in
the business and operations of the Stations, together with any additions thereto
between the date of this Agreement and the Closing Date.
"KTVC-TV Purchase Agreement" means the Asset Purchase Agreement dated
as of the date hereof, among Paxson Communications of Cedar Rapids-48, Inc. and
Fant Broadcasting Company of Iowa, Inc. concerning the sale of the assets used
or useful in the business or operations of television station KTVC-TV, Cedar
Rapids, Iowa.
"Leasehold Interests" means Seller's interests in leaseholds and
subleaseholds, easements, licenses, rights to access, and rights of way, and
other improvements thereon, which are used or useful in the business or
operations of the Stations, together with any additions thereto between the date
of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations issued
by the FCC, the Federal Aviation Administration, or any other federal, state, or
local government authorities to Seller in connection with the conduct of the
business or operations of the Stations, or with respect to the Construction
Permit together with any additions thereto between the date of this Agreement
and the Closing Date.
"Permitted Liens" means liens for taxes not yet due and payable and
liens created by the operation of the Leasehold Interests.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, or any
governmental entity.
"Purchase Price" shall have the meaning set forth in Section 2.3
hereof.
"Stations" shall have the meaning set forth in the Recitals to this
Agreement.
"Tangible Personal Property" means all machinery, equipment, tools,
furniture, leasehold improvements, office equipment, plant, inventory, spare
parts, and other tangible
- 3 -
<PAGE> 10
personal property which is owned by Seller or in which Seller has an interest
and which is used or useful in the conduct of the business or operations of the
Stations, together with any additions thereto between the date of this Agreement
and the Closing Date, but excluding any Tangible Personal Property consumed in
the ordinary course of business between the date hereof and the Closing Date.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to sell, transfer, assign and/or
deliver to Buyer on the Closing Date, and Buyer agrees to purchase and accept,
all of the assets and property interests owned by Seller (or in which Seller has
a property interest) that are either specifically listed on the Schedules hereto
or are both (i) used or useful in connection with the conduct of the business or
operations of the Stations and (ii) located at the transmitter sites identified
in Schedule 3.6 hereto, together with any additions thereto between the date of
this Agreement and the Closing Date, but excluding the assets described in
Section 2.2 hereof, free and clear of any claims, liabilities, security
interests, mortgages, liens, pledges, conditions, charges, or encumbrances of
any nature whatsoever (except for Permitted Liens), including the following:
(a) The Tangible Personal Property;
(b) The Leasehold Interests;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles, including the goodwill and call signs of the
Stations, if any;
(f) All choses in action of Seller relating to the Stations that
are assignable to Buyer as provided herein;
(g) All records required by the FCC to be kept by the Stations and
copies of all other books and records which belong to Seller and are within its
possession and control relating to the business or operations of the Stations
(exclusive of corporate, financial and accounting records) including executed
copies of the Assumed Contracts; and
(h) The Construction Permit.
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2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Cash or cash equivalents on hand as of the Closing Date; any
insurance policies, letters of credit, or other similar items and cash surrender
value in regard thereto; and any stocks, bonds, certificates of deposit and
similar securities or other investments;
(b) Any pension, profit sharing or employee benefit plans and all
contracts related thereto, and any collective bargaining agreements;
(c) All books and records relating to Seller's internal corporate
organization or internal financial matters;
(d) The Accounts Receivable;
(e) Any Contracts not included in the Assumed Contracts, including,
without limitation, all affiliation agreements relating to the Stations; and
(f) Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees for periods
prior to the Closing Date.
2.3 Purchase Price. The purchase price for the Assets and the
Noncompetition Agreement shall be Two Million Seven Hundred Dollars ($2,700,000)
plus such expenses incurred in connection with obtaining the Construction Permit
as approved by the FCC but not to exceed, in any event, Three Hundred Thousand
Dollars ($300,000) (the "Purchase Price"), adjusted as provided below:
(a) Prorations. The Purchase Price shall be increased or decreased
as required to effectuate the proration of expenses as of 11:59 p.m., Eastern
Standard Time, on the day prior to the Closing Date. All expenses arising from
the operation of the Stations, including business and license fees, utility
charges, real and personal property taxes and assessments levied against the
Assets, property and equipment rentals, applicable copyright or other fees,
sales and service charges, and prepaid and deferred items, shall be prorated
between Buyer and Seller in accordance with the principle that Seller shall be
responsible for all expenses, costs, and liabilities allocable to the period
prior to the Closing Date, and Buyer shall be responsible for all expenses,
costs, and obligations allocable to the period on and after the Closing Date.
Notwithstanding the preceding sentence, there shall be no adjustment for, and
Seller shall remain solely liable with respect to, any Contracts not included in
the Assumed Contracts and any other obligation or liability not being assumed by
Buyer in accordance with Section 2.5.
(b) Taxes. Except for real and personal property taxes and
assessments incurred against the Assets, there shall be no proration or
adjustment for income taxes or any
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other taxes with respect to the Stations or the Assets which shall be Seller's
sole responsibility for all periods prior to the Closing Date. All taxes arising
from the transfer of the Assets hereunder shall be Seller's responsibility
pursuant to Section 11.2 hereof.
(c) Manner of Determining Adjustments. The adjustments and
prorations to the Purchase Price pursuant to Section 2.3(a) will be determined
in accordance with the following procedures:
(i) Seller shall prepare and deliver to Buyer not later than
five (5) Business Days prior to the Closing Date a preliminary settlement
statement, which statement shall set forth Seller's good faith estimate of the
adjustments to the Purchase Price under Section 2.3(a) hereof.
(ii) Buyer and Seller shall use their good faith efforts to
agree upon the adjustments under Section 2.3(a) hereof prior to the Closing.
(iii) No later than forty-five (45) days after the Closing
Date, Buyer will deliver to Seller a statement setting forth Buyer's
determination of the adjustments to the Purchase Price pursuant to Section
2.3(a) hereof. If Seller disputes the amount of the adjustments to the Purchase
Price determined by Buyer, they shall deliver to Buyer, within thirty (30) days
after their receipt of Buyer's statement, Seller's statement setting forth their
determination of the amount of the adjustments to the Purchase Price and the
basis for their dispute in reasonable detail. If Seller notifies Buyer of their
acceptance of Buyer's statement, or if Seller fails to deliver the Seller's
statement within the thirty (30) day period specified in the preceding sentence,
Buyer's determination of the adjustments pursuant to Section 2.3(a) hereof shall
be conclusive and binding on the parties.
(iv) After the Closing, Buyer and Seller shall use good faith
efforts to resolve any dispute involving the determination of the adjustments to
the Purchase Price under Section 2.3(a) hereof. If the parties are unable to
resolve the dispute within fifteen (15) days following the delivery of Seller's
statement described above, Buyer and Seller shall jointly designate and retain,
with fees and expenses to be borne equally by Seller and Buyer, an independent
certified public accountant mutually acceptable to Seller and Buyer who shall be
knowledgeable and experienced in the operation of television broadcasting, to
resolve the dispute within thirty (30) days. The accountant's resolutions of the
dispute shall be final and binding on the parties, and a judgment may be entered
thereon in any court of competent jurisdiction.
2.4 Payment of Purchase Price.
(a) At the Closing, Buyer shall pay to Seller the Purchase
Price adjusted pursuant to Section 2.3(a) hereof by federal wire transfer of
immediately available funds
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pursuant to wire instructions delivered by Seller at least two (2) Business Days
prior to the Closing Date.
(b) If as a result of the final determination of the adjustments to
the Purchase Price pursuant to Section 2.3(c) following the Closing, (i) Buyer
is determined to owe an amount to Seller, Buyer shall pay such amount to Seller
in immediately available funds within five (5) Business Days of the date of such
final determination or (ii) Seller is determined to owe an amount to Buyer,
Seller shall pay such amount to Buyer in immediately available funds within five
(5) Business Days of the date of such final determination. The amount of the
payment made in accordance with this Section 2.4(b) shall bear interest at a per
annum rate equal to the "prime rate," as published in the Money Rates column of
the Eastern Edition of The Wall Street Journal on the Monday of the week in
which the Closing occurs, calculated from the Closing Date to the date such
payment is made to Seller or Buyer, as the case may be, and payable with the
amount of such payment.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall assume and undertake to pay, discharge, and perform all obligations
and liabilities of Seller under the Licenses and the Assumed Contracts to the
extent that either (i) the obligations and liabilities relate to the period from
and after the Closing Date or (ii) the Purchase Price was reduced pursuant to
Section 2.3(a) hereof as a result of the proration of such obligations and
liabilities. Buyer shall not assume any other obligations or liabilities of
Seller, including (i) any obligations or liabilities under any Contract not
included in the Assumed Contracts, (ii) any obligations or liabilities under the
Assumed Contracts relating to the period prior to the Closing Date, (iii) any
claims or pending litigation or proceedings relating to the operation of the
Stations prior to the Closing, (iv) any obligations or liabilities of Seller
under any employee pension, retirement, or other benefit plans or with respect
to commissions, wages, bonuses, incentive payments, vacation pay, sick leave,
severance benefits, or other benefits of employees or former employees of Seller
or their beneficiaries, (v) any obligations or liabilities of Seller with
respect to any Excluded Assets, or (vi) any obligations or liabilities caused
by, arising out of, or resulting from any action or omission of Seller prior to
the Closing.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Standing. Seller is a limited liability company duly organized,
validly existing, and in good standing under the laws of the State of Alabama.
Seller has all requisite corporate power and authority to execute and deliver
this Agreement and the documents contemplated hereby, and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by Seller hereunder and thereunder.
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3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary actions on the part of Seller. This Agreement has been duly executed
and delivered by Seller and constitutes the legal, valid, and binding obligation
of Seller and Fant, enforceable against Seller and Fant in accordance with its
terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery and the performance of
this Agreement and the documents contemplated hereby (with or without the giving
of notice, the lapse of time, or both): (i) will not conflict with the Articles
of Organization of Seller; (ii) will not conflict with, result in a breach of,
or constitute a default under, any law, judgment, order, ordinance, injunction,
decree, rule, regulation, or ruling of any court or governmental
instrumentality; (iii) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license, or permit to which Seller is a party or by which
Seller may be bound; and (iv) will not create any claim, liability, mortgage,
lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon
any of the Assets.
3.4 Licenses. Schedule 3.4 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete copies of the Licenses
(including any and all amendments and other modifications thereto) listed on
Schedule 3.4. The Licenses listed on Schedule 3.4 have been validly issued and
the Seller is the authorized legal holder thereof. The FCC Licenses comprise all
of the licenses, permits and other authorizations required from the FCC for the
conduct of the business or operations of the Stations in accordance with
applicable laws and in the manner and to the extent they are now conducted and
the Construction Permit authorizes construction of a new full power television
station to operate on Channel 51 in Batavia, New York. None of the Licenses
listed on Schedule 3.4 is subject to any restriction or condition which would
limit the full operation of the Stations as presently operated. The Licenses
listed on Schedule 3.4 are in full force and effect. The business and operations
of the Stations are being conducted in accordance with the Licenses listed on
Schedule 3.4. Seller has no reason to believe that the Licenses issued by the
FCC will not be renewed by the FCC in the ordinary course.
3.5 Title to and Condition of Leasehold Interests. Schedule 3.5
contains a complete and accurate description of all leasehold interests
necessary to conduct the business and operations of the Stations as now
conducted. With respect to each leasehold or subleasehold interest included in
the Leasehold Interests being conveyed under this Agreement, so long as Seller
fulfills its obligations under the lease therefor, except for landlord's
mortgagee, if any, Seller has enforceable rights to nondisturbance and quiet
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enjoyment, and no third party holds any interest in the leased premises with the
right to foreclose upon such Seller's leasehold or subleasehold interest. Seller
has full legal and practical access to the Leasehold Interests.
3.6 Title to and Condition of Tangible Personal Property. Schedule 3.6
contains descriptions of all material items of the Personal Property which
comprise all material personal property necessary to conduct the business or
operations of the Stations as now conducted. Except as described in Schedule
3.6, Seller owns and has good title to all Personal Property, free and clear of
any security interest, mortgage, pledge, conditional sales agreement, or other
lien or encumbrance, except for Permitted Liens. Each item of material Personal
Property is in good operating condition and repair (ordinary wear and tear
excepted), and is available for immediate use in the business or operations of
the Stations.
3.7 Contracts. Schedule 3.7 contains descriptions of all the
Contracts. Seller has delivered to Buyer true and complete copies of all written
Contracts and true and complete memoranda of all oral Contracts. Other than the
Contracts, Seller requires no contract or agreement to enable it to carry on its
business as presently conducted. All of the Assumed Contracts are in full force
and effect and are valid, binding and enforceable in accordance with their terms
except as the enforceability thereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies. Seller is not in breach, nor to Seller's knowledge is any
other party in breach, of the terms of any such Assumed Contracts. Except as
expressly set forth in Schedule 3.7, Seller is not aware of any intention by any
party to any Assumed Contract (i) to terminate such contract or amend the terms
thereof, (ii) to refuse to renew the same upon expiration of its term, or (iii)
to renew the same upon expiration only on terms and conditions which are
substantially more onerous than those pertaining to such existing contract.
Subject to obtaining the Consents, Seller has full legal power and authority to
assign its rights under the Assumed Contracts to Buyer in accordance with this
Agreement, and such assignment will not affect the validity, enforceability and
continuation of any of the Assumed Contracts.
3.8 Insurance. Schedule 3.8 comprises a true and complete list of all
insurance policies of Seller which insure any part of the Assets. All policies
of insurance listed in Schedule 3.8 are in full force and effect. During the
three-year period ending on the date hereof, no insurance policy of Seller on
the Assets or the Stations have been canceled by the insurer and no application
of Seller for insurance has been rejected by any insurer.
3.9 Reports. All returns, reports and statements which the Stations
are currently required to file with the FCC and any other governmental agency
have been filed. All of such reports, returns and statements are complete and
correct as filed.
3.10 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local or city tax returns
which are required to be filed, and
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they have paid or caused to be paid all taxes shown on said returns or on any
tax assessment received by them to the extent that such taxes have become due,
or has set aside on its books reserves (segregated to the extent required by
sound accounting practice) deemed by them to be adequate with respect thereto.
No events have occurred which could impose on Buyer any transferee liability for
any taxes, penalties, or interest due or to become due from Seller.
3.11 Claims and Legal Actions. There is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative or tax proceeding, nor any order, decree or judgment, in progress
or pending, or to the knowledge of Seller threatened, against or relating to
Seller, the Assets, or the business or operations of the Stations, nor does
Seller know of any basis for the same.
3.12 Environmental; Hazardous Materials. There are no claims, notices,
suits, proceedings or investigations pending or, to Seller's knowledge,
threatened, and there are no judgments against Seller or the Stations by or
before any governmental authority concerning environmental compliance. To
Seller's knowledge, after due inquiry, (i) no toxic materials, hazardous waste,
or hazardous substances, including any asbestos or asbestos-related products,
any oils, petroleum-derived compounds or pesticides (hereinafter collectively
referred to as the "Hazardous Materials") have been or are located on or about
the Leasehold Interests; (ii) the Leasehold Interests has not been previously
used for the storage, manufacture or disposal of Hazardous Materials; and (iii)
no underground storage tank or related equipment ("UST") is located at the
Leasehold Interests.
3.13 Compliance with Laws. Seller has complied in all material respects
with the Licenses and all federal, state, and local laws, rules, regulations,
and ordinances applicable or relating to the ownership and operation of the
Stations. Neither the ownership or use of the properties of the Stations nor the
conduct of the business or operations of the Stations conflicts with the rights
of any other person or entity.
3.14 Full Disclosure. No representation or warranty made by Seller in
this Agreement or any certificate to be furnished by Seller at Closing contains
or will contain any untrue statement of a material fact, or omits or will omit
to state any material fact required to make any statement made herein or therein
not misleading in any such case that was knowingly or willfully made or omitted,
as the case may be, by Seller.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of Florida.
Buyer has all requisite corporate power and authority to execute and deliver
this Agreement and the documents
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contemplated hereby, and to perform and comply with all of the terms, covenants,
and conditions to be performed and complied with by Buyer hereunder and
thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Buyer have been duly authorized by all
necessary actions on the part of Buyer. This Agreement has been duly executed
and delivered by Buyer and constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the FCC
Consent, the execution, delivery, and performance by Buyer of this Agreement and
the documents contemplated hereby (with or without the giving of notice, the
lapse of time, or both): (i) will not conflict with the Certificate of
Incorporation or Bylaws of Buyer; (ii) will not conflict with, result in a
breach of, or constitute a default under, any law, judgment, order, injunction,
decree, rule, regulation, or ruling of any court or governmental instrumentality
applicable to Buyer; (iii) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license, or permit to which Buyer is a party or by which
Buyer may be bound, such that Buyer could not acquire the Assets or operate the
Stations.
4.4 Full Disclosure. No representation or warranty made by Buyer in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Buyer pursuant hereto contains or will knowingly contain any
untrue statement of a material fact, or omits or will omit to state any material
fact required to make any statement made herein or therein not misleading.
4.5 Buyer Qualifications. Buyer is legally, financially and otherwise
qualified to be the licensee of and acquire, own and operate the Stations and
hold the Construction Permit under the Communications Act of 1934, as amended,
and the rules, regulations and policies of the FCC. Buyer knows of no fact that
would, under existing law and the existing rules, regulations, policies and
procedures of the FCC disqualify Buyer as assignee of the FCC Licenses or as the
owner and operator of the Stations.
SECTION 5. OPERATIONS OF THE STATIONS PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this Agreement
and the Closing Date, Seller shall conduct its business in accordance with its
past practices (except where such conduct would conflict with the following
covenants or with Seller's other
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obligations under this Agreement), and in accordance with the other covenants in
this Section 5.
5.2 Contracts. Seller will not enter into any contract or commitment
relating to the Stations or the Assets, or amend or terminate any Contract (or
waive any material right thereunder), or incur any obligation (including
obligations relating to the borrowing of money or the guaranteeing of
indebtedness) that will be binding on Buyer after Closing without Buyer's
written consent.
5.3 Disposition of Assets. Seller shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except in connection with
the acquisition of replacement property of equivalent kind and value.
5.4 Encumbrances. Seller shall not create, assume or permit to exist any
claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of
any nature whatsoever upon the Assets, except for (i) liens which shall be
removed prior to the Closing Date and, (ii) liens for current taxes not yet due
and payable.
5.5 Licenses. Seller shall not cause or permit, by any act or failure to
act, any of the Licenses issued by the FCC to expire or to be revoked,
suspended, or modified, or take any action that could cause the FCC or any other
governmental authority to institute proceedings for the suspension, revocation,
or adverse modification of any of the Licenses. Seller shall not fail to
prosecute with due diligence any applications to any governmental authority in
connection with the operation of the Stations and shall file any required
applications to extend and maintain the construction permit in full force and
effect.
5.6 Rights. Seller shall not knowingly waive any material right relating
to the Stations or any of the Assets.
5.7 Access to Information. Seller shall give Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
during normal business hours to the Assets and to all other properties,
equipment, books, records, Contracts, and documents relating to the Stations for
the purpose of audit and inspection and will furnish or cause to be furnished to
Buyer or its authorized representatives all material information with respect to
the affairs and business of the Stations that Buyer may reasonably request
(including any operations reports produced with respect to the affairs and
business of the Stations).
5.8 Maintenance of Assets. Seller shall maintain all of the Assets in
good condition (ordinary wear and tear excepted) with inventories of spare parts
and expendable supplies being maintained at levels consistent with past
practices.
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5.9 Insurance. Seller shall maintain substantially the same insurance
coverage provided by the existing insurance policies on the Stations and the
Assets until the Closing Date.
5.10 Consents. Subject to the provisions of Section 6.5 hereof, Seller
shall use its best efforts to obtain the Consents (other than Consents relating
to Contracts that are not Assumed Contracts) without any change in the terms or
conditions of any Assumed Contract or License as in effect on the date of this
Agreement. Seller shall advise Buyer of any communications it receives
concerning the Consents and of any conditions proposed, considered, or requested
for any of the Consents. Upon Buyer's request, Seller shall cooperate with Buyer
and use its best efforts to obtain from the Lessors under the Leasehold
Interests such estoppel certificates and consents to the collateral assignment
of the lessee's interest under each such lease as Buyer's lenders may request.
5.11 Books and Records. Seller shall maintain its books and records
relating to the Stations in accordance with past practices.
5.12 Notification. Seller shall promptly notify Buyer in writing of any
material change in any of the information contained in Seller's representations
and warranties contained in Section 3 of this Agreement.
5.13 Compliance with Laws. Seller shall comply in all material respects
with all laws, rules, and regulations applicable or relating to the ownership
and operation of the Stations.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare the appropriate
applications for the FCC Consent and shall file the necessary applications with
the FCC on or before May 19, 1997. The parties shall prosecute the applications
with all reasonable diligence and otherwise use their reasonable commercial
efforts to obtain a grant of the applications as expeditiously as practicable.
Each party agrees to comply with any condition imposed on it by the FCC Consent,
except that no party shall be required to comply with a condition if (1) the
condition was imposed on it as the result of a circumstance the existence of
which does not constitute a breach by such party of any of its representations,
warranties, or covenants under this Agreement, and (2) compliance with the
condition would have a material adverse
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effect upon it. Buyer and Seller shall oppose any requests for reconsideration
or judicial review of the FCC Consent, provided, however, that the parties shall
continue to have all rights available to them pursuant to Section 9 hereof. If
the Closing shall not have occurred for any reason within the original effective
period of the FCC Consent, and neither party shall have terminated this
Agreement under Section 9, the parties shall jointly request an extension of the
effective period of the FCC Consent. No extension of the FCC Consent shall limit
the exercise by either party of its rights under Section 9.
6.2 Control of the Stations. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Stations; such operations, including
complete control and supervision of all of the Stations' programs, employees,
and policies, shall be the sole responsibility of Seller until the Closing.
6.3 Risk of Loss. The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing, except to the extent
of loss or damage resulting from actions or negligence of Buyer or its agents,
representatives or independent contractors.
6.4 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and rules and regulations of securities markets, each party will
keep confidential any information of a confidential nature obtained from the
other party in connection with the transactions contemplated by this Agreement.
Except as provided in this Paragraph each party will refrain from disclosing any
such information to any third party. If this Agreement is terminated, each party
will return to the other party all copies of all documents and other all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Cooperation. Buyer and Seller shall cooperate fully with each other
and their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their reasonable commercial efforts to consummate
the transaction contemplated hereby and to fulfill their obligations under this
Agreement. Notwithstanding the foregoing, neither Buyer nor Seller shall have
any obligation (i) to expend funds to obtain any of the Consents or (ii) to
agree to any material adverse change in any License or Assumed Contract to
obtain a Consent required with respect thereto; provided, however, that Seller
shall be required to expend funds, if necessary, to cure any defaults in order
to obtain Consents and either party shall be required to expend funds in respect
of normal and usual filing fees and the fees of professional advisors.
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6.6 Access to Books and Records. Seller shall provide Buyer access and
the right to copy for a period of ninety (90) days from the Closing Date any
books and records relating to the Assets but not included in the Assets. Buyer
shall provide Seller access and the right to copy for a period of ninety (90)
days from the Closing Date any books and records relating to the Assets that are
included in the Assets.
6.7 Broker. Each of Buyer and Seller represents and warrants that
neither they nor any person or entity acting on their behalf have incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transactions contemplated by this Agreement.
6.8 Parent Guaranty. Paxson Communications Corporation, a Delaware
corporation, of which Buyer is an indirect, wholly-owned subsidiary, hereby
fully and unconditionally guarantees all obligations of Buyer hereunder.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing are subject at Buyer's option to the fulfillment or waiver by Buyer
prior to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Seller shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by them prior to or
on the Closing Date.
(c) Consents. All Consents relating to Assumed Contracts shall have
been obtained and delivered to Buyer without any material adverse change in the
terms or conditions of any agreement or any governmental license, permit, or
other authorization.
(d) FCC Consent. The FCC Consent shall have been granted without
the imposition on Buyer of any material conditions that need not be complied
with by Buyer under Section 6.1 hereof, Seller shall have complied with any
conditions imposed on them by the FCC Consent, and the FCC Consent shall have
become a Final Order.
(e) Governmental Authorizations. Seller shall be the holder of all
FCC Licenses and there shall not have been any modification of any FCC License
that could have a material adverse effect on the Stations or the conduct of its
business and operations or the
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ability to construct the Channel 51 television station in Batavia, New York. No
proceeding shall be pending the effect of which would be reasonably likely to
revoke, cancel, fail to renew, suspend, or modify adversely any FCC License.
(f) Material Adverse Change. There shall not have been a material
adverse change in the Assets since the date of this Agreement, including,
without limitation, any damage, destruction or loss affecting any material
assets used in the conduct or the business of the Stations, except normal wear
and tear to the Assets.
(g) Deliveries. Seller shall have made or stand willing to make all
the deliveries to Buyer set forth in Section 8.2.
(h) Release of Liens. Seller shall have delivered to Buyer evidence
reasonably satisfactory to Buyer that all security interests, mortgages,
encumbrances, and liens on the Assets that are not Permitted Liens have been
released and removed.
(i) Concurrent Closing. The transactions contemplated by the
KTVC-TV Purchase Agreement shall have been consummated in accordance with the
terms thereof contemporaneously with the Closing.
7.2 Conditions to Obligations of Seller All obligations of Seller at
the Closing are subject at Seller's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing to make all
the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted without
the imposition on Seller of any material conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
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<PAGE> 23
(e) Concurrent Closing. The transactions contemplated by the
KTVC-TV Purchase Agreement shall have been consummated in accordance with the
terms thereof contemporaneously with the Closing.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place simultaneously with
the consummation of the transactions contemplated by the KTVC-TV Purchase
Agreement, subject to the satisfaction or waiver of all of the other conditions
precedent to holding the Closing.
(b) Closing Place. The Closing shall be held at the offices of Dow,
Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite 800, Washington D.C.
20036.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Subject to the provisions of this
Agreement, duly executed bills of sale, general warranty deeds, assignments, and
other transfer documents which shall be sufficient to vest good and marketable
title to the Assets in the name of Buyer, free and clear of all mortgages,
liens, restrictions, encumbrances, claims, and obligations except for Permitted
Liens;
(b) Consents. An executed copy of any instrument evidencing receipt
of any Consent;
(c) Certificates. A certificate, dated as of the Closing Date,
executed by Seller certifying (1) that the representations and warranties of
such Seller contained in this Agreement are true and complete in all material
respects as of the Closing Date as though made on and as of that date; and (2)
that such Seller has in all material respects performed and complied with all of
its obligations, covenants, and agreements set forth in this Agreement to be
performed and complied with on or prior to the Closing Date and such estoppel
certificates and consents to the collateral assignment of the lessee's interest
under each such lease as Buyer's lenders may request;
(d) Licenses, Contracts, Business Records, Etc. Copies of all
documents described in Section 2.1(g) hereof;
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<PAGE> 24
(e) Opinion of Counsel. An opinion of Seller's counsel dated as of
the Closing Date, substantially in the form of Schedule 8.2(e) hereto;
(f) Resolutions. Certified copy of resolutions of the Board of
Directors of Seller authorizing the execution, delivery and performance of this
Agreement;
(g) Noncompetition Agreement. An executed copy of the
Noncompetition Agreement in the form of Schedule 8.2(g) hereof;
(h) Lease Agreement. A tower site lease for the Channel 51
television station licensed to Batavia, New York having terms substantially
consistent with the Option to Lease referred to in Schedule 3.5, together with
all permits necessary for the construction of that station; and
(i) Other Instruments. Such other instruments and certificates or
other documentation as Seller are required by the terms hereof to deliver or as
Buyer may reasonably request.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel;
(a) Purchase Price. The Purchase Price as provided in Section 2.3;
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations under the Licenses and Assumed Contracts arising on or after the
Closing Date;
(c) Certificate. A certificate, dated as of the Closing Date,
executed by Buyer certifying (1) that the representations and warranties of
Buyer contained in this Agreement are true and complete in all material respects
as of the Closing Date as though made on and as of that date, and (2) that Buyer
has in all material respects performed and complied with all of its obligations,
covenants, and agreements set forth in this Agreement to be performed and
complied with on or prior to the Closing Date;
(d) Opinion of Counsel. An opinion of Buyer's counsel dated as of
the Closing Date, substantially in the form of Schedule 8.3(d) hereto;
(e) Resolutions. Certified copy of resolutions of Buyer's Board of
Directors authorizing the execution, delivery and performance of this Agreement;
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<PAGE> 25
(f) Noncompetition Agreement. An executed copy of the
Noncompetition Agreement, in the form of Schedule 8.2(g), for which Forty
Thousand Dollars ($40,000) of the Purchase Price is allocated; and
(g) Other Instruments. Such other instruments and certificates or
other documentation as Buyer is required by the terms hereof to deliver or as
Seller may reasonably request.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Assets abandoned, if Seller is not then
in material default, upon written notice to Buyer, upon the occurrence of any of
the following:
(a) Conditions. If, on the date that would otherwise be the Closing
Date, any of the conditions precedent to the obligations of Seller set forth in
this Agreement have not been satisfied or waived in writing by Seller.
(b) Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree, or order, not caused by
Seller, that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by June 1,
1998.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer and
the purchase and sale of the Stations abandoned, if Buyer is not then in
material default, upon written notice to Seller, upon the occurrence of any of
the following:
(a) Conditions. If on the date that would otherwise be the Closing
Date any of the conditions precedent to the obligations of Buyer set forth in
this Agreement have not been satisfied or waived in writing by Buyer.
(b) Judgments. If there shall be in effect on the date that would
otherwise be the Closing Date any judgment, decree, or order, not caused by
Buyer, that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by June 1,
1998.
9.3 Rights on Termination.
(a) If this Agreement is terminated pursuant to Section 9.1 or 9.2
and neither party is in material breach of any provision of this Agreement, the
parties hereto shall not have any further liability to each other with respect
to the purchase and sale of the Assets. If this Agreement is terminated by Buyer
due to Seller's
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<PAGE> 26
material breach of any provision of this Agreement, and Buyer is not in material
breach of any provision of this Agreement, Buyer shall have all rights and
remedies available at law or equity, including the right to seek specific
performance of this Agreement. Seller agrees that the Assets include unique
property that cannot be readily obtained on the open market and that Buyer would
be irreparably injured if this Agreement is not specifically enforced after
breach if Seller shall have committed a material breach. Therefore, Buyer shall
have the right to specifically enforce Seller's performance under this Agreement
and Seller agrees to waive the defense in any such suit that Buyer has an
adequate remedy at law and to interpose no opposition, legal or otherwise, as to
the propriety of specific performance as a remedy.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the closing for a period of eighteen (18) months.
10.2 Indemnification by Seller. Seller hereby agrees to indemnify and
hold Buyer harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting from any
untrue representation, breach of warranty, or omission or nonfulfillment of any
covenant by Seller contained in this Agreement or in any certificate, document,
or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by Buyer pursuant
to this Agreement.
(c) Any and all losses, liabilities, or damages resulting from the
operation or ownership of the Stations and/or the Assets prior to the Closing
Date, including any liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring prior to the Closing Date.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.3 Indemnification by Buyer. Buyer hereby agrees to indemnify and
hold Seller harmless against and with respect to, and shall reimburse Seller
for:
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<PAGE> 27
(a) Any and all losses, liabilities, or damages resulting from any
untrue representation, breach of warranty, or omission or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, Schedule,
document, or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer pursuant to
this Agreement.
(c) Any and all losses, liabilities, or damages resulting from the
operation or ownership of the Stations and/or the Assets by Buyer on and after
the Closing.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant as soon as practicable
after written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties, following
receipt of notice from the Claimant of a claim, the Indemnifying Party shall
have thirty days to make such investigation of the claim as the Indemnifying
Party deems necessary or desirable. For the purposes of such investigation, the
Claimant agrees to make available to the Indemnifying Party and/or its
authorized representatives the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnifying Party agree at or
prior to the expiration of the thirty-day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the claim. If the
Claimant and the Indemnifying Party do not agree within the thirty-day period
(or any mutually agreed upon extension thereof), the Claimant may seek
appropriate remedy at law or equity or under the arbitration provisions of this
Agreement, as applicable.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the
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<PAGE> 28
Claimant shall cooperate fully with the Indemnifying Party subject to
reimbursement for reasonable actual out-of-pocket expenses incurred by the
Claimant as the result of a request by the Indemnifying Party. If the
Indemnifying Party elects to assume control of the defense of any third-party
claim, the Claimant shall have the right to participate in the defense of such
claim at its own expense. If the Indemnifying Party does not elect to assume
control or otherwise participate int he defense of any third party claim, it
shall be bound by the results obtained by the Claimant with respect to such
claim.
(d) If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnification rights provided in Sections 10.2 and 10.3
shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Limitation. Neither Buyer nor Seller shall be required to indemnify
the other party under this Section 10, except to the extent that the aggregate
amount of all claims against the party exceeds Fifty Thousand Dollars ($50,000).
SECTION 11. MISCELLANEOUS
11.1 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
11.2 Fees and Expenses. Any federal, state, or local sales or transfer tax
arising in connection with the conveyance of the Assets by Seller to Buyer
pursuant to this Agreement shall be paid by Seller. Buyer shall pay the fee
payable to the FCC in connection with the filing of the application for FCC
Consent. Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents, and representatives, and each party shall be
responsible for all fees or commissions payable to any finder, broker, advisor,
or similar person retained by or on behalf of such party.
11.3 Arbitration. Except as otherwise provided to the contrary below, any
dispute arising out of or related to this Agreement that Seller and Buyer are
unable to resolve by themselves shall be settled by arbitration in Washington,
D.C. by a panel of three (3) arbitrators. Seller and Buyer shall each designate
one (1) disinterested arbitrator, and the
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<PAGE> 29
two (2) arbitrators so designated shall select the third arbitrator. Before
undertaking to resolve the dispute, each arbitrator shall be duly sworn
faithfully and fairly to hear and examine the matters in controversy and to make
a just award according to the best of his or her understanding. The arbitration
hearing shall be conducted in accordance with the commercial arbitration rules
of the American Arbitration Association. The written decision of a majority of
the arbitrators shall be final and binding on Seller and Buyer. The costs and
expenses of the arbitration proceeding shall be assessed between Seller and
Buyer in a manner to be decided by a majority of the arbitrators, and the
assessment shall be set forth in the decision and award of the arbitrators.
Judgment on the award, if it is not paid within thirty (30) days, may be entered
in any court having jurisdiction over the matter. No action at law or suit in
equity based upon any claim arising out of or related to this Agreement shall be
instituted in any court by Seller or Buyer against the other except (i) an
action to compel arbitration pursuant to this Section, (ii) an action to enforce
the award of the arbitration panel rendered in accordance with this Section, or
(iii) a suit for specific performance under Section 9.4(b) of this Agreement.
11.4 Notices. All notices, demands, and requests required or permitted to
be given under the provisions of this Agreement shall be (a) in writing, (b)
sent by telecopy (with receipt personally confirmed by telephone), delivered by
personal delivery, or sent by commercial delivery service or registered or
certified mail, return receipt requested, (c) deemed to have been given on the
date of personal delivery or the date set forth in the records of the delivery
service or on the return receipt, and (d) addressed as follows:
If to Buyer: Paxson Communications of Buffalo-51, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Attn: Mr. Lowell W. Paxson
Telecopy: (407) 655-9424
Telephone: (407) 659-4122
With copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W., Suite 800
Washington, D.C. 20036
Telecopy: (202) 776-2222
Telephone: (202) 776-2786
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<PAGE> 30
If to Seller: Fant Broadcasting of New York, L.L.C.
2154 Highland Avenue
Birmingham, AL 35205
Attn: Mr. Anthony Fant
Telecopy: (205) 933-1040
Telephone: (205) 933-1030
With copy to: Michael A. King, Esq.
Brown & Wood, LLP
One World Trade Center
New York, New York 10048
Telecopy: (212) 839-5599
Telephone: (212) 839-5300
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.4.
11.5 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto; provided,
however, that Buyer may assign its rights and obligations under this Agreement
to a wholly-owned subsidiary or commonly controlled affiliate satisfying the
requirements of Section 4.5 hereof without seeking or obtaining Seller's prior
approval. Upon any permitted assignment by Buyer or Seller in accordance with
this Section 11.5, all references to "Buyer" herein shall be deemed to be
references to Buyer's assignee and all references to "Seller" herein shall be
deemed to be references to Seller's assignee. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.6 Further Assurances. The parties shall take any actions and execute any
other documents that may be necessary or desirable to the implementation and
consummation of this Agreement, including, in the case of Seller, any additional
bills of sale, deeds, or other transfer documents that, in the reasonable
opinion of Buyer, may be necessary to ensure, complete, and evidence the full
and effective transfer of the Assets to Buyer pursuant to this Agreement.
11.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
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<PAGE> 31
11.8 Headings. The headings in this Agreement are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
11.9 Gender and Number. Words used in this Agreement, regardless of the
gender and number specifically used, shall be deemed and construed to include
any other gender, masculine, feminine, or neuter, and any other number, singular
or plural, as the context requires.
11.10 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.11 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.11.
11.12 Counterparts. This Agreement may be signed in counterparts with the
same effect as if the signature on each counterpart were upon the same
instrument.
11.13 Press Releases. Neither party shall publish any press release, make
any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
and, if required, press releases with governmental authorities as may, in its
judgment, be required or advisable in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby,
in which case the other party shall be first notified in writing.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have duly executed this Amended
and Restated Asset Purchase Agreement as of the day and year first above
written.
PAXSON COMMUNICATIONS OF
BUFFALO-51, INC.
By: /s/ Lowell W. Paxson
-------------------------------------
Name: Lowell W. Paxson
Title: Chairman
FANT BROADCASTING COMPANY OF NEW
YORK, L.L.C.
By: /s/ Anthony Fant
------------------------------------
Name: Anthony Fant
Title: Managing Members
/s/ Anthony Fant
----------------------------------------
ANTHONY FANT, an Individual
PAXSON COMMUNICATIONS CORPORATION JOINS
IN THE EXECUTION OF THE FOREGOING ASSET
PURCHASE AGREEMENT SOLELY FOR THE
PURPOSE OF SECTION 6.8 THEREOF.
PAXSON COMMUNICATIONS
CORPORATION
By: /s/ Lowell W. Paxson
------------------------------------
Name: Lowell W. Paxson
Title: Chairman
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<PAGE> 33
EX-10.170
Schedule 3.3 to the
Asset Purchase Agreement
by and between
Paxson Communications of Buffalo-51, Inc.
and Fant Broadcasting of New York, L.L.C.
List of Consents Required
NONE, except for the necessary approvals and consents required pursuant to the
various rules, regulations and requirements of the Federal Communications
Commission.
<PAGE> 34
Schedule 3.4 to the
Asset Purchase Agreement
by and between
Paxson Communications of Buffalo-51, Inc.
and Fant Broadcasting of New York, L.L.C.
List of Licenses
1. Television Broadcast Station Construction Permit
Grant Date: 5-10-96
Permit File No. BPCT-950320KO
2. LPTV Station License for W69CS (Buffalo, NY)
File No. BALTTL-951101IA
3. LPTV Station License for W63BM (Rochester, NY)
File No. BALTTL-951101IB
<PAGE> 35
Schedule 3.5 to the
Asset Purchase Agreement
by and between
Paxson Communications of Buffalo-51, Inc.
and Fant Broadcasting of New York, L.L.C.
Leasehold Interests
NONE
<PAGE> 36
Schedule 3.6 to the
Asset Purchase Agreement
by and between
Paxson Communications of Buffalo-51, Inc.
and Fant Broadcasting of New York, L.L.C.
List of Personal Property
1. Transmitter, antenna and miscellaneous equipment for LPTV W63BM, located
at tower site on Pinnacle Hill at 1156 Highland Avenue, Brighton, NY
2. Antenna, lines and transmitter for LPTV W69CS, located at the Midland Bank
Building in Buffalo, New York
<PAGE> 37
Schedule 3.7 to the
Asset Purchase Agreement
by and between
Paxson Communications of Buffalo-51, Inc.
and Fant Broadcasting of New York, L.L.C.
List of Contracts
1. April 7, 1997, Option to Lease (Tower Site) from Howard Clark to Fant
Broadcasting of New York, L.L.C.
<PAGE> 38
Schedule 3.8 to the
Asset Purchase Agreement
by and between
Paxson Communications of Buffalo-51, Inc.
and Fant Broadcasting of New York, L.L.C.
List of Insurance Policies
Personal Property described in Schedule 3.6 covered under a policy of insurance
issued by Vesta Insurance. Coverage is a Special Form including theft, $1,000
deductible.
<PAGE> 39
SCHEDULE 8.2(e)
SELLER'S OPINION
1. Seller is a limited liability company duly organized and in good
standing under the laws of the State of Alabama.
2. Seller has full corporate power and authority to execute, deliver
and perform the Asset Purchase Agreement and the other Transaction Documents
[Transaction Documents shall mean the documents executed and delivered by
Seller at Closing] to which it is a party. Seller's execution, delivery and
performance of the Purchase Agreement and the other Transaction Documents to
which it is a party have been duly and validly authorized by all necessary
corporate action on the part of Seller.
3. The Purchase Agreement and each of the other Transaction Documents
to which Seller is a party have been duly executed and delivered by Seller and
constitute the valid and binding obligation of Seller, enforceable against
Seller in accordance with their respective terms subject to (i) bankruptcy,
insolvency, reorganization, moratorium and other similar laws and related court
decisions now or hereinafter in effect relating to creditors' rights and (ii)
the application of general equitable principles.
4. The execution, delivery and performance by Seller of the Purchase
Agreement and the other Transaction Documents to which Seller is a party (a) do
not require the consent of any third party under any of the Seller Agreements
[Seller Agreements shall mean such agreements that are certified by Seller to
Seller's counsel to be material to the operation of the business of Seller or
the transactions contemplated by the Purchase Agreement, except that Seller
Agreements shall not include any Contracts listed on Schedule 3.7 that are not
designated as Assumed Contracts], other than consents set forth on Schedule 3.3
of the Purchase Agreement: (b) do not violate Applicable Law [Applicable Law
means those laws and regulations that a lawyer exercising customary
professional diligence would recognize as being applicable to the transactions
contemplated by the Transaction Documents, although no opinion is hereby
expressed as to laws other than the laws of the State of Alabama] or any
judgment, order, injunction, decree, which is applicable to Seller and known to
us; (c) do not, either alone or with the giving of notice or the passage of
time or both, conflict with, constitute grounds for termination of, or result
in a breach of the terms, conditions or provisions of, or constitute a default
under any of the Seller Agreements; and (d) do not result in the creation of
any lien, charge or encumbrance on any of the Assets pursuant to the terms of
any of the Seller Agreements.
<PAGE> 40
-2-
5. All bills of sale, assignments, and other conveyancing documents
delivered by Seller to Buyer on the date hereof are in proper form to convey
and assign all of Seller's right, title, and interest in and to the Tangible
Personal Property to Buyer.
6. The Licenses listed on Exhibit A hereto (the "FCC Licenses") were
validly issued to Seller, are in full force and effect and are not subject to
any condition other than such conditions that are set forth in the FCC Licenses.
7. The FCC has granted its consent to the assignment of the FCC
Licenses from Seller to Buyer (the "FCC Consent"). To the best of our
knowledge based solely on a review of the FCC's files and records and the
Officer's Certificate, the FCC Consent has not been reversed, stayed, enjoined,
set aside, annulled or suspended, no requests have been filed for
administrative or judicial review, reconsideration, appeal or stay of the FCC
Consent, and the time periods for filing any such requests and for the FCC to
set aside the FCC Consent on its own motion have expired.
Opinions 1-5 to be provided by Seller's General Counsel. Opinions 6-7
to be provided by Fletcher, Heald and Hildreth, PLC, Seller's FCC counsel.
<PAGE> 41
SCHEDULE 8.2(g)
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT is dated as of ______ ___, 1997, by and
among PAXSON COMMUNICATIONS OF BUFFALO-51, INC., a Florida corporation
("Buyer"), FANT BROADCASTING OF NEW YORK, L.L.C., an Alabama limited liability
company ("Seller"), and ANTHONY J. FANT, an individual ("Fant").
RECITALS:
A. Seller, Buyer and Fant have entered into an Asset Purchase
Agreement dated as of April __,1997 (the "Purchase Agreement"), pursuant to
which Buyer agreed to purchase from Seller and Fant (a) substantially all of
the assets (the "Assets") that are owned by Seller or Fant or in which Seller
or Fant have a transferrable interest and which are used or useful in the
business or operations of low power television stations W69CS, Channel 69,
Buffalo, New York, and W63BM, Rochester, New York, and (b) the construction
permit (the "Permit") for WAQF-TV, Batavia, New York (W69CS, W63BM and WAQF-TV
are collectively, the "Stations").
B. Fant is President of Seller and is actively involved in television
station ownership and possesses special knowledge, abilities and experience
regarding the business and operation of the Stations.
C. The agreement of Seller and Fant to deliver this Noncompetition
Agreement was a material inducement to Buyer in entering into the Purchase
Agreement, and the delivery of this Noncompetition Agreement by Seller and Fant
was a condition to Buyer's obligation to purchase the Assets and Permit.
D. Buyer, as the owner of the Stations, desires to preclude Seller
and Fant form competing against it during the term of this Agreement.
AGREEMENT
In consideration of the above recitals and the covenants and agreements
set forth in this Agreement, the parties agree as follows:
SECTION 1. COVENANT
Seller and Fant covenant and agree that for a period of three years
after the date of this Agreement, neither Seller, Fant nor any entity
controlling, controlled by or under common control with Seller or Fant (an
"Affiliate") will, directly or indirectly, own, manage, operate, join, control,
or engage or participate in the ownership, management, operation, or control
of, or be connected as a shareholder, director, officer, agent, partner,
<PAGE> 42
- 2 -
joint venturer, consultant, advisor, or otherwise with, or render any services
to any business or organization any part of which engages in the business of
television broadcasting serving or proposing to serve all or any portion of the
Buffalo, New York, or Rochester, New York, designated Market Areas (DMA) as
defined by A.C. Nielsen. The foregoing covenant shall not prohibit Seller,
Fant or any Affiliate from owning securities of any company listed on a national
securities exchange.
SECTION 2. COMPENSATION
As compensation for the covenants of Seller and Fant not to compete with
Buyer, Buyer has pais to Seller and Fant the amount of One Hundred Thousand
dollars (40,000).
SECTION 3. ENFORCEABILITY; REMEDIES
3.1 Remedies. Seller and Fant agree that if Seller, Fant or any
Affiliate engages or threatens to engage in any activity that constitutes a
violation of the provisions of this Agreement, Buyer shall have the right and
remedy to have the provisions of this Agreement specifically enforced to the
extent permitted by law by any court having jurisdiction, it being acknowledged
and agreed that any breach of this Agreement would cause immediate irreparable
injury to Buyer and that money damages would not provide an adequate remedy at
law for any breach. Such right and remedy shall be in addition to, and not in
lieu of, any other rights and remedies available to Buyer at law or in equity.
3.2 Reformation. If any of the provisions or covenants contained in
this Agreement are held to be unenforceable in any jurisdiction because of the
duration or scope thereof, the court making such determination shall have the
power to reduce the duration and/or scope of the provision or covenant, and the
provision or covenant in its reduced form shall be enforceable; provided,
however, that the determination of such court shall not affect the
enforceability of this Agreement in any other jurisdiction.
SECTION 4. MISCELLANEOUS
4.1 Notices. all notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (a) in writing, (b)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, (c) deemed to have been
given on the date of personal delivery or the date set forth in the records of
the delivery service or on the return receipt, and (d) addressed as follows:
<PAGE> 43
-3-
If to Seller/Fant or any Affiliate: Anthony J. Fant
Fant Broadcasting of New York, L.L.C.
2154 Highland Avenue
Birmingham, Alabama 35205
If to Buyer: Lowell W. Paxson
Paxson Communications of Buffalo-51, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
4.1.
4.2 Benefit and Binding Effect. No party may assign this Agreement
without the prior written consent of the other party hereto. This Agreement
shall be binding upon and inure to the benefit of the parties and their and
their respective successors and permitted assigns.
4.3 Further Assurance. The parties shall execute any other documents
that may be necessary and desirable to the implementation and consummation of
this Agreement.
4.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
4.5 Headings. The headings herein are included for ease of reference
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
4.6 Amendments. This Agreement cannot be amended, supplemented, or
change except by an agreement in writing that makes specific reference to this
Agreement and which is signed by the party against which enforcement of any
such amendment, supplement, or modification is sought.
4.7 Counterparts. this agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
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<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have duly executed this
Noncompetition Agreement as of the day and year first above written.
FANT BROADCASTING OF NEW YORK,
L.L.C.
By:
-----------------------------
Name:
Title:
ANTHONY J. FANT
--------------------------------
PAXSON COMMUNICATIONS OF
BUFFALO-51, INC.
By:
-----------------------------
William L. Watson
Secretary
<PAGE> 45
SCHEDULE 8.3(d)
BUYER'S OPINION
1. Buyer is a corporation duly organized and in good standing under
the laws of the State of Florida. Guarantor is a corporation duly organized
and in good standing under the laws of the State of Delaware.
2. Each of Buyer and Guarantor has full corporate power and authority
to execute, deliver and perform the Asset Purchase Agreement and the other
Transaction Documents [Transaction Documents shall mean the documents executed
and delivered by Buyer at Closing] to which it is a party. Buyer's and
Guarantor's execution, delivery, and performance of the Purchase Agreement and
the other Transaction Documents to which it is a party have been duly and
validly authorized by all necessary corporate action on the part of Buyer or
Guarantor, as the case may be.
3. The Purchase Agreement and the Guarantee and each of the other
Transaction Documents to which Buyer or Guarantor is a party have been duly
executed and delivered by Buyer or guarantor, as the case may be, and
constitute the valid and binding obligation of Buyer or Guarantor, as the case
may be, enforceable against Buyer or Guarantor, as the case may be, in
accordance with their respective terms subject to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws and related court decisions
now or hereinafter in effect relating to creditors' rights and (ii) the
application of general equitable principles.
4. The execution, delivery and performance by Buyer and Guarantor of
the Purchase Agreement and the other Transaction Documents to which it is a
party (a) do not require the consent of any third party under any of the Buyer
or Guarantor Agreements [Buyer or Guarantor agreements shall mean such
agreements that are certified by Buyer to Buyer's counsel to be material to the
operation of Buyer's business or the transactions contemplated by the Purchase
Agreement]; (b) do not violate any provisions of Buyer's or Guarantor's
corporate charter or bylaws; (c) do not violate any Applicable Law [Applicable
Law means those laws and regulations that a lawyer exercising customary
professional diligence would recognize as being applicable to the transactions
contemplated by the Transaction Documents, although no opinion is hereby
expressed as to laws other than the laws of the State of Florida], or judgment,
order, injunction, or decree, which is applicable to Buyer or Guarantor and
known to us; and (d) do not, either alone or with the giving of notice or the
passage of time or both, conflict with, constitute grounds for termination of,
or result in a breach of the terms, conditions or provisions of, or constitute
a default under any of the Buyer or Guarantor Agreements.
Opinion 1-4 to be provided by Buyer's General Counsel.
<PAGE> 1
EXHIBIT 10.171
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated May 14, 1997, by and between
Paxson Communications of West Palm Beach, Inc., a Florida corporation ("Buyer"),
and American Radio Systems Corporation, a Delaware corporation ("Seller").
PREMISES:
A. Seller is the owner of and operator of, and its wholly owned subsidiary
American Radio Systems License Corp., a Delaware corporation ("License Corp.")
is the licensee of, radio stations WKGR(FM), Ft. Pierce, WOLL(FM) Riviera Beach
and WEAT(AM), West Palm Beach, and WBZT(AM), West Palm Beach, Florida (the
"Stations") pursuant to licenses issued by the Federal Communications Commission
(the "FCC").
B. Buyer is a subsidiary of Paxson Communications Corporation, a Delaware
corporation ("Paxson").
C. Seller desires to sell, and Buyer wishes to buy, substantially all
assets used or useful in the operation of the Stations and the broadcast
business made possible thereby for the price and on the terms and conditions
hereafter set forth.
AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
SECTION 1
DEFINED TERMS
The following terms shall have the following meanings in this Agreement:
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1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on the Stations for cash) by
Seller prior to the Closing Date as reflected on the billing records of Seller
relating to the Stations.
1.2 "Assets" means the tangible and intangible assets owned and used in
connection with the conduct of the business or operations of any of the
Stations, being such assets as are specifically set forth in Section 2.1 herein,
which are being sold, transferred, or otherwise conveyed to Buyer hereunder, as
specified in detail in Section 2.1, together with all tangible or intangible
assets that are acquired by Seller between the date of this Agreement and the
Closing Date for use in connection with the business or operation of any of the
Stations.
1.3 "Assumed Contracts" means (i) all Contracts listed in Schedule 3.7 that
are designated to indicate that they will be assumed by Buyer upon its purchase
of the Stations, (ii) any Contracts entered into by, or assigned to Seller in
the ordinary course of business between the date hereof and the Closing Date
that Buyer agrees in writing to assume, (iii) all Contracts, in existence on the
date of this Agreement that meet the criteria set forth in Section 3.7 (i) -
(iii) for exclusion from Schedule 3.7, and (iv) all Contracts with advertisers
for the sale of time or talent on the Stations for cash entered into in the
ordinary course of business.
1.4 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8.
1.5 "Closing Date" means the date on which the Closing occurs.
1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the Assets
to Buyer or otherwise to consummate the transaction contemplated hereby,
including without limitation the consents of the parties to those Contracts
designated in Schedule 3.7 with an asterisk.
1.7 "Contracts" means all contracts, agreements, non-governmental licenses
and leases, written or oral (including any amendments and other modifications
thereto) to which Seller is a party or which are binding upon Seller that relate
or are used in the business or operations of the Stations, and (i) which are in
effect on the date hereof, or (ii) which are entered into by Seller between the
date hereto and the Closing Date.
1.8 "Escrow Deposit" shall mean the sum of One Million Five Hundred
Thousand Dollars ($1,500,000) held by First Union National Bank of Florida, N.A.
as Escrow Agent
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pursuant to an Escrow Agreement of even date, by and among Buyer, Seller, and
Escrow Agent in the form set forth in Schedule 1.8 hereto.
1.9 "Excluded Assets" shall mean those assets described or set forth in
Section 2.2 herein, in addition to any assets not specifically set forth in
Section 2.1 herein.
1.10 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
1.11 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller or License Corp. in connection with
the conduct of the business or operations of any of the Stations.
1.12 "Final Order" means action of the FCC, (a) which has not been
reversed, stayed enjoined, set aside, annulled or suspended, and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal or stay, and the time for filing any such
requests and for the FCC to review the action on its own motion has expired, or
(ii) in the event of review, reconsideration or appeal that does not result in
the FCC consent being reversed, stayed, enjoined, set aside, annulled or
suspended, the time for further review, reconsideration or appeal has expired.
1.13 "Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) held or owned by Seller in connection with
the conduct of the business or operations of any of the Stations on the date of
this Agreement, including those listed in Schedule 3.9, and all such intangible
assets that are acquired by Seller between the date of this Agreement and the
Closing Date, other than Excluded Assets.
1.14 "Licenses" means all of the licenses, permits and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration ("FAA"), and any other federal, state or local
governmental authorities to Seller or License Corp. in connection with the
conduct of the business or operations of any of the Stations.
1.15 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, spare
parts, and other tangible
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personal property which are owned or leased by Seller and used as of the date
hereof in the conduct of the business or operations of any of the Stations,
including that listed on Schedule 3.6 plus such additions thereto between the
date hereof and the Closing Date, but excluding the Excluded Assets.
1.16 "Purchase Price" means the purchase price specified in Section 2.3.
1.17 "Real Property" means all of the leasehold interests, easements,
licenses, rights to access, rights-of-way, and other real property interests
owned by Seller and used in the conduct of the business or operations of any of
the Stations which are identified on Schedule 3.5 hereof plus such additions
thereto between the date hereof and the Closing Date.
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4
<PAGE> 5
SECTION 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to sell, transfer and deliver (and
to cause License Corp. to sell, transfer and deliver) to Buyer on the Closing
Date, and Buyer agrees to purchase, all of the Assets, free and clear of any
claims, liabilities, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever (except for those liens for current taxes
not yet due and payable), more specifically described as follows:
(a) The Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) All intangibles and all other information and similar intangible
assets relating to any of the Stations, including those listed in Schedule
3.9 hereto;
(f) All of the Seller's proprietary information, that relates to any
of the Stations, including without limitation, technical information and
data, machinery and equipment warranties, maps, computer discs and tapes,
plans, diagrams, blueprints, and schematics, including filings with the
FCC which relate to the Stations, if any;
(g) All choses in action and rights under warranties of Seller
relating to any of the Stations or any of the Assets, if any;
(h) All books and records relating to the business or operations of
any of the Stations, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept.
2.2 Excluded Assets. The Assets shall exclude the assets listed on
Schedule 2.2 and the following assets:
(a) Seller's cash on hand as of the Closing Date and all other
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cash in any of Seller's bank or savings accounts; any and all
insurance policies, letters of credit, or other similar items and any
cash surrender value in regard thereto; and any stocks, bonds,
certificates of deposit and similar investments.
(b) Any Contracts other than the Assumed Contracts;
(c) Seller's books and records related to internal matters and
financial relationships with Seller's lenders;
(d) Any claims, rights and interest in and to any refunds of
federal, state or local franchise, income or other taxes or fees of any
nature whatsoever for periods prior to the Closing Date;
(e) Any pension, profit-sharing or employee benefit plans, and any
employment or collective bargaining agreement;
(f) The Accounts Receivable;
(g) Subject to Section 6.10, the Seller's current tower site
including real estate, improvements and personal property for radio
station WBZT(AM) located at 4763 10th Avenue North, Lake Worth, Florida;
and
(h) Any assets that are disposed of between the date of this
Agreement and the Closing Date in compliance with Section 5.1(A)(3) of this
Agreement.
2.3 Purchase Price.
(a) The Purchase Price shall be Thirty-Three Million Dollars
($33,000,000), as adjusted pursuant to Section 2.4, plus the fair market
value of the assets to be conveyed to Seller pursuant to Section 2.3(b).
At the Closing, Buyer shall pay or cause to be paid to or for the account
of Seller the Purchase Price as adjusted by the estimated adjustments set
forth in Seller's preliminary settlement statement referred to in Section
2.4, less that portion of the Purchase Price consisting of the fair market
value of the assets to be conveyed to Seller pursuant to Section 2.3(b)
and less any portion of the Purchase Price that Buyer is entitled to
withhold pursuant to Section 6.10(the "Estimated Purchase Price") by
federal wire transfer of same-day funds pursuant to wire instructions
which shall be delivered by Seller to Buyer at least two days prior to the
Closing Date. The Purchase Price shall be allocated among the tangible and
intangible assets, including goodwill and license value, of the Stations,
in accordance with an independent appraisal undertaken by an independent
appraiser reasonably acceptable to Seller and retained by the Buyer.
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(b) In addition to the amount set forth in Section 2.3(a) above, the
Buyer shall convey or cause to be conveyed to Seller, as additional
consideration at Closing, the assets set forth in Schedule 2.3 (b) hereto.
2.4 Adjustments and Prorations. The Purchase Price shall be decreased by
the product of 17.37 times the amount, if any, by which Broadcast Cash Flow (as
defined in Section 7.1(G)) of the Stations for the period of twelve consecutive
calendar months ending immediately prior to the Closing Date is less than
$1,900,000. The Purchase Price shall be increased or decreased as required to
effectuate the proration of revenues and expenses as provided in this Section
2.4. All revenues arising from the Stations up until midnight on the day prior
to the Closing Date, and all expenses arising from the Stations up until
midnight on the day prior to the Closing Date, including business and license
fees (including any retroactive adjustments thereof), utility charges, real and
personal property taxes and assessments levied against the Assets, accrued
employee benefits such as vacation time (but excluding sick leave, which shall
not be prorated) for any employee of any of the Stations who becomes an employee
of Buyer on the Closing Date, property and equipment rentals, applicable
copyright or other fees, sales and service charges, taxes (except for taxes
arising from the transfer of the Assets hereunder), and similar prepaid and
deferred items, shall be prorated between Buyer and Seller in accordance with
the principle that Seller shall receive all revenues, and all refunds to Seller
and deposits of Seller held by third parties, and shall be responsible for all
expenses, costs and liabilities allocable in accordance with generally accepted
accounting principles to the conduct of the business or operations of the
Stations for the period prior to the Closing Date, and Buyer shall receive all
revenues and shall be responsible for all expenses, costs and obligations
allocable in accordance with generally accepted accounting principles to the
conduct of the business or operations of the Stations on the Closing Date and
for the period thereafter. Buyer shall receive credit to the extent the value
(as calculated in Seller's financial statements consistent with past practice)
of any and all advertising time to be run following the Closing for which trade
or barter consideration has been received by the Seller prior to the Closing
exceeds Eighty Thousand Dollars ($80,000.00).
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A. Any adjustments or prorations will, insofar as feasible, be determined
and paid on the Closing Date, with final settlement and payment being made in
accordance with the procedures set forth in Section 2.4B.
B. Within sixty (60) days after the Closing Date, Buyer shall deliver to
Seller a certificate (the "Closing Certificate"), signed by Buyer, providing a
compilation of the adjustments and prorations to be made pursuant to this
Section 2.4, together with such supporting evidence as Seller may reasonably
request. If Seller shall conclude that the Closing Certificate does not
accurately reflect the adjustments and prorations to be made pursuant to this
Section 2.4, Seller shall, within thirty (30) days after its receipt of the
Closing Certificate, provide to Buyer its written statement of any discrepancies
believed to exist. If Seller notifies Buyer of its acceptance of Buyer's
calculation of the Purchase Price or if Seller fails to deliver its statement of
discrepancies within the 30-day period specified in the preceding sentence,
Buyer's determination of the Purchase Price shall be conclusive and binding on
the parties as of the last day of the 30-day period. Seller and Buyer shall
attempt jointly to resolve the discrepancies within fifteen (15) days after
receipt of Seller's discrepancy statement, which resolution, if achieved, shall
be binding upon all parties to this Agreement and not subject to dispute or
review. If the parties cannot resolve the discrepancy to their mutual
satisfaction within such fifteen (15) day period, Buyer or Seller may elect that
the parties, jointly designate a regional or local branch of a nationally known
independent public accounting firm to be retained to review the Closing
Certificate together with Seller's discrepancy statement and any other relevant
documents. The cost of retaining such independent public accounting firm shall
be borne equally by Buyer and Seller. Such firm shall report its conclusions as
to adjustments pursuant to this Section 2.4, which report shall be conclusive on
both parties to this Agreement and not subject to dispute or review. If, after
adjustment as appropriate with respect to the amount of the aforesaid
adjustments paid or credited at the Closing, Buyer is determined to owe an
amount to Seller, Buyer shall pay such amount to Seller, and if Seller is
determined to owe an amount to Buyer, Seller shall pay such amount thereof to
Buyer, in each case within ten (10) days of such determination, but subject to
Section 6.10.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall pay, discharge and perform (i) all of the obligations and
liabilities of Seller under the Licenses and the
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Assumed Contracts insofar as they relate to the time period on and after the
Closing Date and arise out of events occurring after the Closing Date, (ii) all
obligations and liabilities arising out of events occurring after the Closing
related to Buyer's ownership of the Assets or its conduct of the business or
operations of the Stations after the Closing, and (iii) all obligations and
liabilities for which Buyer receives a proration adjustment under Section 2.4.
All other obligations and liabilities of Seller, including (i) any obligations
under any Contract not included in the Assumed Contracts, (ii) any obligations
under the Assumed Contracts relating to the time period prior to the Closing
Date, and (iii) any claims or pending litigation or proceedings relating to the
operation of the Stations prior to the Closing shall remain and be the
obligations and liabilities solely of Seller.
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SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to conduct its business in the State of Florida,
which is the only jurisdiction where the conduct of the business or operations
of the Stations requires such qualification. Seller has all requisite corporate
power and authority (i) to own, lease, and use the Assets as presently owned,
leased, and used, and (ii) to conduct the business or operations of the Stations
as presently conducted. Seller has all requisite corporate power and authority
to execute and deliver this Agreement and the documents contemplated hereby, and
to perform and comply with all of the terms, covenants and conditions to be
performed and complied with by Seller, hereunder and thereunder. Seller is not a
participant in any joint venture or partnership with any other person or entity
with respect to any part of the Stations' operations or the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by judicial discretion
in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the Consents
listed on Schedule 3.8, the execution, delivery, and performance of this
Agreement and the documents contemplated hereby (with or without the giving of
notice, the lapse of time, or both): (i) do not require the consent of any third
party; (ii) will not conflict with any provision of the Certificate of
Incorporation or By Laws of Seller; (iii) will not conflict with, result in a
breach of, or constitute a default under, any law, judgment, order, ordinance,
decree, rule, regulation or ruling of any court or governmental instrumentality,
which is applicable to Seller; (iv) will not conflict
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with, constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license or permit to which
Seller is a party or by which it may be bound; and (v) will not create any
claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of
any nature whatsoever upon the Assets.
3.4 Licenses. Schedule 3.4 includes a true and complete list of the
Licenses. Seller has delivered to Buyer true and complete copies of the Licenses
(including any and all amendments and other modifications thereto). The Licenses
were validly issued and License Corp. is as of the date of this Agreement and
shall be on the Closing Date, the authorized legal holder thereof. The Licenses
comprise all of the licenses, permits and other authorizations required from any
governmental or regulatory authority for the lawful conduct of the business or
operations of the Stations as presently operated. Seller has no reason to
believe that the Licenses will not be renewed by the FCC or other granting
authority in the ordinary course.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains complete
and accurate descriptions of all the Real Property, which comprises all real
property interests necessary to conduct the business or operations of the
Stations as now conducted. Seller holds no fee simple interests in any real
property necessary or used to conduct the business or operations of the Stations
as now conducted. Seller has delivered to Buyer true and complete copies of all
leases or other material instruments pertaining to the Real Property (including
any and all amendments and other modifications of such instruments), all of
which instruments are valid, binding and enforceable in accordance with their
terms. Seller is not in material breach, nor is any other party in material
breach, of the terms of any of such leases or other instruments. All Real
Property (i) is available for immediate use in the conduct of the business or
operations of the Stations, (ii) to Seller's knowledge after due investigation,
materially complies as described in Schedule 3.5 with all applicable building,
electrical and zoning codes and all regulations of any governmental authority
having jurisdiction and (iii) is in satisfactory condition and repair consistent
with its present use. Seller has full legal and practical access to the Real
Property.
3.6 Title to and Condition of Personal Property. Schedule 3.6 lists
(subject to the provisions of Section 6.16 hereof) all material items of the
Personal Property, which comprise all
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personal property used to conduct the business or operations of the Stations as
now conducted. Except as described in Schedule 3.6, Seller owns and has good
title to all Personal Property. None of the Personal Property owned by Seller is
subject to any security interest, mortgage, pledge, conditional sales agreement,
or other lien or encumbrance, except for (i) liens for current taxes not yet due
and payable, and (ii) any other claims or encumbrances which are described in
Schedule 3.6. Except as shown in Schedule 3.6, the Personal Property taken as a
whole is in good operating condition and repair (ordinary wear and tear
excepted), and is available for immediate use in the business or operations of
the Stations, and the transmitting and studio equipment included in the Personal
Property (i) has been maintained consistent with FCC rules and regulations, and
(ii) will permit the Stations and any unit auxiliaries thereto to operate in
accordance with the terms of the FCC Licenses and the rules and regulations of
the FCC, and with all other applicable federal, state and local statutes,
ordinances, rules and regulations.
3.7 Contracts. Schedule 3.7 lists all Contracts except for: (i) contracts
with advertisers for the sale of time on the Stations for cash and substantially
at rate card and which are not prepaid and which may be canceled by the Stations
without penalty on not more than thirty (30) days notice, (ii) miscellaneous
service contracts terminable at will without penalty, and (iii) other contracts
not involving either aggregate liabilities under all such contacts exceeding
Five Thousand Dollars ($5,000) or any material nonmonetary obligation. All of
the Assumed Contracts are in full force and effect, and are valid, binding and
enforceable in accordance with their terms, except as the enforceability thereof
may be affected by bankruptcy, insolvency or similar laws affecting creditors'
rights generally, or by court-applied equitable remedies. Seller is not in
material breach, nor to Seller's knowledge is any other party in material
breach, of the terms of any such Contracts nor does there exist under any
Contract any event that, after notice or lapse of time or both, could constitute
a material breach by any party thereto. Except for the need to obtain the
Consents listed on Schedule 3.8, Seller has full legal power and authority to
assign its rights under the Assumed Contracts to Buyer in accordance with this
Agreement, and such assignments will not affect the validity, enforceability and
continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1 and
the other Consents listed on Schedule 3.8, no consent, approval, permit or
authorization of, or declaration
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to or filing with any governmental or regulatory authority, or any other third
party is required (i) to consummate this Agreement and the transaction
contemplated hereby, (ii) to permit Seller to assign or transfer the Assets to
Buyer, or (iii) to enable Buyer to conduct the business or operations of the
Stations in essentially the same manner as such business or operations are
presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Schedule 3.9 is a true and
complete list of all Intangibles (exclusive of those required to be listed in
Schedule 3.4) all of which are valid and in good standing and uncontested.
Seller has delivered to Buyer copies of all documents establishing the
Intangibles. Seller is not aware that it is infringing upon or otherwise acting
adversely to any trademarks, trade names, copyrights, patents, patent
applications, know-how, methods, or processes owned by any other person or
persons, and there is no claim or action pending, or to the knowledge of Seller
threatened, with respect thereto. The Intangibles listed on Schedule 3.9
comprise all intangible property interests necessary to conduct the business and
operations of the Stations as now conducted.
3.10 Insurance. The business of the Stations and the Personal Property
included in the Assets are insured against loss or damage in amounts generally
customary in the broadcast industry. Schedule 3.10 comprises a true and complete
list of all insurance policies of Seller which insure any part of the Assets.
All policies of insurance listed in Schedule 3.10 are in full force and effect.
3.11 Reports. Except where failure to do so would not have a material
adverse effect on the ownership or operation of the Stations, all returns,
reports and statements which the Stations is currently required to file with the
FCC or with any other governmental agency have been filed, and all reporting
requirements of the FCC and other governmental authorities having jurisdiction
thereof have been complied with; all of such reports, returns and statements are
substantially complete and correct as filed; and the Stations' public inspection
file is located at the main studio and is in compliance with the FCC's rules and
regulations.
3.12 Employee Benefit Plans and Employees. Schedule 3.12 includes an
accurate description of all employee benefit plans and arrangements applicable
to the employees of Seller employed at the Stations, including pension or thrift
plans, individual or supplemental pension or accrued compensation arrangements,
contributions to hospitalization or other health or life
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insurance programs, incentive plans, bonus arrangements, and vacation, sick
leave, disability and termination arrangements or policies, including workers'
compensation policies, and a description of all fixed or contingent liabilities
or obligations of Seller or Chancellor with respect to any person employed at
any of the Stations or any person retained as an independent contractor at any
of the Stations. Seller has furnished or made available to Buyer true and
complete copies of all written documents or information with respect to employee
matters and arrangements at the Stations, including without limitation, all
employee handbooks, rules and policies, plan documents, trust agreements,
employment agreements, summary plan descriptions, and descriptions of any
unwritten plans listed in Schedule 3.12. There exists no action, suit or claim
(other than routine claims for benefits) with respect to any of such plans or
arrangements pending or, to the knowledge of Seller, threatened against any of
such plans or arrangements, and Seller possesses no knowledge of any facts which
could give rise to any such action, suit or claim. Schedule 3.12 contains a true
and complete list of all employees of any of the Stations and all persons
retained as independent contractors at any of the Stations and a description of
all compensation arrangements affecting them (including salary, bonus and other
benefit arrangements) and a description of their duties as of the date of this
Agreement.
3.13 Labor Relations. Seller has provided Buyer with true and complete
copies of all written contracts of employment. Seller, and to Seller's
knowledge, after due investigation Seller's predecessors in interest, in their
operation of the Stations, have complied in all material respects with all
applicable laws, rules and regulations relating to the employment of labor,
including those related to wages, hours, collective bargaining, occupational
safety, discrimination, and the payment of social security and other payroll
related taxes, and neither Seller, not to its knowledge, after due investigation
its predecessors in interest, have received any notice alleging that it has
failed to comply in any material respect with any such laws, rules or
regulations. No controversies, disputes, or proceedings are pending or, to the
best of its knowledge, threatened, between Seller and any employees of the
Stations. Seller is not a party to or subject to any collective bargaining
agreements with respect to the Stations except as described in Schedule 3.7
hereto. No labor union or other collective bargaining unit represents any of the
employees of the Stations. To the best knowledge of Seller, there is no union
campaign being conducted to solicit cards from employees to authorize a union to
request a
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National Labor Relations Board certification election with respect to any of
Seller's employees at the Stations.
3.14 Claims, Legal Actions. Except as set forth in Schedule 3.14, and
except for any investigations and rule-making proceedings generally affecting
the broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to the
knowledge of Seller threatened, against or relating to Seller, License Corp. the
Assets, or the business or operations of the Stations, nor does Seller know of
any basis for the same. In particular, except as set forth in Schedule 3.14, but
without limiting the generality of the foregoing, there are no applications,
complaints or proceedings pending or, to the best of its knowledge, threatened
(i) before the FCC relating to the business or operations of any of the Stations
other than applications, complaints or proceedings which affect the radio
industry generally, (ii) before any federal or state agency involving charges of
illegal discrimination by any of the Stations under any federal or state
employment laws or regulations, or (iii) against Seller or the Stations before
any federal, state or local agency involving environmental or zoning laws or
regulations.
3.15 Compliance with Laws. To the best knowledge of Seller, after due
investigation Seller and License Corp. have complied in all material respects
with (i) the Licenses, and (ii) all applicable federal, state and local laws,
rules, regulations and ordinances. To the best knowledge of Seller, after due
investigation neither the ownership or use, nor the conduct of the business or
operations, of the Stations conflicts with rights of any other person, firm or
corporation.
3.16 Environmental Matters. During Seller's period of ownership and, to the
best knowledge of Seller, during those of its predecessors, there has been no
production, storage, treatment, recycling, disposal, use, generation, discharge,
release or other handling or disposition of any kind by Seller or any such
predecessor of any toxic or hazardous wastes, substances, products, pollutants
or materials of any kind, including, without limitation, petroleum and petroleum
products and asbestos, or any other wastes, substances, products, pollutants or
material regulated under any environmental laws at, in, on, from or under the
Real Property. The operations of Seller and, to Seller's best knowledge, those
of its predecessors, are and have been conducted, as the case may be, in
material compliance with the Comprehensive Environmental
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Response, Compensation and Liability Act, the Resource Conservation and Recovery
Act, the Federal Water Pollution Control Act, the Clean Air Act, the Safe
Drinking Water Act, the Toxic Substances Control Act, the Refuse Act, or the
Emergency Planning and Community Right-to-Know Act (each as amended) and all
other laws, rules, and regulations of federal, state, and local governments (and
agencies thereof) concerning release or threatened release of hazardous
substances, public health and safety, or pollution or protection of the
environment (collectively, "Environmental Laws"). To the best knowledge of
Seller, after due investigation, Seller has no liability relating to its
ownership and operation of any of the Stations under any Environmental Law. No
charge, complaint, action, suit, proceeding, hearing, investigation, claim,
demand, or notice has been filed or commenced against Seller in connection with
its ownership or operation of any of the Stations alleging any failure to comply
with any Environmental Law.
3.17 Financial Statements. Seller has furnished Buyer with true and
complete copies of operating statements regarding the Stations for the calendar
year ended December 31, 1996 (collectively, the "Financial Statements"). The
Financial Statements have been prepared from the books and records of Seller
and, as required, its predecessors-in-interest, have been prepared in accordance
with generally accepted accounting principles consistently applied and
maintained throughout the periods indicated, accurately reflect the books,
records, and accounts of the Stations (which books, records, and accounts are
complete and correct), are complete and correct in all material respects, and
present fairly the financial condition of the Stations as at their respective
dates and the results of operations for the periods then ended. None of the
Financial Statements understates the true costs and expenses of conducting the
business or operations of the Stations (except that trade and barter
transactions are not reflected in the Financial Statements), fails to disclose
any material contingent liabilities, or inflates the revenues of the Stations.
In addition, Seller has made available to Buyer operating statements regarding
the Stations prepared by their prior owners to the extent Seller has such
statements in its possession, but as to which Seller makes no representations or
warranties.
3.18 Taxes. There are no governmental investigations or other legal,
administrative, or tax proceedings pursuant to which Seller is or could be made
liable for any taxes, penalties, interest, or other charges, the liability for
which could extend to Buyer as transferee of the
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business of the Stations, and no event has occurred that could impose on Buyer
any transferee liability for any taxes, penalties, or interest due or to become
due from Seller .
3.19 Conduct of Business in Ordinary Course. Since August 1, 1996, Seller
has conducted the business and operations of the Stations only in the ordinary
course and have not:
(a) Suffered any material adverse change in the business, assets, or
properties of any of the Stations, including any damage, destruction, or loss
affecting any assets used or useful in the conduct of the business of any of the
Stations;
(b) Made any material increase in compensation payable or to become
payable to any of the employees of the Stations, or any bonus payment made or
promised to any employee of the Stations, or any material change in personnel
policies, employee benefits, or other compensation arrangements affecting the
employees of the Stations;
(c) Made or permitted License Corp. to make any sale, assignment,
lease, or other transfer of any of the Stations' properties other than in the
normal and usual course of business with suitable replacements being obtained
therefor;
(d) Canceled any debts owed to or claims held by the owner of any
Station with respect to such Station, except in the normal and usual course of
business;
(e) Suffered any material write-down of the value of any Assets; or
(f) Transferred or granted any right under, or entered into any
settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right relating to any of the Stations.
3.20 Transactions with Affiliates. Except as disclosed on Schedule 3.20,
Seller has not been involved in any business arrangement or relationship
relating to any of the Stations with
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any affiliate of Seller, and no affiliate of Seller owns any property or right,
tangible or intangible, which is used in the business of any of the Stations.
3.21 Full Disclosure. No representation or warranty made by Seller in this
Agreement or in any certificate, document, or other instrument furnished or to
be furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, and is qualified to conduct business in the State of Florida. Buyer
has all requisite corporate power and authority to execute and deliver this
Agreement and the documents contemplated hereby, and to perform and comply with
all of the terms, covenants, and conditions to be performed and complied with by
Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery and
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by judicial discretion
in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the Consents,
the execution, delivery, and performance by Buyer of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) do not require the consent of any third party; (ii) will
not conflict with the Certificate of Incorporation or Bylaws of Buyer; (iii)
will not conflict with, result in a breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any material agreement, instrument, licenses, or permit to which Buyer is a
party or by which Buyer may be bound.
4.4 FCC Qualification. Except as disclosed on Schedule 4.4, Buyer has no
knowledge of any facts which would, under present law (including the
Communications Act of 1934, as amended) and present rules, regulations and
practices of the FCC, disqualify Buyer as an assignee of the licenses, permits
and authorizations listed on Schedule 3.4 hereto, or as an owner
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and/or operator of the Stations' Assets, and Buyer will not take, or
unreasonably fail to take, any action which Buyer knows would cause such
disqualification.
4.5 Paxson Tower Assets Representations and Warranties.
A. Real Property. Buyer has delivered to Seller true and complete
copies of all leases or other material instruments pertaining to the
Paxson Tower Assets (including any and all amendments and other
modifications of such instruments), all of which instruments are valid,
binding and enforceable in accordance with their terms. To Buyer's
knowledge, Buyer is not in material breach, nor is any other party in
material breach, of the terms of any such leases or other instruments. All
such real property to Buyer's knowledge materially complies as described
in Schedule 2.3(b) with all applicable building, electrical and zoning
codes and all regulations of any governmental authority having
jurisdiction.
B. Personal Property. Except as described on Schedule 2.3(b), Buyer
owns and has good title to all property listed thereon. None of such
personal property owned by Buyer is subject to any security interest,
mortgage, pledge, conditional sales agreement, or other lien or
encumbrance, except for (i) liens for current taxes not yet due and
payable, and (ii) any other claims or encumbrances which are described in
Schedule 2.3(b).
C. Consents. To Seller's knowledge, no consent, approval, permit or
authorization of, or declaration to or filing with any government or
regulatory authority, or any other third party is required to permit
Buyer to assign or transfer the Paxson Tower Assets to Seller.
D. Compliance with Laws. To the best knowledge of Buyer, Buyer has
compiled in all material respects with all applicable federal, state and
local laws, rules, regulations and ordinances with respect to the Paxson
Tower Assets. To the best knowledge of Seller, neither the ownership or
use, nor the conduct of the business or operations of the Paxson Tower
Assets conflicts with the rights of any other person, firm or corporation.
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SECTION 5
COVENANTS OF SELLER
5.1 Pre-Closing Covenants. Except with the prior written consent of
Buyer between the date hereof and the Closing Date, Seller covenants that it
and License Corp. shall operate the Stations in the ordinary course of business
in accordance with their respective past practices (except where such would
conflict with the following covenants or with Seller's other obligations
hereunder), and abide by the following negative and affirmative covenants:
A. Negative Covenants. Seller shall not do any of the following:
(1) Compensation. Increase the compensation, bonuses or other
benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Stations, except in
accordance with current year budget as disclosed in Schedule 3.12;
(2) Contracts. Modify or amend any of the Assumed Contracts; enter
into any new Contracts except in the ordinary course of business, provided
that all new Contracts (other than Contracts for the sale of broadcast
time) shall not involve aggregate liabilities exceeding Five Thousand
Dollars ($5,000) or any material nonmonetary obligation; enter into any
trade or barter agreements which create obligations to be performed
subsequent to the Closing;
(3) Disposition of Assets. Sell, assign, lease, or otherwise transfer
or dispose of any of the material Assets, except for assets consumed in
the ordinary course of business or assets disposed of following the
acquisition of replacement property of equivalent kind and value;
(4) Encumbrances. Create, assume or permit to exist any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of
any nature whatsoever upon the Assets, except for (i) those in existence
on the date of this Agreement and disclosed in
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Schedules 3.5 and 3.6, (ii) mechanics' liens and other similar liens which
will be removed prior to the Closing Date, and (iii) liens for current
taxes not yet due and payable;
(5) Programming. Reduce the Stations' programming hours below the
minimum required by the FCC, or make any other material changes in the
Stations' programming policies, except such changes as in the good faith
judgment of the Seller are required by the public interest;
(6) Licenses. Do any act or fail to do any act which might result in
the expiration, revocation, suspension or modification of any of the
Licenses, or fail to prosecute with due diligence any applications to any
governmental authority in connection with the operation of the Stations;
(7) Rights. Waive any material right relating to the Stations or
the Assets; or
(8) No Inconsistent Action. Take any action which is inconsistent
with Seller's obligations hereunder or which could hinder or delay the
consummation of the transaction contemplated by this Agreement.
B. Affirmative Covenants. Seller shall do the following:
(1) Access to Information. Upon prior notice, allow Buyer and
its authorized representatives reasonable access at mutually agreeable
times to the Assets and to all other properties, equipment, books,
records, Contracts and documents relating to the Stations (but not
relating solely to Seller's other operations or business) for the purpose
of audit and inspection including inspections incident to the
environmental study described in Section 6.11 and the engineering study
described in Section 6.12, and furnish or cause to be furnished to Buyer
or its authorized representatives all information with respect to the
affairs and business of the Stations (but not relating solely to Seller's
other operations or business) as Buyer may reasonably request, it being
understood that the rights of Buyer hereunder shall not be exercised in
such a manner as to interfere with
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the operations of the business of Seller; provided that neither the
furnishing of such information to Buyer or its representatives nor any
investigation made heretofore or hereafter by Buyer shall affect Buyer's
rights to rely on any representation or warranty made by Seller in this
Agreement, each of which shall survive any furnishing of information or
any investigation;
(2) Maintenance of Assets. Maintain all of the Assets or replacements
thereof and improvements thereon in good condition (ordinary wear and tear
excepted), and use, operate and maintain all of the above assets in a
reasonable manner, with inventories or spare parts and expendable supplies
being maintained at levels consistent with past practices;
(3) Insurance. Maintain the existing insurance policies on the
Stations and the Assets;
(4) Consents. Use its reasonable efforts to obtain the Consents and
the estoppel certificates described in Section 8.2(f), and promptly advise
Buyer of any difficulties experienced in obtaining any of the Consents and
of any conditions proposed, considered, or requested for any of the
Consents;
(5) Preservation of Business. Use its reasonable efforts to preserve
the business and audience of the Stations, and its present relationships
with their employees, suppliers, customers and others having business
relations with it and maintain levels of marketing and promotions efforts
and expenditures during the period prior to the Closing Date equal to or
greater to such levels in the year immediately prior to the Closing Date;
(6) Books and Records. Maintain its books and records in
accordance with past practices;
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(7) Notification. Promptly notify Buyer in writing of any unusual or
material developments with respect to the assets of the Stations, and of
any material change in any of the information contained in Seller's
representations and warranties contained in Section 3 hereof or in the
schedules hereto, provided that such notification shall not relieve Seller
of any obligations hereunder;
(8) Personnel. Promptly notify Buyer as personnel vacancies occur
at the Stations and consider for employment all personnel recommended by
Buyer for such vacant positions;
(9) Trade and Barter Agreements. Provide prior to the Closing Date
the advertising time due under any trade and barter agreements in the
normal course of business;
(10) Financial Information. Furnish to Buyer within fifteen (15) days
after the end of each month ending between the date hereof and the Closing
Date a statement of income and expense relating to the Stations'
operations for the month just ended and such other financial information
(including information on payables and receivables) as Buyer may
reasonably request and which is prepared in the ordinary course of
business. All financial information delivered to Buyer pursuant to this
Section shall be prepared from the books and records of the Stations in
accordance with generally accepted accounting principles consistently
applied, shall accurately reflect the books, records, and accounts of the
Stations, shall be complete and correct in all material respects, and
shall present fairly the financial condition of the Stations as at their
respective dates and the results of operations for the periods then ended.
(11) Contracts. Prior to the Closing Date, deliver to Buyer a list of
all Contracts entered into between the date hereof and the Closing Date of
the type required to be listed in Schedule 3.7, together with copies of
such Contracts; and
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(12) Compliance with Laws. Comply in all material respects with all
rules and regulations of the FCC, and all other laws, rules and
regulations to which Seller, the Stations or the Assets are subject.
5.2 Post-Closing Covenants. After the Closing, Seller will take such
actions, and execute and deliver to Buyer such further deeds, bills of sale, or
other transfer documents as, in the reasonable opinion of counsel for Buyer, may
be necessary to ensure, complete and evidence the full and effective transfer of
the Assets to Buyer pursuant to this Agreement.
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SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by this
Agreement is subject to the prior consent and approval of the FCC. Within ten
(10) days after the execution of this Agreement, Buyer and Seller shall file
with the FCC an appropriate application for FCC Consent. The parties shall
prosecute said application with all reasonable diligence and otherwise use their
best efforts to obtain the grant of such application as expeditiously as
practicable. If the FCC Consent imposes any condition on any party hereto, such
party shall use its best efforts to comply with such condition except that
neither party shall be required to comply with a condition if (1) the condition
was imposed on it as the result of a circumstance the existence of which does
not constitute a breach by the party of any of its representations, warranties,
or covenants under this Agreement, and (2) compliance with the condition would
have a material adverse effect upon it.. If reconsideration or judicial review
is sought with respect to the FCC Consent, Buyer and Seller shall oppose such
efforts to obtain reconsideration or judicial review (but nothing herein shall
be construed to limit either party's right to terminate this Agreement pursuant
to Section 9 of this Agreement).
6.2 Control of the Stations. Prior to the Closing Buyer shall not, directly
or indirectly, control, supervise, direct, or attempt to control, supervise or
direct, the operations of the Stations; such operations, including complete
control and supervision of all of the Stations' programs, employees, and
policies, shall be the sole responsibility of Seller until the completion of the
Closing hereunder.
6.3 Taxes, Fees and Expenses. Seller and Buyer shall each pay 50% of all
sales and similar taxes and fees, if any, arising out of the transfer of the
Assets pursuant to this Agreement, provided, however, that Seller's share of
sales tax on tangible personal property shall not exceed Four Thousand Dollars
($4,000). All filing fees required by the FCC and the FTC (associated with
filings required under the HSR Act) shall be paid equally by Seller and Buyer.
Except as otherwise provided in this Agreement, each party shall pay its own
expenses incurred in
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connection with the authorization, preparation, execution, and performance of
this Agreement, including all fees and expenses of counsel, accountants, agents,
and other representatives.
6.4 Brokers. Buyer and Seller each represents and warrants that neither it
nor any person or entity acting on its behalf has incurred any liability for any
finders' or brokers' fees or commissions in connection with the transaction
contemplated by this Agreement, except for Blackburn and Company, Inc., whose
fee shall be solely the responsibility of Seller.
6.5 Confidentiality. Except as necessary for the consummation of the
transaction contemplated hereby, each party hereto will keep confidential any
information which is obtained from the other party in connection with the
transaction contemplated hereby and which is not readily available to members of
the general public, and will not use such information for any purpose other than
in furtherance of the transactions contemplated hereby. In the event this
Agreement is terminated and the purchase and sale contemplated hereby abandoned,
each party will return to the other party all documents, work papers and other
written material obtained by it from the other party in connection with the
transaction contemplated hereby.
6.6 Cooperation. Buyer and Seller shall cooperate fully with each other and
their respective counsel and accountants in connection with any actions required
to be taken as part of their respective obligations under this Agreement, and
Buyer and Seller shall execute such other documents as may be necessary and
desirable to the implementation and consummation of this Agreement, and
otherwise use their best efforts to consummate the transaction contemplated
hereby and to fulfill their obligations hereunder. Notwithstanding the
foregoing, Buyer shall have no obligation (i) to expend funds to obtain the
Consents, or (ii) to agree to any adverse change in any License or Assumed
Contract to obtain a Consent required with respect thereto.
6.7 Risk of Loss.
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing. If any loss,
damage, impairment, confiscation, or condemnation of or to any of the Assets
occurs, Seller shall repair, replace, or restore the Assets to their prior
condition as represented in this Agreement as soon thereafter as possible, and
Seller shall use the proceeds of any claim under any insurance policy solely to
repair, replace, or restore any of the Assets that are lost, damaged, impaired,
or destroyed.
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B. If any loss, damage or destruction of the Assets occurs and Seller
cannot restore or replace the Assets before the date otherwise provided in this
Agreement for the Closing, then, at Buyer's option, the Closing shall be
postponed, for a period of up to one hundred twenty (120) days, to permit the
repair or replacement of the damage or loss. Alternatively, Buyer may, at its
option, proceed to close this Agreement and complete the restoration and
replacement of such damaged Assets after the Closing Date, in which event Seller
shall deliver to Buyer all insurance proceeds received in connection with such
damage or destruction of the Assets to the extent not already expended by Seller
arising in connection with such restoration and replacement.
C. Notwithstanding any of the foregoing, Buyer may terminate this
Agreement forthwith without any further obligation hereunder by written notice
to Seller if any event occurs which prevents signal transmission by the Stations
in a manner generally equivalent to its current operations for a consecutive
period of five (5) or a cumulative period of fourteen (14) days after the date
hereof.
6.8 Employee Matters. Seller shall promptly notify Buyer of any changes
that occur prior to Closing with respect to the information set forth on
Schedule 3.13.
6.9 Accounts Receivable. At the Closing, Seller shall designate Buyer as
its agent to collect the Accounts Receivable. Seller shall deliver to Buyer on
or as soon as practicable after the Closing date a complete and detailed
statement showing the name, amount and age of each Account Receivable. Subject
to and limited by the following, collections of the Accounts Receivable will be
for the account of Seller. Buyer shall endeavor in the ordinary course of
business to collect the Accounts Receivable for a period beginning on the
Closing Date and ending on the last day of the third full calendar month
beginning after the Closing Date (the "Collection Period"). Any payment received
by Buyer during the Collection Period from any customer with an account which is
an Account Receivable shall first be applied in reduction of the Account
Receivable, unless the customer has disputed such application and directs
otherwise. On or before the 15th day after the last day of each calendar month
during the Collection Period, Buyer shall furnish Seller with a list of , and
pay over to Seller, the amounts collected during such calendar month with
respect to the Accounts Receivable. Buyer shall provide Seller with a final
accounting on or before the fifteenth (15th) day following the end of the
Collection Period.
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As Seller's agent, Buyer shall not be obligated to use any extraordinary efforts
or expend any sums to collect any of the Accounts Receivable or to refer any of
such Accounts Receivable to a collection agency or to any attorney for
collection, and Buyer shall not make any such referral or compromise, nor settle
or adjust the amount of any such Account Receivable, except with the approval of
Seller. Buyer shall incur no liability to Seller for any uncollected account.
During the Collection Period, without specific agreement with Buyer to the
contrary, neither Seller nor its agents shall make any direct solicitation of
the Account Receivable for collection purposes.
6.10 Tower Lease Arrangements. Seller agrees that Seller, or Seller's
subsidiary, American Tower Systems, Inc., a Delaware Corporation ("ATS") will
enter into on or before the Closing Date agreements, in substantially the form
or substantially in accordance with the terms, set forth in the respective
Exhibit to this Agreement:
<TABLE>
<S> <C>
Exhibit 6.10(a) WOLL Main Antenna Lease Terms
Exhibit 6.10(b) WKGR Main Antenna Lease Terms
Exhibit 6.10(c) WHBI-TV Main Antenna Lease
Exhibit 6.10(d) WBZT Lease Agreement
Exhibit 6.10(e) Option Agreement (Tiger Mountain, Seattle, WA)
Exhibit 6.10(f) WOLL Rental Sharing Agreement
Exhibit 6.10(g) WBZT Interim Lease Agreement
</TABLE>
In addition, Seller hereby agrees to construct, at Seller's sole expense, a
tower site for WBZT(AM) in accordance with the specifications set forth in
Exhibit 6.10(h) and the construction of said tower site shall be completed prior
to the Closing, if possible, but in any event as soon as practicable. If the new
transmitter site for radio station WBZT(AM) is not fully operational on the
Closing Date, Buyer shall withhold from the amount otherwise payable to Seller
at the Closing pursuant to Section 2.3(a) the sum of Six Hundred Thousand
Dollars (the "Holdback Amount"). Buyer shall pay the Holdback Amount of Seller
within five business days after the new transmitter site for radio station
WBZT(AM) is fully operational. Between the Closing Date and the date of payment
to Seller, Buyer shall not be required to hold or invest the Holdback Amount
separately from any other funds of Buyer.
6.11 Environmental Audit. Buyer may, at its option, retain an environmental
consultant to be selected by Buyer to perform a Phase I environmental survey of
the properties of any or all of the Stations. If the survey discloses any
material environmental hazard or material possibility of future liability for
environmental damages or clean-up costs, Buyer shall so notify Seller as soon as
practicable.
6.12 Engineering Study. Buyer may, at its option, retain an engineering
firm to conduct a proof of performance study of any or all of the Stations and
to prepare a report on any or all of the Stations' compliance with customary
engineering practices and all applicable FCC rules, regulations, prescribed
practices, and technical standards. If the survey discloses any material
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<PAGE> 30
deficiencies in the operations or equipment of any of the Stations, Buyer shall
so notify Seller as soon as practicable.
6.13 Bulk Sales Law. If applicable, the Bulk Sales law of the State of
Florida shall be complied with by Seller. Any loss, liability, obligation, or
cost suffered by Seller or Buyer as the result of the failure of Seller or Buyer
to comply with the provisions of any bulk sales law applicable to the transfer
of the Assets as contemplated by this Agreement shall be borne by Seller.
6.14 Access to Books and Records. Seller shall provide Buyer access and the
right to copy for a period of three years from the Closing Date any books and
records relating to the Assets but not included in the Assets. Buyer shall
provide Seller access and the right to copy for a period of three years from the
Closing Date any books and records relating to the Assets that are included in
the Assets.
6.15 HSR Act Filing. Seller and Buyer have filed with the U.S. Department
of Justice and the Federal Trade Commission appropriate filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). The waiting period under the HSR Act has expired without action by the
Department of Justice or the Federal Trade Commission to prevent the Closing.
6.16 Adjustments to Personal Property. Buyer and Seller acknowledge that
the items of Personal Property listed on Schedule 3.6 represent Seller's good
faith determination of material equipment and property associated with the
Stations, notwithstanding that certain items of the Personal Property have been
in shared use with other radio stations owned by Seller. Accordingly, Buyer and
Seller hereby agree to negotiate in good following the date of this Agreement
and prior to Closing in order to address any instances claimed Buyer where such
division of personal property results in less than a reasonably satisfactory
allocation of equipment and facilities for Buyer to operate the Stations.
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<PAGE> 31
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at the
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions any of which may be waived by Buyer in
whole or in part in its sole discretion in writing:
A. Representations and Warranties. The representations and warranties
of Seller in this Agreement shall be true and complete in all material respects
at and as of the Closing Date as though such representations and warranties were
made at and as of such time.
B. Covenants and Conditions. Seller shall have in all material respects
performed and complied with the covenants, agreements, and conditions required
by this Agreement to be performed or complied with by it prior to or on the
Closing Date.
C. Consents. Each of the Consents marked as "material" on Schedule 3.7
shall have been duly obtained and delivered to Buyer with no material adverse
change to the terms of the License or Assumed Contract with respect to which
such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and there
shall not have been any modification of any of such Licenses which has an
adverse effect on the Stations or the conduct of their business or operations.
No proceeding shall be pending the effect of which would be to revoke, cancel,
fail to renew, suspend or modify adversely any of the Licenses.
E. Deliveries. Seller shall have made or stand willing and able to make
all the deliveries to Buyer set forth in Section 8.2
F. Adverse Change. Between the date of this Agreement and the Closing
Date, there shall have been no material adverse change in the business, assets,
liabilities, results of operations, condition (financial or otherwise), or
prospects of any of the Stations, including any damage, destruction, or loss
affecting any assets used or useful in the conduct of the business of any of the
Stations.
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<PAGE> 32
G. Financial Covenant. Broadcast Cash Flow of the Stations for the
latest period of twelve consecutive calendar months ending at least fifteen days
prior to the Closing Date shall be at least $1,900,000. As used in this
Agreement, "Broadcast Cash Flow" means (i) with respect to each Station, net
income from advertising sales on such Station excluding non-cash items and after
restoring thereto amounts previously deducted for depreciation, amortization of
intangibles (other than of programming rights), interest, corporate/management
fees, income taxes, retirement benefits (excluding executive/talent deferred
income), and any other home office allocations, but in no event less than zero,
and (ii) with respect to the Stations as a whole, the sum of the Broadcast Cash
Flow of each of the Stations. All home office allocations to the individual
Stations shall be made in good faith.
H. FCC Consent. The FCC Consent shall have been granted without the
imposition on Buyer of any conditions that need not be complied with by Buyer
under Section 6.1 hereof, Seller shall have complied with any conditions imposed
on it by the FCC Consent and the FCC Consent shall have become a Final Order.
7.2 Conditions to Obligations of Seller. The obligations of Seller at the
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions any of which may be waived by Seller in
whole or in part in its sole discretion in writing:
A. Representations and Warranties. The representations and warranties
of Buyer contained in this Agreement shall be true and complete in all material
respects at and as of the Closing Date as though such representations and
warranties were made at and as of such time.
B. Covenants and Conditions. Buyer shall have in all material respects
performed and complied with the covenants, agreements, and conditions required
by this Agreement to be performed or complied with by it prior to or on the
Closing Date.
C. Deliveries. Buyer shall have made or stand willing and able to make
all the deliveries set forth in Section 8.3.
D. FCC Consent. The FCC Consent shall have been granted without the
imposition on Seller of any conditions that need not be complied with by Seller
under Section
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6.1 hereof, Buyer shall have complied with any conditions imposed on it by the
FCC Consent and the FCC Consent shall have become a Final Order.
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<PAGE> 34
SECTION 8
CLOSING AND CLOSING DELIVERIES
8.1 Closing. Except as provided in the following sentence or in Section
6.7(B) or as otherwise agreed to by Buyer and Seller, the Closing shall take
place at 10:00 a.m. on a date, to be set by Buyer on at least five days' written
notice to Buyer, which shall be not earlier than the first business day after
and not later than the tenth business day after the day on which the FCC Consent
shall have become a Final Order, provided, though, that Buyer shall waive the
requirement for a Final Order and schedule the Closing, within five (5) days
notice to Seller after receipt of the FCC Consent, provided Buyer has obtained
the approval to do so from its lenders, which Buyer hereby agrees to use its
best efforts to obtain. If Buyer fails to specify the date for Closing pursuant
to the preceding sentence prior to the tenth business day after the day on which
the FCC Consent shall have become a Final Order, the Closing shall take place on
the fifteenth business day after the day on which the FCC Consent shall have
become a Final Order. The Closing shall be held at the offices of Dow, Lohnes &
Albertson, 1200 New Hampshire Avenue, N.W., Suite 800, Washington, D.C.
20036-6802, or any other place that is agreed upon by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale, motor vehicle
titles, assignments and other transfer documents which shall be sufficient
to vest good and marketable title to the Assets in the name of Buyer or
its permitted assignees, free and clear of any claims, liabilities,
mortgages, liens, pledges, conditions, charges, or encumbrances of any
nature whatsoever (except for liens for current taxes not yet due and
payable);
(b) Consents. The original of each Consent marked as "material"
with an asterisk on Schedule 3.8;
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<PAGE> 35
(c) Seller's Certificate. A certificate, dated as of the Closing
Date, executed by Seller, certifying: (i) that the representations and
warranties of Seller contained in this Agreement are true and complete in
all material respects as of the Closing Date, as though made on and as of
that date; and (ii) that Seller has, in all material respects, performed
its obligations and complied with its covenants set forth in this
Agreement to be performed and complied with prior to or on the Closing
Date;
(d) Secretary Certificate. A certificate, dated as of the Closing
Date, executed by Seller's Secretary: (i) certifying that the execution
and delivery of this Agreement by Seller and the consummation of the
transaction contemplated hereby have been authorized and ratified; and
(ii) providing, as attachments thereto, a certificates of good standing
certified by appropriate Delaware and Florida state officials; as of a
date not more than fifteen (15) days before the Closing Date and copies of
Seller's Certificate of Incorporation and By Laws certified by Seller's
Secretary as of the Closing Date;
(e) Opinions of Counsel. Opinions of Seller's counsel and
communications counsel dated as of the Closing Date, and addressed to
Buyer and at Buyer's directions, to Buyer's lenders, substantially in the
form of Schedule 8.2 hereto;
(f) Estoppel Certificates. Estoppel certificates of the lessors of
all leasehold and subleasehold interests included in the Real Property and
estoppel certificates of contracting parties to those Assumed Contracts
listed in Schedule 3.7 that are designated to indicate that estoppel
certificates are required under this paragraph;
(g) Tax, Lien, and Judgment Searches. Results of a search for tax,
lien, and judgment filings in the Secretary of State's records of the
State of Florida and in the records of Palm Beach and Martin Counties,
Florida, such searches having been made no earlier than fifteen days prior
to the Closing Date.
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<PAGE> 36
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price paid to Seller or Seller's
designee as provided in Section 2.3;
(b) Paxson Tower Assets. Documents sufficient to convey good and
marketable title to the Paxson Tower Assets to Seller.
(c) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations under the Licenses and Assumed Contracts arising on or after
the Closing Date;
(d) Officer's Certificate. A certificate, dated as of the Closing
Date, executed by Buyer, certifying (i) that the representations and
warranties of Buyer contained in this Agreement are true and complete in
all material respects as of the Closing Date, except for changes
contemplated by this Agreement, as though made on and as of that date, and
(ii) that Buyer has, in all material respects, performed its obligations
and complied with its covenants set forth in this Agreement to be
performed or complied with on or prior to the Closing Date;
(e) Secretary's Certificate. A certificate, dated as of the Closing
Date, executed by Buyer's Secretary: (i) certifying that the resolutions,
as attached to such certificate, were duly adopted by Buyer's Board of
Directors, authorizing and approving the execution of this Agreement and
the consummation of the transaction contemplated hereby and that such
resolutions remain in full force and effect; and (ii) a copy of the
certificate of incorporation and Bylaws of Buyer as in effect on the date
hereof, certified by Buyer's secretary as of the Closing Date;
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<PAGE> 37
(f) Opinion of Counsel. An opinion of Buyer's General Counsel dated
as of the Closing Date, substantially in the form of Schedule 8.3 hereto.
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SECTION 9
RIGHTS OF BUYER AND SELLER
ON TERMINATION OR BREACH
9.1 Termination Rights.
(a)This Agreement may be terminated by either Buyer or Seller if the
terminating party is not then in breach of any material provision of this
Agreement, upon written notice to the other party, upon the occurrence of any of
the following:
(i) If on the date that would otherwise be the Closing Date (i) any
of the conditions precedent to the obligations of the terminating party
set forth in Section 7 of this Agreement shall not have been satisfied,
and (ii) satisfaction of such condition shall not have been waived by the
terminating party;
(ii) If the Closing shall not have occurred on or before January 1,
1998; or
(iii) There shall be in effect on the date that would otherwise be
the Closing Date any judgment, decree, or order that would prevent or make
unlawful the Closing.
(b) This Agreement may be terminated by Buyer, upon written notice to
Seller, upon the occurrence of any of the following:
(i) Buyer shall have notified Seller no later than thirty (30) days
after the date hereof of material environmental hazards (which shall mean
for those which, in the aggregate, costs of remediation would exceed Fifty
Thousand Dollars ($50,000) as indicated in the environmental study
described in Schedule 6.11 and the cause thereof shall not have been
remedial prior to thirty (30) days following such notice.
(ii) Buyer shall have notified Seller no later then thirty (30) days
after the date hereof of material deficiencies in the technical operations
or equipment of any of the Stations, as indicated in the engineering study
described in Section 6.12, and the cause thereof shall not have been
remedied prior to thirty (30) days following such notice.
Upon termination: (i) if neither party hereto is in breach of any provision of
this Agreement, the parties hereto shall not have any further liability to each
other; (ii) if Seller shall be in breach of any material provision of this
Agreement, Buyer shall have all rights and remedies available at
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law or in equity or (iii) if Buyer shall be in breach of any material provision
of this Agreement, Seller shall be entitled only to liquidated damages as
provided in Section 9.2 hereof. If, upon termination, Buyer shall not be in
breach of any material provision of this Agreement, the Escrow Deposit, plus all
interest or other proceeds from the investment thereof, shall be paid to Buyer.
9.2 Liquidated Damages. In the event this Agreement is terminated by Seller
due to a material breach by Buyer of its representations, warranties, covenants
and other obligations under this Agreement, then the Escrow Deposit shall be
paid to Seller as liquidated damages, it being agreed that the Escrow Deposit
shall constitute full payment for any and all damages suffered by Seller by
reason of Buyer's failure to close this Agreement. Buyer and Seller agree in
advance that actual damages would be difficult to ascertain and that the amount
of the Escrow Deposit is a fair and equitable amount to reimburse Seller for
damages sustained due to Buyer's breach of this Agreement. All interest or other
proceeds from the investment of the Escrow Deposit, shall be paid to Buyer.
9.3 Specific Performance. The parties recognize that in the event Seller
should refuse to perform under the provisions of this Agreement, monetary
damages alone would not be adequate. Buyer shall therefore be entitled to obtain
specific performance of the terms of this Agreement. In the event of any action
to enforce this Agreement, Seller hereby waives the defense that there is an
adequate remedy at law.
9.4 Defaults. In the event of a default by a party hereto (the "Defaulting
Party") which results in the filing of a lawsuit for damages, specific
performance, or other remedy the other party (the Nondefaulting Party) shall be
entitled to reimbursement by the Defaulting Party of reasonable legal fees and
expenses incurred by the Nondefaulting Party.
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SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTS,
AND INDEMNIFICATION
10.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties, and shall survive the Closing Date for a period of twelve (12)
months (the "Survival Period"). Any investigations by or on behalf of any party
hereto shall not constitute a waiver as to enforcement of any representation,
warranty, or covenant contained herein.
10.2 Indemnification by Seller. Following the Closing, Seller shall
indemnify and hold Buyer harmless against and with respect to, and shall
reimburse Buyer for:
(a) Any and all losses, liabilities or damages resulting from any
untrue representation, breach of warranty or nonfulfillment of any
covenants by Seller contained herein or in any certificate, document or
instrument delivered to Buyer hereunder.
(b) Any and all obligations of Seller not assumed by Buyer pursuant
to the terms hereof;
(c) Any and all losses, liabilities or damages resulting from the
operation or ownership of the Stations prior to the Closing Date,
including any and all liabilities arising under the Licenses or the
Assumed Contracts which relate to events occurring prior to the Closing
Date; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, incident to any
of the foregoing or incurred in investigating or attempting to avoid the
same or to oppose the imposition thereof.
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10.3 Indemnification by Buyer. Following the Closing, Buyer shall
indemnify and hold Seller harmless against and with respect to, and shall
reimburse Seller for:
(a) Any and all losses, liabilities or damages resulting from any
untrue representation, breach of warranty or nonfulfillment of any
covenants by Buyer contained herein or in any certificate delivered to
Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from Buyer's
operation or ownership of the Stations on or after the Closing Date,
including any and all liabilities or obligations arising under the
Licenses or the Assumed Contracts which are assumed by Buyer under this
Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof.
10.4 Procedures for Indemnification. The procedures for indemnification
shall be as follows:
A. The party claiming the indemnification (the "Claimant") shall
promptly give notice to the party from whom indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying (i) the factual basis for such claim, and (ii) the
amount of the claim. If the claim relates to an action, suit or proceeding filed
by a third party against Claimant, such notice shall be given by Claimant within
five (5) days after written notice of such action, suit or proceeding was given
to Claimant.
B. Following receipt of notice from the Claimant of a claim, the
Indemnifying Party shall have thirty (30) days to make such investigation of the
claim as the Indemnifying Party deems necessary or desirable. For the purposes
of such investigation, the Claimant agrees to make available to the Indemnifying
Party and/or its authorized representative(s) the information relied upon by the
Claimant to substantiate the claim. If the
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<PAGE> 42
Claimant and the Indemnifying Party agree at or prior to the expiration of said
thirty (30) day period (or any mutually agreed upon extension thereof) to the
validity and amount of such claim, or if the Indemnifying Party does not respond
to such notice, the Indemnifying Party shall immediately pay to the Claimant the
full amount of the claim. Buyer shall be entitled to apply any or all of the
Accounts Receivable collected on behalf of Seller to a claim as to which Buyer
is entitled to indemnification hereunder. If the Claimant and the Indemnifying
Party do not agree within said period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate legal remedy.
C. With respect to any claim by a third party as to which the Claimant
is entitled to indemnification hereunder, the Indemnifying Party shall have the
right at its own expense, to participate in or assume control of the defense of
such claim, and the Claimant shall cooperate fully with the Indemnifying Party,
subject to reimbursement for reasonable actual out-of-pocket expenses incurred
by the Claimant as the result of a request by the Indemnifying Party. If the
Indemnifying Party elects to assume control of the defense of any third-party
claim, the Claimant shall have the right to participate in the defense of such
claim at its own expense.
D. If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make all reasonable efforts to reach
a decision with respect thereto as expeditiously as possible.
E. 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.
F. The indemnification rights provided in Sections 10.2 and 10.3 shall
extend to the shareholders, directors, officers, partners employees and
representatives of the Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Limitation on Indemnification. Neither party shall be entitled to
indemnification hereunder for any losses, liabilities, or damages resulting from
any untrue representation or breach of warranty by the other party unless (i) a
claim for such losses, liabilities, or damages was made during the Survival
Period and (ii) the aggregate loss, damage or expense for all such claims
exceeds $33,000, in which event the indemnified party shall be entitled to
recover all such
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loss, damage or expense. In no event shall the aggregate amount required to be
paid by either indemnifying party hereunder for any losses, liabilities, or
damages resulting from any untrue representation or breach of warranty by such
party exceed $3,300,000. The limitations in this Subsection 10.5 shall not apply
to any claim for indemnification for any liability of the Claimant to any third
party or to claims by Buyer arising from any defect in Seller's title to the
Assets.
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SECTION 11
MISCELLANEOUS
11.1 Notices. All notices, demands, and requests required or permitted to
be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, or by facsimile
transmission, with receipt confirmation, (iii) deemed to have been given on the
date of personal delivery or the date set forth in the records of the delivery
service or on the return receipt, and (iv) addressed as follows:
If to Seller: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
Attn: Steven B. Dodge
Fax: (617) 375-7575
With a Copy to: American Radio Systems
116 Huntington Avenue
Boston, MA 02116
Attn: Michael B. Milsom
Fax: (617) 375-7550
If to Buyer: Paxson Communications of West Palm Beach, Inc.
c/o Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson, President
Fax: (561)659-4252
With a copy to: Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W., Suite 800
Washington, D.C. 20036-6802
Attention: John R. Feore, Jr.
Fax: (202)776-2222
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or to such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.
11.2 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto, except
that Buyer may assign its rights and obligations under this Agreement to any
entity controlled by or commonly controlled with Paxson, provided, however, that
following which assignment Buyer shall remain liable to Seller for all of
Buyer's obligations hereunder. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
11.3 Governing Law. This Agreement shall be governed, construed, and
enforced in accordance with the internal laws of the State of Florida (without
regard to the choice of law provisions thereof).
11.4 Headings. The headings herein are included for ease of reference only
and shall not control or affect the meaning or construction of the provisions of
this Agreement.
11.5 Gender and Number. Words used herein, regardless of the gender and
number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine or neuter, and any other number, singular or plural,
as the context required.
11.6 Entire Agreement. This Agreement, all schedules hereto, and all
documents and certificates to be delivered by the parties pursuant hereto
collectively represent the entire understanding and agreement between Buyer and
Seller with respect to the subject matter hereof. All schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement supersedes all prior
negotiations between Buyer and Seller, and all letters of intent and other
writings related to such negotiations, and cannot be amended, supplemented or
modified except by an agreement in writing which makes specific reference to
this Agreement and is signed by the party against which enforcement of any such
amendment, supplement or modification is sought.
11.7 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty,
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covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 11.7.
11.8 Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable or any
extent, the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greater extent permitted by law.
11.9 Counterparts. This Agreement may be signed in two counterparts with
the same effect as if the signature on each such counterpart were upon the same
instrument.
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IN WITNESS WHEREOF, this Agreement has been executed by Buyer and Seller as
of the date first above written.
SELLER: AMERICAN RADIO SYSTEMS CORPORATION
By: /s/ Steven B. Dodge
-----------------------
Steven B. Dodge
Title: Chief Executive Officer
BUYER: PAXSON COMMUNICATIONS OF WEST PALM
BEACH, INC.
By: /s/ Samuel W. Paxson
-----------------------
Title: Chairman
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<PAGE> 1
EXHIBIT 10.172
================================================================================
OPTION AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
HONOLULU-66, INC.
AND
DOVE BROADCASTING COMPANY OF HAWAII, INC.
FOR
TELEVISION STATION KAPA(TV)
KANEOHE, HAWAII
* * *
MAY 20, 1997
================================================================================
<PAGE> 2
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement") is entered into as of
May 20, 1997 by and between PAXSON COMMUNICATIONS OF HONOLULU-66, INC., a
Florida corporation ("Paxson"), and DOVE BROADCASTING COMPANY OF HAWAII, INC., a
Hawaii corporation ("Grantor").
R E C I T A L S
A. Grantor owns or leases all of the assets (the "Assets") that are
used or useful in the business and operations of Television Station KAPA(TV),
Channel 66, Kaneohe, Hawaii (the "Station"), and holds as part of the Assets the
authorizations issued by the Federal Communications Commission ("FCC") for the
Station (the "FCC Licenses").
B. Grantor desires to grant to Paxson an exclusive and irrevocable
option to purchase the Assets, including the FCC Licenses, on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Grant of Option. In consideration for One Thousand Dollars
($1,000) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Grantor hereby grants to Paxson an exclusive
and irrevocable option to acquire the Assets, including the FCC Licenses (the
"Option") for a purchase price as set forth in Schedule A thereto and payable
upon the closing of the Asset Purchase Agreement (as defined in Section 3
below); provided, however, that in the event that the Fair Market Value of the
Assets, as determined by utilizing the provisions set forth in Schedule A
thereto is less than $5,000,000, the Option shall not be exercised by Paxson and
Grantor shall be under no obligation hereunder.
2. Effective Date and Notice of Exercise. This Option Agreement
shall become effective upon execution by Paxson and Grantor and may be exercised
by Paxson by delivery to Grantor of written notice of Paxson's intention to
exercise the Option (the "Option Notice"); which Option Notice may be given by
Paxson at any time during the ninety (90) day period following commencement of
the Station's programming pursuant to program test authority ("Option Period");
provided, however, that in the event the Option cannot be exercised by Paxson
during the Option Period for the reason set forth in Section 2 hereof, an
additional 270 days shall be added to the Option Period.
<PAGE> 3
3. Asset Purchase Agreement. Within five (5) business days following
Grantor's receipt of the Option Notice, Grantor and Paxson shall enter into the
Asset Purchase Agreement in the form of Schedule B hereto (the "Asset Purchase
Agreement"), it being understood that the only changes to such form shall be
immaterial corrections and changes, if any, in the information contained in the
Schedules thereto and the addition of Schedules not attached to the Asset
Purchase Agreement at the execution of this Option Agreement to the extent such
changes and information or the addition of Schedules is reasonably required to
reflect events occurring after the date hereof; provided, however, Paxson shall
not be required to enter into the Asset Purchase Agreement if the changes to the
Schedules or the addition of Schedules represent a material adverse change from
the Asset Purchase Agreement and Schedules attached hereto. In the event Paxson
concludes such changes or such additional Schedules represent a material adverse
change, Paxson shall notify Grantor in writing that the changes or additions to
the Asset Purchase Agreement attached hereto are unacceptable whereupon this
Option Agreement shall terminate and be of no further force and effect. In the
absence of such written notice by Paxson to Grantor, the parties shall enter
into the Asset Purchase Agreement and thereafter Grantor and Paxson shall
perform their respective obligations under the Asset Purchase Agreement,
including, without limitation, filing and prosecuting an appropriate application
for FCC consent to the assignment of the FCC Licenses from Grantor to Paxson
(the "FCC Consent").
4. Survival of Option. In the event that the transactions
contemplated by this Option Agreement are not consummated for any reason
whatsoever, the Option shall nevertheless remain exercisable by Paxson during
the period provided for in Section 2 hereof, and, upon such exercise, Paxson and
Grantor shall enter into an Asset Purchase Agreement that is substantially
identical to the Asset Purchase Agreement and thereafter diligently proceed to
perform their obligations thereunder.
5. Control of the Station. Prior to the closing of the transactions
contemplated by the Asset Purchase Agreement, Paxson shall not, directly or
indirectly, control, supervise, direct, or attempt to control, supervise, or
direct, the operations of the Station; such operations, including complete
control and supervision of all of the Station programs, employees, and policies,
shall be the sole responsibility of Grantor until the closing of the
transactions contemplated by the Asset Purchase Agreement.
6. Representations and Warranties of Grantor. Grantor represents and
warrants to Paxson as follows:
(a) Grantor is a Hawaii corporation and has full power and
authority to execute and deliver this Option Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Option
Agreement and the consummation of the
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<PAGE> 4
transactions contemplated hereby by Grantor have been duly and validly
authorized by the Grantor. This Option Agreement has been duly and validly
executed and delivered by Grantor and constitutes a legal, valid and binding
agreement of Grantor enforceable against Grantor in accordance with its terms,
except as such enforceability may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
(b) Except for the FCC Consent, there is no requirement
applicable to Grantor to obtain any permit, authorization, consent or approval
of, any governmental or regulatory authority or any other third party as a
condition to the consummation by Grantor of the transactions contemplated by
this Option Agreement and the Asset Purchase Agreement, and Grantor is required
to make no filing with the FCC except for filing this Option Agreement, the
Asset Purchase Agreement, the application for the FCC Consent, and the filing of
a license application to cover the Station's construction.
(c) Subject to obtaining the FCC Consent, the execution, delivery
and performance of this Option Agreement and the Option Purchase Agreement by
Grantor will not (i) result in a default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of any note, bond, mortgage, agreement, or lease to which Grantor is
a party or by which any of the FCC Licenses or the other Assets are bound, or
(ii) violate any statute, law, rule, regulation, order, writ, injunction or
decree applicable to Grantor, the FCC Licenses or the other Assets.
7. Representations and Warranties of Paxson. Paxson represents and
warrants to Grantor as follows:
(a) Paxson is a Florida corporation and has full corporate power
and authority to execute and deliver this Option Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Option
Agreement and the consummation of the transactions contemplated hereby by Paxson
have been duly and validly authorized by all necessary corporate action on the
part of Paxson. This Option Agreement has been duly and validly executed and
delivered by Paxson and constitutes a legal, valid and binding agreement of
Paxson enforceable against Paxson in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by judicial discretion in the
enforcement of equitable remedies.
(b) Except for the FCC Consent, there is no requirement
applicable to Paxson to obtain any permit, authorization, consent or approval
of, any governmental or regulatory authority or any other third party as a
condition to the consummation by Paxson
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<PAGE> 5
of the transactions contemplated by this Option Agreement and the Asset Purchase
Agreement, and, Paxson is required to make no filing with the FCC except for
filing the application for the FCC Consent and notice of consummation of the
assignment of license when that takes place.
(c) Subject to obtaining the FCC Consent, the execution, delivery
and performance of this Option Agreement and the Option Purchase Agreement by
Paxson will not (i) conflict with Paxson's organizational documents, (ii) result
in a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, agreement, or lease to which Paxson is a party or by which any
of its assets are bound, or (iii) violate any statute, law, rule, regulation,
order, writ, injunction or decree applicable to Paxson.
8. Covenants of Grantor. So long as this Agreement is in effect,
Grantor covenants that it will not, without the Buyer's prior written approval:
(a) Create or incur, assume or suffer to exist any indebtedness,
obligation or liability, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, except for: (i)
indebtedness evidenced by the Loan Agreement of May 20, 1997; and (ii)
indebtedness (other than for borrowed money) incurred in the ordinary course of
business not to exceed Twenty Five Thousand Dollars ($25,000.00) in the
aggregate at any one time.
(b) Create, assume or suffer to exist, directly or indirectly,
any security interest, mortgage, deed of trust, pledge, lien, charge or other
encumbrance, of any nature whatsoever upon any of its properties or assets, now
owned or hereafter as acquired, excluding, however, from the operation of this
covenant:
(i) any security interest or lien created pursuant to the
Loan Agreement ("Loan Agreement") dated as of May 20, 1997 between Grantor and
Paxson;
(ii) liens for taxes or assessments either not delinquent
or the validity of which are being contested in good faith by appropriate legal
or administrative proceedings and as to which adequate reserves shall have been
set aside on its books, in conformity with generally accepted accounting
principles;
(iii) materialmen's, mechanics', carriers', workmen's,
repairmen's, warehousemen's or other like liens arising in the ordinary course
of business and either not yet due and payable or being contested in good faith
by appropriate legal proceedings and as
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<PAGE> 6
to which adequate reserves shall have been set aside on its books, in conformity
with generally accepted accounting principles;
(iv) deposits or pledges to secure payment of workers'
compensation, unemployment insurance or other social security benefits or
obligations; or
(v) any judgment lien, unless the judgment it secures shall
not, within thirty (30) days after the entry thereof, have been discharged,
vacated, reversed, or execution thereof stayed pending appeal, or shall not have
been discharged, vacated or reversed within thirty (30) days after the
expiration of any such stay.
(c) Sell, transfer, lease or otherwise dispose of any of its
material assets except in connection with the acquisition of replacement
property of equivalent kind and value.
(d) Enter into any consolidation or merger with, or into any
acquisition of all or substantially all of the properties or assets of any
person or entity.
(e) Change, in any material respect, the nature or character of
its business as intended, or engage in any activity not reasonably related to
such business.
(f) Enter into any contract or commitment relating to its stock
or assets except for contracts involving aggregate payments of less than
Twenty-five Thousand Dollars ($25,000.00) and contracts which can be terminated
without penalty on thirty (30) days' notice or less, or amend or terminate any
material contract (or waive any substantial right thereunder), or incur any
obligation (including obligations relating to the borrowing of money or
guarantee of indebtedness).
(g) Transfer or grant any right under, or enter into any
settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, service mark, trade name, franchise, or similar right, or
modify any existing right relating to the Grantor.
(h) Enter into any agreement or grant any person or entity a
right to purchase the Station's FCC licenses or all or substantially all of the
assets of the Grantor.
(i) Enter into any agreement or take any other action that would
interfere with, or prevent, Grantor's transferring the Assets to Buyer as
contemplated hereunder or under the Purchase Agreement.
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<PAGE> 7
(j) Grantor will notify Buyer promptly of the threat of, or
commencement against itself or its shareholder of any claim, suit, action,
arbitration, legal, administrative or other proceeding, or governmental
investigation or tax audit affecting the Station or Grantor and will cooperate
fully with Buyer in taking any and all actions necessary or desirable to the
consummation of the transactions contemplated by this Agreement.
9. Cooperation. Grantor and Paxson shall cooperate fully with
each other and their respective counsel and accountants in connection with any
steps required to be taken as part of their respective obligations under this
Option Agreement and the Asset Purchase Agreement and will each use their
respective best efforts to perform or fulfill all conditions and obligations to
be performed or fulfilled by them under this Option Agreement and the Asset
Purchase Agreement so that the transactions contemplated hereby shall be
consummated.
10. Specific Performance. The parties recognize that if Grantor
breaches this Option Agreement and refuses to perform under the provisions of
this Option Agreement, monetary damages alone would not be adequate to
compensate Paxson for its injury. Paxson shall therefore be entitled, in
addition to any other remedies that may be available, including money damages,
to obtain specific performance of the terms of this Option Agreement. If any
action is brought by Paxson to enforce this Option Agreement, Grantor shall
waive the defense that there is an adequate remedy at law.
11. Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Option Agreement shall be (a)
in writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed to
have been given on the date of personal delivery or the date set forth in the
records of the delivery service or on the return receipt, and (d) addressed as
follows:
If to Grantor: Mr. Paul Tennyson
Dove Broadcasting Company of Hawaii, Inc.
875 Waimanu Street, Suite 601
Honolulu, Hawaii 96813
With a copy (which shall
not constitute notice to): Harry F. Cole, Esquire
Bechtel & Cole, Chartered
1901 L Street, N.W., Suite 250
Washington, D.C. 20036
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<PAGE> 8
If to Paxson: Paxson Communications of Honolulu-66, Inc.
601 Clearwater Park North
W. Palm Beach, FL 33401
Attention: Mr. Lowell W. Paxson
With a copy (which shall
not constitute notice to): John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson
A Professional Limited Liability Company
Suite 800
1200 New Hampshire Ave., N.W.
Washington, D.C. 20036
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.
12. Entire Agreement; Amendment. This Option Agreement and the
Asset Purchase Agreement supersede all prior agreements and understandings of
the parties, oral and written, with respect to its subject matter. This Option
Agreement and the Asset Purchase Agreement may be modified only by an agreement
in writing executed by all of the parties hereto. No waiver of compliance with
any provision of this Option Agreement or the Asset Purchase Agreement will be
effective unless evidenced by an instrument evidenced in writing and signed by
the parties hereto.
13. Further Assurances. From time to time after the date of
execution hereof, the parties shall take such further action and execute such
further documents, assurances and certificates as either party reasonably may
request of the other to effectuate the purposes of this Option Agreement.
14. Counterparts. This Option Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and shall become
effective when each of the parties hereto shall have delivered to it this Option
Agreement duly executed by the other parties hereto.
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<PAGE> 9
15. Headings. The headings in this Option Agreement are for the
sole purpose of convenience of reference and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Option Agreement.
16. Governing Law. This Option Agreement shall be construed under
and in accordance with the laws of the State of Florida without giving effect to
the principles of conflicts of law.
17. Benefit and Binding Effect; Assignability. This Option
Agreement shall inure to the benefit of and be binding upon Grantor, Paxson and
their respective successors and permitted assigns. No party hereto may assign
this Option Agreement without the prior written consent of the other parties
hereto, except that Paxson at any time prior to the consummation of the
transactions contemplated by this Option Agreement may assign its rights and
obligations under this Option Agreement without Grantor's consent to (a) any
entity controlled by or under common control with Paxson or (b) any other entity
designated by Paxson, which is reasonably acceptable to Grantor based upon its
financial capacity to consummate the transactions contemplated by this Option
Agreement and the Asset Purchase Agreement and its legal qualifications to
acquire the FCC licenses. Upon any permitted assignment by a party in accordance
with this Section 17, all references to "Paxson" herein shall be deemed to be
references to Paxson's assignee and all references to "Grantor" herein shall be
deemed to be references to Grantor's assignee, as the case may be.
Notwithstanding the foregoing, Paxson may assign its rights, benefits, duties or
obligations hereunder to its lenders as collateral security for the obligations
of Paxson to such lenders.
18. Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Option Agreement, and except as and to the
extent required by law, each party will keep confidential any information
obtained from the other party in connection with the transactions contemplated
by this Option Agreement. If this Option Agreement is terminated, each party
will return to the other party all information obtained by the such party from
the other party in connection with the transactions contemplated by this Option
Agreement.
19. Press Release. No party shall publish any press release, make
any other public announcement or otherwise communicate with any news media
concerning this Option Agreement or the transactions contemplated hereby without
the prior written consent of the other party.
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<PAGE> 10
IN WITNESS WHEREOF the parties hereto have executed this Option
Agreement as of the date first above written.
PAXSON COMMUNICATIONS OF
HONOLULU-66, INC.
By: /s/ William L. Watson
------------------------------
Name: William L. Watson
Title: Secretary
DOVE BROADCASTING COMPANY OF
HAWAII, INC.
By: /s/ Paul A. Tennyson
-------------------------------
Name: Paul A. Tennyson
Title: President
<PAGE> 11
SCHEDULE A
PURCHASE PRICE
The Purchase Price for the Assets shall be the lesser of (i) the Fair
Market Value of the Assets as determined utilizing the procedures set forth
below and (ii) $5,000,000. The purchase price shall be paid at the Closing by
Buyer to Seller by wire transfer of immediately available federal funds or other
means mutually satisfactory to Buyer and Seller in accordance with written
instructions provided by Seller to the Buyer prior to the Closing Date.
The Fair Market Value of the Assets shall be determined by an
appraisal, in accordance with the following provisions:
(1) The Fair Market Value of the Assets shall be equal to the
appraised value of the Assets as of the date of the Option Notice, exclusive of
any broker's fee, less the amount of any outstanding debt of the Station.
(2) The appraisal will be conducted in conformity with
standard appraisal techniques in use at the time of the appraisal, applying the
market and economic factors then relevant.
(3) The appraisal will be conducted by a qualified appraiser
with experience in the television broadcast industry to be agreed upon by Seller
and Buyer within five days written notice from Buyer to Seller; provided that,
if the parties fail to agree on an appraiser, any party may apply to the
American Arbitration Association for the appointment of an appraiser, who shall
be a qualified appraiser with experience in the television broadcasting
industry.
(4) The value of the Assets arrived at by the appraiser shall,
absent manifest error, be conclusive and binding on the relevant parties.
<PAGE> 12
SCHEDULE B
ASSET PURCHASE AGREEMENT
<PAGE> 1
EXHIBIT 10.172.1
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 20th day of May, 1997, is by and
among PAXSON COMMUNICATIONS OF HONOLULU- 66, INC., a Florida corporation having
its principal offices at 601 Clearwater Park Road, West Palm Beach, Florida
33401 ("Lender") and DOVE BROADCASTING COMPANY OF HAWAII, a Hawaii corporation
having its principal offices at 875 Waimanu Street, Honolulu, Hawaii
("Borrower").
W I T N E S E T H :
WHEREAS, Borrower is the permittee of television station KAPA(TV),
Channel 66, Kaneohe, Hawaii (FCC File No. BPCT-950811KH) (the "Station");
WHEREAS, Lender and the Borrower have entered into an Option Agreement
(the "Option Agreement"), pursuant to which, among other things, Borrower has
agreed to sell and Lender has agreed to purchase all of the assets used or
useful in the operations of the Station subject to the prior approval of the
Federal Communications Commission ("FCC") and the terms and conditions set
forth in the Option Agreement;
WHEREAS, Lender has agreed to make a loan to Borrower in the total
principal amount of One Million Five Hundred Thousand Dollars ($1,500,000);
WHEREAS, such Loan shall be evidenced by a Promissory Note in the same
amount, which shall be issued by Borrower and dated as of the date hereof;
WHEREAS, the Borrower has agreed to guarantee its obligations under
this Agreement and the Note and to secure such guarantee by granting Lender a
first party security interest in the Station's assets, ("Security Interest")
and by a pledge of ten percent (10%) of the Stock interests in the Borrower
(the "Pledged Shares");
WHEREAS, Lender and Borrower have entered into a Construction
Agreement pursuant to which Lender agrees to purchase the equipment necessary
to construct the Station and to construct the Station for Borrower.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, Lender and Borrower agree as follows:
ARTICLE I AMOUNT AND TERMS OF THE LOANS
Section 1.1 The Loan. Lender agrees, upon the terms and conditions
hereinafter set forth, to make a loan or loans to Borrower in an aggregate
principal amount of One Million Five Hundred Thousand Dollars ($1,500,000) (the
"Loan").
<PAGE> 2
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Section 1.2 The Promissory Note. The outstanding principal amount of the
Loan shall be evidenced by and subject to the terms of a promissory note, dated
of even date herewith, substantially in the form set forth as Exhibit 1 hereto
(as amended, renewed, restated, increased, consolidated or substituted from time
to time, the "Note"), payable to the order of Lender and representing the
obligation of Borrower to pay Lender the amount of the Loan, with interest
thereon, as prescribed in Section 1.4. All references to the "Note" in this Loan
Agreement and the Security Agreement (each as defined in this Loan Agreement)
and in such other agreements and documents executed and delivered in connection
with this Loan Agreement shall be deemed to be references to the Note referred
to in this Section.
Section 1.3 Interest. The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum at all times equal to eight percent
(8%). Interest shall be calculated on the basis of a year of three- hundred and
sixty (360) days and the actual number of days elapsed during the period for
which such interest is payable. Interest shall begin to accrue on the
outstanding principal amount of the Loan on the date of disbursement of the Loan
and shall be repaid pursuant to Section 1.4 hereof; provided, however, that
interest shall cease to accrue if the Option Period is extended pursuant to
Section 2 of the Option Agreement as of the date of the extension.
Section 1.4 Principal. Should Lender not exercise the Option, the
outstanding principal balance of the Loan plus any accrued interest thereon
shall be due and payable on the One Hundred Twentieth day following the end of
the Option Period, as defined in the Option Agreement (the "Maturity Date");
provided, however, that upon the Closing pursuant to the Asset Purchase
Agreement attached to the Option Agreement, all unpaid Principal and Accrued
Interest shall be immediately due and payable.
Section 1.5 Mandatory Prepayment. Notwithstanding anything in this
Agreement to the contrary, upon a termination of the Option Agreement for any
reason the entire outstanding principal balance and all accrued interest thereon
shall mmediately be due and payable on the One Hundred Twentieth day following
such termination.
Section 1.6 Information. Borrower agrees to furnish to Lender such
information as Lender may reasonably request in connection with the Loan or the
Station.
Section 1.7 Prepayment. Borrower may prepay the Note in whole at any
time, or from time to time in part, with accrued interest to the date of
prepayment on the amount prepaid, without penalty, provided that each payment,
other than that for the full amount of the outstanding balance, shall be in the
amount of Ten Thousand Dollars ($10,000) or an integral multiple
thereof.
<PAGE> 3
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Section 1.8 Payment on Non-Business Days. Whenever any payment to be
made hereunder or under the Note shall be due on a Saturday, Sunday or public
holiday, such payment may be made on the next succeeding business day, and such
extension of time in such case shall be included in the computation of
interest hereunder and under the Note.
Section 1.9 Taxes. All sums payable by Borrower hereunder or under the
Note, whether of principal, interest, fees, expenses or otherwise, shall be paid
in full, free of any deductions or withholdings for any and all present and
future taxes, levies, imposts, stamps, duties, fees, assessments, deductions,
withholdings, and other governmental charges and all liabilities with respect
thereto. If Borrower is prohibited by law from making payments hereunder or
under the Note free of such deductions or withholdings, then Borrower shall pay
such additional amount as may be necessary in order that the actual amount
received by Lender after such deduction or withholding shall equal the full
amount stated to be payable hereunder or under the Note.
ARTICLE II CLOSING
Section 2.1 Closing Date. Closing of the transactions contemplated by
this Agreement shall occur, subject to the satisfaction of all of the
conditions set forth in Article IV, on five business days written notice from
Borrower to Lender (the "Closing Date").
ARTICLE III SECURITY
Section 3.1 Security Interest. As partial security for the Loan,
Borrower shall execute and deliver to Lender, on or before the Closing Date, a
security agreement in the form of Exhibit 2 hereto (the "Security Agreement").
Section 3.2 Pledge Agreement. As further security for the Loan, a
Shareholder of Borrower shall execute and deliver to Lender a Pledge Agreement
in the form of Exhibit 3 hereto (the "Pledge Agreement") pursuant to which
Shareholder shall pledge to Lender a ten percent (10%) ownership interest in the
Borrower.
Section 3.3 Mortgages. At such time as the Borrower acquires any parcel
of real estate, the Borrower shall execute a first mortgage or deed of trust in
favor of Lender on such parcel, in form and substance acceptable to Lender (a
"Mortgage"). If requested by Lender, the Borrower shall also deliver to Lender
with respect to such property one or more of the following documents, each of
which shall be in form and substance satisfactory to Lender: (i) fixture filing
UCC-1 financing statements, (ii) copies of any lease relating to such property,
if any, (iii) executed tenant subordination agreements and estoppel
certificates,
<PAGE> 4
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if applicable, (iv) a survey of such real property, (v) a
mortgagee title insurance policy, with such coverage and with such endorsements,
including, without limitation, usury, first loss, last dollar, revolving credit,
variable rate, doing business, zoning comprehensive, contiguity (as applicable)
and survey, to the extent available in the state where the property is located,
as Lender may require, and (vi) any other document required by applicable law to
create or perfect a mortgage lien with respect to such property or reasonably
required by Lender.
ARTICLE IV CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to Loan. The obligation of Lender to
disburse the Loan hereunder is subject to the following conditions precedent:
(a) The Option Agreement shall be duly executed by Lender and
the Borrower and shall be in full force and effect; and
(b) Lender shall have received all of the following, on or
before the Closing Date(s), in form and substance satisfactory to Lender:
(i) The Note, duly executed and delivered by Borrower;
(ii) The Security Agreement, together with appropriate
UCC-1 forms duly executed and delivered by the Borrower;
(iii) Copies of UCC, judgment and tax lien searches in each
jurisdiction in which Collateral covered by the Security Agreement is located;
(iv) With respect to owned real property, if any, the
documents required by Section 3.3;
(v) Copies of the certificates evidencing the insurance
required to be maintained by the Borrower pursuant to Section 6.1(e);
(vi) Written evidence, satisfactory to Lender, that the
Borrower holds a valid construction permit issued by the Federal Communications
Commission ("FCC") authorizing construction of the Station and that Borrower has
obtained all necessary FAA and zoning approvals/permits for the site;
(vii) The Construction Agreement shall be duly executed by
Lender and Borrower and shall be in full force and effect;
<PAGE> 5
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(viii) Such other agreements, certificates, opinions of
counsel and documents that Lender may reasonably require.
Section 4.2 Compliance. All of the representations and warranties of
Borrower in this Loan Agreement shall be true and accurate in all material
respects on and as of the Closing Date as if made on and as of such date and
time. Borrower shall be in compliance with all of the applicable terms and
provisions of this Agreement and no Event of Default or any event which with the
lapse of any applicable grace period or the giving of notice or both would
constitute an Event of Default shall have occurred and be continuing. Borrower
shall have performed all obligations and taken all actions to be performed or
taken by it hereunder on or prior to such date. On the Closing Date, Borrower
shall deliver to Lender a certificate, dated as of such date and signed by
Borrower, certifying compliance with the conditions of this Section 4.2.
ARTICLE V REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and make the
Loan, Borrower represents and warrants as follows:
Section 5.1 Existence and Standing. Borrower is a corporation duly
organized, validly existing and in good standing under the laws of Hawaii and
has all authority to conduct its business, to own its properties and to execute
and deliver, and to perform all of its obligations under this Agreement, the
Note, any Mortgage, the Security Agreement, and all other documents that have
been or will be executed and delivered by Borrower pursuant to this Agreement
(the foregoing documents are collectively, the "Loan Documents").
Section 5.2 Authorizations, Compliance with Laws. The execution,
delivery and performance by Borrower of this Agreement, the Note, any Mortgage,
the Security Agreement, and all other documents required to be executed and
delivered by Borrower pursuant to this Agreement have been duly authorized by
all necessary action and do not and will not (i) violate any provision of any
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to the Borrower; or the
Station or (ii) result in a breach of or constitute a default under any
agreement or instrument to which Borrower is a party or by which its properties
may be affected; or (iii) result in the creation of a lien, charge or
encumbrance of any nature upon Borrower's properties or assets other than as
contemplated by this Agreement.
Section 5.3 No Consent. Except for such filings with and approvals of
the FCC that may be required in connection with the exercise by Lender of its
rights under the Loan Documents, upon an Event of Default, no authorization,
consent, approval, license,
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exemption of or filing or registration with any court or governmental department
or agency, is or will be necessary for the valid execution, delivery and
performance by Borrower of this Agreement, the Note, any Mortgage, the Security
Agreement, or any other document required to be executed and delivered by
Borrower pursuant to this Agreement.
Section 5.4 Binding Obligations. This Agreement, the Note, any Mortgage,
the Security Agreement, and all other documents required to be executed and
delivered by Borrower pursuant to this Agreement have been executed and
delivered by Borrower and constitute legal, valid and binding obligations of
Borrower.
Section 5.5 Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of Borrower, threatened against or affecting the
Borrower or its properties before any court or governmental department or agency
which materially adversely affects the transactions contemplated by this
Agreement or which would have a material adverse effect on the business,
properties, prospects, operation or condition (financial or otherwise) of the
Station.
Section 5.6 No Default. Borrower is not in default in the performance,
observance or fulfillment of any of the obligations or conditions contained in
any material agreement or instrument to which it is a party, nor with respect to
any order, judgment, writ, injunction or decree of any court, governmental
authority or arbitration board.
Section 5.7 Compliance with Laws. The Borrower has complied with all
applicable federal, state and local laws. The Borrower has obtained all
necessary licenses and permits required for the conduct of its business and
operations or such licenses and permits have been applied for and are now being
diligently pursued.
Section 5.8 Taxes. The Borrower has filed all tax returns and reports
(federal, state and local) required to be filed by it, and has paid all taxes
shown thereon, including interest and penalties, and all assessments received by
it (except to the extent that the same are being contested in good faith by
appropriate proceedings diligently prosecuted and as to which adequate reserves
have been set aside on the books of the Borrower in conformity with generally
accepted accounting principles).
Section 5.9 Title to Properties. The Borrower has good and marketable
title to all of its property and assets and valid and enforceable leasehold
interests in the property which it holds under lease, all such property, assets
and leasehold interests being free and clear of any and all mortgages, deeds of
trust, assignments, liens, security interests, charges or encumbrances of any
nature whatsoever, except for those created hereby, and no mortgages, deeds of
trust, financing statements or other evidences of security interests covering
all or
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any of the aforesaid property are on file among the records of any public
office, except those evidencing a security interest in favor of Lender.
Section 5.10 Absence of Undisclosed Liabilities. Except for (i)
obligations arising under the Loan Documents, (ii) liabilities and obligations
incurred pursuant to the terms of the Option Agreement, and (iii) liabilities
incurred in the ordinary course of business (other than for borrowed money),
Borrower has on the date hereof no material liabilities or obligations relating
to the Station or otherwise of any nature, whether accrued, absolute, contingent
or otherwise.
Section 5.11 Solvency. Borrower has received, or has the right to
receive, consideration which is the reasonable equivalent value of the
obligations and liabilities that Borrower has incurred to Lender. Borrower is
not insolvent as defined in Section 101 of Title 11 of the United States Code or
any applicable state insolvency statute, nor, after giving effect to the
consummation of the transactions contemplated herein, will Borrower be rendered
insolvent by the execution and delivery of this Agreement, the Note or the other
Loan Documents to Lender. Borrower is not engaged, and Borrower is not about to
engage, in any business or transaction for which the assets retained by it shall
be an unreasonably small capital, taking into consideration the obligations to
Lender incurred hereunder and under the Loan Documents. Borrower does not intend
to, and Borrower does not believe that it will, incur debts beyond its ability
to pay them as they mature.
Section 5.12 Material Misstatement. No statement made herein or
information, exhibit or report furnished by Borrower to Lender in connection
with this Agreement or its negotiation, contains any material misstatement of
fact or omits to state a material fact or any fact necessary to make the
foregoing not misleading.
Section 5.13 Station Construction and Operation. Borrower shall fully
cooperate with Lender to complete construction of the Station in accordance with
the terms of the Construction Agreement and Borrower shall commence programming
of the Station immediately upon completion of the Station's construction at no
less than the minimum level required by the FCC. Borrower shall send must carry
election notices to all cable systems within the Honolulu, Hawaii ADI meeting
all the requirements of the FCC no later than sixty (60) days prior to
commencement of broadcast operations by the Station.
ARTICLE VI COVENANTS OF BORROWER
Section 6.1 Affirmative Covenants. So long as the Note shall remain
unpaid, Borrower hereby covenants and agrees that it will, unless Lender shall
otherwise consent in writing:
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(a) Payment of Obligations. Pay punctually and discharge
when due: (i) all indebtedness heretofore or hereafter incurred; (ii) all taxes,
assessments and governmental charges or levies imposed upon it or its income or
profits, or upon any properties belonging to it; (iii) claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like persons
which, if unpaid might become a lien or charge upon the property of the Station
or the Borrower; provided that this covenant shall not require the payment of
any of the matters set forth in (i), (ii) and (iii) above if the same shall be
contested in good faith and by proper proceedings diligently pursued and as to
which adequate reserves have been set aside on the books of the Borrower in
accordance with generally accepted accounting principles.
(b) Maintenance of Properties. Maintain and preserve all of
the Borrower's properties necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
(c) Compliance with Laws. Comply in all material respects
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority.
(d) Maintenance of Insurance. Maintain with responsible and
reputable insurance companies policies on all of the Borrower's properties and
covering such risks, including public liability and workers' compensation, in
such amounts as are usually carried by companies engaged in similar businesses
and owning similar properties as the Borrower and promptly upon execution
thereof provide to Lender copies of all such policies and any riders or
amendments thereto. The policies of insurance required hereunder shall name
Lender as an additional loss payee or additional insured, as applicable, and
shall provide that Lender shall receive at least thirty (30) days' written
notice prior to the cancellation, termination or alteration of any such policy.
(e) Operations in Ordinary Course. Continue to operate the
Borrower's business in the ordinary course.
(f) Perfection of Liens. Do all things requested by Lender
to preserve and perfect as first liens and security interests the liens and
security interests of Lender arising pursuant to the Security Agreement, any
Mortgage or any other agreement required hereunder.
(g) FCC Approval. If counsel to Lender reasonably determines
that the consent of the FCC is required in connection with the execution,
delivery and performance of
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this Agreement, the Security Agreement, any Mortgage
or any other document delivered to Lender in connection herewith or therewith or
as a result of any action which may be taken pursuant hereto or thereto, then
Borrower, at its sole cost and expense, agree to use their best efforts to
secure such consent and to cooperate with Lender in any action commenced by
Lender to secure such consent.
(h) Agreements. Comply with the Borrower's obligations under
the Option Agreement.
(i) Information and Inspection. Insure that the Borrower
shall furnish to Lender from time to time, upon request, full information
pertaining to any covenant, provision or condition hereof, or to any matter
connected with its books, records, operations, financial condition, properties,
activities or business. At all reasonable times, Borrower shall permit any
authorized representatives designated by Lender to visit and inspect any of the
properties of the Borrower and its books and records, and to take extracts
therefrom and make copies thereof, and to discuss the Borrower's affairs,
finances and accounts with the management and independent accountants of the
Borrower.
Section 6.2 Negative Covenants. So long as the Note shall
remain unpaid and the Agreement shall not have been terminated, Borrower hereby
covenants that it will not, without Lender's prior written approval:
(a) Indebtedness. Create or incur, assume or suffer to exist
any indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, except for:
(i) indebtedness (other than for borrowed money) incurred in the ordinary course
of business not to exceed Twenty- Five Thousand Dollars ($25,000) in the
aggregate at any one time; (ii) obligations or liabilities arising under the
indemnification provisions of the Option Agreement.
(b) Liens. Create, assume or suffer to exist, directly or
indirectly, any security interest, mortgage, deed of trust, pledge, lien, charge
or other encumbrance, of any nature whatsoever upon any of its properties or
assets, now owned or hereafter as acquired, excluding, however, from the
operation of this covenant:
(i) any security interest or lien created pursuant to
or in connection with this Agreement or securing the Loan, the Security
Agreement, or any Mortgage;
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(ii) liens for taxes or assessments either not
delinquent or the validity of which are being contested in good faith by
appropriate legal or administrative proceedings and as to which adequate
reserves shall have been set aside on its books, in conformity with generally
accepted accounting principles;
(iii) materialmen's, mechanics', carriers', workmen's,
repairmen's, warehousemen's or other like liens arising in the ordinary course
of business and either not yet due and payable or being contested in good faith
by appropriate legal proceedings and as to which adequate reserves shall have
been set aside on its books, in conformity with generally accepted accounting
principles;
(iv) deposits or pledges to secure payment of workers'
compensation, unemployment insurance or other social security benefits or
obligations; or
(v) any judgment lien, singly or aggregated with other
judgment liens, in an amount less than Fifty Thousand Dollars ($50,000), unless
the judgment it secures shall not, within thirty (30) days after the entry
thereof, have been discharged, vacated, reversed, or execution thereof stayed
pending appeal, or shall not have been discharged, vacated or reversed within
thirty (30) days after the expiration of any such stay.
(c) Disposition of Assets. Except pursuant to the terms of
the Option Agreement, sell, transfer, lease or otherwise dispose of any of its
assets or properties other than sales of assets in the ordinary course of
business (which sales in the ordinary course of business shall expressly not
include any transfer or assignment of any FCC License).
(d) Merger. Enter into any consolidation or merger with, or
into any acquisition of all or substantially all of the properties or assets of
any person or entity.
(e) Transfer or Issuance of Ownership Interests. Issue or
permit the transfer of any options, warrants, convertible securities or other
rights to purchase an ownership interest in the Station. The preceding sentence
shall not apply to issuances.
(f) Change of Business. Change, in any material respect, the
nature or character of its business as intended, or engage in any activity not
reasonably related to such business.
(g) Remove Assets. Remove any of the assets procured with
the proceeds of the borrowings provided for herein, or any replacements for such
assets, to a jurisdiction in which no financing statement on Form UCC-1 has been
filed by Lender with respect to such assets.
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(h) Transactions with Affiliates. Enter into any transaction
or agreement, other than the Transaction Documents, with any affiliate of the
Borrower.
(i) Contracts. Enter into any contract or commitment
relating to its assets except for contracts involving aggregate payments of less
than Twenty Thousand Dollars ($20,000) and contracts which can be terminated
without penalty on thirty (30) days' notice or less, or amend or terminate any
material contract (or waive any substantial right thereunder), or incur any
obligation (including obligations relating to the borrowing of money or
guarantee of indebtedness).
(j) Adverse Change. Suffer any material adverse change in
the business, assets, properties, prospects or condition (financial or
otherwise) of the Borrower or the Station, or any damage, destruction or loss
affecting any assets used or useful in the conduct of the business of the
Borrower.
(k) Cancellation of Debts. Cancel any debts owed to or
claims held by the Borrower.
(l) Write-Down. Suffer any significant write-down of the
value of any assets or any significant write-off as uncollectible of any
accounts receivable without the prior written consent of Lender except and as
required by generally accepted accounting principles as required to present
accurate financial information on the Borrower.
(m) Rights. Transfer or grant any right under, or enter into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, service mark, trade name, franchise, or similar right, or
modify any existing right relating to the Station.
(n) Agreements. Terminate, amend or commit any material
breach or default under the Option Agreement.
Section 6.3 Reporting Requirements. So long as the Note
shall remain unpaid and the Agreement shall not have been terminated, the
Borrower shall, unless Lender shall otherwise consent in writing, furnish to
Lender:
(a) Default Certificate. As soon as possible and in any
event within five (5) business days after the occurrence of each Event of
Default (as defined in Section 7.1) of which the Borrower has knowledge, the
statement of Borrower setting forth details of such Event of Default and the
action which the Borrower proposes to take with respect thereto.
<PAGE> 12
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(b) Financial Statements. Quarterly financial statements
within thirty (30) days after the end of each fiscal quarter; within ninety (90)
days after the end of each fiscal year of the Borrower, a copy of the audited
financial statements for such year for the Borrower, including therein a balance
sheet of the Borrower as of the end of such fiscal year, statements of income
and expense of the Borrower for such fiscal year, and a statement of cash flow
of Borrowers for such fiscal year, in each case prepared by an independent
public accountant of recognized standing acceptable to Lender, except that
Lender may waive the audit requirement and accept a review of the Borrower's
financial records.
(c) Notice of Litigation. Promptly give written notice of
all actions, suits and proceedings before any court or governmental agency,
domestic or foreign, which may be commenced or threatened against the Borrower
in which the claim involved is Five Thousand Dollars ($5,000) or more and of any
other matter of the type described in Section 5.6.
(d) Other Information. Such other information respecting the
business, properties, operations or the condition, financial or otherwise, of
the Borrower or the Station as Lender may from time to time reasonably request.
ARTICLE VII EVENTS OF DEFAULT
Section 7.1 Events of Default. Under this Agreement, an Event of
Default shall be any of the following:
(a) Borrower shall fail to pay any installment of principal
or interest on the Note, or any other obligation to Lender when due whether at
the due date thereof or by acceleration or otherwise, and, in the case of any
installment of interest, such default shall remain unremedied for a period of
five (5) days; or
(b) The security interest or lien of Lender in any material
portion of the collateral covered by the Security Agreement, or any Mortgage
shall at any time not constitute a legal, valid and enforceable security
interest or lien; or
(c) Any representation or warranty made by Borrower herein,
in the Security Agreement or any Mortgage, or in any certificate, agreement,
instrument or statement contemplated by or made or delivered pursuant to or in
connection with this Agreement, the Note, any Mortgage, the Security Agreement
shall prove to have been incorrect in any material respect when made; or
<PAGE> 13
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(d) Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement, the Note, the Security
Agreement, any Mortgage, and any such failure remains unremedied for thirty (30)
days after written notice thereof shall have been given to Borrower by Lender;
or
(e) The Borrower shall fail to pay any indebtedness for
borrowed money owing by the Borrower or any interest or premium thereon, when
due, whether such indebtedness shall become due by scheduled maturity, by
required prepayment, by acceleration, by demand or otherwise, or the Borrower
shall fail to perform any term, covenant or agreement under any agreement or
instrument evidencing or securing or relating to any such indebtedness owing by
the Borrower if the effect of such failure is to accelerate, or to permit the
holder of such indebtedness to accelerate the maturity of such indebtedness; or
(f) Either (i) the Borrower shall fail to pay its debts as
they mature in the ordinary course of business; or (ii) the Borrower shall file
a petition commencing a voluntary case concerning it under any Chapter of Title
11 of the United States Code entitled "Bankruptcy"; or (iii) the Borrower shall
apply for or consent to the appointment of any receiver, trustee, custodian or
similar officer for it or for all or any substantial part of its property; or
(iv) such receiver, trustee, custodian or similar officer shall be appointed
without the application or consent of the Borrower and such appointment shall
continue undischarged for a period of thirty (30) days; or (v) an involuntary
case is commenced against the Borrower under any Chapter of the aforementioned
Title 11 and an order for relief under such Title 11 is entered or the petition
commencing the case is controverted but is not dismissed within thirty (30) days
after the commencement of the case; or (vi) the Borrower shall institute (by
petition, application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to it under the laws of any jurisdiction; or (vii)
any such proceeding shall be instituted against the Borrower and shall remain
undismissed for a period of thirty (30) days; or (viii) the Borrower shall take
any action for the purpose of effectuating the foregoing; or
(g) Any court, government, or government agency shall
condemn, seize or otherwise appropriate or take custody or control of all or a
substantial portion of the property or assets of the Borrower; or
(h) There shall be a cancellation, denial or revocation of
any material FCC License for the Station (including the Construction Permit),
the Borrower shall be finally denied renewal of any such FCC License, or any
such FCC License shall be renewed on
<PAGE> 14
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terms that materially adversely affect the economic or commercial value or
usefulness thereof; or
(i) Any money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an amount in excess of
Fifty Thousand Dollars ($50,000), or (ii) in the aggregate at any time an amount
in excess of Fifty Thousand Dollars ($50,000), and in either case not adequately
covered by insurance as to which the insurance Borrower has acknowledged
coverage, shall be entered or filed against the Borrower or its assets and shall
remain undischarged, unvacated, unbonded or unstayed for a period of 30 days or
in any event later than five days prior to the date of any proposed sale
thereunder; or
(j) Any material adverse effect upon or change in (a) the
properties, assets, business, operations, financial condition, prospects or
liabilities of the Borrower or on the ability of the Borrower to conduct its
business, (b) the ability of the Borrower, or any other party to a Loan Document
(other than Lender) to perform its obligations hereunder, or under any other
Loan Document to which it is a party, (c) the validity or enforceability of this
Agreement, the Note, any other Loan Document, (d) the rights or remedies of
Lender under this Agreement, the Note, any other Loan Document, or at law or in
equity or (e) the value of any material collateral granted to Lender pursuant to
any Loan Document shall occur.
Section 7.2 Effect of Event of Default. Should any Event of Default
occur, Lender may at its option by written notice to Borrower declare the entire
unpaid principal amount of the Note, together with all unpaid interest and all
other amounts payable under this Agreement and every other obligation of
Borrower to Lender, immediately due and payable, whereupon the Note and all such
obligations shall become and be forthwith due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by Borrower, anything contained herein or in the Note or in such other
note or evidence of indebtedness to the contrary notwithstanding; provided,
however, that in case of an Event of Default under Section 7.1(g), all the
obligations of Borrower under this Agreement and the Note shall become
immediately due and payable as of the date of any such Event of Default
regardless of the cause of such Event of Default and without any notice to
Borrower required from Lender. Lender shall have, in addition to all other
rights and remedies allowed by law, the rights and remedies of a secured party
under the Uniform Commercial Code and, without limiting the generality of the
foregoing, the rights and remedies provided for in the Security Agreement, and
any Mortgage or Leasehold Mortgage, which provisions are hereby incorporated by
reference.
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ARTICLE VIII MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies. No failure or delay on the
part of Lender in exercising any right, power or remedy hereunder shall operate
as a waiver, nor shall any single or partial exercise of any such right, power
or remedy hereunder. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 8.2 Amendments. No amendment, modification, termination or
waiver of any provision of this Agreement, the Note, the Security Agreement, or
any Mortgage, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless in writing, signed by Lender and then only in the
specific instance and for the specific purpose for which given. No notice to or
demand on Borrower in any case shall entitle it to any other or further notice
or demand in similar or other circumstances.
Section 8.3 Conflicts. In the event of any conflict or inconsistency
between any provision of this Agreement and a provision of the Note, the
Security Agreement, or any Mortgage, the provisions of this Agreement shall
control.
Section 8.4 Address for Notices. All notices and other communications
under this Agreement shall be in writing and shall be served by personal service
or by mailing a copy thereof by registered or certified mail, return receipt
requested, to the applicable party at the addresses indicated below:
If to Borrower: Mr. Paul Tennyson
Dove Broadcasting Company of Hawaii, Inc.
875 Waimanu Street, Suite 601
Honolulu, Hawaii 96813
With a copy (which shall Harry F. Cole, Esquire
not constitute notice to): Bechtel & Cole, Chartered
1901 L Street, N.W., Suite 250
Washington, D.C. 20036
If to Lender: Mr. Lowell W. Paxson
Paxson Communications of Honolulu-66, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
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With a copy (which shall John R. Feore, Jr., Esquire
not constitute notice to): Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W., Suite 800
Washington, D.C. 20036
or at such other address as may be designated by either party in a written
notice to the other complying as to delivery with the terms of this Section.
All such notices and other communications shall be effective when deposited in
the mails.
Section 8.5 Expenses. Borrower agrees to pay on demand all costs and
expenses incurred by Lender directly in the enforcement of this Agreement, the
Note, the Security Agreement, any Mortgage, and other instruments and documents
to be delivered hereunder, including, without limitation, the reasonable fees
and expenses of any attorney to whom the Note is referred for collection
(whether or not litigation is commenced) or for representation out of court, in
trial, on appeal or in proceedings under any bankruptcy or insolvency law or
otherwise. In addition, Borrower shall pay any and all taxes and fees payable or
determined to be payable in connection with the execution, delivery or
recordation of any instruments and documents to be delivered hereunder. In
addition, Borrower agrees to pay (i) all the actual and reasonable costs and
expenses of Borrower performance of and compliance with all agreements and
conditions contained herein and in the other Loan Documents on its part to be
performed or complied with including, without limitation, confirming compliance
with environmental and insurance requirements; and (ii) all the actual and
reasonable costs and expenses of creating and perfecting liens in favor of
Lender pursuant to any Loan Document.
Section 8.6 Binding Effect; Assignment. This Agreement shall become
effective when executed and thereafter shall be binding upon and inure to the
benefit of Borrower, Lender and their respective successors and assigns, except
that Borrower shall not have the right to assign any rights or obligations
hereunder without the prior written consent of Lender. Lender shall be permitted
to assign, without Borrower's consent, all or any portion of Lender's rights and
interests hereunder and under each other document executed in connection with
this Loan Agreement (x) to one or more other affiliates of Lender, and, upon any
such assignment, each reference herein or in such other document to "Lender"
shall be deemed to be and include a reference to such other affiliate and (y) to
creditors of Lender or its affiliates as security for indebtedness of Lender or
such affiliates. For purposes of this section, the term affiliate shall mean, as
applied to any entity or individual, any other entity or individual directly or
indirectly controlling, controlled by, or under common control with, that entity
or individual. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and under "common
control with"), as applied to any entity or individual, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and
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policies of that entity or individual, whether through the ownership of voting
securities, partnership interests or otherwise by contract.
Section 8.7 Governing Law. This Agreement, the Note, the Security
Agreement, and related documents shall be governed by, and construed in
accordance with, the laws of the State of Florida with the exception of its
conflicts of laws provisions; provided that the effect of any recordation shall
be determined by the State thereof.
Section 8.8 Severability of Provisions. Any provision of this Agreement,
the Note, the Security Agreement, or any Mortgage that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions or affecting the validity or enforceability of any
provisions in any other jurisdiction.
Section 8.9 Headings. Article and Section headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
Section 8.10 Rights Affected by Extensions. The rights of Lender and its
assigns shall not be impaired by any indulgence, release, renewal, extension or
modification which Lender may grant with respect to the indebtedness or any part
thereof, or with respect to the collateral or with respect to any endorser,
guarantor, or surety without notice or consent of Borrower or any endorser,
guarantee, or surety.
Section 8.11 Survival of Representations and Warranties. All
representations and warranties made in this Agreement and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Agreement and the Note and the making of the Loan hereunder
and continue in full force and effect, as of the respective dates as of which
they were made, until all of the obligations of Borrower to Lender hereunder
have been paid in full.
Section 8.12 FCC Compliance. Notwithstanding anything herein or in any
of the other Loan Documents to the contrary, but without limiting or waiving
Borrower's obligations hereunder or under any of the other Loan Documents,
Lender's remedies hereunder and under the other Loan Documents are subject to
compliance with the Communications Act of 1934, as amended, and all applicable
rules, regulations and policies of the FCC, and Lender will not take any action
pursuant to this Agreement or any of the other Loan Documents that would
constitute or result in any assignment of any FCC authorization held by the
Borrower or any change of control of the Station if such assignment or change of
control would require under then existing law (including the written rules and
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regulations promulgated by the FCC), the prior approval of the FCC, without
first obtaining such approval of the FCC. This Agreement, the other Loan
Documents and the transactions contemplated hereby and thereby do not and will
not constitute, create, or have the effect of constituting or creating, directly
or indirectly, actual or practical ownership of Borrower by Lender or control,
affirmative or negative, direct or indirect, of Borrower by Lender, over the
programming, management or any other aspect of the operation of Borrower, which
ownership and control remain exclusively and at all times in Borrower until such
time as Lender has complied with such law, rules, regulations and policies.
Section 8.13 Further Assurances. From time to time, Borrower shall
execute and deliver to Lender such additional documents as Lender may reasonably
require to carry out the purposes of this Agreement or any of the documents
entered into in connection herewith, or to preserve and protect the rights of
Lender hereunder or thereunder.
Section 8.14 Indemnification. Borrower hereby indemnifies and holds
harmless Lender and its directors, officers, shareholders, employees, agents,
counsel, subsidiaries and affiliates (the "Indemnified Persons") from and
against any and all losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against any
Indemnified Person in any way relating to or arising out of this Agreement, the
documents entered into in connection herewith, or any of them or any of the
transactions contemplated hereby or thereby; provided, however, that Borrower
shall not be liable to any Indemnified Person, if there is a judicial
determination that such losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the gross negligence or willful misconduct of such Indemnified Person.
Section 8.15 Waiver. EACH OF LENDER AND BORROWER HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND THE
LENDER/BORROWERS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, REPLACEMENTS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN.
Section 8.16 Maximum Interest. Lender and Borrower intend that this
Agreement and the other Loan Documents conform to all applicable usury laws.
Accordingly, no
<PAGE> 19
- 19 -
provisions of the Loan Documents shall require the payment or permit the
collection of interest in excess of the maximum rate permitted by applicable law
("Maximum Rate"), or obligate Borrower to pay any taxes, assessments, charges,
insurance premiums or other amounts which are held to constitute interest to the
extent that such payments, when added to the other obligations under the Loan
Documents, would be held to constitute contracting for, or the payment by
Borrower of, interest at a rate greater than the Maximum Rate. Lender and
Borrowers further agree that:
(i) if any excess of interest in such respect is herein or
in any such other instrument provided for, or shall be adjudicated to be so
provided for herein or in any such instrument, the provisions of this subsection
8.16 shall govern, and neither Borrowers nor its successors or assigns shall be
obligated to pay the amount of such interest to the extent it is in excess of
the Maximum Rate;
(ii) if at any time the amount of interest under any of the
Loan Documents for a calendar year exceeds the Maximum Rate had the Maximum Rate
at all times been in effect, the interest chargeable under any such Loan
Document shall be limited to the amount of interest that could have been charged
if the Maximum Rate had at all times been in effect, but any subsequent
reductions in the interest due shall not reduce the rate of interest chargeable
under any such Loan Document below the Maximum Rate until the total amount of
interest accrued under any such Loan Document equals the amount of interest that
would have accrued if the interest provided for in any such Loan Document had at
all times been in effect and collectible;
(iii) if the maturity of any Loan Document is accelerated
for any reason, or in the event of any prepayment by Borrower, or in any other
event, earned interest may never include more than the Maximum Rate, computed
from the date of disbursement of the funds evidenced by such Loan Document until
payment, and any interest otherwise payable under such Loan Document that is in
excess of the Maximum Rate shall be canceled automatically as of such
acceleration or such other event and (if theretofore paid) shall be credited
against principal;
(iv) if it should be held that any interest payable or
chargeable under any Loan Document is in excess of the Maximum Rate, the
interest payable or chargeable under such Loan Document shall be reduced to the
maximum amount permitted by applicable federal or state law, whichever shall
permit the higher lawful interest, as construed by courts having jurisdiction
thereof; and
<PAGE> 20
- 20 -
(v) the spreading, prorating and amortizing of interest
over the Maturity Date of the Loan Documents shall be allowed to the fullest
extent permitted by applicable law.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be executed by their respective duly authorized officers as of the date first
above written.
PAXSON COMMUNICATIONS
OF HONOLULU-66, INC.
By: /S/ William L. Watson
-----------------------------------
Name: William L. Watson
Title: Secretary
DOVE BROADCASTING COMPANY
OF HAWAII, INC.
By: /S/ Paul A. Tennyson
----------------------------------
Name: Paul A. Tennyson
Title: President
<PAGE> 1
EXHIBIT 10.173
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BY AND AMONG
PAXSON COMMUNICATIONS OF ROANOKE-38, INC.,
VINE AND BRANCH, INC.
AND
EVANGEL FOURSQUARE CHURCH
FOR
TELEVISION STATION WEFC
ROANOKE, VIRGINIA
* * *
MAY 28, 1997
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Accounts Receivable" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assumed Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Consents" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Contracts" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Consent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Final Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Intangibles" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Title to and Condition of Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Title to and Condition of Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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3.14 Claims and Legal Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.17 Conduct of Business in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.18 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.19 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.20 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.5 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.1 Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.2 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.3 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.6 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.7 Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.8 No Inconsistent Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.9 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.10 Maintenance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.12 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.14 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.15 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.17 Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.18 Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.19 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.20 Collection of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.21 Personnel Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Control of the Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.6 Engineering Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.7 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.8 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.9 Title Insurance and Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.10 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.12 Use of Space . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.13 Station Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.14 Assumption of Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.15 Agreements with Evangel Foursquare Church . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.3 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.11 Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SCHEDULES
Schedule 2.2 -- Excluded Assets
Schedule 3.3 -- Consents
Schedule 3.4 -- Licenses
Schedule 3.5 -- Real Property
Schedule 3.6 -- Tangible Personal Property
Schedule 3.7 -- Contracts
Schedule 3.9 -- Intangibles
Schedule 3.10 -- Insurance Matters
Schedule 3.12 -- Employee Matters
Schedule 8.2(i) -- Opinion of Seller's Counsel
Schedule 8.3(d) -- Opinion of Buyer's Counsel
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<PAGE> 6
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 28th day of May,
1997, by and among PAXSON COMMUNICATIONS OF ROANOKE-38, INC., a Florida
corporation ("Buyer"), VINE AND BRANCH, INC., a Virginia corporation
("Seller"), and Evangel Foursquare Church, unincorporated ("the Church").
R E C I T A L S
A. The Church owns all of the issued and outstanding capital stock of
Seller.
B. Seller is the licensee of and owns and operates television station
WEFC(TV), Roanoke, Virginia (the "Station") pursuant to licenses issued by the
Federal Communications Commission ("FCC").
C. Seller desires to sell, and Buyer desires to buy, substantially all
the assets that are used or useful in the business or operations of the Station,
for the price and on the terms and conditions set forth in this Agreement.
A G R E E M E N T S
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer, Seller and the Church,
intending to be bound legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of advertising time run on the Station by Seller prior to the Closing Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7
that are specifically designated on Schedule 3.7 as Contracts that are to be
assumed by Buyer upon its purchase of the Station, (ii) any Contracts entered
into by Seller between the date of this Agreement and the Closing Date that
Buyer agrees in writing to assume, and (iii) time sales contracts entered into
by Seller in compliance with Section 5.3.
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"Closing" means the consummation of the purchase and sale of the
Assets pursuant to this Agreement in accordance with the provisions of Section
8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer
or otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including any amendments and other
modifications thereto) to which Seller is a party or which are binding upon
Seller and which relate to or affect the Assets or the business or operations
of the Station, and (i) which are in effect on the date of this Agreement or
(ii) which are entered into by Seller between the date of this Agreement and
the Closing Date.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by Seller or under which Seller is licensed or franchised and which are used or
useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local governmental
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authorities to Seller in connection with the conduct of the business or
operations of the Station, together with any additions thereto between the date
of this Agreement and the Closing Date.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real
property, including fee estates, leaseholds and subleaseholds, purchase
options, easements, licenses, rights to access, and rights of way, and all
buildings and other improvements thereon, and other real property interests
which are used or useful in the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property which is used or
useful in the conduct of the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, Seller hereby agrees to sell, transfer,
and deliver to Buyer on the Closing Date, and Buyer agrees to purchase, all of
the tangible and intangible assets used or useful in connection with the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date, but
excluding the assets described in Section 2.2, free and clear of any claims,
liabilities, security interests, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for liens for current
taxes not yet due and payable), including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of Seller
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
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(f) All of Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station;
(g) The Accounts Receivable as of 11:59 p.m., Roanoke,
Virginia time, on the day prior to the Closing Date;
(h) All choses in action of Seller relating to the
Station; and
(i) All books and records relating to the business or
operations of the Station, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept by the Station.
2.2 Excluded Assets. The Assets shall exclude the following
assets:
(a) Seller's cash on hand as of the Closing and all other
cash in any of Seller's bank or savings accounts; any insurance policies,
letters of credit, or other similar items and cash surrender value in regard
thereto; and any stocks, bonds, certificates of deposit and similar
investments;
(b) All books and records that Seller is required by law
to retain and that pertain to Seller's corporate organization;
(c) Any pension, profit-sharing, or employee benefit
plans, and any collective bargaining agreements; and
(d) All donations and contributions to the Church or the
Evangelical Foursquare Ministry and all lists of donors, contributors or other
supporters of the Station or the Church.
(e) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets shall be
Five Million Five Hundred Thousand Dollars ($5,500,000) adjusted as provided
below:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses. All expenses
arising from the operation of the Station, including business and license fees,
utility charges, real and personal property taxes and assessments levied
against the Assets, property and equipment rentals, applicable copyright or
other fees, sales and service charges, taxes (except for taxes arising from the
transfer of the Assets under this Agreement), FCC annual regulatory fees and
similar prepaid
<PAGE> 10
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and deferred items, shall be prorated between Buyer and Seller in accordance
with the principle that Seller shall be responsible for all expenses, costs,
and liabilities allocable to the period prior to the Closing Date, and Buyer
shall be responsible for all expenses, costs, and obligations allocable to the
period on and after the Closing Date. Notwithstanding the preceding sentence,
(i) there shall be no adjustment for, and Seller shall remain solely liable
with respect to, any Contracts not included in the Assumed Contracts and any
other obligation or liability not being assumed by Buyer in accordance with
Section 2.5, and (ii) there shall be no adjustment for, and Seller shall be
entitled to retain, the aggregate amount of pre-paid rent under the tower lease
agreements listed in Schedule 3.7 for the period ending on the date that is six
months following the Closing Date. Buyer shall be entitled to an adjustment in
its favor if and to the extent that the pre-paid rent under any such tower
lease agreements is for a period in excess of such six month period.
(b) Manner of Determining Adjustments. Any adjustments
will, insofar as feasible, be determined and paid on the Closing Date, with
final settlement and payment by the appropriate party occurring no later than
ninety (90) days after the Closing Date or such other date as the parties shall
mutually agree upon. Seller shall prepare and deliver to Buyer not later than
five (5) days before the Closing Date a preliminary settlement statement which
shall set forth Seller's good faith estimate of the adjustments to the Purchase
Price under Section 2.3(a). The preliminary settlement statement (i) shall
contain all information reasonably necessary to determine the adjustments to
the Purchase Price under Section 2.3(a), to the extent such adjustments can be
determined or estimated as of the date of the preliminary settlement statement,
and such other information as may be reasonably requested by Buyer, and (ii)
shall be certified by Seller to be true and complete in all material respects
as of the date thereof.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer, at
least two (2) days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of Seller under the Licenses and the Assumed
Contracts insofar as they relate to the time on and after the Closing Date, and
arise out of events related to Buyer's ownership of the Assets or its operation
of the Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or
proceedings relating to the operation of the Station prior to the Closing, (iv)
any obligations or liabilities arising under capitalized leases or other
financing agreements, (v) any obligations or liabilities arising under
agreements entered into other than in the ordinary course of business, (vi) any
obligations or liabilities of Seller under any
<PAGE> 11
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employee pension, retirement, health and welfare or other benefit plans or
collective bargaining agreements, (vii) any obligation to any employee of the
Station for severance benefits, vacation time, or sick leave accrued prior to
the Closing Date, or (viii) any obligations or liabilities caused by, arising
out of, or resulting from any action or omission of Seller prior to the
Closing, and all such obligations and liabilities shall remain and be the
obligations and liabilities solely of Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Virginia. Seller has all requisite power and authority
(i) to own, lease, and use the Assets as now owned, leased, and used, (ii) to
conduct the business and operations of the Station as now conducted, and (iii)
to execute and deliver this Agreement and the documents contemplated hereby,
and to perform and comply with all of the terms, covenants, and conditions to
be performed and complied with by Seller hereunder. The Church has all
requisite power and authority to execute, deliver and perform this Agreement.
Seller is not a participant in any joint venture or partnership with any other
person or entity with respect to any part of the operations of the Station or
any of the Assets.
3.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Seller and the Church have been
duly authorized by all necessary actions on the part of Seller and the Church.
This Agreement has been duly executed and delivered by Seller and the Church
and constitutes the legal, valid, and binding obligations of Seller and the
Church, enforceable against them in accordance with its terms, except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, and by judicial discretion
in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both): (i) do not require the consent
of any third party; (ii) will not conflict with any provision of the Articles
of Incorporation or Bylaws of Seller or any organizational or governing
documents of the Church; (iii) will not conflict with, result in a breach of,
or constitute a default under, any law, judgment, order, ordinance, injunction,
decree, rule, regulation, or ruling of any court or governmental
instrumentality; (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Seller or the Church
is a party or by
<PAGE> 12
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which Seller or the Church may be bound; and (v) will not create any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of any
nature whatsoever upon any of the Assets.
3.4 Governmental Licenses. Schedule 3.4 includes a true and
complete list of the Licenses. Seller has delivered to Buyer true and complete
copies of the Licenses (including any amendments and other modifications
thereto). The Licenses have been validly issued, and Seller is the authorized
legal holder thereof. The Licenses listed on Schedule 3.4 comprise all of the
licenses, permits, and other authorizations required from any governmental or
regulatory authority for the lawful conduct of the business and operations of
the Station in the manner and to the full extent they are now conducted, and
none of the Licenses is subject to any restriction or condition that would
limit the full operation of the Station as now operated. The Licenses are in
full force and effect, and the conduct of the business and operations of the
Station is in accordance therewith. Seller has no reason to believe that any
of the Licenses would not be renewed by the FCC or other granting authority in
the ordinary course. The Station's city of license, as determined by the FCC,
is located within the Roanoke-Lynchburg Area of Dominant Influence as defined
by the 1991-1992 Area of Dominant Influence Market Guide published by The
Arbitron Co. and the Roanoke-Lynchburg Designated Market Area as defined by the
1995 United States Television Household Estimates published by Nielsen Media
Research. On or before October 1, 1996, Seller made a valid election of must
carry with respect to each cable system located within the Station's Area of
Dominant Influence, no cable system has advised Seller of any signal quality or
copyright indemnity or other prerequisite to cable carriage of the Station's
signal, and no cable system has declined or threatened to decline such carriage
or failed to respond to a request for carriage or sought any form of relief
from carriage from the FCC.
3.5 Title to and Condition of Real Property. Schedule 3.5
contains a complete and accurate description of all the Real Property and
Seller's interests therein (including street address, legal description, owner,
and use and the location of all improvements thereon). The Real Property
listed on Schedule 3.5 comprises all real property interests necessary to
conduct the business and operations of the Station as now conducted. Seller
has good and marketable fee simple title, insurable at standard rates, to all
fee estates (including the improvements thereon) included in the Real Property,
free and clear of all liens, mortgages, pledges, covenants, easements,
restrictions, encroachments, leases, charges, and other claims and encumbrances
of any nature whatsoever, and without reservation or exclusion of any mineral,
timber, or other rights or interests, except for liens for real estate taxes
not yet due and payable and liens disclosed on Schedule 3.5. With respect to
each leasehold or subleasehold interest included in the Real Property being
conveyed under this Agreement so long as Seller fulfills its obligations under
the lease therefor, Seller has enforceable rights to nondisturbance and quiet
enjoyment, and no third party holds any interest in the leased premises with
the right to foreclose upon Seller's leasehold or subleasehold interest. All
towers, guy anchors, and buildings and other improvements included in the
Assets are
<PAGE> 13
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located entirely on the Real Property listed in Schedule 3.5. Seller has
delivered to Buyer true and complete copies of all deeds pertaining to the Real
Property. All Real Property (including the improvements thereon) (i) is in
good condition and repair consistent with its present use, (ii) is available
for immediate use in the conduct of the business and operations of the Station,
and (iii) complies with all applicable building or zoning codes and the
regulations of any governmental authority having jurisdiction. Seller has full
legal and practical access to the Real Property. All easements, rights-of-way,
and real property licenses have been properly recorded in the appropriate
public recording offices.
3.6 Title to and Condition of Tangible Personal Property.
Schedule 3.6 lists all material items of Tangible Personal Property. The
Tangible Personal Property listed on Schedule 3.6 comprises all material items
of tangible personal property necessary to conduct the business and operations
of the Station as now conducted. Except as described in Schedule 3.6, Seller
owns and has good title to each item of Tangible Personal Property, and none of
the Tangible Personal Property owned by Seller is subject to any security
interest, mortgage, pledge, conditional sales agreement, or other lien or
encumbrance, except for liens for current taxes not yet due and payable. Each
item of Tangible Personal Property is available for immediate use in the
business and operations of the Station. All items of transmitting and studio
equipment included in the Tangible Personal Property (i) have been maintained
in a manner consistent with generally accepted standards of good engineering
practice, and (ii) will permit the Station and any auxiliary broadcast
facilities related to the Station to operate in accordance with the terms of
the FCC Licenses and the rules and regulations of the FCC, and with all other
applicable federal, state, and local statutes, ordinances, rules, and
regulations.
3.7 Contracts. Schedule 3.7 is a true and complete list of all
Contracts except contracts with advertisers for the sale of advertising time on
the Station for cash at prevailing rates and which have not been prepaid and
which may be canceled by the Station without penalty on not more than thirty
days' notice. Seller has delivered to Buyer true and complete copies of all
written Contracts, true and complete memoranda of all oral Contracts (including
any amendments and other modifications to such Contracts), and a schedule
summarizing Seller's obligations under trade and barter agreements relating to
the Station. Other than the Contracts listed on Schedule 3.7 and cash
programming contracts, Seller requires no contract, lease, or other agreement
to enable it to carry on its business as now conducted. All of the Assumed
Contracts are in full force and effect, and are valid, binding, and enforceable
in accordance with their terms. There is not under any Assumed Contract any
default by any party thereto or any event that, after notice or lapse of time
or both, could constitute a default. Seller is not aware of any intention by
any party to any Assumed Contract (i) to terminate such contract or amend the
terms thereof, (ii) to refuse to renew the Assumed Contract upon expiration of
its term, or (iii) to renew the Assumed Contract upon expiration only on terms
and conditions which are more onerous than those now existing. Except for the
need to obtain the Consents listed in Schedule 3.3, Seller has full legal power
<PAGE> 14
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and authority to assign its rights under the Assumed Contracts to Buyer in
accordance with this Agreement, and such assignment will not affect the
validity, enforceability, or continuation of any of the Assumed Contracts.
Seller's news contract with WDBJ-TV may be terminated by Buyer or Seller
without premium or penalty by giving sixty (60) days written notice prior to
September 5, 1997. Upon Buyer's request, Seller agrees to give such notice of
cancellation in accordance with the terms of the WDBJ-TV news contract.
3.8 Consents. Except for the FCC Consent provided for in Section
6.1 and the other Consents described in Schedule 3.3, no consent, approval,
permit, or authorization of, or declaration to or filing with any governmental
or regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Station in essentially the same manner as
such business and operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Seller has delivered to Buyer copies of
all documents establishing or evidencing all Intangibles. Seller is not
infringing upon or otherwise acting adversely to any trademarks, trade names,
service marks, service names, copyrights, patents, patent applications,
know-how, methods, or processes owned by any other person or persons, and there
is no claim or action pending, or to the knowledge of Seller threatened, with
respect thereto. The Intangibles listed on Schedule 3.9 comprise all
intangible property interests necessary to conduct the business and operations
of the Station as now conducted.
3.10 Insurance. Schedule 3.10 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the business
of the Station. All policies of insurance listed in Schedule 3.10 are in full
force and effect. During the past three years, no insurance policy of Seller
on the Assets or the Station has been canceled by the insurer and no
application of Seller for insurance has been rejected by any insurer.
3.11 Reports. All returns, reports, and statements that the
Station is currently required to file with the FCC or with any other
governmental agency have been filed, and all reporting requirements of the FCC
and other governmental authorities having jurisdiction over Seller and the
Station have been complied with. All of such returns, reports, and statements
are substantially complete and correct as filed. Seller has timely paid to the
FCC all annual regulatory fees payable with respect to the FCC Licenses.
3.12 Personnel.
(a) All of Seller's Employee Plans and Compensation
Arrangements are listed in Schedule 3.12, and complete and accurate copies of
any such written Employee
<PAGE> 15
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Plans and Compensation Arrangements (or related insurance policies) have been
furnished to Buyer, along with copies of any employee handbooks or similar
documents describing such Employee Plans and Compensation Arrangements.
Descriptions of any unwritten Employee Plans or Compensation Arrangements also
are provided in Schedule 3.12. Schedule 3.12 also contains a true and complete
list of all employees of the Station, their job description, date of hire,
salary and amount and date of last salary increase.
(b) Each Employee Plan and Compensation Arrangement has
been administered in compliance with its own terms and in material compliance
with the provisions of ERISA, the Code, the Age Discrimination in Employment
Act and any other applicable Federal or state laws. Seller is not aware of the
existence of any governmental audit or examination of any Employee Plan or
Compensation Arrangement or of any facts which would lead it to believe that
any such audit or examination is pending or threatened. There exists no
action, suit or claim (other than routine claims for benefits) with respect to
any Employee Plan or Compensation Arrangement pending or, to the best knowledge
of Seller, threatened against any of such plans or arrangements, and Seller
possesses no knowledge of any facts which could give rise to any such action,
suit or claim.
(c) Seller does not contribute to and is not required to
contribute to any Multi-employer Plan with respect to the employees of the
Station, and neither Seller nor any other trade or business under common
control with Seller (within the meaning of Sections 414(b), (c), (m) or (o) of
the Code) has incurred or reasonably expects to incur any "withdrawal
liability," as defined under Section 4201 et seq. of ERISA.
(d) Except as described in Schedule 3.12, neither Seller
nor any other trade or business under common control with Seller (within the
meaning of Sections 414(b), (c), (m) or (o) of the Code) sponsors, maintains or
contributes to any Employee Plan or Compensation Arrangement that provides
retiree medical or retiree life insurance coverage to former employees of
Seller at the Station.
(e) Except as described in Schedule 3.12, with respect to
each Employee Plan and, to the extent applicable, each Compensation
Arrangement: (i) each Employee Plan that is intended to be tax-qualified, and
each amendment thereto, is the subject of a favorable determination letter, and
no plan amendment that is not the subject of a favorable determination letter
would affect the validity of an Employee Plan's letter; (ii) no prohibited
transaction, within the definition of section 4975 of the Code or Title 1, Part
4 of ERISA, has occurred which would subject Seller to any liability; and (iii)
all contributions, premiums or payments accrued, in whole or in part, under
each Employee Plan or Compensation Arrangement or with respect thereto as of
the Closing will be paid by the Seller prior to the Closing, including, but not
limited to, contributions thereto with respect to the plan year ending
immediately prior to the Closing.
<PAGE> 16
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(f) For purposes of this Agreement, the following terms
shall have the meaning indicated: (i) "Employee Plan" shall mean any pension,
profit-sharing, deferred compensation, vacation, bonus, incentive, medical,
vision, dental, disability, life insurance or any other employee benefit plan
as defined in Section 3(3) of ERISA to which Seller or any entity related to
Seller (under the terms of Section 414(b), (c), (m) or (o) of the Code)
contributes or to which Seller or any entity related to Seller (under the terms
of Sections 414(b), (c), (m) or (o) of the Code) sponsors, maintains or
otherwise is bound which provides benefits to persons employed or previously
employed at the Station; (ii) "Code" shall mean the Internal Revenue Code of
1986, as amended, any successor thereto and any regulations promulgated
thereunder; (iii) "Compensation Arrangement" shall mean any plan or
compensation arrangement other than an Employee Plan, whether written or
unwritten, which provides to employees, former employees, officers, directors
and shareholders of Seller or any entity related to Seller (under the terms of
Section 414(b), (c), (m) or (o) of the Code) employed or previously employed at
the Station any compensation or other benefits, whether deferred or not, in
excess of base salary or wages, including, but not limited to, any bonus or
incentive plan, stock rights plan, deferred compensation arrangement, life
insurance, stock purchase plan, severance pay plan and any other employee
fringe benefit plan; (iv) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, any successor thereto and any regulations
promulgated thereunder; and (v) "Multi-employer Plan" means a plan, as
defined in ERISA Section 3(37), to which Seller or any entity related to Seller
(under the terms of Section 414(b) or (c) of the Code) contributes or is
required to contribute.
(g) Seller is not a party to or subject to any collective
bargaining agreements with respect to the Station. Seller has no written or
oral contracts of employment with any employee of the Station, other than those
listed in Schedule 3.7. Seller has complied with all laws, rules, and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety, discrimination, and
the payment of social security and other payroll related taxes, and Seller has
not received any notice alleging that it has failed to comply in any material
respect with any such laws, rules, or regulations. No controversies, disputes,
or proceedings are pending or, to the best of Seller's knowledge, threatened,
between Seller and any employee (singly or collectively) of the Station. No
labor union or other collective bargaining unit represents or claims to
represent any of the employees of the Station. To the best of Seller's
knowledge, there is no union campaign being conducted to represent any
employees of the Station or to solicit cards from employees to authorize a
union to request a National Labor Relations Board certification election with
respect to any employees at the Station.
3.13 Taxes. Seller has filed or caused to be filed all federal
income tax returns and all other federal, state, county, local, or city tax
returns which are required to be filed, and it has paid or caused to be paid
all taxes shown on those returns or on any tax assessment received by it to the
extent that such taxes have become due, or has set aside on its books
<PAGE> 17
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adequate reserves (segregated to the extent required by generally accepted
accounting principles) with respect thereto. There are no governmental
investigations or other legal, administrative, or tax proceedings pursuant to
which Seller is or could be made liable for any taxes, penalties, interest, or
other charges, the liability for which could extend to Buyer as transferee of
the business of the Station, and no event has occurred that could impose on
Buyer any transferee liability for any taxes, penalties, or interest due or to
become due from Seller. Seller is not required to file Virginia sales tax
returns with respect to the operation of the Station.
3.14 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry, there is no claim,
legal action, counterclaim, suit, arbitration, governmental investigation or
other legal, administrative, or tax proceeding, nor any order, decree or
judgment, in progress or pending, or to the knowledge of Seller threatened,
against or relating to Seller with respect to its ownership or operation of the
Station or otherwise relating to the Assets or the business or operations of
the Station, nor does Seller know or have reason to be aware of any basis for
the same. In particular, but without limiting the generality of the foregoing,
there are no applications, complaints or proceedings pending or, to the best of
its knowledge, threatened (i) before the FCC relating to the business or
operations of the Station other than rule making proceedings which affect the
television industry generally, (ii) before any federal or state agency relating
to the business or operations of the Station involving charges of illegal
discrimination under any federal or state employment laws or regulations, or
(iii) before any federal, state, or local agency relating to the business or
operations of the Station involving zoning issues under any federal, state, or
local zoning law, rule, or regulation.
3.15 Environmental Matters.
(a) Seller has complied in all material respects with all
laws, rules, and regulations of all federal, state, and local governments (and
all agencies thereof) concerning the environment, public health and safety, and
employee health and safety, and no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been filed or commenced
against Seller in connection with its ownership or operation of the Station
alleging any failure to comply with any such law, rule, or regulation.
(b) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and there is no basis related to the past or present
operations, properties, or facilities of Seller for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand against Seller giving rise to any such liability) under any law, rule,
or regulation of any federal, state, or local government (or agency thereof)
concerning release or threatened release of hazardous substances, public health
and safety, or pollution or protection of the environment.
<PAGE> 18
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(c) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and Seller has not handled or disposed of any substance,
arranged for the disposal of any substance, or owned or operated any property
or facility in any manner that could form the basis for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand (under the common law or pursuant to any statute) against Seller giving
rise to any such liability) for damage to any site, location, or body of water
(surface of subsurface) or for illness or personal injury.
(d) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and there is no basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
against Seller giving rise to any such liability) under any law, rule, or
regulation of any federal, state, or local government (or agency thereof)
concerning employee health and safety.
(e) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and Seller has not exposed any employee to any substance or
condition that could form the basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand (under the
common law or pursuant to statute) against Seller giving rise to any such
liability) for any illness or personal injury to any employee.
(f) In connection with its ownership or operation of the
Station, Seller has obtained and been in compliance in all material respects
with all of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all federal,
state, and local laws, rules, and regulations (including all codes, plans,
judgments, orders, decrees, stipulations, injunctions, and charges thereunder)
relating to public health and safety, worker health and safety, and pollution
or protection of the environment, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
(g) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by Seller in
connection with its ownership and operation of the Station or, to the best of
Seller's knowledge, after due investigation, by any other party on any Real
Property.
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3.16 Compliance with Laws. Seller has complied in all material
respects with the Licenses and all federal, state, and local laws, rules,
regulations, and ordinances applicable or relating to the ownership and
operation of the Station. Neither the ownership or use of the properties of
the Station nor the conduct of the business or operations of the Station
conflicts with the rights of any other person or entity.
3.17 Conduct of Business in Ordinary Course. Since January 1,
1997, Seller has conducted the business and operations of the Station only in
the ordinary course and has not:
(a) Suffered any material adverse change in the business,
assets, or properties of the Station, including any damage, destruction, or
loss affecting any assets used or useful in the conduct of the business of the
Station;
(b) Made any material increase in compensation payable or
to become payable to any of the employees of the Station, or any bonus payment
made or promised to any employee of the Station, or any material change in
personnel policies, employee benefits, or other compensation arrangements
affecting the employees of the Station;
(c) Made any sale, assignment, lease, or other transfer
of any of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(d) Canceled any debts owed to or claims held by Seller
with respect to the Station, except in the normal and usual course of business;
(e) Suffered any material write-down of the value of any
Assets or any material write-off as uncollectible of any accounts receivable of
the Station; or
(f) Transferred or granted any right under, or entered
into any settlement regarding the breach or infringement of, any license,
patent, copyright, trademark, trade name, franchise, or similar right, or
modified any existing right relating to the Station.
3.18 Transactions with Affiliates. Seller has not been involved in
any business arrangement or relationship relating to the Station with any
affiliate of Seller, and no affiliate of Seller owns any property or right,
tangible or intangible, which is used in the business of the Station. As used
in this paragraph, "affiliate" has the meaning set forth in Rule 12b-2
promulgated under the Securities and Exchange Act of 1934.
3.19 Broker. Neither Seller nor any person acting on Seller's
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
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3.20 Full Disclosure. No representation or warranty made by Seller
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida and at Closing will be duly qualified to conduct business as a
foreign corporation in the State of Virginia. Buyer has all requisite power
and authority to execute and deliver this Agreement and the documents
contemplated hereby, and to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by Buyer hereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Buyer have been duly authorized
by all necessary actions on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with its terms,
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the documents contemplated hereby (with or without the giving of notice,
the lapse of time, or both): (i) do not require the consent of any third
party; (ii) will not conflict with the Articles of Incorporation or Bylaws of
Buyer; (iii) will not conflict with, result in a breach of, or constitute a
default under, any law, judgment, order, injunction, decree, rule, regulation,
or ruling of any court or governmental instrumentality; or (iv) will not
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license, or
permit to which Buyer is a party or by which Buyer may be bound, such that
Buyer could not acquire or operate the Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement, except for a
commission payable by Buyer to Patrick Communications Corporation.
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4.5 Full Disclosure. No representation or warranty made by Buyer
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall operate the Station diligently in
the ordinary course of business in accordance with its past practices (except
where such conduct would conflict with the following covenants or with Seller's
other obligations under this Agreement), and in accordance with the other
covenants in this Section 5.
5.2 Compensation. Seller shall not increase the compensation,
bonuses, or other benefits payable or to be payable to any person employed in
connection with the conduct of the business or operations of the Station,
except in accordance with past practices.
5.3 Contracts. Seller will not enter into any contract or
commitment relating to the Station or the Assets, or amend or terminate any
Contract (or waive any material right thereunder), or incur any obligation
(including obligations relating to the borrowing of money or the guaranteeing
of indebtedness) that will be binding on Buyer after Closing, except for cash
time sales agreements made in the ordinary course of business. Prior to the
Closing Date, Seller shall deliver to Buyer a list of all Contracts entered
into between the date of this Agreement and the Closing Date, together with
copies of such Contracts.
5.4 Disposition of Assets. Seller shall not sell, assign, lease,
or otherwise transfer or dispose of any of the Assets, except where no longer
used or useful in the business or operations of the Station or in connection
with the acquisition of replacement property of equivalent kind and value.
5.5 Encumbrances. Seller shall not create, assume or permit to
exist any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Assets, except for (i) liens
disclosed on Schedule 3.5 and Schedule 3.6, which shall be removed prior to the
Closing Date, (ii) liens for current taxes not yet due and payable, and (iii)
mechanics' liens and other similar liens, which shall be removed prior to the
Closing Date.
5.6 Licenses. Seller shall not cause or permit, by any act or
failure to act, any of the Licenses to expire or to be revoked, suspended, or
modified, or take any action that could cause the FCC or any other governmental
authority to institute proceedings for the suspension, revocation, or adverse
modification of any of the Licenses. Seller shall not fail
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prosecute with due diligence any applications to any governmental authority in
connection with the operation of the Station.
5.7 Rights. Seller shall not waive any right relating to the
Station or any of the Assets. Seller shall not cause, by any act or failure to
act, any cable system located within the Station's Area of Dominant Influence
to refuse to carry the Station's signal.
5.8 No Inconsistent Action. Seller shall not take any action that
is inconsistent with its obligations under this Agreement or that could hinder
or delay the consummation of the transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, Seller covenants that neither
it nor any of its directors, officers or agents will, (a) solicit, initiate or
encourage the submission of any proposal or offer relating to any (i)
liquidation, dissolution or recapitalization, (ii) merger or consolidation,
(iii) acquisition or sale of securities, (iv) transfer or assignment of any FCC
License (v) sale, lease or disposition of substantially all of the assets of
Seller, or (vi) similar transaction or business combination, in each case
involving Seller or (b) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in,
or facilitate in any other manner any effort or attempt by any party to do or
seek any of the foregoing. Seller shall notify Buyer as soon as practicable if
any party makes any proposal with respect to any of the foregoing.
Notwithstanding any other provision in this Agreement to the contrary, in the
event that Seller violates its obligations in this Section 5.8, Buyer shall
have the right to seek specific performance of Seller's obligations hereunder.
5.9 Access to Information. Seller shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives
reasonable access to the Assets and to all other properties, equipment, books,
records, Contracts, and documents relating to the Station for the purpose of
audit and inspection, including inspections incident to the environmental study
described in Section 6.5 and the engineering study described in Section 6.6,
and will furnish or cause to be furnished to Buyer or its authorized
representatives all information with respect to the affairs and business of the
Station that Buyer may reasonably request (including any financial reports and
operations reports produced with respect to the affairs and business of the
Station). Without limiting the generality of the foregoing, Seller shall give
Buyer and its counsel, accountants and other authorized representatives
reasonable access to Seller's financial records (except all lists of donors,
contributors, and other supporters of the Station) and Seller's employees,
counsel, accountants and other representatives for the purpose of
preparing and auditing such financial statements as Buyer determines, in its
sole judgment, are required or advisable to comply with federal or state
securities laws and the rules and regulations of securities markets as a result
of the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby. Notwithstanding the requirements of Section
5.9 or any other provision herein to the contrary, Buyer shall not have the
right to review any lists of donors, contributors, or other supporters of the
Station or the Church.
<PAGE> 23
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5.10 Maintenance of Assets. Seller shall use its best efforts and
take all reasonable actions to maintain all of the Assets in good condition
(ordinary wear and tear excepted), and use, operate, and maintain all of the
Assets in a reasonable manner and in accordance with the terms of the FCC
Licenses, all rules and regulations of the FCC and generally accepted standards
of good engineering practice. Seller shall maintain inventories of spare parts
and expendable supplies at levels consistent with past practices. If any loss,
damage, impairment, confiscation, or condemnation of or to any of the Assets
occurs, Seller shall repair, replace, or restore the Assets to their prior
condition as represented in this Agreement as soon thereafter as possible, and
Seller shall use the proceeds of any claim under any insurance policy solely to
repair, replace, or restore any of the Assets that are lost, damaged, impaired,
or destroyed.
5.11 Insurance. Seller shall maintain the existing insurance
policies on the Station and the Assets.
5.12 Consents. Seller shall obtain the Consents without any change
in the terms or conditions of any Contract or License that could be less
advantageous to the Station than those pertaining under the Contract or License
as in effect on the date of this Agreement. Seller shall promptly advise Buyer
of any difficulties experienced in obtaining any of the Consents and of any
conditions proposed, considered, or requested for any of the Consents.
5.13 Books and Records. Seller shall maintain its books and
records relating to the Station in accordance with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing
of any unusual or material developments with respect to the business or
operations of the Station, and of any material change in any of the information
contained in Seller's representations and warranties contained in Section 3 of
this Agreement.
5.15 Financial Information. Seller shall furnish to Buyer within
twenty days after the end of each month ending between the date of this
Agreement and the Closing Date such financial information (including
information on payables and receivables) as Buyer may reasonably request. All
financial information delivered by Seller to Buyer pursuant to this Section
shall be prepared from the books and records of Seller in accordance with
generally accepted accounting principles consistently applied, shall accurately
reflect the books, records, and accounts of the Station.
5.16 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Station.
<PAGE> 24
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5.17 Financing Leases. Seller will satisfy at or prior to Closing
all outstanding obligations under capital and financing leases with respect to
any of the Assets and obtain good title to the Assets leased by Seller pursuant
to those leases so that those Assets shall be transferred to Buyer at Closing
free of any interest of the lessors.
5.18 Programming. Seller shall not make any material changes in
the broadcast hours or in the percentages of types of programming broadcast by
the Station, or make any other material change in the Station's programming
policies, except such changes as in the good faith judgment of the Seller are
required by the public interest.
5.19 Preservation of Business. Seller shall use its best efforts
to preserve the business and organization of the Station and use its best
efforts to keep available to the Station its present employees and to preserve
the audience of the Station and the Station's present relationships with
suppliers, advertisers, and others having business relations with it, to the
end that the business, operations, and prospects of the Station shall be
unimpaired at the Closing Date. The ordinary and customary operating,
marketing, promotional, sales, and advertising practices of the Station shall
be maintained.
5.20 Collection of Accounts Receivable. Seller shall collect the
accounts receivable of the Station only in the ordinary course consistent with
its past practices and will not take any action designed or likely to
accelerate the collection of its accounts receivable.
5.21 Personnel Recommendations. Seller shall promptly notify Buyer
as personnel vacancies occur at the Station and consider for employment all
personnel recommended by Buyer for such vacant positions.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with
the purchase and sale of the Assets pursuant to this Agreement shall be subject
to the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an
appropriate application for the FCC Consent and shall file the application with
the FCC within five (5) business days of the execution of this Agreement. The
parties shall prosecute the application with all reasonable diligence and
otherwise use their best efforts to obtain a grant of the application as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on it by the FCC Consent, except that no party shall be required to
comply with a condition if (1) the condition was imposed on it as the result of
a circumstance the existence of which does not constitute a breach by the party
of any of its representations, warranties, or
<PAGE> 25
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covenants under this Agreement, and (2) compliance with the condition would have
a material adverse effect upon it. Buyer and Seller shall oppose any requests
for reconsideration or judicial review of the FCC Consent. If the Closing shall
not have occurred for any reason within the original effective period of the FCC
Consent, and neither party shall have terminated this Agreement under Section 9,
the parties shall jointly request an extension of the effective period of the
FCC Consent. No extension of the FCC Consent shall limit the exercise by either
party of its rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of Seller until the Closing.
6.3 Risk of Loss.
(a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing.
(b) If any damage or destruction of the Assets or any
other event occurs which (i) causes the Station to cease broadcasting
operations for a period of seven or more days or (ii) prevents in any material
respect signal transmission by the Station in the normal and usual manner and
Seller fails to restore or replace the Assets so that normal and usual
transmission is resumed within seven days of the damage, destruction or other
event, Buyer, in its sole discretion, may (x) terminate this Agreement
forthwith without any further obligations hereunder upon written notice to
Seller, or (y) proceed to consummate the transaction contemplated by this
Agreement and complete the restoration and replacement of the Assets after the
Closing Date, in which event Seller shall deliver to Buyer all insurance
proceeds received in connection with such damage, destruction or other event.
6.4 Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each
party will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
<PAGE> 26
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6.5 Environmental Audit. Buyer may, at its option and expense,
retain an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Station. If the survey discloses
any material environmental hazard or material possibility of future liability
for environmental damages or clean-up costs, Buyer shall so notify Seller as
soon as practicable.
6.6 Engineering Study. Buyer may, at its option and expense,
retain an engineering firm to conduct a proof of performance study of the
Station and to prepare a report on the Station's compliance with customary
engineering practices and all applicable FCC rules, regulations, prescribed
practices, and technical standards. If the survey discloses any material
deficiencies in the operations or equipment of the Station, Buyer shall so
notify Seller as soon as practicable.
6.7 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, Buyer shall have no obligation (i) to expend
funds to obtain any of the Consents or (ii) to agree to any adverse change in
any License or Assumed Contract to obtain a Consent required with respect
thereto.
6.8 Bulk Sales Law. If applicable, the Bulk Sales law of the
State of Virginia shall be complied with by Seller. Any loss, liability,
obligation, or cost suffered by Seller or Buyer as the result of the failure of
Seller or Buyer to comply with the provisions of any bulk sales law applicable
to the transfer of the Assets as contemplated by this Agreement shall be borne
by Seller.
6.9 Title Insurance and Surveys.
(a) Title Insurance on Fee Property. With respect to
each parcel of Real Property that Seller owns, Buyer will obtain at Buyer's
expense, at or prior to Closing, an ALTA Owner's Policy of Title Insurance Form
B- 1987 (or equivalent policy acceptable to Buyer), issued by a title insurer
satisfactory to Buyer, in an amount equal to the fair market value of the
property and any improvements thereon (as reasonably determined by Buyer),
insuring title to such parcel to be in the name of Buyer as of the Closing,
subject only to liens or encumbrances expressly permitted by this Agreement.
(b) General Requirements as to Title Insurance Policies.
Each title insurance policy obtained by Buyer pursuant to this Agreement shall
(1) insure title to the Real Property described in the policy and all recorded
easements benefitting such Real
<PAGE> 27
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Property, (2) contain an "extended coverage endorsement" insuring over the
general exceptions customarily contained in title policies, (3) contain an ALTA
Zoning Endorsement 3.1 (or equivalent), (4) contain an endorsement insuring that
the Real Property described in the policy is the same real estate shown in the
survey delivered with respect to such property, (5) contain an inflation
endorsement, (6) contain a "contiguity" endorsement with respect to any Real
Property consisting of more than one record parcel, and (7) not be subject to
any survey exception or any defect or encroachment disclosed by a survey
delivered with respect to the property.
(c) Surveys. With respect to each parcel of Real
Property, as to which a title insurance policy is to be procured pursuant to
this Agreement, Buyer will procure, at its own expense, a current survey of the
parcel, prepared by a licensed surveyor and conforming to current ALTA Minimum
Detail Requirements for Land Title Surveys, disclosing the location of all
improvements, easements, party walls, sidewalks, roadways, utility lines, and
other matters customarily shown on such surveys, and showing access
affirmatively to public streets and roads.
6.10 Access to Books and Records. Seller shall provide Buyer
access and the right to copy for a period of three years from the Closing Date
any books and records relating to the Assets that are not included in the
Assets. Buyer shall provide Seller access and the right to copy for a period
of three years from the Closing Date any books and records relating to the
Assets.
6.11 Appraisal. Buyer and Seller agree to allocate the Purchase
Price for tax and recording purposes in accordance with an appraisal to be
conducted by an appraisal firm selected and paid for by Buyer with experience
in the valuation and appraisal of television station assets.
6.12 Use of Space. Seller shall provide Buyer with unrestricted
access and the right to use the Station's master control facilities and such
engineering space and offices as Buyer reasonably requires for the operation of
the Station, free of charge for a period of 120 days following the Closing
Date.
6.13 Station Employees.
(a) Prior to the Closing, Buyer shall interview the
Station's employees and offer employment to those employees selected by Buyer
in its sole discretion and upon such terms and conditions as Buyer may
determine.
<PAGE> 28
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(b) For each Station employee that Buyer hires, Buyer
shall provide credit towards Buyer's benefits plans in accordance with the
terms of such plans for vacation pay, sick leave and length of service accrued
by each such employee as of the Closing Date.
(c) Prior to filing of the assignment application
referred to in Section 6.1, Buyer shall interview Andy Wright at Buyer's West
Palm Beach, Florida headquarters for the position of Station manager.
6.14 Assumption of Certain Contracts. Buyer will assume at Closing
the Contracts for the broadcast of local religious programming listed on
Schedule 3.7 that, as of the Closing Date, have been paid until such time as the
programming contracts expire or until twenty-six (26) weeks from the Closing
Date, whichever shall occur first.
6.15 Agreements with Evangel Foursquare Church.
(a) For a period of five (5) years from the Closing Date,
Buyer shall provide the Church, free of charge, with one (1) hour of
programming time per week, to be aired each week on a weekday to be agreed upon
by Seller and Buyer before the Closing. The Church shall notify Buyer in
writing of the Church's designated one hour time slot between the hours of 9:00
a.m. and noon no less than thirty (30) days prior to Closing. This arrangement
shall be exclusive to the Church and the programming shall be limited to
religious programs produced by the Church. If the Church is unable to provide
its program to Buyer for broadcast on the agreed upon day during the first week
following the Closing, the Church shall not forfeit its right to the program
time; provided, however, that Buyer shall not be obligated to broadcast the
Church's program until thirty (30) days following the date the Church provides
Buyer with written notice that it is ready and able to provide its program to
Buyer.
(b) Buyer shall provide the Church with ninety, 30-second
spots per quarter (the "Spots"), at no cost, for a period of five (5) years
from the Closing Date. Buyer shall have the right, in its sole discretion, to
preempt any Spot, without compensation to the Church, if Buyer receives an
offer from any party to purchase such Spot; provided, however, that the Church
shall receive a make-good credit for each Spot that Buyer preempts. The Spots
shall not be cumulative and shall expire, if unused, at the end of each
quarter. The use of the Spots shall be exclusive to the Church and the Church
shall not license, sell, or otherwise convey any Spot to any party. The
content of all such Spots must relate directly to the Church or the activities
of the Church.
(c) Buyer agrees to immediately forward to Seller at the
address specified in Section 11.3 all contributions and donations to the Church
or the Evangelical Foursquare Ministry that Buyer receives following the
Closing.
<PAGE> 29
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SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer
at the Closing are subject at Buyer's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Seller contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Seller shall have
performed and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
it prior to or on the Closing Date.
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied
with by Buyer under Section 6.1 hereof, Seller shall have complied with any
conditions imposed on it by the FCC Consent, and the FCC Consent shall have
become a Final Order.
(e) Governmental Authorizations. Seller shall be the
holder of all Licenses and there shall not have been any modification of any
License that could have an adverse effect on the Station or the conduct of its
business and operations. No proceeding shall be pending or threatened the
effect of which could be to revoke, cancel, fail to renew, suspend, or modify
adversely any License.
(f) Deliveries. Seller shall have made or stand willing
to make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change in the
business, assets, or properties of the Station, including any damage,
destruction, or loss affecting any assets used or useful in the conduct of the
business of the Station.
(h) Tower Approvals. The FAA shall have issued a No
Hazard Determination or similar finding in response to the March 26, 1997
Notice of Proposed Construction or Alteration filed with the FAA (a copy of
which Notice is included in
<PAGE> 30
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Schedule 3.4 hereto), and the FCC shall have issued to Seller a construction
permit or similar authorization that reflects the Station's actual antenna tower
location and height.
7.2 Conditions to Obligations of Seller. All obligations of
Seller at the Closing are subject at Seller's option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Buyer shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing
to make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00
a.m. on a date, to be set by Buyer on at least five days' written notice to
Seller, that is (1) not earlier than the first business day after the FCC
Consent is granted, and (2) not later than ten business days following the date
upon which the FCC Consent has become a Final Order, subject to satisfaction or
waiver of all other conditions precedent to the holding of the Closing. If
Buyer fails to specify the date for Closing prior to the fifth business day
after the date upon which the FCC Consent becomes a Final Order, the Closing
shall take place on the tenth business day after the date upon which the FCC
Consent becomes a Final Order.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place that is agreed upon by Buyer and
Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
<PAGE> 31
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(a) Transfer Documents. Duly executed warranty bills of
sale, deeds, assignments, and other transfer documents which shall be
sufficient to vest good and marketable title to the Assets in the name of
Buyer, free and clear of all claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges or encumbrances, except for
liens for current taxes not yet due and payable;
(b) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Seller by an officer of Seller,
certifying (1) that the representations and warranties of Seller contained in
this Agreement are true and complete in all material respects as of the Closing
Date as though made on and as of that date; and (2) that Seller has in all
material respects performed and complied with all of its obligations,
covenants, and agreements set forth in this Agreement to be performed and
complied with on or prior to the Closing Date;
(d) Tax, Lien, and Judgment Searches. Results of a
search for tax, lien, and judgment filings in the records of the Virginia State
Corporation Commission as well as the records of those counties in Virginia in
which any of the Assets are located, such searches having been made no earlier
than fifteen days prior to the Closing Date;
(e) Licenses, Contracts, Business Records, Etc. Copies
of all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by
Seller in connection with its operations;
(f) Accounts Receivable. A complete and accurate list of
the Station's accounts receivable as of a date no more than five business days
prior to the Closing Date, including, with respect to each of the accounts
receivable, the account number, date of issuance, name and address of account
debtor, aggregate amount, and balance due;
(g) Opinion of Counsel. An Opinion of Seller's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.2(i)
hereto;
(h) Lenders Certificates. Such certificates and
confirmations to Buyer's senior lenders as Buyer may reasonably request in
connection with obtaining financing for the performance of its payment
obligations hereunder.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
<PAGE> 32
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(a) Purchase Price. The Purchase Price as provided in
Section 2.3;
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Seller's obligations under the Licenses and Assumed Contracts insofar as they
relate to the time on and after the Closing Date and arise out of events
related to Buyer's ownership of the Assets or its operation of the Station on
or after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Buyer by an officer of Buyer,
certifying (1) that the representations and warranties of Buyer contained in
this Agreement are true and complete in all material respects as of the Closing
Date as though made on and as of that date, and (2) that Buyer has in all
material respects performed and complied with all of its obligations,
covenants, and agreements set forth in this Agreement to be performed and
complied with on or prior to the Closing Date;
(d) Opinion of Counsel. An opinion of Buyer's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3(d)
hereto.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Seller
set forth in this Agreement have not been satisfied or waived in writing by
Seller.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
by December 31, 1997.
(d) Breach. Without limiting Seller's rights under the
other provisions of this Section 9.1, if Buyer has failed to cure any material
breach of any of its representations, warranties or covenants under this
Agreement within fifteen days after Buyer received written notice of such
breach from Seller.
<PAGE> 33
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9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Station abandoned, if Buyer is not then
in material default, upon written notice to Seller, upon the occurrence of any
of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer
set forth in this Agreement have not been satisfied or waived in writing by
Buyer.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
on or before December 31, 1997.
(d) Interruption of Service. If any event shall have
occurred that prevented signal transmission of the Station in the normal and
usual manner for a continuous period of seven days.
(e) Environmental Hazards. Buyer shall have notified
Seller of material environmental hazards or the material possibility of
environmental damages or clean-up costs, as indicated in the environmental
study described in Section 6.5, within 30 days prior to the Closing Date, and
the cause thereof shall not have been remedied prior to the Closing Date.
(f) Technical Deficiencies. Buyer shall have notified
Seller of material deficiencies in the operations or equipment of the Station,
as indicated in the engineering study described in Section 6.6, within 30 days
prior to the Closing Date, and the cause thereof shall not have been remedied
prior to the Closing Date.
(g) Breach. Without limiting Buyer's rights under the
other provisions of this Section 9.2, if Seller has failed to cure any material
breach of any of its representations, warranties or covenants under this
Agreement within fifteen days after Seller received written notice of such
breach from Buyer.
9.3 Rights on Termination. If this Agreement is terminated
pursuant to Section 9.1 or Section 9.2 and neither party is in material breach
of this Agreement, the parties hereto shall not have any further liability to
each other with respect to the purchase and sale of the Assets. If this
Agreement is terminated by Seller due to Buyer's material breach of this
Agreement, then Seller shall have all rights and remedies available at law. If
this Agreement is terminated by Buyer due to Seller's material breach of this
Agreement, Buyer shall have all rights and remedies available at law or equity.
<PAGE> 34
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SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
eighteen months. Any investigations by or on behalf of any party hereto shall
not constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
Seller shall affect Buyer's right to rely on any representation or warranty
made by Seller or relieve Seller of any obligations under this Agreement as the
result of a breach of any of its representations and warranties.
10.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or
any information Buyer may have, Seller hereby agrees to indemnify and hold
Buyer harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Seller contained in this Agreement or in any certificate, document,
or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by
Buyer pursuant to this Agreement, including any liabilities arising at any time
under any Contract not included in the Assumed Contracts.
(c) Any loss, liability, obligation, or cost resulting
from the failure of the parties to comply with the provisions of any bulk sales
law applicable to the transfer of the Assets.
(d) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station prior to the Closing, including
any liabilities arising under the Licenses or the Assumed Contracts which
relate to events occurring prior the Closing Date.
(e) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have,
<PAGE> 35
- 30 -
Buyer hereby agrees to indemnify and hold Seller harmless against and with
respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, document,
or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station on and after the Closing.
(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim. If the claim relates to an action, suit, or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant within five
business days after written notice of such action, suit, or proceeding was given
to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty- day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
<PAGE> 36
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(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnifications rights provided in Sections 10.2
and 10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other remedies
that may be available, including money damages, to obtain specific performance
of the terms of this Agreement. If any action is brought by Buyer to enforce
this Agreement, Seller shall waive the defense that there is an adequate remedy
at law.
10.6 Attorneys' Fees. In the event of a default by either party
which results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing party shall be entitled to reimbursement from
the other party of its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales tax
arising in connection with the conveyance of the Assets by Seller to Buyer
pursuant to this Agreement shall be paid by Seller. Buyer and Seller shall
each pay one- half of all transfer taxes and all filing fees required by the
FCC in connection with the FCC Consent. Except as otherwise provided in this
Agreement, each party shall pay its own expenses incurred in connection with
the authorization, preparation, execution, and performance of this Agreement,
including all fees and expenses of counsel, accountants, agents, and
representatives. Buyer shall pay at
<PAGE> 37
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the Closing the brokerage fee to Patrick Communications Corporation in the
amount of $150,000, and each party shall be responsible for all fees or
commissions payable to any other finder, broker, advisor, or similar person
retained by or on behalf of such party.
11.2 Arbitration. Except as otherwise provided to the contrary
below, any dispute arising out of or related to this Agreement that Seller and
Buyer are unable to resolve by themselves shall be settled by arbitration by a
panel of three (3) neutral arbitrators who shall be selected in accordance with
the procedures set forth in the commercial arbitration rules of the American
Arbitration Association. The persons selected as arbitrators shall have prior
experience in the broadcasting industry but need not be professional
arbitrators, and persons such as lawyers, accountants, brokers and bankers shall
be acceptable. Before undertaking to resolve the dispute, each arbitrator shall
be duly sworn faithfully and fairly to hear and examine the matters in
controversy and to make a just award according to the best of his or her
understanding. The arbitration hearing shall be conducted in accordance with the
commercial arbitration rules of the American Arbitration Association in
Washington, D.C. The written decision of a majority of the arbitrators shall be
final and binding on Seller and Buyer. The costs and expenses of the arbitration
proceeding shall be assessed between Seller and Buyer in a manner to be decided
by a majority of the arbitrators, and the assessment shall be set forth in the
decision and award of the arbitrators. Judgment on the award, if it is not paid
within thirty days, may be entered in any court having jurisdiction over the
matter. No action at law or suit in equity based upon any claim arising out of
or related to this Agreement shall be instituted in any court by Seller or Buyer
against the other except (i) an action to compel arbitration pursuant to this
Section, (ii) an action to enforce the award of the arbitration panel rendered
in accordance with this Section, or (iii) a suit for specific performance
pursuant to Section 10.5.
11.3 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed
to have been given on the date of personal delivery or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
If to Seller or the Church: Pastor C. Kenneth Wright
Vine and Branch, Inc./Evangel Foursquare Church
612 Bullitt Avenue, S.E.
Roanoke, VA 24013
With a copy to: Donald W. Huffman, Esq.
Donald W. Huffman & Associates, P.C.
22 Church Avenue, S.W.
Roanoke, VA 24011
<PAGE> 38
- 33 -
If to Buyer: Mr. Lowell W. Paxson
Paxson Communications of Roanoke-38, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.3.
11.4 Benefit and Binding Effect. Neither party hereto may assign
this Agreement without the prior written consent of the other party hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement, in whole or in part, to one or more subsidiaries or commonly
controlled affiliates of Buyer without seeking or obtaining Seller's prior
approval in which event Buyer shall have no further obligation hereunder and
Buyer may collaterally assign its rights and interests hereunder to its senior
lenders without seeking or obtaining Seller's prior approval. Upon any
permitted assignment by Buyer or Seller in accordance with this Section 11.4,
all references to"Buyer" herein shall be deemed to be references to Buyer's
assignee and all references to "Seller" herein shall be deemed to be references
to Seller's assignee, as the case may be. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
Seller, any additional bills of sale, deeds, or other transfer documents that,
in the reasonable opinion of Buyer, may be necessary to ensure, complete, and
evidence the full and effective transfer of the Assets to Buyer pursuant to
this Agreement.
11.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT
REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for
ease of reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
<PAGE> 39
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11.8 Gender and Number. Words used in this Agreement, regardless
of the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby or thereby
prior to the filing of the application for FCC Consent. Following such filing,
neither party shall publish any press release or make any other public
announcement or otherwise make such communications without the prior consent of
the other party, which consent shall not be unreasonably withheld or delayed;
provided, however, that nothing contained herein shall prevent either party
from (a) making such public announcements as may be required to comply with
federal or state securities laws or (b) promptly making all filings with
governmental authorities as may, in its judgment be required or advisable in
connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 40
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IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
PAXSON COMMUNICATIONS OF
ROANOKE-38, INC.
By: /s/ Lowell W. Paxson
---------------------------------------
Name: Lowell W. Paxson
Title: Chairman
VINE AND BRANCH, INC.
By: /s/ Kenneth Wright
----------------------------------------
C. Kenneth Wright
President
EVANGEL FOURSQUARE CHURCH
By: /s/ C. Kenneth Wright
----------------------------------------
C. Kenneth Wright
Pastor
<PAGE> 1
EXHIBIT 10.174
================================================================================
LOAN AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
BOSTON-46, INC.
AND
CHANNEL 46 OF BOSTON, INC.
FOR
TELEVISION STATION WHRC(TV),
NORWELL, MASSACHUSETTS
* * *
JUNE 10, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. AMOUNT AND TERMS OF THE LOANS........................................................1
Section 1.1 The Loan......................................................................1
Section 1.2 The Promissory Note...........................................................1
Section 1.3 Interest......................................................................2
Section 1.4 Repayment of the Loan.........................................................2
Section 1.5 Use of Proceeds and Advancement of Funds......................................2
Section 1.6 Deposit.......................................................................3
Section 1.7 Information...................................................................3
Section 1.8 Prepayment....................................................................3
Section 1.9 Payment on Non-Business Days..................................................3
ARTICLE II. CLOSING.............................................................................3
Section 2.1 Closing Date..................................................................3
ARTICLE III. SECURITY...........................................................................4
Section 3.1 Security Interest.............................................................4
Section 3.2 Pledge Agreement..............................................................4
Section 3.3 Leasehold Mortgages...........................................................4
Section 3.4 Mortgages.....................................................................4
ARTICLE IV. CONDITIONS OF LENDING...............................................................5
Section 4.1 Conditions Precedent to Loan..................................................5
Section 4.2 Compliance....................................................................6
ARTICLE V. REPRESENTATIONS AND WARRANTIES.......................................................6
Section 5.1 Representations and Warranties of the Borrower................................6
ARTICLE VI. COVENANTS OF THE BORROWER...........................................................9
Section 6.1 Affirmative Covenants.........................................................9
Section 6.2 Negative Covenants...........................................................10
Section 6.3 Reporting Requirements.......................................................13
ARTICLE VII. EVENTS OF DEFAULT.................................................................14
Section 7.1 Events of Default............................................................14
Section 7.2 Effect of Event of Default...................................................17
ARTICLE VIII. MISCELLANEOUS....................................................................17
Section 8.1 No Waiver; Cumulative Remedies...............................................17
Section 8.2 Amendments...................................................................17
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 8.3 Conflicts....................................................................18
Section 8.4 Address for Notices..........................................................18
Section 8.5 Expenses.....................................................................18
Section 8.6 Binding Effect; Assignment...................................................19
Section 8.7 Governing Law................................................................19
Section 8.8 Severability of Provisions...................................................19
Section 8.9 Headings.....................................................................20
Section 8.10 Rights Affected by Extensions................................................20
Section 8.11 Survival of Representations and Warranties...................................20
Section 8.12 FCC Compliance...............................................................20
Section 8.13 Further Assurances...........................................................21
Section 8.14 Indemnification..............................................................21
Section 8.15 Waiver.......................................................................21
Section 8.16 Maximum Interest.............................................................21
Section 8.17 Counterparts.................................................................22
ARTICLE IX. GUARANTY...........................................................................23
Section 9.1 Guaranty.....................................................................23
Section 9.2 Representations and Warranties...............................................24
Section 9.3 Limited Recourse.............................................................24
</TABLE>
LIST OF EXHIBITS
----------------
Exhibit 1 -- Promissory Note
Exhibit 2 -- Security Agreement
Exhibit 3 -- Pledge Agreement
Exhibit 4 -- Mortgage
- ii -
<PAGE> 4
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 10th day of June, 1997, is by and
between PAXSON COMMUNICATIONS OF BOSTON-46, INC., a Florida corporation having
its principal offices at 601 Clearwater Park Road, West Palm Beach, Florida
33401 (the "Lender"), and CHANNEL 46 OF BOSTON, INC., a Florida corporation
having its principal offices at 14444 66th Street North, Clearwater, Florida
34624 (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Borrower is purchasing substantially all of the assets and
properties, including all broadcast licenses issued by the Federal
Communications Commission (the "FCC Licenses") and other governmental
authorities, of Television Station WHRC(TV), Norwell, Massachusetts (the
"Station") pursuant to an Asset Purchase Agreement (the "Purchase Agreement"),
dated as of September 27, 1996, between the Borrower and Massachusetts
Redevelopment Limited Liability Company ("Seller");
WHEREAS, the Lender is willing to lend the Borrower sufficient funds to
acquire the Station on which the Lender will provide programming pursuant to a
Time Brokerage Agreement; and
WHEREAS, the Borrower desires to borrow funds from the Lender to
finance the purchase and operation of the Station.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, the Lender and the Borrower agree as follows:
ARTICLE I. AMOUNT AND TERMS OF THE LOANS
Section 1.1 The Loan. The Lender agrees, upon the terms and conditions
hereinafter set forth, to make a loan or loans to the Borrower in an aggregate
principal amount not to exceed at any one time outstanding Sixteen Million
Dollars ($16,000,000.00) plus such additional amounts that are reasonably
requested by the Borrower for the purposes set forth in Section 1.5 and are
approved by the Lender in its sole and absolute discretion (the "Loan").
Section 1.2 The Promissory Note. The outstanding principal amount of
the Loan shall be evidenced by and subject to the terms of a promissory note,
dated of even date herewith, substantially in the form set forth as Exhibit 1
hereto (as amended, renewed, restated, increased, consolidated or substituted
from time to time, the "Note") payable to the order of the Lender and
representing the obligation of the Borrower to pay the Lender the amount of the
Loan, with interest thereon, as prescribed in Section 1.3. All references to the
"Note" in this Loan Agreement, the Security Agreement, the Pledge Agreement,
each Leasehold Mortgage or Mortgage (each as defined in this Loan Agreement) and
in such other
<PAGE> 5
- 2 -
agreements and documents executed and delivered in connection with this Loan
Agreement shall be deemed to be references to the Note referred to in this
Section.
Section 1.3 Interest. The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum equal to 9%. Interest shall be
calculated on the basis of a year of three-hundred and sixty (360) days and the
actual number of days elapsed during the period for which such interest is
payable. Interest shall begin to accrue on the outstanding principal amount of
the Loan on the date of disbursement thereof. The first payment of interest by
the Borrower to the Lender shall be due thirty (30) days after the acquisition
of the Station by the Borrower, at which time all accrued interest shall become
due and payable. Thereafter, accrued interest shall be paid monthly on or before
the first day of each month until all principal and interest hereunder is paid
in full and at the repayment or maturity of the Loan. If any installment of
principal or interest is not paid when due, that installment shall bear interest
at a rate per annum equal to the lower of the highest rate permitted by law or
eighteen percent (18%) from the date due thereof until paid in full.
Section 1.4 Repayment of the Loan. In the event that the Purchase
Agreement is terminated prior to the acquisition of the Station by the Borrower,
the Borrower shall immediately repay to the Lender the outstanding principal
amount of the Loan, if any. The outstanding principal amount of the Loan plus
all accrued and unpaid interest thereon shall be due and payable on the first
day of the 84th month following the acquisition of the Station by the Borrower
(the "Maturity Date"). In the event of a termination of the Time Brokerage
Agreement dated as of October 7, 1996, between the Lender and Seller, as amended
by amendments dated as of April 17, 1997 and June 10, 1997 and as assumed by the
Borrower pursuant to Assumption of Time Brokerage Agreement, dated as of June
10, 1997, by and between Seller and the Borrower (the "Time Brokerage
Agreement"), the Borrower shall, in addition to payments of interest required
under Section 1.3 hereof, repay the outstanding principal balance of the Loan in
consecutive, equal monthly installments commencing on the first day of the month
following such termination (the "Amortization Commencement Date") and ending on
the Maturity Date, with each such monthly principal installment payment equal to
(x) the principal amount of the Loan outstanding hereunder as of the first day
of the month following such termination divided by (y) the total number of
consecutive months included in the period commencing on the Amortization
Commencement Date, through and including the Maturity Date.
Section 1.5 Use of Proceeds and Advancement of Funds. The proceeds of
the Loan are to be used by the Borrower exclusively for (i) financing the
purchase of the Station under the Purchase Agreement following receipt of
approval by the Federal Communications Commission (the "FCC") of the assignment
of the FCC Licenses of the Station to the Borrower, (ii) financing the purchase
of certain equipment from the Lender in the amount of
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$395,686.47 pursuant to the Bill of Sale of even date herewith (the "Bill of
Sale") and (iii) working capital and operating expenses relating to the Station.
The parties hereto acknowledge that on the date hereof, the Lender made Loans to
the Borrower in the amount of $15,395,686.47, $15,000,000 of which were used to
acquire the Station from Seller under the Purchase Agreement and $395,686.47 of
which were used to acquire the equipment from the Lender pursuant to the Bill of
Sale.
Section 1.6 Deposit. The parties hereto acknowledge that the Lender
has already advanced to the Borrower $250,000 to be used as a deposit (the
"Deposit") towards the purchase of the Station. The parties hereto agree that
the Deposit, together with any interest earned thereon while held in escrow,
shall be returned to the Lender immediately upon receipt thereof by the
Borrower. The Borrower shall instruct and cause the escrow agent holding the
Deposit to pay such Deposit to the Lender immediately upon the Borrower becoming
entitled to receive such deposit under the Purchase Agreement and the Escrow
Agreement governing such Deposit.
Section 1.7 Information. The Borrower agrees to furnish to the Lender
such information as the Lender may reasonably request in connection with the
Loan or the Station.
Section 1.8 Prepayment. The Borrower may prepay the Loan in whole at
any time, or from time to time in part, with accrued interest to the date of
prepayment on the amount prepaid, without penalty, provided that each payment,
other than that for the full amount of the outstanding balance, shall be in the
amount of Ten Thousand Dollars ($10,000.00) or an integral multiple thereof,
provided, however, that if any such prepayment is made within three years of the
Borrower's acquisition of the Station, the Borrower shall reimburse the Lender
for any prepayment penalty imposed on the Lender or its affiliates under their
debt agreements or instruments as a result of the Borrower's prepayment. Each
prepayment on the Loan shall be applied to installments of principal payable on
the Loan in the inverse order of maturity.
Section 1.9 Payment on Non-Business Days. Whenever any payment to be
made hereunder or under the Note shall become due on a Saturday, Sunday or
public holiday, such payment may be made on the next succeeding business day,
and such extension of time in such case shall be included in the computation of
interest hereunder and under the Note.
ARTICLE II. CLOSING
Section 2.1 Closing Date. Subject to the satisfaction of the terms and
conditions hereof, the closing of this transaction shall occur on a date agreed
upon by the parties hereto (the "Closing Date").
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ARTICLE III. SECURITY
Section 3.1 Security Interest. As security for the Loan, the Borrower
shall execute and deliver to the Lender, on or before the Closing Date, a
security agreement in the form of Exhibit 2 hereto (the "Security Agreement").
Section 3.2 Pledge Agreement. As further security for the Loan, on or
before the Closing Date, the Borrower shall deliver to the Lender a pledge
agreement in the form of Exhibit 3 hereto, duly executed by The Christian
Network, Inc. (the "Shareholder"), the sole shareholder of the Borrower (the
"Pledge Agreement").
Section 3.3 Leasehold Mortgages. If requested by the Lender, at such
time as the Borrower enters into any lease or assumes the Lessee's interest
under any lease, it shall execute with respect to such lease a leasehold
mortgage substantially in the form of Exhibit 4 hereto (a "Leasehold Mortgage"),
granting the Lender a lien on its leasehold interest under such lease. In
particular, and without limiting the generality of the foregoing, if requested
by the Lender, the Borrower shall execute a Leasehold Mortgage with respect to
each lease, if any, that it assumes or enters into as part of the acquisition of
the Station. If requested by the Lender, the Borrower shall also deliver to the
Lender with respect to any lease to which the Borrower becomes a party one or
more of the following documents, each of which shall be in form and substance
satisfactory to the Lender: (i) evidence of the filing of the lease or a
memorandum of lease, (ii) an estoppel certificate executed by the landlord under
such lease or any sublessee, (iii) an executed landlord's consent and waiver,
(iv) fixture filing UCC-1 financing statements, (v) copies of such lease and any
sublease, (vi) executed tenant subordination agreements, (vii) a title
encumbrance report with respect to the real property subject to such lease, and
(viii) any other document required by applicable law to create or perfect a
mortgage lien with respect to such lease or reasonably required by the Lender.
Section 3.4 Mortgages. At such time as the Borrower acquires any
parcel of real estate, the Borrower shall execute a first mortgage or deed of
trust in favor of the Lender on such parcel, in form and substance acceptable to
the Lender (a "Mortgage"). If requested by the Lender, the Borrower shall also
deliver to the Lender with respect to such property one or more of the following
documents, each of which shall be in form and substance satisfactory to the
Lender: (i) fixture filing UCC-1 financing statements, (ii) copies of any lease
relating to such property, if any, (iii) executed tenant subordination
agreements and estoppel certificates, if applicable, (iv) a survey of such real
property, (v) a mortgagee title insurance policy, with such coverage and with
such endorsements, including, without limitation, usury, first loss, last
dollar, revolving credit, variable rate, doing business, zoning comprehensive,
contiguity (as applicable) and survey, to the extent available in the state
<PAGE> 8
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where the property is located, as the Lender may require, and (vi) any other
document required by applicable law to create or perfect a mortgage lien with
respect to such property or reasonably required by the Lender.
ARTICLE IV. CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to Loan. The obligation of the Lender
to disburse from time to time any portion of the Loan hereunder is subject to
the condition precedent that the Lender shall have received all of the
following, on or before the Closing Date, in form and substance satisfactory to
the Lender:
(1) The Note, duly executed and delivered by the Borrower;
(2) The Security Agreement, together with appropriate UCC-1
forms and, if applicable, landlord lien waivers, duly executed and delivered by
the Borrower;
(3) The Pledge Agreement, duly executed and delivered by the
Shareholder together with stock certificates and blank stock powers;
(4) Certified copies of the resolutions of (i) the Board of
Directors of the Borrower evidencing approval of the execution, delivery and
performance of this Agreement, the Note and the Security Agreement and other
matters contemplated hereby, and (ii) the Board of Stewards of the Shareholder
evidencing approval of the execution, delivery and performance of this Loan
Agreement and the Pledge Agreement;
(5) A Certificate of Good Standing for the Borrower and the
Shareholder in Florida and for the Borrower in Massachusetts;
(6) Copies of UCC, judgment and tax lien searches in each
jurisdiction in which collateral covered by the Security Agreement is located,
naming the Borrower as debtor;
(7) a copy of the executed Time Brokerage Agreement together
with documentation that it has been duly assumed by the Borrower and that it
constitutes the legal and valid obligation of the Borrower enforceable in
accordance with its terms;
(8) With respect to each leased real property, the documents
required by Section 3.3, and with respect to each owned real property, the
documents required by Section 3.4;
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(9) Copies of the certificates evidencing the insurance
required to be maintained by the Borrower pursuant to Section 6.1(5);
(10) Evidence, in form and substance acceptable to the Lender,
that the Borrower has received the approval of the FCC to be the licensee of the
Station and that such approval remains in full force and effect and is not
subject to any motions or petitions for reconsideration or other opposition;
(11) A copy of the Purchase Agreement and each other contract,
certificate and other document executed by the Borrower or the Seller of the
Station in connection with the Borrower's acquisition of the Station; and
(12) Such other agreements, certificates, opinions of counsel
and documents that the Lender may reasonably require.
Section 4.2 Compliance. All of the representations and warranties of
the Borrower and the Shareholder in this Loan Agreement, the Note, the Security
Agreement and the Pledge Agreement shall be true and accurate in all material
respects on and as of the Closing Date and the date of any subsequent
disbursement of any portion of the Loan, as if made on and as of such date and
time. The Borrower shall be in compliance with all of the applicable terms and
provisions of this Agreement and no Event of Default or any event which with the
lapse of any applicable grace period or the giving of notice or both would
constitute an Event of Default shall have occurred and be continuing at such
times. The Borrower shall have performed all obligations and taken all actions
to be performed or taken by it hereunder on or prior to such dates. On the
Closing Date, the Borrower and Shareholder shall deliver to the Lender a
certificate, dated as of such date and signed by an executive officer of the
Borrower and the Shareholder, certifying compliance with the conditions of this
Section 4.2. Each disbursement of all or a portion of the Loan to the Borrower
shall in and of itself, constitute a representation and warranty that the
Borrower and the Shareholder as of the date of such Loan, are in compliance with
this Section and if the Borrower or Shareholder is not in compliance with this
Section, the Lender shall not be required to disburse such Loan to the Borrower.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of the Borrower. In order
to induce the Lender to enter into this Agreement and make the Loan, the
Borrower represents and warrants as follows:
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(1) Existence and Standing. The Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Florida and is qualified to do business and in good standing under the laws
of any other jurisdiction in which it conducts its business, and has all
requisite power and authority, corporate or otherwise, to conduct its business,
to own its properties and to execute and deliver, and to perform all of its
obligations under this Agreement, the Note, any Mortgage or Leasehold Mortgage,
the Security Agreement and all other documents that have been or will be
executed and delivered by the Borrower pursuant to this Agreement.
(2) Authorizations, Compliance with Laws. The execution,
delivery and performance by the Borrower of this Agreement, the Note, any
Mortgage or Leasehold Mortgage, the Security Agreement and all other documents
required to be executed and delivered by the Borrower pursuant to this Agreement
have been duly authorized by all necessary corporate action and do not and will
not (i) violate (A) any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to the Borrower or (B) any provision of the charter or by-laws of
the Borrower; or (ii) result in a breach of or constitute a default under any
agreement or instrument to which the Borrower is a party or by which its
properties may be affected; or (iii) result in the creation of a lien, charge or
encumbrance of any nature upon the Borrower's properties or assets other than as
contemplated by this Agreement.
(3) No Consent. No authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental department
or agency, except for filing with the FCC and the consent of the lessor of the
leasehold interest acquired and assumed by the Borrower at the closing of the
acquisition of the Station, is or will be necessary to the valid execution,
delivery and performance by the Borrower of this Agreement, the Note, any
Mortgage or Leasehold Mortgage, the Security Agreement or any other document
required to be executed and delivered by the Borrower pursuant to this
Agreement.
(4) Binding Obligations. This Agreement, the Note, any
Leasehold Mortgage, any Mortgage, the Security Agreement, the Pledge Agreement
and all other documents required to be executed and delivered by the Borrower
(or, in the case of this Agreement and the Pledge Agreement, by the Shareholder)
pursuant to this Agreement have been or, on or prior to the Closing Date, will
be executed and delivered by duly authorized officers of the Borrower (or, in
the case of this Agreement and the Pledge Agreement, of the Shareholder) and
constitute or, on or prior to the Closing Date, will constitute, legal, valid
and binding obligations of the Borrower (or, in the case of this Agreement and
the Pledge Agreement, of the Shareholder) enforceable in accordance with their
respective terms.
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(5) Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of the Borrower, threatened against or affecting
the Borrower, the Station or its properties before any court or governmental
department or agency which materially adversely affects the transactions
contemplated by this Agreement or which would have a material adverse effect on
the business, properties, prospects, operation or condition (financial or
otherwise) of the Borrower or the Station.
(6) No Default. The Borrower is not in default in the
performance, observance or fulfillment of any of the obligations or conditions
contained in any material agreement or instrument to which it is a party, nor
with respect to any order, judgment, writ, injunction or decree of any court,
governmental authority or arbitration board.
(7) Compliance with Laws. The Borrower has complied in all
material respects with all applicable federal, state and local laws. The
Borrower has obtained all material licenses and permits required for the conduct
of its business and operations or such licenses and permits have been applied
for and are now being diligently pursued.
(8) Taxes. The Borrower has filed all tax returns and reports
(federal, state and local) required to be filed by it, and has paid all taxes
shown thereon, including interest and penalties, and all assessments received by
it (except to the extent that the same are being contested in good faith by
appropriate proceedings diligently prosecuted and as to which adequate reserves
have been set aside on the books of the Borrower in conformity with generally
accepted accounting principles).
(9) Title to Properties. The Borrower has, or will have upon
the closing of the acquisition of the Station, good and marketable title to all
of its property and assets and valid and enforceable leasehold interests in the
property which it holds under lease, all such property, assets and leasehold
interests being free and clear of any and all mortgages, deeds of trust,
assignments, liens, security interests, charges or encumbrances of any nature
whatsoever, except for those created hereby, and to the Borrower's knowledge, no
mortgages, deeds of trust, financing statements or other evidences of security
interests covering all or any of the aforesaid property are on file among the
records of any public office, except those evidencing a security interest in
favor of the Lender.
(10) Material Misstatement. No statement made herein or
information, exhibit or report furnished by the Borrower to the Lender in
connection with this Agreement or its negotiation, contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the foregoing not misleading.
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ARTICLE VI. COVENANTS OF THE BORROWER
Section 6.1 Affirmative Covenants. So long as the Note shall remain
unpaid and this Agreement shall not have been terminated, the Borrower hereby
covenants and agrees that it will, unless the Lender shall otherwise consent in
writing:
(1) Payment of Obligations. Pay punctually and discharge when
due: (i) all indebtedness heretofore or hereafter incurred; (ii) all taxes,
assessments and governmental charges or levies imposed upon it or its income or
profits, or upon any properties belonging to it; (iii) claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like persons
which, if unpaid might become a lien or charge upon the property of the
Borrower; provided that this covenant shall not require the payment of any of
the matters set forth in (i), (ii) and (iii) above if the same shall be
contested in good faith and by proper proceedings diligently pursued and as to
which adequate reserves have been set aside on the books of the Borrower in
accordance with generally accepted accounting principles.
(2) Preservation of Existence. Preserve and maintain its
respective corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation.
(3) Maintenance of Properties. Subject to the provisions of
the Time Brokerage Agreement, maintain and preserve all of its properties
necessary or useful in the proper conduct of its business in good working order
and condition, ordinary wear and tear excepted.
(4) Compliance with Laws. Comply in all material respects
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority.
(5) Maintenance of Insurance. Maintain with responsible and
reputable insurance companies policies on all of its properties and covering
such risks, including public liability and workers' compensation, in such
amounts as are usually carried by companies engaged in similar businesses and
owning similar properties as the Borrower, and promptly upon execution thereof
provide to the Lender copies of all such policies and any riders or amendments
thereto. The policies of insurance required hereunder shall name the Lender as
an additional loss payee or additional insured, as applicable, and shall provide
that the Lender shall receive at least thirty (30) days' written notice prior to
the cancellation, termination or alteration of any such policy.
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(6) Operations in Ordinary Course. Continue to operate its
business in the ordinary course.
(7) Perfection of Liens. Do all things requested by the Lender
to preserve and perfect the liens and security interests of the Lender arising
pursuant to the Security Agreement, the Pledge Agreement, any Leasehold
Mortgage, any Mortgage or any other agreement required hereunder as first liens
and security interests.
(8) FCC Approval. If counsel to the Lender reasonably
determines that the consent of the FCC is required as a result of any action
which may be taken pursuant to this Agreement, the Pledge Agreement, the
Security Agreement, any Mortgage or Leasehold Mortgage or any other document
delivered to the Lender in connection herewith or therewith, then the Borrower,
at its sole cost and expense, agrees to use its best efforts to secure such
consent and to cooperate with the Lender in any action commenced by the Lender
to secure such consent.
(9) Purchase Agreement. Comply in all material respects with
its obligations under the Purchase Agreement and the Time Brokerage Agreement.
Section 6.2 Negative Covenants. So long as the Note shall remain
unpaid and this Agreement shall not have been terminated, the Borrower hereby
covenants that it will not, without the Lender's prior written approval:
(1) Indebtedness. Create or incur, assume or suffer to exist
any indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, except for:
(i) indebtedness evidenced by the Note; (ii) indebtedness (other than for
borrowed money) incurred in the ordinary course of business not to exceed Fifty
Thousand Dollars ($50,000.00) in the aggregate at any one time; (iii)
obligations or liabilities arising under the indemnification provisions of the
Purchase Agreement.
(2) Liens. Create, assume or suffer to exist, directly or
indirectly, any security interest, mortgage, deed of trust, pledge, lien, charge
or other encumbrance, of any nature whatsoever upon any of its properties or
assets, now owned or hereafter acquired, excluding, however, from the operation
of this covenant with respect to property or assets other than the Stock (as
defined in the Pledge Agreement):
(i) any security interest or lien created pursuant to
or in connection with this Agreement or securing the Loan, the Security
Agreement, the Pledge Agreement, any Leasehold Mortgage or any Mortgage;
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(ii) liens for taxes or assessments either not
delinquent or the validity of which are being contested in good faith by
appropriate legal or administrative proceedings and as to which adequate
reserves shall have been set aside on its books, in conformity with generally
accepted accounting principles;
(iii) materialmen's, mechanics', carriers', workmen's,
repairmen's, warehousemen's or other like liens arising in the ordinary course
of business and either not yet due and payable or being contested in good faith
by appropriate legal proceedings and as to which adequate reserves shall have
been set aside on its books, in conformity with generally accepted accounting
principles;
(iv) deposits or pledges to secure payment of workers'
compensation, unemployment insurance or other social security benefits or
obligations; or
(v) any judgment lien, singly or aggregated with other
judgment liens, in an amount less than $100,000, unless the judgment it secures
shall not, within thirty (30) days after the entry thereof, have been
discharged, vacated, reversed, or execution thereof stayed pending appeal, or
shall not have been discharged, vacated or reversed within thirty (30) days
after the expiration of any such stay.
(3) Disposition of Assets. Sell, transfer, lease or otherwise
dispose of any of its assets or properties other than sales of assets in the
ordinary course of business (which shall expressly not include any transfer or
assignment of any FCC License).
(4) Merger. Enter into any consolidation or merger with, or
into any acquisition of all or substantially all of the properties or assets of
any person or entity.
(5) Transfer or Issuance of Shares. Issue or permit the
transfer of any shares of the capital stock of the Borrower, or any options,
warrants, convertible securities or other rights to purchase the Borrower's
stock. The preceding sentence shall not apply to issuances or transfers to the
Lender.
(6) Change of Business. Change, in any material respect, the
nature or character of its business as intended, or engage in any activity not
reasonably related to such business.
(7) Remove Assets. Remove any of the assets procured with the
proceeds of the borrowings provided for herein, or any replacements for such
assets, to a jurisdiction
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in which no financing statement on Form UCC-1 has been filed by the Lender with
respect to such assets.
(8) Distributions or Dividends. Declare or make, directly or
indirectly, any payment or distribution, or incur any liability for the
purchase, acquisition, redemption or retirement of any capital stock of the
Borrower or as a dividend, return of capital or other payment or distribution of
any kind to a shareholder of the Borrower or any affiliate of the Borrower
(other than any stock dividend or stock split or similar distribution payable
only in capital stock of the Borrower) in respect of the Borrower's capital
stock.
(9) Transactions with Affiliates. Enter into any transaction
or agreement with any affiliate of the Borrower, except for an affiliation
agreement or similar programming agreement with Shareholder so long as such
affiliation agreement can be terminated by the Borrower at its option upon 30
days or less prior notice to Shareholder.
(10) Contracts. Enter into any contract or commitment relating
to its stock or assets except for contracts involving aggregate payments of less
than Five Thousand Dollars ($5,000.00) and contracts which can be terminated
without penalty on thirty (30) days' notice or less, or amend or terminate any
material contract (or waive any substantial right thereunder), or incur any
obligation (including obligations relating to the borrowing of money or
guarantee of indebtedness), except for an affiliation agreement or similar
programming agreement with Shareholder so long as such affiliation agreement can
be terminated by the Borrower at its option upon 30 days or less prior notice to
Shareholder.
(11) Adverse Change. Suffer any material adverse change in the
business, assets, properties or condition (financial or otherwise) of the
Borrower or the Station, or any damage, destruction or loss affecting any assets
used or useful in the conduct of the business of the Borrower, provided,
however, that this subsection (11) shall not apply to any changes occasioned by
or resulting from actions taken by the Lender under the Time Brokerage
Agreement, litigation involving the use of the "Bridgewater Site" (as defined in
the Purchase Agreement) as the transmitter location for the Station, or actions
by the FCC relating to the Advanced Television Proceeding.
(12) Employee Compensation. Suffer any material increase in
excess of the reasonable range in the broadcast industry in the same or similar
markets in compensation payable or to become payable to any employees, or any
bonus payment made or promised to any employee, or any material change in
personnel policies, insurance benefits or other compensation arrangements
affecting any employees, provided that nothing in this clause shall be construed
to limit or restrict the commission compensation of employees who may be selling
brokered time for the Borrower.
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(13) Cancellation of Debts. Cancel any debts owed to or claims
held by the Borrower.
(14) Write-Down. Suffer any significant write-down of the
value of any assets or any significant write-off as uncollectible of any
accounts receivable without the prior written consent of the Lender except and
as required by generally accepted accounting principles as required to present
accurate financial information on the Borrower.
(15) Rights. Transfer or grant any right under, or enter into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, service mark, trade name, franchise, or similar right, or
modify any existing right relating to the Borrower.
(16) Television Affiliation Agreement. In the event the
Borrower acquires the Station, terminate, amend or waive any provision of any
Television Affiliation Agreement (as defined in Section 7.1(4) below), provided
that an affiliation agreement or similar programming agreement with Shareholder
shall be excluded from this covenant so long as at all times such agreement can
be terminated by the Borrower at its option upon 30 days or less prior notice to
Shareholder.
(17) Purchase Agreement; Time Brokerage Agreement. Terminate,
amend, commit any material breach or default under or waive any material term of
the Purchase Agreement or commit any material breach or default under the Time
Brokerage Agreement.
(18) Subsidiaries. Create or acquire any subsidiary of the
Borrower, unless the Lender shall have approved such action in advance and the
Borrower shall have taken all actions required by the Lender to grant the Lender
a first priority security interest in all of the issued and outstanding stock of
such subsidiary. The Borrower acknowledges and agrees that until such time as
such security interest is granted and perfected, the Lender shall have an
equitable lien in the stock of any subsidiary created or acquired by the
Borrower.
Section 6.3 Reporting Requirements. So long as the Note shall remain
unpaid and the Agreement shall not have been terminated, the Borrower shall,
unless the Lender shall otherwise consent in writing, furnish to the Lender:
(1) Default Certificate. As soon as possible and in any event
within five (5) business days after the occurrence of any Event of Default (as
defined in Section 7.1) of which the Borrower has knowledge, the statement of
the President of the Borrower setting
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forth details of such Event of Default and the action which the Borrower
proposes to take with respect thereto.
(2) Financial Statements. Quarterly financial statements
within thirty (30) days after the end of each fiscal quarter; within ninety (90)
days after the end of each fiscal year of the Borrower, a copy of the audited
financial statements for such year for the Borrower, including therein a balance
sheet of the Borrower as of the end of such fiscal year, statements of income
and expense of the Borrower for such fiscal year, and a statement of cash flow
of the Borrower for such fiscal year, in each case prepared by an independent
public accountant of recognized standing acceptable to the Lender, except that
the Lender may waive the audit requirement and accept a review of the Borrower's
financial records.
(3) Notice of Litigation. Except with respect to existing
litigation involving the use of the "Bridgewater Site," promptly give written
notice of all actions, suits and proceedings before any court or governmental
agency, domestic or foreign, which may be commenced or threatened against the
Borrower in which the claim involved is Five Thousand Dollars ($5,000.00) or
more and of any other matter of the type described in Section 5.1(5).
(4) Budget. An annual budget within thirty (30) days of the
beginning of each fiscal year of the Borrower. Such budget shall be satisfactory
in form and substance to the Lender.
(5) Other Information. Such other information respecting the
business, properties, operations or the condition, financial or otherwise, of
the Borrower as the Lender may from time to time reasonably request.
ARTICLE VII. EVENTS OF DEFAULT
Section 7.1 Events of Default. Under this Agreement, an Event of
Default shall be any of the following:
(1) The Borrower shall fail to pay any installment of
principal or interest on the Note, or any other obligation to the Lender when
due whether at the due date thereof or by acceleration or otherwise, and, in the
case of any installment of interest, such default shall remain unremedied for a
period of five (5) days; or
(2) The security interest or lien of the Lender in any
material portion of the collateral covered by the Security Agreement, the Pledge
Agreement or any Leasehold
<PAGE> 18
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Mortgage or Mortgage shall at any time not constitute a legal, valid and
enforceable security interest or lien; or
(3) Any representation or warranty made by the Borrower (or
any of its officers) herein, in the Security Agreement, any Leasehold Mortgage
or Mortgage or by the Shareholder (or any of its officers) herein or in the
Pledge Agreement or in any certificate, agreement, instrument or statement
contemplated by or made or delivered pursuant to or in connection with this
Agreement, the Note, any Leasehold Mortgage or Mortgage, the Security Agreement
or the Pledge Agreement, shall prove to have been incorrect in any material
respect when made; or
(4) The Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement, the Note, the Security
Agreement, any Leasehold Mortgage or Mortgage, the Time Brokerage Agreement or
any television affiliation agreement relating to the Station (the "Television
Affiliation Agreement"), or the Shareholder shall fail to perform or observe any
term, covenant or agreement contained in the Pledge Agreement or herein, and any
such failure remains unremedied for thirty (30) days after written notice
thereof shall have been given to the Borrower by the Lender; or
(5) The Borrower or the Shareholder shall fail to pay any
indebtedness for borrowed money owing by the Borrower or the Shareholder or any
interest or premium thereon, when due, whether such indebtedness shall become
due by scheduled maturity, by required prepayment, by acceleration, by demand or
otherwise, or the Borrower or the Shareholder shall fail to perform any term,
covenant or agreement under any agreement or instrument evidencing or securing
or relating to any such indebtedness owing by the Borrower or the Shareholder if
the effect of such failure is to accelerate, or to permit the holder of such
indebtedness to accelerate the maturity of such indebtedness and such
acceleration could impair in any material respects the ability of the Borrower
or the Shareholder to timely perform their obligations hereunder or under any
other agreement contemplated hereby or could materially adversely affect any
right of the Lender hereunder or under any other agreement contemplated hereby;
or
(6) The Borrower shall expend the proceeds of the Loan for any
purpose other than the purchase of the Station and working capital and operating
expenses relating to the Station without the prior written consent of the
Lender, which may be withheld in the Lender's sole and absolute discretion; or
(7) Either (i) the Borrower or the Shareholder shall fail to
pay its debts as they mature in the ordinary course of business; or (ii) the
Borrower or the Shareholder shall file a petition commencing a voluntary case
concerning it under any Chapter of Title 11 of
<PAGE> 19
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the United States Code entitled "Bankruptcy"; or (iii) the Borrower or the
Shareholder shall apply for or consent to the appointment of any receiver,
trustee, custodian or similar officer for it or for all or any substantial part
of its property; or (iv) such receiver, trustee, custodian or similar officer
shall be appointed without the application or consent of the Borrower or the
Shareholder and such appointment shall continue undischarged for a period of
sixty (60) days; or (v) an involuntary case is commenced against the Borrower or
the Shareholder under any Chapter of the aforementioned Title 11 and an order
for relief under such Title 11 is entered or the petition commencing the case is
controverted but is not dismissed within sixty (60) days after the commencement
of the case; or (vi) the Borrower or the Shareholder shall institute (by
petition, application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to it under the laws of any jurisdiction; or (vii)
any such proceeding shall be instituted against the Borrower or the Shareholder
and shall remain undismissed for a period of sixty (60) days; or (viii) the
Borrower or the Shareholder shall take any action for the purpose of
effectuating the foregoing; or
(8) Any court, government, or government agency shall condemn,
seize or otherwise appropriate or take custody or control of all or a
substantial portion of the property or assets of the Borrower; or
(9) There shall be a cancellation, denial or revocation of any
material FCC License for the Station, except for denial or cancellation of any
FCC License to use the Bridgewater Site prior to the time that final local
zoning is received authorizing the construction and operation of the Station
from that site, the Borrower shall be finally denied renewal of any such
License, or any such FCC License shall be renewed on terms that materially
adversely affect the economic or commercial value or usefulness thereof,
provided that such denial, cancellation or non-renewal is not attributable in
any way to Lender's conduct under the Time Brokerage Agreement or the terms
thereof; or
(10) Any money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an amount in excess of One
Hundred Thousand Dollars ($100,000.00), or (ii) in the aggregate at any time an
amount in excess of One Hundred Thousand Dollars ($100,000.00), and in either
case not adequately covered by insurance as to which the insurance company has
acknowledged coverage, shall be entered or filed against the Borrower or its
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 30 days or in any event later than five days prior to the date of any
proposed sale thereunder; or
(11) The Shareholder shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to Article
<PAGE> 20
- 17 -
IX hereof or any obligation of the Shareholder under Article IX hereof shall,
for any reason other than the full satisfaction thereof, not be or shall cease
to be in full force and effect or is, or is declared to be, null and void, or
the Shareholder shall, or shall purport to, terminate, revoke, repudiate,
declare voidable or void, deny, disaffirm or otherwise contest Article IX hereof
or any term or provision thereof or any of its obligations or liabilities under
Article IX hereof.
Section 7.2 Effect of Event of Default. Should any Event of Default
occur, the Lender may at its option by written notice to the Borrower declare
the entire unpaid principal amount of the Note, together with all unpaid
interest and all other amounts payable under this Agreement and every other
obligation of the Borrower to the Lender, immediately due and payable, whereupon
the Note and all such obligations shall become and be forthwith due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower, anything contained herein or in the
Note or in such other note or evidence of indebtedness to the contrary
notwithstanding; provided, however, that in case of an Event of Default under
Section 7.1(7), all the obligations of the Borrower under this Agreement and the
Note shall become immediately due and payable as of the date of any such Event
of Default regardless of the cause of such Event of Default and without any
notice to the Borrower required from the Lender. The Lender shall have, in
addition to all other rights and remedies allowed by law, the rights and
remedies of a secured party under the Uniform Commercial Code and, without
limiting the generality of the foregoing, the rights and remedies provided for
in the Security Agreement, Pledge Agreements, and any Mortgage or Leasehold
Mortgage, which provisions are hereby incorporated by reference.
Section 7.3 Effect of Time Brokerage Agreement. Notwithstanding any
other provision of this Agreement or any other Loan Document, an Event of
Default shall not be deemed to occur and neither Borrower nor Shareholder shall
be deemed to be in default hereunder or thereunder to the extent that any action
or failure to act, including the payment of any obligations or liabilities of
Borrower or the Station, on the part of Borrower or Shareholder is attributable
in substantial part to a breach or default by Lender under the Time Brokerage
Agreement.
ARTICLE VIII. MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies. No failure or delay on the
part of the Lender in exercising any right, power or remedy hereunder shall
operate as a waiver, nor shall any single or partial exercise of any such right,
power or remedy hereunder. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
<PAGE> 21
- 18 -
Section 8.2 Amendments. No amendment, modification, termination or
waiver of any provision of this Agreement, the Note, the Security Agreement, the
Pledge Agreement or any Mortgage or Leasehold Mortgage, nor consent to any
departure by the Borrower therefrom, shall in any event be effective unless in
writing, signed by the Lender and then only in the specific instance and for the
specific purpose for which given. No notice to or demand on the Borrower in any
case shall entitle it to any other or further notice or demand in similar or
other circumstances.
Section 8.3 Conflicts. In the event of any conflict or inconsistency
between any provision of this Agreement and a provision of the Note, the
Security Agreement, the Pledge Agreement or any Mortgage or Leasehold Mortgage,
the provisions of this Agreement shall control.
Section 8.4 Address for Notices. All notices and other communications
under this Agreement shall be in writing and shall be served by personal service
or by mailing a copy thereof by registered or certified mail, return receipt
requested, to the applicable party at the addresses indicated below:
If to the Borrower: James L. West
Channel 46 of Boston, Inc.
14444 66th Street North
Clearwater, Florida 34624
If to the Lender: Lowell W. Paxson
Paxson Communications of Boston-46, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
or at such other address as may be designated by either party in a written
notice to the other complying as to delivery with the terms of this Section. All
such notices and other communications shall be effective when deposited in the
mails.
Section 8.5 Expenses. The Borrower agrees to pay on demand all costs
and expenses incurred by the Lender directly in the enforcement of this
Agreement, the Note, the Security Agreement, any Mortgage or Leasehold Mortgage,
the Pledge Agreement and other instruments and documents to be delivered
hereunder, including, without limitation, the reasonable fees and expenses of
any attorney to whom the Note is referred for collection (whether or not
litigation is commenced) or for representation out of court, in trial, on appeal
or in proceedings under any bankruptcy or insolvency law or otherwise. In
addition, the Borrower shall pay any and all taxes and fees payable in
connection with the execution,
<PAGE> 22
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delivery or recordation of any instruments and documents to be delivered
hereunder. In addition, the Borrower agrees to pay (i) all the actual and
reasonable costs and expenses of the Lender in connection with the negotiation,
preparation and execution of this Loan Agreement, the Note, the Security
Agreement, the Pledge Agreement, any Mortgage or Leasehold Mortgage and all
other documents and instruments to be delivered hereunder (collectively, the
"Loan Documents") and all the costs of furnishing all opinions by counsel for
the Borrower, and of the Borrower's performance of and compliance with all
agreements and conditions contained herein and in the other Loan Documents on
its part to be performed or complied with including, without limitation,
confirming compliance with environmental and insurance requirements; (ii) the
reasonable fees, expenses and disbursements of counsel to the Lender (including
allocated costs of internal counsel) in connection with the negotiation,
preparation, and execution of the Loan Documents and the Loan and any consents,
amendments, waivers or other modifications hereto or thereto; and (iii) all the
actual and reasonable costs and expenses of creating and perfecting liens in
favor of the Lender pursuant to any Loan Document.
Section 8.6 Binding Effect; Assignment. This Agreement shall become
effective when executed and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Lender and their respective successors and assigns,
except that the Borrower shall not have the right to assign any rights or
obligations hereunder without the prior written consent of the Lender. The
Lender shall be permitted to assign, without the Borrower's consent, all or any
portion of the Lender's rights and interests hereunder and under each other
document executed in connection with this Loan Agreement (x) to one or more
other affiliates of the Lender, and, upon any such assignment, each reference
herein or in such other document to "Lender" shall be deemed to be and include a
reference to such other affiliate and (y) to creditors of the Lender or its
affiliates as security for indebtedness of the Lender or such affiliates. For
purposes of this section, the term affiliate shall mean, as applied to any
entity or individual, any other entity or individual directly or indirectly
controlling, controlled by, or under common control with, that entity or
individual. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and under "common
control with"), as applied to any entity or individual, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that entity or individual, whether through the
ownership of voting securities, partnership interests or otherwise by contract.
Section 8.7 Governing Law. This Agreement, the Note, the Security
Agreement and related documents shall be governed by, and construed in
accordance with, the laws of the State of Florida with the exception of its
conflicts of laws provisions; provided that the effect of any recordation shall
be determined by the State thereof.
<PAGE> 23
- 20 -
Section 8.8 Severability of Provisions. Any provision of this
Agreement, the Note, the Pledge Agreement, the Security Agreement, or any
Mortgage or Leasehold Mortgage that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions or affecting the validity or enforceability of any provisions in any
other jurisdiction.
Section 8.9 Headings. Article and Section headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
Section 8.10 Rights Affected by Extensions. The rights of the Lender
and its assigns shall not be impaired by any indulgence, release, renewal,
extension or modification which the Lender may grant with respect to the
indebtedness or any part thereof, or with respect to the collateral or with
respect to any endorser, guarantor, or surety without notice or consent of the
Borrower or any endorser, guarantee, or surety.
Section 8.11 Survival of Representations and Warranties. All
representations and warranties made in this Agreement and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Agreement and the Note and the making of the Loan hereunder
and continue in full force and effect, as of the respective dates as of which
they were made, until all of the obligations of the Borrower to the Lender
hereunder have been paid in full.
Section 8.12 FCC Compliance. Notwithstanding anything herein or in any
of the other Loan Documents to the contrary, but without limiting or waiving the
Borrower's obligations hereunder or under any of the other Loan Documents, the
Lender's remedies hereunder and under the other Loan Documents are subject to
compliance with the Communications Act of 1934, as amended, and all applicable
rules, regulations and policies of the FCC, and neither the Lender nor the
Borrower will take any action pursuant to this Agreement or any of the other
Loan Documents that would constitute or result in any assignment of any FCC
authorization held by the Borrower or any change of control of the Station if
such assignment or change of control would require under then existing law
(including the written rules and regulations promulgated by the FCC), the prior
approval of the FCC, without first obtaining such approval of the FCC. This
Agreement, the other Loan Documents and the transactions contemplated hereby and
thereby do not and will not constitute, create, or have the effect of
constituting or creating, directly or indirectly, actual or practical ownership
of the Borrower by the Lender or control, affirmative or negative, direct or
indirect, of the Borrower by the Lender, over the programming, management or any
other aspect of the operation of the Borrower, which ownership and control
remain
<PAGE> 24
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exclusively and at all times in the Borrower until such time as the Lender has
complied with such law, rules, regulations and policies.
Section 8.13 Further Assurances. From time to time, the Borrower shall
execute and deliver to the Lender such additional documents as the Lender may
reasonably require to carry out the purposes of this Agreement or any of the
documents entered into in connection herewith, or to preserve and protect the
rights of the Lender hereunder or thereunder.
Section 8.14 Indemnification. The Borrower hereby indemnifies and
holds harmless the Lender and its directors, officers, shareholders, employees,
agents, counsel, subsidiaries and affiliates (the "Indemnified Persons") from
and against any and all losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against any
Indemnified Person in any way relating to or arising out of this Agreement, the
documents entered into in connection herewith, or any of them or any of the
transactions contemplated hereby or thereby; provided, however, that the
Borrower shall not be liable to any Indemnified Person, if there is a judicial
determination that such losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulted solely from
the gross negligence or willful misconduct of such Indemnified Person.
Section 8.15 Waiver. EACH OF THE LENDER, THE BORROWER AND SHAREHOLDER
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN
DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED.
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
REPLACEMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN.
Section 8.16 Maximum Interest. The Lender and the Borrower intend that
this Agreement and the other Loan Documents conform to all applicable usury
laws. Accordingly, no provisions of the Loan Documents shall require the payment
or permit the collection of interest in excess of the maximum rate permitted by
applicable law ("Maximum Rate"), or obligate the Borrower to pay any taxes,
assessments, charges, insurance premiums or other amounts which are held to
constitute interest to the extent that such payments, when added to the other
obligations under the Loan Documents, would be held to constitute
<PAGE> 25
- 22 -
contracting for, or the payment by the Borrower of, interest at a rate greater
than the Maximum Rate. The Lender and the Borrower further agree that:
(1) if any excess of interest in such respect is herein or in
any such other instrument provided for, or shall be adjudicated to be so
provided for herein or in any such instrument, the provisions of this subsection
8.16 shall govern, and neither the Borrower nor its successors or assigns shall
be obligated to pay the amount of such interest to the extent it is in excess of
the Maximum Rate;
(2) if at any time the amount of interest under any of the
Loan Documents for a calendar year exceeds the Maximum Rate had the Maximum Rate
at all times been in effect, the interest chargeable under any such Loan
Document shall be limited to the amount of interest that could have been charged
if the Maximum Rate had at all times been in effect, but any subsequent
reductions in the interest due shall not reduce the rate of interest chargeable
under any such Loan Document below the Maximum Rate until the total amount of
interest accrued under any such Loan Document equals the amount of interest that
would have accrued if the interest provided for in any such Loan Document had at
all times been in effect and collectible;
(3) if the maturity of any Loan Document is accelerated for
any reason, or in the event of any prepayment by the Borrower, or in any other
event, earned interest may never include more than the Maximum Rate, computed
from the date of disbursement of the funds evidenced by such Loan Document until
payment, and any interest otherwise payable under such Loan Document that is in
excess of the Maximum Rate shall be canceled automatically as of such
acceleration or such other event and (if theretofore paid) shall be credited
against principal;
(4) if it should be held that any interest payable or
chargeable under any Loan Document is in excess of the Maximum Rate, the
interest payable or chargeable under such Loan Document shall be reduced to the
maximum amount permitted by applicable federal or state law, whichever shall
permit the higher lawful interest, as construed by courts having jurisdiction
thereof; and
(5) the spreading, prorating and amortizing of interest over
the term of the Loan Documents shall be allowed to the fullest extent permitted
by applicable law.
Section 8.17 Counterparts. This Agreement may be signed in any number
of counterparts with the same effect as if the signature on all counterparts
were upon the same instrument.
<PAGE> 26
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ARTICLE IX. GUARANTY
Section 9.1 Guaranty. In consideration for the Lender's execution and
delivery of this Loan Agreement and the Lender's agreement to make the Loan, the
Shareholder agrees as follows:
(1) The Shareholder hereby guarantees the full, complete and
timely payment and performance by the Borrower of each and every obligation of
the Borrower under this Loan Agreement, the Note, the Security Agreement, each
Mortgage and Leasehold Mortgage and each other agreement or instrument executed
and delivered by the Borrower in connection with this Loan Agreement
(individually, a "Borrower Loan Document" and collectively, the "Borrower Loan
Documents"). If any default shall be made by the Borrower in the payment or
performance of any of such obligations, then Shareholder will itself pay or
perform or cause to be paid or performed such obligation upon receipt of notice
from the Lender specifying in summary form the default. The Lender may proceed
to enforce its rights against Shareholder from time to time prior to,
contemporaneously with, or after any enforcement against the Borrower, or
without any enforcement against the Borrower. The obligations of Shareholder
under this Guaranty shall be absolute and unconditional and shall remain in full
force and effect without regard to and shall not be released, discharged, or in
any way affected by (and Shareholder expressly waives any and all defenses
arising out of, or based on): (i) any amendment or modification of or supplement
to any Borrower Loan Document; (ii) any exercise or non-exercise of, or delay in
exercising any, right, remedy, power, or privilege under or in respect of any
Borrower Loan Document; (iii) any bankruptcy, insolvency, arrangement,
composition, assignment for the benefit of creditors, or similar proceeding
commenced by or against the Borrower or Shareholder; (iv) the dissolution
(voluntarily or involuntarily) of the Lender; (v) the genuineness, validity, or
enforceability of any Borrower Loan Document; or (vi) any other circumstance
which might otherwise constitute a legal or equitable discharge of a guarantor
or surety. If payment of any sum by the Borrower pursuant to any Borrower Loan
Document is recovered as a preference or fraudulent transfer under any
applicable bankruptcy or insolvency law, the liability of Shareholder under such
Borrower Loan Document shall continue and remain in full force and effect
notwithstanding such recovery.
(2) Shareholder waives presentment, protest, demand, or action
or delinquency in respect of any of the obligations of the Borrower under the
Borrower Loan Documents. Shareholder waives all set-offs and counterclaims and
all notices of nonperformance, notices of protest, notices of dishonor, and
notices of acceptance of this guaranty.
<PAGE> 27
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(3) This guaranty shall be deemed a continuing guaranty, and
the above consents and waivers of Shareholder shall remain in full force and
effect until the satisfaction in full of all obligations of the Borrower under
the Borrower Loan Documents.
(4) Shareholder agrees that any and all claims in its favor
against the Borrower, any endorser or any other guarantor of all or any part of
the obligations of the Borrower under the Borrower Loan Documents, or against
any of their respective properties, arising by reason of any payment by
Shareholder to the Lender pursuant to the provisions hereof or otherwise, shall
be subordinate and subject in right of payment to the prior payment, in full in
cash, of all obligations of the Borrower under the Borrower Loan Documents.
Shareholder agrees that any right of subrogation arising as a result of its
performance hereunder shall not exist unless and until all obligations of the
Borrower under the Borrower Loan Documents are paid in full in cash.
Section 9.2 Representations and Warranties. Shareholder hereby
represents and warrants to the Lender as follows:
(1) This Loan Agreement has been duly and validly executed and
delivered by Shareholder and constitutes its legal, valid, and binding agreement
with respect to the provisions contained in Article IX, enforceable in
accordance with its terms, except as the enforceability of this Loan Agreement
may be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally, and by judicial discretion in the enforcement of equitable
remedies.
(2) The execution, delivery, and performance by Shareholder of
this Loan Agreement: (i) do not require the consent of any third party; (ii)
will not conflict with any provision of the Articles of Incorporation or Bylaws
of Shareholder; (iii) will not conflict with, result in a breach of, or
constitute a default under, any law, judgment, order, ordinance, injunction,
decree, rule, regulation, or ruling of any court or governmental
instrumentality; and (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or accelerate
or permit the acceleration of any performance required by the terms of, any
agreement, instrument, license, or permit to which Shareholder is a party or by
which Shareholder may be bound.
Section 9.3 Limited Recourse. Notwithstanding anything to the contrary
contained in this Article IX, in any action or proceeding commenced with
reference to any Loan Document, no judgment obtained against Shareholder shall
be enforced against any of its separate assets, other than Shareholder's
interest in all of the issued and outstanding capital stock of the Borrower
(whether outstanding on the date hereof or hereafter), and Shareholder's
liability under any Loan Document shall be limited to such interest. In any
<PAGE> 28
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legal action or suit in equity which the Lender may undertake against
Shareholder to enforce its rights and remedies under any Loan Document, any
judgment obtained by the Lender may be satisfied by recourse only to
Shareholder's interest in all of the issued and outstanding capital stock of the
Borrower (whether outstanding on the date hereof or hereafter) and not by
recourse to any other assets of Shareholder.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 29
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers, as of the
date first above written.
PAXSON COMMUNICATIONS OF
BOSTON-46, INC.
By: /s/Anthony L. Morrison
--------------------------
Anthony L. Morrison
Vice President
CHANNEL 46 OF BOSTON, INC.
By: /s/James L. West
--------------------------
James L. West
Chairman
THE CHRISTIAN NETWORK, INC. HEREBY
JOINS IN THE EXECUTION OF THE FOREGOING
AGREEMENT TO AGREE TO THE PROVISIONS OF
SECTION 8.15 AND ARTICLE IX ONLY, AS OF
THE DATE FIRST ABOVE WRITTEN.
THE CHRISTIAN NETWORK, INC.
By:/s/James L. West
-----------------------------------
James L. West
Chairman
<PAGE> 1
EXHIBIT 10.175
ASSET ACQUISITION AGREEMENT
DATED AS OF JUNE 13, 1997
BY AND AMONG
LANDMARK COMMUNICATIONS, INC., THE TRAVEL
CHANNEL, INC., AND PAXSON COMMUNICATIONS
CORPORATION
<PAGE> 2
ASSET ACQUISITION AGREEMENT
DATED AS OF JUNE 13, 1997
BY AND AMONG
LANDMARK COMMUNICATIONS, INC., THE TRAVEL
CHANNEL, INC., AND PAXSON COMMUNICATIONS
CORPORATION
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1. CERTAIN DEFINITIONS................................................................................... 1
1.1 Terms Defined in this Section...................................................................... 1
1.2 Terms Defined Elsewhere in this Agreement.......................................................... 4
1.3 Terms Generally.................................................................................... 6
SECTION 2. ACQUISITION OF ASSETS AND CONSIDERATION............................................................... 6
2.1 Acquisition of Assets.............................................................................. 6
2.2 Excluded Assets.................................................................................... 8
2.3 Consideration...................................................................................... 9
2.4 Proration of Expenses.............................................................................. 9
2.5 Assumption of Liabilities and Obligations..........................................................13
2.6 Liabilities Not Assumed............................................................................13
2.7 Allocation of Consideration........................................................................14
SECTION 3. REPRESENTATIONS AND WARRANTIES OF LCI AND TRAVEL......................................................14
3.1 Organization, Standing, and Authority..............................................................14
3.2 Authorization and Binding Obligation...............................................................15
3.3 Absence of Conflicting Agreements; Consents........................................................15
3.4 Licenses...........................................................................................16
3.5 Real Property......................................................................................16
3.6 Tangible Personal Property.........................................................................16
3.7 Contracts..........................................................................................17
3.8 Intangible Property................................................................................17
3.9 Financial Statements...............................................................................18
3.10 Personnel..........................................................................................18
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
3.11 Claims and Legal Actions..........................................................................19
3.12 Compliance with Laws..............................................................................20
3.13 Environmental Matters.............................................................................20
3.14 Transactions with Affiliates; Completeness of Assets..............................................21
3.15 Cable Subscribers.................................................................................21
3.16 Ownership of Shares...............................................................................21
3.17 Investment........................................................................................22
3.18 Conduct of Business...............................................................................22
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PCC................................................................22
4.1 Organization, Standing, and Authority.............................................................22
4.2 Authorization and Binding Obligation..............................................................23
4.3 Absence of Conflicting Agreements.................................................................23
4.4 Shares............................................................................................23
4.5 SEC Reports.......................................................................................23
SECTION 5. OPERATIONS OF THE CHANNEL PRIOR TO CLOSING...........................................................24
5.1 Generally.........................................................................................24
5.2 Contracts.........................................................................................24
5.3 Disposition of Assets.............................................................................24
5.4 Encumbrances......................................................................................24
5.5 Licenses..........................................................................................25
5.6 Obligations.......................................................................................25
5.7 Access to Information.............................................................................25
5.8 Consents..........................................................................................25
5.9 Maintenance of Assets.............................................................................26
5.10 Notification......................................................................................26
5.11 Financial Information.............................................................................26
5.12 Compliance with Laws..............................................................................27
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS.....................................................................27
6.1 HSR Act Filing....................................................................................27
6.2 Agreement Regarding Ownership Restrictions........................................................27
6.3 Confidentiality...................................................................................27
6.4 Cooperation.......................................................................................28
6.5 Access to Books and Records.......................................................................28
6.6 Noncompetition....................................................................................29
6.7 Accounts Receivable...............................................................................30
6.8 Environmental Audit...............................................................................30
6.9 Bulk Sales Law....................................................................................30
6.10 No Inconsistent Action............................................................................30
6.11 Rule 144 Information..............................................................................30
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
6.12 Services Agreement................................................................................31
6.13 Change of Name of Travel..........................................................................31
6.14 Registration Rights Agreement.....................................................................31
SECTION 7. CONDITIONS TO OBLIGATIONS OF PARTIES AT CLOSING......................................................31
7.1 Conditions to Obligations of PCC..................................................................31
7.2 Conditions to Obligations of LCI and Travel.......................................................32
SECTION 8. CLOSING AND CLOSING DELIVERIES.......................................................................33
8.1 Closing...........................................................................................33
8.2 Deliveries by LCI and Travel......................................................................33
8.3 Deliveries by PCC.................................................................................34
SECTION 9. TERMINATION..........................................................................................35
9.1 Termination by LCI................................................................................35
9.2 Termination by PCC................................................................................35
9.3 Rights on Termination.............................................................................35
9.4 Specific Performance..............................................................................36
9.5 Attorneys' Fees...................................................................................36
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES.......................................................................36
10.1 Representations and Warranties....................................................................36
10.2 Indemnification by LCI............................................................................36
10.3 Indemnification by PCC............................................................................37
10.4 Procedure for Indemnification.....................................................................38
10.5 Certain Limitations...............................................................................39
SECTION 11. MISCELLANEOUS.......................................................................................40
11.1 Fees and Expenses.................................................................................40
11.2 Notices...........................................................................................40
11.3 Benefit and Binding Effect........................................................................41
11.4 Further Assurances................................................................................41
11.5 GOVERNING LAW.....................................................................................42
11.6 Headings..........................................................................................42
11.7 Entire Agreement..................................................................................42
11.8 Waiver of Compliance; Consents....................................................................42
11.9 Counterparts......................................................................................42
</TABLE>
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<PAGE> 5
ASSET ACQUISITION AGREEMENT
This ASSET ACQUISITION AGREEMENT is dated as of June 13, 1997, by and
among Landmark Communications, Inc., a Virginia corporation; The Travel Channel,
Inc., a Virginia corporation; and Paxson Communications Corporation, a Delaware
corporation.
PRELIMINARY STATEMENT
Landmark Communications, Inc. ("LCI") and Landmark Television, Inc., a
Nevada corporation ("Television"), collectively, own directly or indirectly all
of the issued and outstanding capital stock of The Travel Channel, Inc.
("Travel"). LCI owns directly or indirectly all of the issued and outstanding
capital stock of The Weather Channel, Inc. Travel owns or has rights to use
substantially all of the assets used in the business and operations of the
Channel (as defined herein). LCI and Travel now desire that Travel convey to
Paxson Communications Corporation ("PCC"), and PCC wishes to acquire, all of the
assets owned or rights held by Travel for use in the business or operations of
the Channel, except as set forth in this Agreement, for the consideration and on
the terms and conditions set forth in this Agreement. PCC may designate an
Affiliate of PCC to receive such assets and may direct that Travel transfer such
assets directly to such Affiliate of PCC.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, PCC, LCI, and Travel, intending to be
bound legally, agree as follows:
SECTION 1. CERTAIN DEFINITIONS
1.1 Terms Defined in this Section.
The following terms, as used in this Agreement, have the meanings set
forth in this Section:
"Affiliate," with respect to any Person, means any other Person
controlling, controlled by, or under common control with such Person. For
purposes of this definition, the term "control" means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise, and the terms "controlled by" and "under common control
with" have meanings corresponding to the meaning of "control."
"Agreement" means this Asset Acquisition Agreement, as it may be
amended from time to time.
"Assets" means the assets specified in Section 2.1.
<PAGE> 6
"Assumed Contracts" means (a) all Contracts listed on Schedule 3.7, (b)
Contracts in existence on the date of this Agreement that are not required to be
listed on Schedule 3.7, and (c) Contracts entered into by Travel between the
date of this Agreement and the Closing Date in compliance with Section 5.2.
"Business Day" means any day (other than a day which is a Saturday or
Sunday) on which banks are permitted to be open for business in the City of New
York.
"Channel" means The Travel Channel, a cable television network
providing viewers in the United States with programming relating to leisure
travel and related topics through original, co- produced, and acquired
non-fiction programming, but does not include the business or operations in
Latin America, Europe, and South Africa conducted by Travel Channel Latin
America, Inc., Landmark Travel Channel Limited, Voyage SAS, or any other Person.
"Class A Common Stock" means the Class A Common Stock, par value $.001
per share, of PCC.
"Closing" means the consummation of the acquisition of the Assets
pursuant to this Agreement in accordance with the provisions of Section 8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consents" means the consents, permits, or approvals of governmental
authorities and other third parties that are necessary to transfer the Assets to
PCC or to the Designated Affiliate, if applicable, or otherwise to consummate
the transactions contemplated by this Agreement in compliance with any provision
of law or the terms of any mortgage, indenture, lease, contract, agreement,
instrument, license, or permit to which any party to this Agreement is a party
or by which any party to this Agreement or its properties may be bound legally,
regardless whether the obtaining of such consent, permit, or approval is a
condition to the obligations of any party at the Closing under this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses, and
other agreements, commitments, or arrangements (including leases for personal or
real property and employment agreements), written or oral, to which Travel is a
party or which are binding upon Travel and that relate to or affect the Assets
or the business or operations of the Channel, and (a) that are in effect on the
date of this Agreement or (b) that are entered into by Travel between the date
of this Agreement and the Closing Date.
"Effective Time" means 12:01 a.m., Eastern time, on the Closing Date.
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<PAGE> 7
"Environmental Laws" means all currently effective federal, state,
local, and foreign statutes, regulations, ordinances, and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, and all common law concerning public health, and pollution or
protection of the environment, including all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances,
or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FCC" means the Federal Communications Commission.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Intangible Property" means any trademark, trade name, logo, service
mark, brand mark, brand name, computer program, database, industrial design,
copyright, invention, drawing, customer list, proprietary know-how, or
information owned by Travel, and Travel's rights to use any trademark, trade
name, logo, service mark, brand mark, brand name, computer program, database,
industrial design, copyright, invention, drawing, customer list, proprietary
know-how, or information that is not owned by Travel, for use in connection with
the conduct of the business or operations of the Channel (including the name
"The Travel Channel" and all rights relating to the use of such name and any
logos or characters developed by or on behalf of Travel for use in connection
with the Channel), and all registrations thereof and pending applications
therefor, together with any renewals, extensions, modifications, or additions
thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, construction permits,
registrations, and other authorizations issued by any federal, state, or local
governmental authorities to Travel, used or held by Travel for use in connection
with the conduct of the business or operations of the Channel, and all
applications therefor, together with any renewals, extensions, modifications, or
additions thereto between the date of this Agreement and the Closing Date.
"Material Adverse Effect" means a material adverse effect on the
business, results of operations, properties, operations, financial condition,
assets, or liabilities of the Channel, taken as a whole.
"Permitted Liens" means, with respect to any Asset, (a) liens for
current taxes not yet due and payable or taxes that in good faith are being
contested or litigated and are not material to be business or operations of the
Channel, (b) landlord's liens for property taxes not delinquent, (c) statutory
liens that were created in the ordinary course of business, and (d) easements
and restrictions that are disclosed on Schedule 3.5.
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<PAGE> 8
"Person" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, governmental entity, or other entity or organization.
"Real Property" means all real property, and all buildings, fixtures,
and other improvements thereon, whether or not owned or held by Travel, used in
the business or operations of the Channel.
"Real Property Interests" means all interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings, and
other improvements thereon, used or held by Travel for use in connection with
the conduct of the business or operations of the Channel, other than Excluded
Assets described in Section 2.2(k), together with any additions, improvements,
and replacements thereto between the date of this Agreement and the Closing
Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, fixtures, leasehold improvements, office equipment,
materials and supplies, plant, inventory, video libraries and archives, spare
parts, and other tangible personal property of every kind and description used
or held by Travel for use in connection with the conduct of the business or
operations of the Channel, other than Excluded Assets described in Section
2.2(k), together with any additions, improvements, and replacements thereto
between the date of this Agreement and the Closing Date.
"Taxes" means all taxes, charges, fees, levies, or other assessments
imposed by any federal, state, local, or foreign taxing authority, whether
disputed or not, including income, capital, estimated, excise, property, sales,
transfer, withholding, employment, payroll, and franchise taxes and any
interest, penalties, or additions attributable to or imposed on or with respect
to such assessments.
"Transponder Agreement" means the C-4 Satellite Transponder Service
Agreement between GE American Communications, Inc. and Travel, as assignee,
dated as of November 9, 1990, as amended on April 7, 1997.
"Uplink Agreement" means the Service Agreement by and between Travel
and Crawford Communications, dated as of February 18, 1997.
1.2 Terms Defined Elsewhere in this Agreement.
For purposes of this Agreement, the following terms have the meanings
set forth in the sections indicated:
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Accounts Receivable Section 6.7
</TABLE>
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<PAGE> 9
<TABLE>
<S> <C>
Affiliation Agreement Section 3.7
Average Trading Price Section 2.3(b)
Benefit Arrangements Section 3.10(a)(iii)
Channel Preliminary Statement
Claimant Section 10.4(a)
Designated Affiliate Section 2.1
DOJ Section 6.1
Employees Section 3.10(a)
ERISA Affiliate Section 3.10(c)
Excluded Assets Section 2.2
Financial Statements Section 3.9
FTC Section 6.1
Indemnifying Party Section 10.4(a)
LCI Preliminary Statement
Losses Section 10.2
PCC Preliminary Statement
PCC's SEC Reports Section 4.5
Pension Plan Section 3.10(b)
Programming Agreements Section 3.7
Registration Rights Agreement Section 6.14
Restricted Business Section 6.6(a)
Rule 144 Section 6.11(a)
Sandler Partnerships Section 3.16
Services Agreement Section 6.12
Television Preliminary Statement
Travel Preliminary Statement
Welfare Plan Section 3.10(a)(i)
</TABLE>
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<PAGE> 10
1.3 Terms Generally.
The definitions in Section 1.1 and elsewhere in this Agreement shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context requires, any pronoun includes the corresponding masculine,
feminine, and neuter forms. The words "include," "includes," and "including" are
not limiting. Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day. As used in this Agreement,
"knowledge" of LCI or Travel is limited to the actual knowledge of Alfred F.
Ritter, Jr., Executive Vice President of LCI, Louis F. Ryan, Executive Vice
President and General Counsel of LCI, and Bahns Stanley, General Manager of
Travel.
SECTION 2. ACQUISITION OF ASSETS AND
CONSIDERATION
2.1 Acquisition of Assets.
Subject to the terms and conditions set forth in this Agreement
(including the representations and warranties made and relied upon hereunder),
LCI and Travel hereby agree that Travel will transfer, convey, assign, and
deliver to PCC, or to an Affiliate of PCC designated by PCC to receive the
Assets (the "Designated Affiliate"), on the Closing Date, and PCC agrees to
acquire, itself or by transfer directly to the Designated Affiliate, all of
Travel's right, title, and interest as of the Closing Date in all of the
tangible and intangible assets used or held by Travel for use in connection with
the conduct of the business or operations of the Channel, whether or not
reflected on the books and records of Travel, together with any additions
thereto between the date of this Agreement and the Closing Date, but excluding
the Excluded Assets, free and clear of any claims, liabilities, liens, security
interests, mortgages, pledges, encumbrances, or restrictions (except for liens
for current taxes not yet due and payable and landlord's liens for property
taxes not delinquent), including the following:
(a) The Tangible Personal Property;
(b) The Real Property Interests;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangible Property;
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<PAGE> 11
(f) All proprietary information, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints, and schematics relating to the business or operations of
the Channel, other than Excluded Assets described in Section 2.2(k);
(g) All claims or causes of action of Travel to the extent they relate
to the Assets;
(h) Copies of all books and records, including files, books of account,
computer programs, tapes, electronic data processing software, customer lists,
and other records relating to the Assets or the business or operations of the
Channel, including executed copies of the Assumed Contracts and Travel's
database of program rights; provided, however, that Travel may redact or remove
from any such books and records any information contained therein that does not
relate to the Channel or the Assets;
(i) All insurance proceeds arising out of damage, destruction, or loss
of any Asset or any other property or asset used or held by Travel on the date
of this Agreement (other than an Excluded Asset described in Section 2.2(k)) to
the extent of any damage or destruction that remains unrepaired, or to the
extent any destroyed property or asset that remains unreplaced, at the Closing
Date;
(j) All orders and agreements now existing or entered into in the
ordinary course of business between the date of this Agreement and the Closing
Date, for the sale of advertising time on the Channel, except for those that, on
the Closing Date, have already been filled or have expired;
(k) All programs, program rights, and programming materials and
elements of whatever form or nature owned or held by Travel, whether recorded on
film, tape, or any other medium or intended for live performance, broadcast, or
other manner of presentation and whether completed or in production (such as
outlines, scripts, or otherwise);
(l) All rights under manufacturers' and vendors' warranties relating to
Assets;
(m) All goodwill in, and going concern value of, the Channel;
(n) All security deposits under any Assumed Contract to the extent a
credit was made in favor of Travel as a result of such security deposits in
making prorations pursuant to Section 2.4(a); and
(o) All prepaid expenses as of the Closing Date to the extent a credit
was made in favor of Travel as a result of such prepaid expenses in making
prorations pursuant to Section 2.4(a).
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<PAGE> 12
2.2 Excluded Assets.
The Assets shall exclude the following (the "Excluded Assets") (and
without any implication that Travel is conveying any asset not expressly
excluded):
(a) Travel's cash and cash equivalents on hand as of the
Closing and Travel's interest in its bank or savings accounts and any stocks,
bonds, certificates of deposit, and similar investments;
(b) Any insurance policies, promissory notes, amounts due to
Travel from employees, bonds, letters of credit, certificates of deposit, or
other similar items, and any cash surrender value in regard thereto;
(c) Any pension, profit-sharing, or employee benefit plans;
(d) All tax returns and supporting materials, all original
financial statements and supporting materials, all of Travel's corporate minute
books and other books and records related to internal corporate matters and
financial relationships with Travel's lenders and Affiliates, all books and
records that Travel is required by law to retain, and all records of Travel
relating to the disposition of the Assets;
(e) Any interest in and to any refunds of Taxes for periods
prior to the Closing Date;
(f) Any assets and properties of Travel that are disposed of
prior to the Closing Date in compliance with this Agreement;
(g) Any claim or cause of action by Travel relating to the
period before the Effective Time;
(h) Any collective bargaining agreements;
(i) Any shares of capital stock of any Person;
(j) Any assets owned by The Weather Channel, Inc., none of
which shall be tangible personal property located on the premises leased by
Travel from Prentiss Properties Acquisition Partners, L.P.; and
(k) Travel's interest in any assets that are owned jointly by
Travel and The Weather Channel, Inc. and described generally on Schedule 2.2,
none of which shall be tangible personal property located on the premises leased
by Travel from Prentiss Properties Acquisition Partners, L.P.
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<PAGE> 13
2.3 Consideration.
(a) In consideration of the transfer, conveyance, assignment,
and delivery to PCC (or directly to the Designated Affiliate, if applicable) of
the Assets pursuant to this Agreement, at the Closing,
(i) PCC shall issue to Travel a number of validly issued,
fully paid, and nonassessable shares of Class A Common Stock equal to the
quotient of $55,000,000 divided by the Average Trading Price of the Class A
Common Stock as of the Closing Date; and
(ii) PCC shall pay or cause to be paid to or for the
account of Travel, the sum of $20,000,000, by federal wire transfer of same-day
funds pursuant to wire instructions which shall be delivered by Travel to PCC at
least two Business Days prior to the Closing Date.
(b) The "Average Trading Price" of the Class A Common Stock
equals, as of a particular date, the average of the reported closing market
prices per share of the Class A Common Stock for the 30 consecutive trading days
ending on the third trading day prior to such date. The closing market price for
each day in question shall be the last sale price, regular way or, if no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system of the principal national securities exchange on
which the Class A Common Stock is listed or admitted to trading or, if the Class
A Common Stock is not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if no such sale price is quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by the Nasdaq National Market System or such other system then in use
or, if on any such trading day the Class A Common Stock is not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by the professional market maker who has been most active in making a market in
the Class A Common Stock during the preceding twelve months. The Average Trading
Price of the Class A Common Stock shall be appropriately adjusted to reflect the
effects of any stock dividend, stock split, reclassification, recapitalization,
or combination affecting such stock, the record date, ex-dividend date, or
similar date of which occurs during the period in which the Average Trading
Price is to be determined or thereafter prior to the Effective Time.
2.4 Proration of Expenses.
(a) Prorations. Subject to Section 2.4(b), all expenses
arising from the operation of the Channel, including business and license fees,
utility charges, real and personal property taxes and assessments levied against
the Assets, property and equipment rentals, applicable copyright or other fees,
sales and service charges, and similar prepaid and deferred items, shall be
prorated between PCC and Travel in accordance with the principle that Travel
shall be responsible for all expenses, costs, liabilities, and obligations
allocable to the operations of the Channel for the period prior to the Effective
Time, and PCC or the Designated Affiliate, if applicable, shall be responsible
for all expenses, costs, liabilities, and obligations allocable to
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<PAGE> 14
the operations of the Channel for the period after the Effective Time. To
effectuate the proration of expenses pursuant to this Section 2.4(a), but
subject to Section 2.4(b), Travel shall receive a credit equal to the amount of
any expenses, costs, liabilities, or obligations that are paid or incurred by
Travel and are allocable to the operations of the Channel for the period after
the Effective Time and PCC shall receive a credit equal to the amount of any
expenses, costs, liabilities, or obligations that are paid or incurred by PCC or
the Designated Affiliate, if applicable, and are allocable to the operations of
the Channel for the period before the Effective Time. Any determination whether
any expense, cost, liability, or obligation is allocable to or relates to the
period before or after the Effective Time, for purposes of calculating
prorations pursuant to this Section 2.4(b) or the assumption of liabilities and
obligations pursuant to Section 2.5 (or the exclusion therefrom pursuant to
Section 2.6(c)) shall be based on the extent to which all facts and
circumstances necessary for the accrual of such expense, cost, liability, or
obligation in accordance with generally accepted accounting principles have been
satisfied as of the Effective Time, except that any payment obligation arising
under any Programming Agreement that is an Assumed Contract shall be allocable
to and shall relate to the period during which the payment is required to be
made.
(b) Expenses Not Prorated.
(i) There shall be no proration of, and Travel shall
remain solely liable with respect to, expenses, costs, liabilities, and
obligations arising under any Contracts not included in the Assumed Contracts
and any other expenses, costs, liabilities, and obligations that are not assumed
by PCC or the Designated Affiliate in accordance with Section 2.5.
(ii) PCC shall receive a credit pursuant to Section
2.4(a) to the extent that PCC or the Designated Affiliate assumes any liability
under any Assumed Contract to refund (or to credit against payments otherwise
due) any security deposit or similar prepayment paid to Travel by any lessee or
other third party.
(iii) There shall be no proration of any employee
compensation (including accrued vacation, sick leave, or severance benefits)
with respect to employees of the Channel, including employees of the Channel who
are hired by PCC or the Designated Affiliate at or following the Closing. Travel
shall be solely responsible for the payment of all compensation owed to the
Channel's employees up to the Effective Time. PCC or the Designated Affiliate
may, as of the Effective Time, employ those employees of the Channel as PCC or
the Designated Affiliate may elect on terms and conditions determined by PCC or
the Designated Affiliate.
(iv) There shall be no proration of any Taxes, other
than real and personal property taxes and assessments levied against the Assets.
(v) There shall be no proration of music license fees
payable to ASCAP or BMI; Travel shall be responsible for paying all music
license fees with respect to the Channel relating to the period prior to the
Effective Time (including any music license fees determined
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<PAGE> 15
to be payable after the Effective Time) and shall be entitled to any refunds of
music license fees previously paid by Travel with respect to the Channel
relating to the period prior to the Effective Time, and PCC or the Designated
Affiliate, if applicable, shall be responsible for paying all music license fees
with respect to the Channel relating to the period after the Effective Time and
shall be entitled to any refunds of music license fees paid by PCC or the
Designated Affiliate, if applicable, with respect to the Channel relating to the
period after the Effective Time.
(c) Manner of Determining Prorations and Credits. The
prorations required by Section 2.4(a) will be determined finally in accordance
with the following procedures:
(i) Travel shall prepare and deliver to PCC not later
than two Business Days before the Closing Date a preliminary settlement
statement which shall set forth Travel's good faith estimate of the prorations
under Section 2.4(a). The preliminary settlement statement (A) shall contain all
information reasonably necessary to determine the credits to each party, taking
into account all prorations under Section 2.4(a), to the extent such prorations
can be determined or estimated as of the date of the preliminary settlement
statement, and such other information as may be reasonably requested by PCC, (B)
shall be certified by Travel to be true and complete to Travel's knowledge as of
the date thereof, and (C) shall be based upon expenses as of the date of the
most recent unaudited monthly financial statements of Travel furnished to PCC
pursuant to Section 5.11.
(ii) Not later than sixty days after the Closing Date,
PCC will deliver to Travel a statement setting forth PCC's determination of the
prorations pursuant to Section 2.4(a). PCC's statement (A) shall contain all
information reasonably necessary to determine the credits to each party, taking
into account all prorations under Section 2.4(a), and such other information as
may be reasonably requested by Travel and (B) shall be certified by PCC to be
true and complete to PCC's knowledge as of the date thereof. During the
thirty-day period following its delivery to Travel of its statement, PCC shall
grant Travel and its accountants, counsel, and other representatives full and
complete access to all books and records relating to the Channel that Travel
deems necessary to determine the credits to each party, taking into account all
prorations under Section 2.4(a). If Travel disputes the prorations determined by
PCC, it shall deliver to PCC within thirty days after its receipt of PCC's
statement a statement setting forth its determination of the amount of the
prorations. If Travel notifies PCC of its acceptance of PCC's statement, or if
Travel fails to deliver its statement within the thirty-day period specified in
the preceding sentence, PCC's determination of the prorations shall be
conclusive and binding on Travel as of the last day of the thirty-day period.
(iii) If Travel disputes the amount of the prorations
determined by PCC, PCC and Travel shall use good faith efforts to resolve any
dispute involving the determination of the prorations as expeditiously as
practicable. If the parties are unable to resolve the dispute within fifteen
days following the delivery of Travel's statement pursuant to Section
2.4(c)(ii), PCC and Travel shall jointly designate an independent certified
public accountant to resolve the dispute. The accountant's resolution of the
dispute shall be final and binding on the parties, and
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<PAGE> 16
a judgment may be entered thereon in any court of competent jurisdiction. Any
fees of this accountant shall be split equally between PCC and Travel.
(d) Payments at Closing With Respect to Prorations.
(i) Except as provided in Section 2.4(d)(iii), Travel
shall pay or cause to be paid to or for the account of PCC at Closing the
amount, if any, by which the credits to PCC pursuant to Section 2.4(a) exceed
the credits to the Travel pursuant to Section 2.4(a), each as estimated in
Travel's preliminary settlement statement pursuant to Section 2.4(c)(i), by
federal wire transfer of same-day funds pursuant to wire instructions which
shall be delivered by PCC to Travel at least two Business Days prior to the
Closing Date
(ii) Except as provided in Section 2.4(d)(iii), PCC
shall pay or cause to be paid to or for the account of Travel at Closing the
amount, if any, by which the credits to Travel pursuant to Section 2.4(a) exceed
the credits to PCC pursuant to Section 2.4(a), each as estimated in Travel's
preliminary settlement statement pursuant to Section 2.4(c)(i), by federal wire
transfer of same-day funds pursuant to wire instructions which shall be
delivered by Travel to PCC at least two Business Days prior to the Closing Date.
(iii) If the amount to be paid to or for the account of
PCC pursuant to Section 2.4(d)(i) or the amount to be paid to or for the account
of Travel pursuant to Section 2.4(d)(ii), but for this Section 2.4(d)(iii),
would be less than $50,000, then no payments under these sections will be made
at Closing, and all payments to effectuate the proration of expenses pursuant to
Section 2.4(a) shall be made pursuant to Section 2.4(e).
(e) Payments to Reflect Final Determination of Prorations.
Within five Business Days after the date on which the prorations are finally
determined pursuant to Section 2.4(c):
(i) Travel shall pay or cause to be paid to or for the
account of PCC, in immediately available funds, the amount, if any, by which the
sum of the credits to PCC pursuant to Section 2.4(a), as finally determined
pursuant to Section 2.4(c), plus the amount of any payment made by PCC pursuant
to Section 2.4(d)(ii) exceeds the sum of the credits to Travel pursuant to
Section 2.4(a), as finally determined pursuant to Section 2.4(c), plus the
amount of any payment made by Travel pursuant to Section 2.4(d)(i).
(ii) PCC shall pay or cause to be paid to or for the
account of Travel, in immediately available funds, the amount, if any, by which
the sum of the sum of the credits to Travel pursuant to Section 2.4(a), as
finally determined pursuant to Section 2.4(c), plus the amount of any payment
made by Travel pursuant to Section 2.4(d)(i) exceeds the sum of the credits to
PCC pursuant to Section 2.4(a), as finally determined pursuant to Section
2.4(c), plus the amount of any payment made by PCC pursuant to Section
2.4(d)(ii).
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2.5 Assumption of Liabilities and Obligations.
As of the Closing Date, PCC or the Designated Affiliate, if applicable,
shall assume and undertake to pay, discharge, and perform all obligations and
liabilities of Travel under the Licenses and the Assumed Contracts to the extent
that either (a) the obligations and liabilities relate to the time after the
Effective Time or (b) PCC received a credit under Section 2.4(a) as a result of
the proration of such obligations and liabilities, regardless of whether any
Consent to the assignment of any License or Assumed Contract to PCC or the
Designated Affiliate has been obtained.
2.6 Liabilities Not Assumed.
Any provision of this Agreement to the contrary notwithstanding (and
without implication that PCC or the Designated Affiliate, if applicable, is
assuming any liability not expressly excluded and, where applicable, without
implication that any of the following have been included in the liabilities
described in Section 2.5), except for the liabilities described in Section 2.5,
neither PCC nor the Designated Affiliate shall assume by virtue of this
Agreement or the transactions contemplated hereby, and neither PCC nor the
Designated Affiliate shall have any liability for, any obligations or
liabilities of Travel of any kind, character, or description whatsoever,
including any of the following liabilities:
(a) any obligations of LCI or Travel hereunder;
(b) any liabilities relating to any of the Excluded Assets, or
any obligations or liabilities under any Contract not included in the Assumed
Contracts;
(c) any obligations or liabilities under the Assumed Contracts
relating to the period prior to the Effective Time except to the extent that PCC
received a credit under Section 2.4(a) as a result of the proration of such
obligations or liabilities;
(d) any liability arising from, or in connection with, the
conduct of the business and operations of the Channel or the Assets prior to the
Closing;
(e) any intercompany liabilities or any liabilities by Travel
to any of its shareholders, directors, or officers or Affiliates, or to any
shareholders, directors, or officers of any of its Affiliates, or any
liabilities relating to the capital stock of Travel;
(f) any liabilities to or with respect to Travel's employees,
whether or not any such employee is offered employment by PCC or the Designated
Affiliate, if applicable, at or after the Closing, relating in any way to such
employee's employment with Travel prior to the Closing (including deferred
compensation liabilities and obligations for severance benefits, vacation time,
or sick leave accrued prior the Closing);
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(g) any liability in respect of any past, present, or future
litigation, action, suit, proceeding, or arbitration arising out of or relating
to the ownership or operation of the Assets or the business and operations of
the Channel prior to the Closing (whether asserted, accrued, or commenced before
or after the Closing);
(h) any liabilities with respect to or arising from
indebtedness for borrowed money incurred or accrued before the Closing; and
(i) any liabilities of Travel for Taxes, including Taxes
arising from the business and operations of the Channel prior to the Effective
Time, other than real and personal property taxes and assessments levied against
the Assets for which PCC received a credit under Section 2.4(a).
2.7 Allocation of Consideration.
The parties agree that $225,000 of the consideration payable by PCC to
Travel at the Closing pursuant to this Agreement shall be allocated for purposes
of Section 1060 of the Code and Temporary Treasury Regulation Section 1.1060-1T
to the covenant contained in Section 6.6(a). The parties further agree that the
portion of the consideration payable by PCC to Travel at the Closing that is
allocated to the covenant contained in Section 6.6(a) is being paid to and
received by Travel as agent for LCI. The parties shall allocate the balance of
the consideration payable by PCC to Travel at the Closing pursuant to this
Agreement among the Assets for purposes of Section 1060 of the Code and
Temporary Treasury Regulation Section 1.1060-1T in accordance with an appraisal
to be conducted within six months after Closing by an appraisal firm selected
and retained by PCC, at PCC's expense, with experience in the valuation and
appraisal of businesses similar to the Channel. Each party agrees to file with
its federal income tax returns an initial asset acquisition statement and any
supplemental statements on Internal Revenue Service Form 8594 required by
Temporary Treasury Regulation Section 1.1060-1T, all in accordance with and
accurately reflecting such allocation of the consideration payable by PCC to
Travel at the Closing pursuant to this Agreement. Notwithstanding the foregoing,
no party shall have any obligation under this Section 2.7 to take any tax
position that such party determines, after consultation with its advisers, would
constitute fraud.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF
LCI AND TRAVEL
LCI and Travel, jointly and severally, represent and warrant to PCC as
follows:
3.1 Organization, Standing, and Authority.
Each of LCI and Travel is a corporation duly organized, validly
existing, and in good standing under the laws of the Commonwealth of Virginia.
Travel has all requisite corporate power and authority (a) to own, lease, and
use the Assets as now owned, leased, and used by it, (b) to conduct the business
and operations of the Channel as now conducted by it, and (c) to
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execute and deliver this Agreement and the documents contemplated hereby, and to
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Travel hereunder and thereunder. Travel is duly
qualified to transact business in each jurisdiction in which the nature of its
business makes such qualification necessary except where failure to so qualify
would not have a Material Adverse Effect or impair or hinder the ability of
Travel to perform its obligations under this Agreement. LCI has all requisite
corporate power and authority to execute and deliver this Agreement and the
documents contemplated hereby, and to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by LCI hereunder and
thereunder. LCI is duly qualified to transact business in each jurisdiction in
which the nature of its business makes such qualification necessary except where
failure to so qualify would not impair or hinder the ability of LCI to perform
its obligations under this Agreement.
3.2 Authorization and Binding Obligation.
The execution, delivery, and performance of this Agreement by each of
LCI and Travel have been duly authorized by all necessary corporate actions on
the part of LCI and Travel. This Agreement has been duly executed and delivered
by each of LCI and Travel and constitutes the legal, valid, and binding
obligation of each of LCI and Travel, enforceable against each of LCI and Travel
in accordance with its terms except as the enforceability of this Agreement may
be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally, and by judicial discretion in the enforcement of equitable
remedies.
3.3 Absence of Conflicting Agreements; Consents.
Subject to obtaining the governmental Consent provided for in Section
6.1 and the other Consents listed on Schedule 3.3, the execution, delivery, and
performance of this Agreement and the documents contemplated hereby by each of
LCI and Travel (with or without the giving of notice, the lapse of time, or
both): (a) do not require the consent of any third party (including any
governmental or regulatory authority); (b) will not conflict with any provision
of the Articles of Incorporation or By-Laws of either LCI and Travel; (c) will
not violate or result in a breach of, or contravene any law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality applicable to either LCI and Travel; (d) will not
violate, conflict with, or result in a material breach of any terms of,
constitute grounds for termination of, constitute a default under, or result in
the acceleration of any performance required by the terms of, any mortgage,
indenture, lease, contract, agreement, instrument, license, or permit to which
either LCI and Travel is a party or by which either LCI and Travel or their
respective properties may be bound legally; and (e) will not create any claim,
liability, mortgage, lien, pledge, condition, charge, encumbrance, or other
security interest upon any of the Assets.
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3.4 Licenses.
Schedule 3.4 is a true and complete list as of the date of this
Agreement of all Licenses. Each License has been validly issued, and Travel is
the authorized legal holder thereof. The Licenses are in full force and effect,
and the conduct of the business and operations of the Channel is in accordance
therewith in all material respects. As of the date of this Agreement, there is
no proceeding pending or, to Travel's knowledge, threatened, seeking the
revocation or limitation of any Licenses. Travel is the holder of all Licenses
necessary or appropriate to enable it to continue to conduct the business as now
conducted.
3.5 Real Property.
Schedule 3.5 contains a complete and accurate description of all the
Real Property and Travel's interests therein (including street address (where
known), legal description (where known), owner, and Travel's use thereof). No
fee estates are included in the Real Property Interests. Except as set forth on
Schedule 3.5, Travel has good title to all Real Property Interests, free and
clear of all liens, security interests, mortgages, pledges, encumbrances, or
restrictions on the Real Property Interests, except for Permitted Liens;
provided, however, that neither LCI nor Travel makes any representation or
warranty hereby regarding any liens, security interests, mortgages, pledges,
encumbrances, or restrictions on any fee estate underlying any Real Property
Interest. All Real Property (including the improvements thereon) is in good
condition and repair consistent with its present use and is available for
immediate use in the conduct of the business and operations of the Channel.
Except for that portion of the Real Property and Real Property Interests subject
to leases where Travel is lessor or sublessor (as identified on Schedule 3.5),
Travel is in possession of the Real Property. As of the date of this Agreement,
to the knowledge of Travel, there are no pending or threatened condemnation or
appropriation proceedings against any of the Real Property or the Real Property
Interests. Travel has full legal and practical access to all Real Property. With
respect to each leasehold or subleasehold interest included in the Real Property
Interests, Travel has enforceable rights to nondisturbance and quiet enjoyment,
and no third party holds any interest in the leased premises with the right to
foreclose upon Travel's leasehold or subleasehold interest.
3.6 Tangible Personal Property.
Schedule 3.6 lists all material items of Tangible Personal Property
used to conduct the business and operations of the Channel as now conducted.
Except as described in Schedule 3.6 and except for Tangible Personal Property
leased pursuant to any Assumed Contract, Travel owns and has good title to each
item of Tangible Personal Property and none of the Tangible Personal Property is
subject to any liens, security interests, mortgages, pledges, encumbrances, or
restrictions, except for Permitted Liens. The items of Tangible Personal
Property listed on Schedule 3.6 are in good working condition (ordinary wear and
tear excepted) and are available for immediate use in the business and
operations of the Channel.
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3.7 Contracts.
Schedule 3.7 is a true and complete list as of the date of this
Agreement of all Contracts as of the date of this Agreement, including all of
Travel's (a) cable television system affiliation agreements ("Affiliation
Agreements") or other agreements or understandings with cable television system
operators, (b) program license agreements and other agreements with respect to
the production, development, broadcast, distribution, or other use of television
programs, films, music, and other audio, visual, and audio-visual works
("Programming Agreements"), (c) leases and rental agreements, and (d) agreements
to buy or sell advertising or engage in other promotional activities. Travel has
delivered or made available to PCC true and complete copies of all written
Assumed Contracts and accurate descriptions of all oral Assumed Contracts listed
on Schedule 3.7. Except as disclosed on Schedule 3.7, all of the Assumed
Contracts are in full force and effect and are valid and binding agreements of
the parties enforceable in accordance with their terms. Except as disclosed on
Schedule 3.7, to the knowledge of Travel, no party is in default in any material
respect under any of the Assumed Contracts, nor does any condition exist that
with the notice or lapse of time or both would constitute such a default. Except
for the need to obtain the Consents listed on Schedule 3.3 (but this
representation and warranty does not create any obligation on the part of Travel
or LCI to obtain any such Consent or make the obtaining of any such Consent a
condition to any party's obligations at Closing, other than as expressly
provided elsewhere in this Agreement), Travel has full legal power and authority
to assign its rights under the Assumed Contracts to PCC or the Designated
Affiliate, if applicable, in accordance with this Agreement, and such assignment
will not affect the validity, enforceability, or continuation of any of the
Assumed Contracts. Except as disclosed on Schedule 3.7, as of the date of this
Agreement, to the knowledge of Travel, no party to any Assumed Contract has
informed Travel of its intention (a) to terminate such Assumed Contract or amend
the terms there of, (b) to refuse to renew the Assumed Contract upon expiration
of its term, or (c) to renew the Assumed Contract upon expiration only on terms
and conditions that are more onerous than those now existing.
3.8 Intangible Property.
Schedule 3.8 is a list of all Intangible Property and indicates, with
respect to each item of Intangible Property, the owner thereof and, if
applicable, the name of the licensor and licensee thereof. Except as set forth
on Schedule 3.8, to Travel's knowledge, each item of Intangible Property is in
good standing and no other Person has any claim of ownership or right of use
with respect thereto. To Travel's knowledge, the use of the Intangible Property
by Travel does not, and the use thereof by PCC or the Designated Affiliate, if
applicable, immediately after the Closing will not, conflict with, infringe
upon, violate, or interfere with or constitute an appropriation of any right,
title, interest, or goodwill, including any intellectual property right,
trademark, trade name, service mark, brand mark, brand name, computer program,
database, industrial design, copyright, or any pending application therefor of
any other Person, and there have been no claims made and Travel has not received
any notice or otherwise acquired any knowledge that any item of Intangible
Property is invalid or conflicts with the asserted rights of any Person or has
not been used or enforced or has been failed to be used or
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<PAGE> 22
enforced in a manner that would result in the abandonment, cancellation, or
unenforceability of any of the Intangible Property. Except as set forth on
Schedule 3.8, Travel is not a party to or bound by any contract, license, or
other agreements relating to the Intangible Property.
3.9 Financial Statements.
Travel has furnished PCC with true and complete copies of an unaudited
balance sheet and income statement of the Channel as at and for the fiscal years
ended December 31, 1996, December 31, 1995, and December 31, 1994, and as at and
for the five months ended May 31, 1997 (collectively, the "Financial
Statements"). The Financial Statements have been prepared from the books and
records of Travel on a consistent basis in accordance with the accounting
principles applied by LCI in preparing its consolidated financial statements
which, on a consolidated basis, have been prepared in accordance with generally
accepted accounting principles and present fairly, in all material respects, the
consolidated financial condition of LCI as at their respective dates and the
results of operations for the periods then ended.
3.10 Personnel.
(a) Employees and Compensation. Schedule 3.10 contains a true
and complete list as of the date of this Agreement of all employees of Travel
engaged in the business and operations of the Channel (collectively, the
"Employees") and a description of all compensation arrangements affecting them.
Schedule 3.10 also contains a true and complete list of all material employee
benefit plans or arrangements maintained or administered by Travel or to which
Travel contributes or is required to contribute and that cover any Employee,
including any:
(i) "Employee welfare benefit plan," as defined in
Section 3(1) of ERISA (a "Welfare Plan");
(ii) Employee plan that is maintained in connection with
any trust described in Section 501(c)(9) of the Code; and
(iii) Employment, severance, or other similar contract,
arrangement, or policy and each plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, or retirement benefits or for deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation rights, stock purchases, or other
forms of incentive compensation or post-retirement insurance, compensation, or
benefits that is not a Welfare Plan (collectively, "Benefit Arrangements").
(b) Pension Plans. Except as disclosed in Schedule 3.10,
there is no "employee pension benefit plan," as defined in Section 3(2) of ERISA
(a "Pension Plan"), that is subject to Title IV or ERISA or Section 412 of the
Code, that covers any Employee and to which Travel contributes or is required to
contribute.
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(c) Multiemployer Plans. Neither Travel nor any entity
required be combined with Travel under Section 414(b), Section 414(c), Section
414(m), or Section 414(o) of the Code (an "ERISA Affiliate") has at any time
been a participant in any "multiemployer pension plan," as defined in Section
3(37) of ERISA, that covers any Employee.
(d) Plan Liabilities. Neither Travel nor any ERISA Affiliate
has incurred, or expects to incur as a result of the consummation of the
transactions contemplated under this Agreement, any cost, fee, expense,
liability, claim, suit, obligation, or other damage with respect to any Pension
Plan, any Welfare Plan, or any Benefit Arrangement that could give rise to the
imposition of any liability, cost, fee, expense, or obligation on PCC or any of
its Affiliates, and, to Travel's knowledge, no facts or circumstances exist that
could give rise to any such cost, fee, expense, liability, claim, suit,
obligation, or other damage.
(e) Delivery of Copies of Relevant Documents and Other
Information. Travel has delivered or made available to PCC true and complete
copies of each of the following documents:
(i) Each Welfare Plan (and, if applicable, related trust
agreements) and all amendments thereto, and each summary plan description
together with any summary of material modifications;
(ii) Each written Benefit Arrangement and written
descriptions thereof that have been distributed to Employees (including
descriptions of the number and level of employees covered thereby); and
(iii) Each employee handbook or similar document
describing any Pension Plan, Welfare Plan, or Benefit Arrangement applicable to
Employees.
(f) Labor Relations. Except as set forth in Schedule 3.10,
Travel is not a party to or subject to any written or oral employment contract
with any Employee. Travel is not subject to any contract prohibiting the
termination of any Employee. Except as disclosed on Schedule 3.10, no
controversies, disputes, or proceedings are pending or, to Travel's knowledge,
threatened, between Travel and any Employee. No labor union or other collective
bargaining unit represents or, to Travel's knowledge, claims to represent any of
the employees of the Channel. To Travel's knowledge, there is no union campaign
being conducted to solicit cards from employees to authorize a union to request
a National Labor Relations Board Certification election with respect to any
employees at the Channel.
3.11 Claims and Legal Actions.
Except as disclosed on Schedule 3.11, as of the date of this Agreement,
there is no claim, legal action, counterclaim, suit, arbitration, or other
legal, administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or to Travel's knowledge threatened, against or relating to
Travel or any of its Affiliates with respect to the Assets or the
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business or operations of the Channel, that could be expected to have a Material
Adverse Effect or impair or hinder the ability of LCI or Travel to perform their
respective obligations under this Agreement.
3.12 Compliance with Laws.
Travel has complied with the Licenses and all federal, state, and local
laws, rules, regulations, ordinances, judgments, orders, and decrees applicable
or relating to the business and operation of the Channel, except for any
noncompliance that would not have a Material Adverse Effect or impair or hinder
the ability of LCI or Travel to perform their respective obligations under this
Agreement.
3.13 Environmental Matters.
(a) Travel and its predecessors and Affiliates, with respect
to the Channel, have complied and are in compliance with all Environmental Laws.
Without limiting the generality of the foregoing, each of Travel and its
predecessors and Affiliates have obtained and complied with, or filed timely
applications for, and are in compliance with, all permits, licenses, and other
authorizations that are required pursuant to Environmental Laws for the
occupation of the Assets and the operation of the Channel. Schedule 3.13 is a
list of all permits, licenses, and other authorizations that are required
pursuant to Environmental Laws for the occupation of the Assets and the
operation of the Channel.
(b) Neither Travel nor any of its predecessors and Affiliates,
with respect to the Channel, has received any written notice regarding any
actual or alleged violation of Environmental Laws, or any liabilities or
potential liabilities, including any investigatory, remedial, or corrective
obligations, relating to any of them or their facilities arising under
Environmental Laws.
(c) To Travel's knowledge, none of the following exists at any
Real Property: (1) underground storage tanks, (2) asbestos-containing material
in any form or condition, (3) materials or equipment containing polychlorinated
biphenyls, or (4) landfills.
(d) Neither Travel nor any of its predecessors and Affiliates,
with respect to the Channel, has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any substance,
including any hazardous substance, or owned or operated any property or facility
in a manner that has given or would give rise to liabilities, including any
liability for response costs, corrective action costs, personal injury, property
damage, or natural resources damages, pursuant to any Environmental Laws.
(e) Neither this Agreement nor the assignment of the Assets
pursuant to this Agreement will result in any obligations for site investigation
or cleanup, or notification to or consent of government agencies or third
parties, pursuant to any "transaction-triggered" or "responsible property
transfer" Environmental Laws.
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(f) Neither Travel nor any of its predecessors and Affiliates,
with respect to the Channel, has, either expressly or by operation of law,
assumed or undertaken any liability, including any obligation for corrective or
remedial action, of any other Person relating to Environmental Laws.
3.14 Transactions with Affiliates; Completeness of Assets.
Except as set forth on Schedule 3.14, there are no agreements relating
to the business or operations of the Channel between Travel and any of its
Affiliates, Travel has not been involved in any material business arrangement or
relationship relating to the Channel with any of its Affiliates, and no
Affiliate of Travel owns any material property or right, tangible or intangible,
that is used in the business or operations of the Channel. Except as set forth
on Schedule 3.14, the Assets, together with those assets and properties to be
used in the performance of services by The Weather Channel, Inc. pursuant to the
Services Agreement, constitute all tangible and intangible assets and properties
necessary for the conduct of the business and operations of the Channel as now
conducted.
3.15 Cable Subscribers.
Schedule 3.15 sets forth, with respect to each cable television system
operator so listed, under the column "Network Subs," as of a recent date, the
number of cable system subscribers to which such cable television system
operator makes the Channel available, based upon the Affiliation Agreement with
such cable television system operator (if an Affiliation Agreement with such
cable television system operator exists) and such other information that Travel
reasonably and in good faith deems relevant to such determination. Schedule 3.15
also designates those cable television system operators that, to Travel's
knowledge, make the Channel available to subscribers without an Affiliation
Agreement.
3.16 Ownership of Shares.
LCI owns directly or indirectly all of the issued and outstanding
capital stock of Television, and Television owns directly all of the issued and
outstanding capital stock of Travel. LCI owns directly or indirectly all of the
issued and outstanding capital stock of The Weather Channel, Inc. Neither LCI
nor any Affiliate of LCI owns any shares of Class A Common Stock.
Notwithstanding the foregoing, LCI could be deemed to be the beneficial owner of
securities of PCC by virtue of its investment in one or more of the following
limited partnerships (which in turn own securities of PCC): Sandler Mezzanine
Partners, L.P., Sandler Mezzanine T-E Partners, L.P., and Sandler Mezzanine
Foreign Partners, L.P. (collectively, the "Sandler Partnerships"). The foregoing
shall not be considered an acknowledgment of beneficial ownership of such
securities by LCI.
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3.17 Investment.
Each of LCI and Travel (a) understands that the shares of Class A
Common Stock to be issued to Travel pursuant to this Agreement have not been,
and will not be, registered under the Securities Act of 1933, as amended, or
under any state securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public offering,
and (b) to the extent it or any of its Affiliates acquires any of the shares of
Class A Common Stock to be issued to Travel pursuant to this Agreement, it or
its Affiliate will be acquiring such shares solely for its own account for
investment purposes, and not with a view to the distribution thereof.
3.18 Conduct of Business.
Since December 31, 1996, Travel has not:
(a) Suffered any damage, destruction, or loss affecting any
assets used or useful in the conduct of the business of the Channel that has had
or would have a Material Adverse Effect;
(b) Except in this Agreement, made or agreed to make any sale,
assignment, lease, or other transfer or disposition of any of the Channel's
assets of the types described in Section 2.1 other than in the normal and usual
course of business with suitable replacements being obtained therefor;
(c) Canceled, amended, or modified, or agreed to cancel,
amend, or modify, any Affiliation Agreement or any Programming Agreement that
has had or would have a Material Adverse Effect; or
(d) Entered into any settlement regarding the breach or
infringement of, any license, patent, copyright, trademark, trade name,
franchise, or similar right, or modified any existing right relating to the
Channel.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF
PCC
PCC represents and warrants to LCI and Travel as follows:
4.1 Organization, Standing, and Authority.
PCC is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. On the Closing Date, PCC or
the Designated Affiliate, if applicable, will be duly qualified to conduct
business in the Commonwealth of Virginia and the State of Georgia. PCC has all
requisite corporate power and authority to execute and deliver
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this Agreement and the documents contemplated hereby, and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by PCC hereunder and thereunder.
4.2 Authorization and Binding Obligation.
The execution, delivery, and performance of this Agreement by PCC have
been duly authorized by all necessary actions on the part of PCC. This Agreement
has been duly executed and delivered by PCC and constitutes the legal, valid,
and binding obligation of PCC, enforceable against PCC in accordance with its
terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements.
Subject to obtaining the governmental Consent provided for in Section
6.1, execution, delivery, and performance by PCC of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (a) do not require the consent of any third party (including
any governmental or regulatory authority); (b) will not conflict with the
Certificate of Incorporation or By-Laws of PCC; and (c) will not violate,
conflict with, or result in a breach of, or constitute a default under, any law,
judgment, order, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality applicable to PCC; and (d) will not violate,
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any mortgage, indenture, lease, contract,
agreement, instrument, license, or permit to which PCC is a party or by which
PCC may be bound legally.
4.4 Shares.
The shares of Class A Common Stock to be issued to Travel pursuant to
this Agreement, upon their issuance in accordance with the terms of this
Agreement, will be validly issued, fully paid, and nonassessable.
4.5 SEC Reports.
PCC has filed all forms, reports, and documents required to be filed by
PCC with the Securities and Exchange Commission since January 1, 1996
(collectively, "PCC's SEC Reports"). PCC's SEC Reports have complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended. As
of their respective dates, none of PCC's SEC Reports, including any financial
statements or schedules included or incorporated by reference therein, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. As of the date of this
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Agreement, since the date of each of PCC's SEC Reports, there have been no
material changes to the business, operations, or capitalization of PCC that have
not been disclosed in a subsequent PCC's SEC Report or otherwise disclosed to
LCI.
SECTION 5. OPERATIONS OF THE CHANNEL PRIOR TO
CLOSING
Between the date of this Agreement and the Closing Date, LCI and Travel
shall comply with the covenants in this Section 5, except as otherwise consented
to in writing by PCC:
5.1 Generally.
Travel shall operate the Channel in the ordinary course of business
consistent with past practices (except where such conduct would conflict with
the following covenants or with the other obligations of LCI and Travel under
this Agreement) and use commercially reasonable efforts to preserve the business
of the Channel and its present relationships with suppliers, customers, and
others having business relations with it.
5.2 Contracts.
Travel will not amend in any material respect or (except as provided
below in this Section 5.2) terminate any Contract (or waive any material right
thereunder), or enter into any contract or commitment relating to the Channel or
the Assets, or incur any obligation that will be binding on PCC after Closing,
except for cash time sales agreements made in the ordinary course of business
consistent with past practices. Prior to the Closing Date, Travel shall deliver
to PCC a list of all Contracts entered into between the date of this Agreement
and the Closing Date and shall make available to PCC copies of such Contracts.
Prior to the Closing Date, Travel shall terminate or permit to expire without
renewal the Agreement, dated February 21, 1996, between Travel and CUC
International, Inc. and the Agreement, dated February 1, 1996, between Travel
and DDB Needham Worldwide, Inc.
5.3 Disposition of Assets.
Travel shall not sell, assign, lease, or otherwise transfer or dispose
of any of the Assets, except where no longer used in the business or operations
of the Channel or in connection with the acquisition of replacement property of
equivalent kind and value.
5.4 Encumbrances.
Travel shall not create, assume, or permit to exist any liens, security
interests, mortgages, pledges, encumbrances, or restrictions upon the Assets,
except for Permitted Liens.
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5.5 Licenses.
Travel shall not cause or permit, by any act or failure to act, any of
the Licenses required to be listed on Schedule 3.4 to expire or to be revoked,
suspended, or modified.
5.6 Obligations.
Travel shall pay all obligations relating to the Channel as they become
due, consistent with past practices.
5.7 Access to Information.
(a) Travel shall give PCC and its counsel, accountants,
engineers, and other authorized representatives reasonable access, upon
reasonable notice, to the Assets, the business and operations of the Channel,
and to all other books, records, and documents of Travel relating to the Channel
(or true and complete copies thereof) for the purpose of audit and inspection,
and will furnish or cause to be furnished to PCC or its authorized
representatives, upon reasonable notice, all information with respect to the
affairs and business of the Channel that PCC may reasonably request.
(b) Without limiting the generality of the foregoing, LCI and
Travel shall give PCC and its counsel, accountants, and other authorized
representatives reasonable access to their financial records and their
employees, counsel, accountants, and other representatives for the purpose of
preparing and auditing such financial statements as PCC determines, in its
judgment, are required or advisable to comply with federal or state securities
laws and the rules and regulations of securities markets as a result of the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby. LCI and Travel agree to provide one or more audit
representation letters as to the information made available to PCC in connection
with any audit performed under this Section 5.7(b). The representation letters
will be in such form and make all representations reasonably required by the
accountants preparing such audit to enable them to issue an opinion acceptable
to the Securities and Exchange Commission or other governmental authority for
purposes of any registration statement or other governmental filing by PCC that
requires such audit, but LCI and Travel shall not be required to provide any
representation letter that is substantively more extensive than the
representation letters that LCI provides to its accountants in connection with
the preparation of its audited financial statements. LCI and Travel will also
request that their independent accountants provide any consents that are
necessary for the inclusion of their opinion with respect to any audited
financial statements prepared by them in any governmental filing by PCC.
5.8 Consents.
Travel shall use commercially reasonable efforts to obtain (a) Consents
of GE American Communications, Inc. and Crawford Communications to the
assignment to PCC or the
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Designated Affiliate, if applicable, of the Transponder Agreement and the Uplink
Agreement, (b) estoppel certificates of GE American Communications, Inc. and
Crawford Communications with respect to the Transponder Agreement and the Uplink
Agreement, (c) any other Consents that PCC requests that Travel attempt to
obtain, (d) estoppel certificates of the lessors of all leasehold and
subleasehold interests included in the Real Property Interests, and (d) any
other estoppel certificates of contracting parties to Assumed Contracts that PCC
requests that Travel attempt to obtain. Travel shall promptly advise PCC of any
difficulties experienced in obtaining any of the Consents or estoppel
certificates and of any conditions proposed, considered, or requested for any of
the Consents or estoppel certificates. Notwithstanding the foregoing, and except
as otherwise expressly provided in this Agreement, Travel shall have no
obligation to expend funds to obtain any Consents or estoppel certificates
except to the extent required to cure any breach or default by Travel under any
Contract and except for customary administrative costs.
5.9 Maintenance of Assets.
Travel shall maintain all of the Tangible Personal Property in good
condition (ordinary wear and tear excepted), consistent with their overall
condition on the date of this Agreement, and use, operate, and maintain all of
the Tangible Personal Property in a reasonable manner. Travel shall maintain
inventories of spare parts and expendable supplies at levels consistent with
past practices. Travel shall repair or replace any Intangible Property, Tangible
Personal Property, or Real Property Interests (other than Travel's rights under
the Transponder Agreement, if applicable) that are lost, damaged, confiscated,
or condemned prior to the Closing.
5.10 Notification.
Travel shall promptly notify PCC in writing (a) if, to Travel's
knowledge, any party to any Assumed Contract has informed Travel of its
intention (i) to terminate such Assumed Contract or amend the terms thereof,
(ii) to refuse to renew the Assumed Contract upon expiration of its term, or
(iii) to renew the Assumed Contract upon expiration only on terms and conditions
that are more onerous than those now existing, (b) of any damage, destruction,
or loss affecting any material portion of the assets used or useful in the
conduct of the business of the Channel, (c) of any failure of performance by any
party under either the Transponder Agreement or the Uplink Agreement, or (d) of
any interruption in the transmission of the Channel's programming to cable
television systems.
5.11 Financial Information.
Travel shall furnish PCC within twenty days after the end of each month
ending between the date of this Agreement and the Closing Date an unaudited
balance sheet and income statement of the Channel as at and for the month just
ended and such other financial information as PCC may reasonably request.
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5.12 Compliance with Laws.
Travel shall comply with all laws, rules, and regulations applicable or
relating to the business and operations of the Channel, except for any
noncompliance that would not have a Material Adverse Effect or impair or hinder
the ability of LCI or Travel to perform their respective obligations under this
Agreement.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 HSR Act Filing.
LCI and PCC agree to (a) file, or cause to be filed, with the U.S.
Department of Justice ("DOJ") and Federal Trade Commission ("FTC") all filings,
if any, that are required in connection with the transactions contemplated
hereby under the HSR Act within five Business Days of the date of this
Agreement; (b) submit to the other party, prior to filing, their respective HSR
Act filings to be made hereunder (other than any portion thereof containing
confidential information regarding such party's ultimate parent entity), and to
discuss with the other any comments the reviewing party may have; (c) cooperate
with each other in connection with such HSR Act filings, which cooperation shall
include furnishing the other with any information or documents that may be
reasonably required in connection with such filings; (d) promptly file, after
any request by the FTC or DOJ and after appropriate negotiation with the FTC or
DOJ of the scope of such request, any information or documents requested by the
FTC or DOJ; and (e) furnish each other with any correspondence from or to, and
notify each other of any other communications with, the FTC or DOJ that relates
to the transactions contemplated hereunder, and to the extent practicable, to
permit each other to participate in any conferences with the FTC or DOJ.
6.2 Agreement Regarding Ownership Restrictions.
At the Closing, PCC and LCI will enter into an Agreement Regarding
Ownership Restrictions substantially in the form of Schedule 6.2 hereto.
6.3 Confidentiality.
(a) Except as and to the extent required by law or as provided
in Section 6.3(c), each party will keep confidential any information obtained
from the other party in connection with the transactions contemplated by this
Agreement. If this Agreement is terminated, each party will return to the
disclosing party or destroy all information obtained by such party from any
other party in connection with the transactions contemplated by this Agreement.
(b) Except as provided in Section 6.3(c), no party shall
publish any press release or make any other public announcement concerning this
Agreement or the transactions
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contemplated hereby without the prior written consent of each other party, which
shall not be withheld unreasonably.
(c) Nothing contained in this Agreement shall prevent any
party, after notification to each other party, from making any filings with
governmental authorities, including in connection with any securities filings
with any governmental authorities or exchanges that, in its judgment, may be
required or advisable in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
6.4 Cooperation.
PCC, LCI, and Travel shall cooperate fully with each other and their
respective counsel and accountants in connection with any actions required to be
taken as part of their respective obligations under this Agreement, and PCC,
LCI, and Travel shall use commercially reasonable efforts to take or cause to be
taken all actions necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including making such filings with governmental and regulatory
authorities, providing information, using commercially reasonable efforts to
obtain all necessary or appropriate waivers, consents, and approvals, and
executing such other documents as may be necessary and desirable to the
implementation and consummation of this Agreement, and otherwise use
commercially reasonable efforts to consummate the transaction contemplated
hereby and to fulfill their obligations under this Agreement. Notwithstanding
the foregoing, and except as otherwise expressly provided in this Agreement, PCC
shall have no obligation to expend funds to obtain any of the Consents or to
agree to any adverse change in any License or Assumed Contract in order to
obtain a Consent required with respect thereto, and neither LCI nor Travel shall
have any obligation to expend funds to obtain any of the Consents or any
estoppel certificates except as provided in Section 5.8. If PCC elects to
designate a Designated Affiliate, PCC agrees to deliver to GE American
Communications, Inc., on or before the Closing, a guaranty (similar in form to
that previously delivered to GE American Communications, Inc. by LCI) of the
performance by the Designated Affiliate of those obligations under the
Transponder Agreement that are required to be assumed by the Designated
Affiliate at the Closing.
6.5 Access to Books and Records.
To the extent requested for any reasonable business purposes hereunder,
and subject to the following two sentences of this Section 6.5, (a) LCI and
Travel shall provide PCC and the Designated Affiliate, if applicable, access and
the right to copy for a period of five years from the Closing Date any books and
records of Travel (or true and complete copies thereof) relating to the Channel
or the Assets but not included in the Assets and (b) PCC and the Designated
Affiliate, if applicable, shall provide LCI and Travel access and the right to
copy for a period of five years after the Closing Date any books and records (or
true and complete copies thereof) relating to the Channel or the Assets with
respect to periods prior to the Closing that are included in the Assets. Any
party that is required to grant any other party access and the right
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to copy any books and records (or true and complete copies thereof) pursuant to
this Section 6.5 may, before doing so, redact or remove therefrom any
information contained therein that does not relate to the Channel or the Assets.
Except as and to the extent required by law or as provided in Section 6.3(c),
each party will keep confidential any information to which it is given access
pursuant to this Section 6.5.
6.6 Noncompetition.
(a) LCI covenants and agrees that for a period of two years
after the Closing Date, neither LCI nor any Affiliate of LCI will, directly or
indirectly, own, manage, operate, control, or engage or participate in the
ownership, management, operation, or control of, or be connected as a
shareholder, director, officer, partner, joint venturer, or otherwise with, any
business or organization which engages as one of its principal activities in the
business (the "Restricted Business") of producing or distributing (by any means,
other than through the sale of videotapes, videodiscs, or similar media to
consumers), to persons within the United States, video programming relating to
travel or tourism or otherwise similar in subject matter to that currently
produced or distributed by the Channel. Notwithstanding the foregoing, and
without any implication that any activity listed below would be prohibited by
this Section 6.6(a) or that any activity not listed below is prohibited by this
Section 6.6(a), this Section 6.6(a) shall not prohibit LCI or any Affiliate of
LCI from:
(i) acquiring or owning securities of any Person that
engages in the Restricted Business or owns, directly or indirectly, any interest
in any business or organization which engages as one of its principal activities
in the Restricted Business, if such securities constitute less than twenty
percent of the voting stock of such Person and do not represent control over
such Person;
(ii) continuing to hold securities in any Person that
commences engaging in the Restricted Business after the acquisition by LCI or an
Affiliate of LCI of such securities if neither LCI nor its Affiliate has control
over the conduct by such entity of the Restricted Business;
(iii) owning, managing, operating, and controlling The
Weather Channel (including the Internet website of The Weather Channel); or
(iv) owning, managing, operating, and controlling
television broadcast stations.
(b) The parties acknowledge and agree that the time, scope,
geographic area, and other provisions of Section 6.6(a) have been specifically
negotiated by sophisticated parties and agree that such time, scope, geographic
area, and other provisions are reasonable under the circumstances. If, despite
this express agreement of the parties, a court should hold any portion of
Section 6.6(a) to be unenforceable for any reason, the maximum restrictions of
time, scope,
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and geographic area that the court determines are reasonable under the
circumstances will be substituted for the restrictions held to be unenforceable.
6.7 Accounts Receivable.
At the Closing, Travel will designate PCC or the Designated Affiliate,
if applicable, as its agent solely for the purposes of collecting all accounts
receivable from the sale by the Channel of advertising time and other goods and
services sold prior to the Closing Date ("Accounts Receivable"). If PCC or the
Designated Affiliate receives monies from an account debtor of PCC or the
Designated Affiliate that is also an account debtor of Travel with respect to
any the Accounts Receivable, PCC or the Designated Affiliate shall credit the
sums received to the oldest account due unless the account debtor directs
otherwise (and neither PCC nor any Affiliate of PCC will encourage any account
debtor to so direct). On or before the fifth business day after the end of each
full calendar month after the Closing, PCC or the Designated Affiliate shall
remit to Travel all amounts collected by PCC or the Designated Affiliate before
the end of such month with respect to the Accounts Receivable.
6.8 Environmental Audit.
PCC may, at its option and expense, retain an environmental consultant
to be selected by PCC to perform Phase I environmental surveys of the Real
Property and associated Assets. Prior to performing any Phase I environmental
surveys, PCC shall obtain the consent of the landlord of the subject Real
Property and shall comply with any conditions placed on such consent by the
landlord, and Travel shall cooperate with PCC in obtaining any such consent. If
any survey discloses any material environmental hazard or material possibility
of future liability for environmental damages or clean-up costs, PCC shall so
notify Travel.
6.9 Bulk Sales Law.
PCC hereby waives compliance by Travel with the provisions of any
applicable bulk sales laws.
6.10 No Inconsistent Action.
No party to this Agreement shall take any action that is inconsistent
with its obligations under this Agreement or that could reasonably be expected
to hinder or delay the consummation of the transactions contemplated by this
Agreement.
6.11 Rule 144 Information.
Until such time as all shares of Class A Common Stock issued to Travel
at the Closing have become freely transferable or are no longer held by LCI or
an Affiliate thereof:
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(a) prior to the second anniversary of the Closing Date, PCC
(or any successor thereto) shall comply with the public information requirements
set forth in Rule 144(c) under the Securities Act of 1933, as amended from time
to time, or any successor rule or regulation ("Rule 144"); and
(b) at any time and for so long as LCI would be considered an
"affiliate" under Rule 144, PCC (or any successor thereto) shall comply with the
public information requirements set forth in Rule 144 with respect to sales by
affiliates.
6.12 Services Agreement.
At the Closing, LCI shall cause The Weather Channel, Inc. to enter into
with PCC or the Designated Affiliate, if applicable, and PCC or the Designated
Affiliate, if applicable, shall enter into with The Weather Channel, Inc., a
Services Agreement substantially in the form of Schedule 6.12 (the "Services
Agreement").
6.13 Change of Name of Travel.
LCI and Travel agree that Travel shall change its corporate name within
thirty days after the Closing to eliminate the words "Travel Channel."
6.14 Registration Rights Agreement.
At the Closing, PCC and Travel will enter into a Registration Rights
Agreement incorporating the provisions of Schedule 6.14 (the "Registration
Rights Agreement").
SECTION 7. CONDITIONS TO OBLIGATIONS OF PARTIES
AT CLOSING
7.1 Conditions to Obligations of PCC.
All obligations of PCC at the Closing are subject at PCC's option to
the fulfillment prior to or at the Closing Date of each of the following
conditions:
(a) HSR Act. The waiting period under the HSR Act shall have
been terminated or shall have expired without action by the DOJ or the FTC to
prevent the Closing.
(b) Injunction, etc. There shall be no effective injunction,
writ, or preliminary restraining order or any order of any nature issued by a
court or governmental agency of competent jurisdiction to the effect that
transactions contemplated by this Agreement may not be consummated as herein
provided, no proceeding or lawsuit shall have been commenced and be continuing
by any federal or state governmental or regulatory agency for the purpose of
obtaining any such injunction, writ, or preliminary restraining order, and no
written notice directed to either LCI, Travel, or PCC shall have been received
from any such federal or state
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agency indicating an intent to restrain, prevent, materially delay, or
restructure the transactions contemplated by this Agreement; provided, however,
that (i) PCC shall have used all commercially reasonable efforts to prevent the
entry of any such injunction or other order that may be entered and (ii) PCC
shall be in compliance with Section 6.1.
(c) Transponder Agreement. The Transponder Agreement shall be
in full force and effect and GE American Communications, Inc. shall have granted
its Consent to the assignment of the Transponder Agreement to PCC or the
Designated Affiliate, if applicable, pursuant to this Agreement and shall have
executed and delivered an estoppel certificate with respect to the Transponder
Agreement in form and substance reasonably satisfactory to PCC. Notwithstanding
the foregoing, the Consent of GE American Communications, Inc. to the assignment
of the Transponder Agreement to the Designated Affiliate, rather than to PCC,
shall not be a condition to PCC's obligations at the Closing unless PCC notifies
LCI of its designation of the Designated Affiliate on or before June 23, 1997.
(d) Deliveries. LCI and Travel shall have made or stand
willing to make all the deliveries to PCC or the Designated Affiliate, if
applicable, set forth in Section 8.2.
7.2 Conditions to Obligations of LCI and Travel.
All obligations of LCI and Travel at the Closing are subject at
Travel's option to the fulfillment prior to or at the Closing Date of each of
the following conditions:
(a) HSR Act. The waiting period under the HSR Act shall have
been terminated or shall have expired without action by the DOJ or the FTC to
prevent the Closing.
(b) Injunction, etc. There shall be no effective injunction,
writ, or preliminary restraining order or any order of any nature issued by a
court or governmental agency of competent jurisdiction to the effect that
transactions contemplated by this Agreement may not be consummated as herein
provided, no proceeding or lawsuit shall have been commenced and be continuing
by any federal or state governmental or regulatory agency for the purpose of
obtaining any such injunction, writ, or preliminary restraining order, and no
written notice directed to either LCI, Travel, or PCC shall have been received
from any such federal or state agency indicating an intent to restrain, prevent,
materially delay, or restructure the transactions contemplated by this
Agreement; provided, however, that (i) LCI and Travel shall have used all
commercially reasonable efforts to prevent the entry of any such injunction or
other order that may be entered and (ii) LCI shall be in compliance with Section
6.1.
(c) Deliveries. PCC and the Designated Affiliate, if
applicable, shall have made or stand willing to make all the deliveries set
forth in Section 8.3.
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SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. Except as provided in the following
sentence or as otherwise agreed to by PCC and Travel, the Closing shall take
place at 10:00 a.m. on the first Friday that is at least five Business Days
after the day on which the waiting period under the HSR Act expires or is
terminated.
(b) Closing Place. The Closing shall be held at the offices
of Dow, Lohnes & Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place that is agreed upon by PCC and
Travel.
8.2 Deliveries by LCI and Travel.
Prior to or on the Closing Date, LCI and Travel shall deliver to PCC or
the Designated Affiliate, if applicable, the following, in form and substance
reasonably satisfactory to PCC and its counsel:
(a) Transfer Documents. Duly executed instruments of
conveyance and transfer, including bills of sale, motor vehicle titles,
assignments, and other transfer documents that are sufficient to vest good and
marketable title to the Assets in the name of PCC or the Designated Affiliate,
if applicable, free and clear of all liens, security interests, mortgages,
pledges, encumbrances, or restrictions (other than any liens, security
interests, mortgages, pledges, encumbrances, or restrictions resulting from the
failure to obtain any Consent), except for liens for current taxes not yet due
and payable and landlord's liens for property taxes not delinquent.
(b) Payment with Respect to Prorations. Any payment required
to be made pursuant to Section 2.4(d)(i).
(c) Consents. Copies of all instruments evidencing receipt of
any Consents and estoppel certificates that have been obtained prior to the
Closing (but this delivery requirement does not create any obligation on the
part of Travel or LCI to obtain any Consent or estoppel certificate or make the
obtaining of any Consent or estoppel certificate a condition to any party's
obligations at Closing, other than as expressly provided elsewhere in this
Agreement).
(d) Licenses, Contracts, Business Records, Etc. Copies of
all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records included in
the Assets.
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(e) Agreement Regarding Ownership Restrictions. The Agreement
Regarding Ownership Restrictions, substantially in the form of Schedule 6.2,
duly executed by LCI.
(f) Services Agreement. The Services Agreement, substantially
in the form of Schedule 6.12, duly executed by The Weather Channel, Inc.
(g) Registration Rights Agreement. The Registration Rights
Agreement, duly executed by Travel.
(h) Opinion of Counsel. An opinion of counsel to LCI and
Travel dated as of the Closing Date, substantially in the form of Schedule
8.2(h) hereto.
(i) Other Documents. Such additional documents, information,
and materials as PCC shall reasonably request.
8.3 Deliveries by PCC.
Prior to or on the Closing Date, PCC shall deliver to LCI and Travel
the following, in form and substance reasonably satisfactory to LCI and Travel
and their counsel:
(a) Shares. Certificates evidencing the shares of Class A
Common Stock to be issued to Travel pursuant to Section 2.3(a)(i).
(b) Cash Consideration. The payment provided in Section
2.3(a)(ii).
(c) Payment with Respect to Prorations. Any payment required
to be made pursuant to Section 2.4(d)(ii).
(d) Assumption Agreements. Appropriate assumption agreements
pursuant to which PCC or the Designated Affiliate, if applicable, shall assume
and undertake to perform Travel's obligations under the Licenses and Assumed
Contracts to the extent provided in Section 2.5.
(e) Agreement Regarding Ownership Restrictions. The Agreement
Regarding Ownership Restrictions, substantially in the form of Schedule 6.2,
duly executed by PCC.
(f) Services Agreement. The Services Agreement, substantially
in the form of Schedule 6.12, duly executed by PCC or the Designated Affiliate,
if applicable.
(g) Registration Rights Agreement. The Registration Rights
Agreement, duly executed by PCC.
(h) Opinion of Counsel. An opinion of PCC's counsel dated as
of the Closing Date, substantially in the form of Schedule 8.3(h) hereto.
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(i) Other Documents. Such additional documents, information,
and materials as Travel shall reasonably request.
SECTION 9. TERMINATION
9.1 Termination by LCI.
This Agreement may be terminated by LCI prior to the Closing and the
acquisition of the Assets abandoned, if neither LCI nor Travel is then in
material default, upon written notice to PCC, upon the occurrence of any of the
following:
(a) Conditions. If on the date on which the Closing is
required to take place pursuant to Section 8.1(a) any of the conditions
precedent to the obligations of LCI and Travel set forth in this Agreement has
not been satisfied or waived in writing by LCI and Travel.
(b) Judgments. If there shall be in effect on the date on
which the Closing is required to take place pursuant to Section 8.1(a) any
judgment, decree, or order that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred on or
before December 13, 1997.
9.2 Termination by PCC.
This Agreement may be terminated by PCC and the acquisition of the
Assets abandoned, if PCC is not then in material default, upon written notice to
LCI, upon the occurrence of any of the following:
(a) Conditions. If on the date on which the Closing is
required to take place pursuant to Section 8.1(a) any of the conditions
precedent to the obligations of PCC set forth in this Agreement has not been
satisfied or waived in writing by PCC.
(b) Judgments. If there shall be in effect on the date on
which the Closing is required to take place pursuant to Section 8.1(a) any
judgment, decree, or order that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred on or
before December 13, 1997.
9.3 Rights on Termination.
Upon the termination of this Agreement, each party shall have all
rights and remedies available to it at law or equity.
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9.4 Specific Performance.
The parties recognize that if any party breaches this Agreement and
refuses to perform under the provisions of this Agreement, monetary damages
alone would not be adequate to compensate the other parties for their injury.
Each party shall therefore be entitled, in addition to any other remedies that
may be available, including money damages, to obtain specific performance of the
terms of this Agreement. If any action is brought by any party to enforce this
Agreement, the other parties shall waive the defense that there is an adequate
remedy at law.
9.5 Attorneys' Fees.
In the event of a default by any party that results in a lawsuit or
other proceeding for any remedy available under this Agreement, the prevailing
party shall be entitled to reimbursement from the other party of its reasonable
legal fees and expenses (whether incurred in arbitration, at trial, or on
appeal).
SECTION 10. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties.
Without prejudice to representations and warranties in other agreements
delivered hereunder, all representations and warranties contained in this
Agreement shall be deemed continuing representations and warranties and shall
survive the Closing Date for a period of twelve months. Any investigations by or
on behalf of any party hereto shall not constitute a waiver as to enforcement of
any representation, warranty, or covenant contained in this Agreement. No notice
or information delivered by any party shall affect any other party's right to
rely on any representation, warranty, or covenant made by such party or relieve
such party of any obligations under this Agreement as the result of a breach of
any of its representations and warranties.
10.2 Indemnification by LCI.
After the Closing, and regardless of any investigation made at any time
by or on behalf of PCC or any information PCC may have, LCI hereby agrees to
indemnify and hold harmless PCC and the Designated Affiliate, if applicable,
from and against, and to reimburse PCC and the Designated Affiliate, if
applicable, for, any and all losses, liabilities, and damages (including
punitive and exemplary damages and fines or penalties and any interest thereon),
costs and expenses (including reasonable fees and disbursements of counsel and
expenses of investigation and defense), claims, or other obligations of any
nature (collectively, "Losses") that result from:
(a) Any inaccuracy in or breach of any representation and
warranty, or any breach or nonfulfillment of any covenant or agreement of LCI or
Travel contained in this
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Agreement or in any certificate, document, or instrument delivered to PCC or the
Designated Affiliate under this Agreement;
(b) Any failure to comply with applicable bulk sales laws;
(c) All obligations of LCI or Travel not required to be
assumed by PCC or the Designated Affiliate, if applicable, pursuant to this
Agreement, including any liabilities arising at any time under any mortgage,
indenture, lease, contract, or other agreement that is not included in the
Assumed Contracts;
(d) The operation or ownership of the Channel and the Assets
prior to the Closing, including any liabilities arising under the Licenses or
the Assumed Contracts that relate to events occurring prior the Closing Date
except to the extent that PCC received a credit under Section 2.4(a) as a result
of the proration of such liabilities;
(e) Any payment obligations assumed by PCC or the Designated
Affiliate, if applicable, pursuant to this Agreement, under any Programming
Agreement in existence on the date of this Agreement, to the extent that the
total payment obligations assumed by PCC or the Designated Affiliate, if
applicable, under all such Programming Agreements, as in effect on the date of
this Agreement, exceed $1,923,175; and
(f) Any claim relating to or arising in connection with any
Pension Plan, Welfare Plan, or Benefit Arrangement established or maintained by
LCI, Travel, or any ERISA Affiliate, including any claim relating to any
severance pay program or any obligation to provide "continuation coverage"
(within the meaning of Sections 601 through 609 of ERISA or Section 4980B of the
Code) to any Employee as the result of any act or omission of LCI, Travel, or
any ERISA Affiliate, or arising as the result of any determination that PCC or
any Affiliate of PCC is a successor employer to such entity.
10.3 Indemnification by PCC.
After the Closing, and regardless of any investigation made at any time
by or on behalf of LCI or Travel or any information that LCI or Travel may have,
PCC hereby agrees to indemnify and hold harmless LCI and Travel from and
against, and to reimburse LCI and Travel for, any and all Losses which result
from:
(a) Any inaccuracy in or breach of any representation and
warranty, or any breach or nonfulfillment of any covenant or agreement of PCC
contained in this Agreement or in any certificate, document, or instrument
delivered to LCI or Travel under this Agreement, or
(b) Any and all obligations required to be assumed by PCC or
the Designated Affiliate, if applicable, pursuant to this Agreement; and
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<PAGE> 42
(c) The operation or ownership of the Channel and the Assets
after the Closing.
10.4 Procedure for Indemnification.
The procedure for indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within ten Business
Days after written notice of such action, suit, or proceeding was given to
Claimant. The Claimant's failure to give such notice timely shall not relieve
the Indemnifying Party from any liability that it otherwise may have to the
Claimant except to the extent the Indemnifying Party is actually prejudiced by
such failure.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree at
or prior to the expiration of the thirty-day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the claim. If the
Claimant and the Indemnifying Party do not agree within the thirty-day period
(or any mutually agreed upon extension thereof), the Claimant may seek
appropriate remedy at law or equity.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, if the
Indemnifying Party notifies the Claimant in writing within ten Business Days of
its receipt of notice from the Claimant of the third-party claim that the
Indemnifying Party acknowledges its potential liability to the Claimant under
this Agreement, the Indemnifying Party shall have the right at its own expense,
to participate in or assume control of the defense of such claim (subject to
Section 10.4(d)), 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 (except that the Claimant shall have the right to
participate in the defense of such claim at the Indemnifying Party's expense if
(i) the Claimant has been advised by its counsel that use of the same counsel to
represent both the Indemnifying Party and the Claimant would present a conflict
of interest, which shall be deemed to include any case where there may be a
legal defense or claim available to the Claimant that is different from or
additional to those available to the Indemnifying Party,
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<PAGE> 43
or (ii) the Indemnifying Party fails vigorously to defend or prosecute such
claim within a reasonable time). If the Indemnifying Party fails timely to
notify the Claimant in writing that the Indemnifying Party acknowledges its
potential liability to the Claimant under this Agreement or if the Indemnifying
Party does not elect to assume control or otherwise participate in the defense
of any third-party claim, the Indemnifying Party shall be bound by the results
obtained by the Claimant with respect to such claim.
(d) The Indemnifying Party may not control the defense of any
claim, without the written consent of the Claimant, if (i) the Claimant has been
advised by its counsel that use of the same counsel to represent both the
Indemnifying Party and the Claimant would present a conflict of interest, or
(ii) the claim involves any material risk of the sale, forfeiture, or loss of,
or the creation of any lien (other than a judgment lien) on, any material
property of the Claimant or could entail a risk of criminal liability to the
Claimant.
10.5 Certain Limitations.
Notwithstanding anything in this Agreement to the contrary,
(a) no party shall indemnify or otherwise be liable to any
other party with respect to any claim for any breach of a representation or
warranty, or for the breach of any covenant contained in Section 5 of this
Agreement, unless notice of the claim is given within twelve months after the
Closing Date;
(b) LCI shall not be required to indemnify or otherwise be
liable to PCC or the Designated Affiliate, if applicable, for any breach of a
representation or warranty, or for the breach of any covenant contained in
Section 5 of this Agreement, unless the Losses of PCC and the Designated
Affiliate, if applicable, from all such breaches exceed in the aggregate One
Hundred Thousand Dollars, in which event LCI shall be required to indemnify PCC
and the Designated Affiliate, if applicable, for all such Losses (subject to the
other limitations in this Agreement);
(c) PCC shall not be required to indemnify or otherwise be
liable to LCI or Travel for any breach of a representation or warranty unless
the Losses of LCI and Travel from all such breaches exceed in the aggregate One
Hundred Thousand Dollars, in which event PCC shall be required to indemnify LCI
and Travel for all such Losses (subject to the other limitations in this
Agreement);
(d) LCI shall not be required to indemnify or otherwise be
liable to PCC or the Designated Affiliate, if applicable, for any breach of a
representation or warranty, or for the breach of any covenant contained in
Section 5 of this Agreement, to the extent that the Losses of PCC and the
Designated Affiliate, if applicable, from all such breaches exceed in the
aggregate Twenty-Five Million Dollars;
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<PAGE> 44
(e) PCC shall not be required to indemnify or otherwise be
liable to LCI or Travel for any breach of a representation or warranty to the
extent that the Losses of LCI and Travel from all such breaches exceed in the
aggregate Twenty-Five Million Dollars;
(f) the amount of Losses for which a Claimant may be entitled
to indemnification under this Agreement (but not the amount of Losses suffered
by a Claimant for purposes of the foregoing provisions of this Section 10.5)
shall be determined on an after-tax basis, after giving effect to any tax
benefit arising from the incurring of any Loss and any tax detriment arising
from the indemnification thereof;
(g) indemnification of Losses under this Agreement shall be
net of any insurance proceeds actually paid to the Claimant with respect to the
event giving rise to such Loss, but no Claimant shall have any obligation under
this Agreement to make any claim under any insurance policy that may be
applicable to such event.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses.
Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents, and representatives, and each party shall be
responsible for all fees or commissions payable to any finder, broker, advisor,
or similar Person retained by or on behalf of such party (including, for LCI,
Donaldson, Lufkin & Jenrette). Travel and PCC shall each pay one-half of any
filing fees, transfer taxes, recordation taxes, sales taxes, document stamps, or
other charges levied by any governmental entity in connection with the
transactions contemplated by this Agreement, including any the fee imposed by
the FTC in connection with filings made pursuant to the HSR Act.
11.2 Notices.
All notices, demands, and requests required or permitted to be given
under the provisions of this Agreement shall be (a) in writing, (b) delivered by
personal delivery, or sent by commercial delivery service or registered or
certified mail, return receipt requested, or sent by facsimile transmission, (c)
deemed to have been given on the date of personal delivery or the date set forth
in the records of the delivery service or on the return receipt or by facsimile
confirmation, and (d) addressed as follows:
If to PCC: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson, President
Telecopier: 561-659-4252
-40-
<PAGE> 45
With a copy to: Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
Attention: John R. Feore, Jr.
Telecopier: 202-776-2222
If to LCI or Travel: c/o Landmark Communications, Inc.
150 West Brambleton Avenue
Norfolk, Virginia 23510-2075
Attention: Alfred F. Ritter Jr., Executive
Vice President, and Louis F. Ryan, Executive
Vice President and General Counsel
Telecopier: 757-664-2164
With a copy to: Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4669
Attention: William J. Grant, Jr.
Telecopier: 212-821-8111
or to any other or additional Persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.2.
11.3 Benefit and Binding Effect.
No party may assign this Agreement without the prior written consent of
each other party hereto, except that, any party may assign any or all of its
rights under this Agreement to any Affiliate (which assignment shall not relieve
the assigning party of any obligations or liabilities under this Agreement).
This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.
11.4 Further Assurances.
The parties shall take any actions and execute any other documents that
may be necessary or desirable to the implementation and consummation of this
Agreement, including, in the case of Travel, any additional deeds, bills of
sale, or other transfer documents that, in the reasonable opinion of PCC, may be
necessary to ensure, complete, and evidence the full and effective transfer of
the Assets to PCC or the Designated Affiliate, if applicable, pursuant to this
Agreement.
-41-
<PAGE> 46
11.5 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO THE CHOICE
OF LAW PROVISIONS THEREOF).
11.6 Headings.
The headings in this Agreement are included for ease of reference only
and shall not control or affect the meaning or construction of the provisions of
this Agreement.
11.7 Entire Agreement.
This Agreement, the schedules, hereto, and all documents, certificates,
and other documents to be delivered by the parties pursuant hereto, collectively
represent the entire understanding and agreement among PCC, LCI, and Travel with
respect to the subject matter of this Agreement. This Agreement supersedes all
prior negotiations among the parties and cannot be amended, supplemented, or
changed except by an agreement in writing that makes specific reference to this
Agreement and that is signed by each party against which enforcement of any such
amendment, supplement, or modification is sought. This document shall not
constitute or otherwise evidence an agreement among the parties hereto relating
to the subject matter hereof unless and until it has been executed and delivered
by the parties hereto.
11.8 Waiver of Compliance; Consents.
Except as otherwise provided in this Agreement, any failure of any of
the parties to comply with any obligation, representation, warranty, covenant,
agreement, or condition herein may be waived by the party entitled to the
benefits thereof only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, representation, warranty, covenant, agreement, or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
11.8.
11.9 Counterparts.
This Agreement may be signed in counterparts with the same effect as if
the signature on each counterpart were upon the same instrument.
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<PAGE> 47
IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first written above.
LANDMARK COMMUNICATIONS,
INC.
By: /s/ A.F. Ritter, Jr.
-------------------------------
Name: A.F. Ritter, Jr.
-----------------------------
Title: Exec. Vice President
----------------------------
THE TRAVEL CHANNEL, INC.
By: /s/ A.F. Ritter, Jr.
-------------------------------
Name: A.F. Ritter, Jr.
-----------------------------
Title: President
----------------------------
PAXSON COMMUNICATIONS
CORPORATION
By: /s/ Lowell W. Paxson
-------------------------------
Name: Lowell W. Paxson
-----------------------------
Title: Chairman and Chief
Executive Officer
----------------------------
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<PAGE> 48
ASSET ACQUISITION STATEMENT
DATED AS OF JUNE 13, 1997
BY AND AMONG
LANDMARK COMMUNICATIONS, INC. THE TRAVEL
CHANNEL, INC. AND PAXSON COMMUNICATIONS
CORPORATION
--------------------------------------------------------------
Schedule 2.2 Excluded Assets
Schedule 3.3 Consents
Schedule 3.4 Licenses
Schedule 3.5 Real Property
Schedule 3.6 Tangible Personal Property
Schedule 3.7 Contracts
Schedule 3.8 Intangible Property
Schedule 3.10 Personnel
Schedule 3.11 Claims and Legal Actions
Schedule 3.13 Environmental Matters
Schedule 3.14 Transactions with Affiliates
Schedule 3.15 Cable Subscribers
Schedule 6.2 Agreement Regarding Ownership Restrictions
Schedule 6.12 Services Agreement
Schedule 6.14 Registration Rights Provisions
Schedule 8.2h Opinion of Counsel to Landmark Communications, Inc. and The
Travel Channel, Inc.
Schedule 8.3h Opinion of Counsel to Paxson Communications Corporation
<PAGE> 1
EXHIBIT 10.176
================================================================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
ORLANDO-56, INC.
AND
CHANNEL 56 OF ORLANDO, INC.
* * *
JUNE 23, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS......................................................................................1
"Accounts Receivable"....................................................................................1
"Affiliation Agreement"..................................................................................1
"Assets".................................................................................................1
"Assumed Contracts"......................................................................................1
"Closing"................................................................................................2
"Closing Date"...........................................................................................2
"Consents"...............................................................................................2
"Contracts"..............................................................................................2
"FCC"....................................................................................................2
"FCC Consent"............................................................................................2
"FCC Licenses"...........................................................................................2
"Final Order"............................................................................................2
"Intangibles"............................................................................................2
"Licenses"...............................................................................................3
"Promissory Note.........................................................................................3
"Purchase Price".........................................................................................3
"Real Property"..........................................................................................3
"Tangible Personal Property".............................................................................3
"Time Brokerage Agreement"...............................................................................3
SECTION 2. PURCHASE AND SALE OF ASSETS......................................................................3
2.1 Agreement to Sell and Buy.......................................................................3
2.2 Excluded Assets.................................................................................4
2.4 Payment of Purchase Price.......................................................................5
2.5 Assumption of Liabilities and Obligations.......................................................5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.........................................................6
3.1 Organization, Standing, and Authority...........................................................6
3.2 Authorization and Binding Obligation............................................................6
3.3 Absence of Conflicting Agreements...............................................................6
3.4 Governmental Licenses...........................................................................6
3.5 Title to and Condition of Real Property.........................................................7
3.6 Title to and Condition of Tangible Personal Property............................................8
3.7 Assumed Contracts...............................................................................8
3.8 Consents........................................................................................8
3.9 Intangibles.....................................................................................9
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
3.10 Insurance.......................................................................................9
3.11 Reports.........................................................................................9
3.12 Personnel.......................................................................................9
3.13 Taxes..........................................................................................10
3.14 Claims and Legal Actions.......................................................................11
3.15 Environmental Matters..........................................................................11
3.16 Compliance with Laws...........................................................................12
3.17 Conduct of Business in Ordinary Course.........................................................13
3.18 Transactions with Affiliates...................................................................13
3.19 Broker.........................................................................................13
3.20 Full Disclosure................................................................................13
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.........................................................14
4.1 Organization, Standing, and Authority..........................................................14
4.2 Authorization and Binding Obligation...........................................................14
4.3 Absence of Conflicting Agreements..............................................................14
4.4 Broker.........................................................................................14
4.5 Buyer Qualifications...........................................................................14
4.6 Full Disclosure................................................................................15
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING......................................................15
5.1 Generally......................................................................................15
5.2 Compensation...................................................................................15
5.3 Contracts......................................................................................15
5.4 Disposition of Assets..........................................................................15
5.5 Encumbrances...................................................................................15
5.6 Licenses.......................................................................................15
5.7 Rights.........................................................................................16
5.8 No Inconsistent Action.........................................................................16
5.9 Access to Information..........................................................................16
5.10 Maintenance of Assets..........................................................................16
5.11 Insurance......................................................................................16
5.12 Consents.......................................................................................16
5.13 Books and Records..............................................................................17
5.14 Notification...................................................................................17
5.15 Compliance with Laws...........................................................................17
5.16 Financing Leases...............................................................................17
5.17 Programming....................................................................................17
5.18 Preservation of Business.......................................................................17
</TABLE>
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<PAGE> 4
<TABLE>
<CAPTION>
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----
<S> <C> <C>
5.19 Collection of Accounts Receivable..............................................................17
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS................................................................17
6.1 FCC Consent....................................................................................17
6.2 Control of the Station.........................................................................18
6.3 Risk of Loss...................................................................................18
6.4 Confidentiality................................................................................19
6.5 Environmental Audit............................................................................19
6.6 Engineering Study..............................................................................19
6.7 Cooperation....................................................................................19
6.8 Sales Tax Filings..............................................................................20
6.9 Access to Books and Records....................................................................20
6.10 Appraisal......................................................................................20
6.11 Buyer Conduct..................................................................................20
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING.....................................................................................20
7.1 Conditions to Obligations of Buyer.............................................................20
7.2 Conditions to Obligations of Seller............................................................21
SECTION 8. CLOSING AND CLOSING DELIVERIES..................................................................22
8.1 Closing........................................................................................22
8.2 Deliveries by Seller...........................................................................22
8.3 Deliveries by Buyer............................................................................23
SECTION 9. TERMINATION.....................................................................................24
9.1 Termination by Seller..........................................................................24
9.2 Termination by Buyer...........................................................................24
9.3 Rights on Termination..........................................................................25
9.4 Survival of Option.............................................................................25
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES..............................................................26
10.1 Representations and Warranties.................................................................26
10.2 Indemnification by Seller......................................................................26
10.3 Indemnification by Buyer.......................................................................26
10.4 Procedure for Indemnification..................................................................27
10.5 Specific Performance...........................................................................28
10.6 Attorneys' Fees................................................................................29
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 11. MISCELLANEOUS..................................................................................29
11.1 Fees and Expenses..............................................................................29
11.2 Arbitration....................................................................................29
11.3 Notices........................................................................................30
11.4 Benefit and Binding Effect.....................................................................30
11.5 Further Assurances.............................................................................31
11.6 Governing Law..................................................................................31
11.7 Headings.......................................................................................31
11.8 Gender and Number..............................................................................31
11.9 Entire Agreement...............................................................................31
11.10 Waiver of Compliance; Consents.................................................................31
11.11 Press Release..................................................................................31
11.12 Consent to Jurisdiction and Service of Process.................................................32
11.13 Counterparts...................................................................................32
</TABLE>
- iv -
<PAGE> 6
LIST OF SCHEDULES
-----------------
Exhibit A -- Affiliation Agreement
Schedule 2.2 -- Excluded Assets
Schedule 3.3 -- Consents
Schedule 3.4 -- Licenses
Schedule 3.5 -- Real Property
Schedule 3.6 -- Tangible Personal Property
Schedule 3.7 -- Contracts
Schedule 3.9 -- Intangibles
Schedule 3.12 -- Employee Matters
Schedule 3.14 -- Litigation
Schedule 8.2(b) -- Form of Estoppel Certificate
Schedule 8.2(g) -- Opinion of Seller's Counsel
Schedule 8.3(d) -- Opinion of Buyer's Counsel
- v -
<PAGE> 7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is dated as of the 23rd day of June,
1997, by and between Paxson Communications of Orlando-56, Inc., a Florida
corporation ("Buyer"), and Channel 56 of Orlando, Inc., a Florida corporation
("Seller").
R E C I T A L S
A. Seller is the licensee of Television Station WIRB(TV), Melbourne,
Florida (the "Station") pursuant to authorizations issued by the Federal
Communications Commission ("FCC").
B. Buyer has been providing programming to the Station pursuant to a
Time Brokerage Agreement.
C. Seller desires to sell, and Buyer desires to buy, substantially
all the assets that are used or useful in the business or operations of the
Station, for the price and on the terms and conditions set forth in this
Agreement.
A G R E E M E N T S
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Seller, intending to be bound
legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of advertising or programming time run on the Station by Seller prior to
the Closing Date.
"Affiliation Agreement" means the Affiliation Agreement in the form of
Exhibit A hereto to be entered into upon the Closing by Buyer and The Christian
Network, Inc. ("CNI").
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7 that
are designated as Contracts that are to be assumed by Buyer upon its purchase of
the Station and (ii) any Contracts
<PAGE> 8
entered into by Seller between the date of this Agreement and the Closing Date
that Buyer agrees in writing to assume.
"Closing" means the consummation of the purchase and sale of the Assets
pursuant to this Agreement in accordance with the provisions of Section 8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer or
otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses, and
other agreements (including leases for personal or real property and employment
agreements), written or oral (including any amendments and other modifications
thereto) to which Seller is a party or which are binding upon Seller and which
relate to or affect the Assets or the business or operations of the Station, and
(i) which are in effect on the date of this Agreement or (ii) which are entered
into by Seller between the date of this Agreement and the Closing Date.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by Seller
or under which Seller is licensed or franchised and which are used or useful in
the business and operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date.
- 2 -
<PAGE> 9
"Licenses" means all licenses, permits, and other authorizations issued
by the FCC, the Federal Aviation Administration, or any other federal, state, or
local governmental authorities in connection with the conduct of the business or
operations of the Station, together with any additions thereto between the date
of this Agreement and the Closing Date.
"Promissory Note" means the Promissory Note executed by Seller and
dated August 31, 1995 in the principal amount of $4,300,000.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, rights of way, all buildings and other
improvements thereon, and other real property interests which are used or useful
in the business or operations of the Station, together with any additions
thereto between the date of this Agreement and the Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts, and other tangible personal property which is used or useful in the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Time Brokerage Agreement" means the Time Brokerage Agreement dated as
of August 31, 1995, between Seller and Buyer.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to sell, transfer, and deliver to
Buyer on the Closing Date, and Buyer agrees to purchase, all of the tangible and
intangible assets used or useful in connection with the conduct of the business
or operations of the Station, together with any additions thereto between the
date of this Agreement and the Closing Date, but excluding the assets described
in Section 2.2, free and clear of any claims, liabilities, security interests,
mortgages, liens, pledges, conditions, charges, or encumbrances of any nature
whatsoever (except for encumbrances permitted by Section 5.5 herein), including
the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
- 3 -
<PAGE> 10
(d) The Assumed Contracts;
(e) The Intangibles and all other intangible assets of Seller
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any, except for any lists
of donors, contributors or other supporters of the Station;
(f) All of Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station;
(g) The Accounts Receivable as of 11:59 p.m., local time, on the
day prior to the Closing Date;
(h) All choses in action of Seller relating to the Station; and
(i) All books and records relating to the business or operations
of the Station, including executed copies of the Assumed Contracts, and all
records required by the FCC to be kept by the Station.
2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Seller's cash on hand as of the Closing and all other cash
in any of Seller's bank or savings accounts; any insurance policies, letters of
credit, or other similar items and cash surrender value in regard thereto; and
any stocks, bonds, certificates of deposit and similar investments;
(b) All books and records that Seller is required by law to
retain and that pertain to Seller's corporate organization;
(c) Any pension, profit-sharing, or employee benefit plans, and
any collective bargaining agreements;
(d) All property listed on Schedule 2.2 hereto; and
(e) All lists of donors, contributors or other supporters of the
Station.
2.3 Purchase Price. The Purchase Price for the Assets shall be
Thirteen Million One Hundred Sixty One Thousand Two Hundred Seventy-Four Dollars
($13,161,274.00), adjusted as provided in Section 2.3(a) below. All principal,
accrued but unpaid interest, fees, expenses and other charges owed by Seller to
Buyer as of the Closing Date under the Promissory Note and the Loan Agreement
dated as of August 31, 1995 shall be applied against the Purchase Price as a
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credit in favor of Buyer. The remaining portion of the Purchase Price shall be
paid by Buyer in cash at the Closing.
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses, other than
expenses for which Buyer is obligated to reimburse Seller under the Time
Brokerage Agreement, for which no proration shall be required. All expenses
arising from the operation of the Station, including business and license fees,
utility charges, real and personal property taxes and assessments levied against
the Assets, property and equipment rentals, applicable copyright or other fees,
sales and service charges, taxes (except for taxes arising from the transfer of
the Assets under this Agreement), FCC regulatory fees, and similar prepaid and
deferred items, shall be prorated between Buyer and Seller in accordance with
the principle that Seller shall be responsible for all expenses, costs, and
liabilities allocable to the period prior to the Closing Date, other than
expenses for which Buyer is obligated to reimburse Seller under the Time
Brokerage Agreement, and Buyer shall be responsible for all expenses, costs, and
obligations allocable to the period on and after the Closing Date.
Notwithstanding the preceding sentence, there shall be no adjustment for, and
Seller shall remain solely liable with respect to, any Contracts not included in
the Assumed Contracts and any other obligation or liability not being assumed by
Buyer in accordance with Section 2.5.
(b) Manner of Determining Adjustments. Any adjustments will,
insofar as feasible, be determined and paid on the Closing Date, with final
settlement and payment by the appropriate party occurring no later than ninety
(90) days after the Closing Date or such other date as the parties shall
mutually agree upon.
2.4 Payment of Purchase Price. The cash portion of the Purchase Price,
as adjusted, shall be paid by Buyer to Seller at Closing by wire transfer of
same-day funds pursuant to wire instructions which shall be delivered by Seller
to Buyer, at least two days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall assume and undertake to pay, discharge, and perform all obligations
and liabilities of Seller under the Licenses and the Assumed Contracts insofar
as they relate to the time on and after the Closing Date, and arise out of
events related to Buyer's ownership of the Assets or its operation of the
Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or proceedings
relating to the operation of the Station prior to the Closing, (iv) any
obligations or liabilities arising under capitalized leases or other financing
agreements not assumed by Buyer, (v) any obligations or liabilities arising
under agreements entered into other than in the ordinary course of business,
(vi) any obligations or liabilities of Seller under any employee pension,
retirement, or other benefit plans or collective bargaining agreements, (vii)
any obligation to any employee of the
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Seller who is employed at the Station for severance benefits, vacation time, or
sick leave accrued prior to the Closing Date, or (viii) any obligations or
liabilities caused by, arising out of, or resulting from any action or omission
of Seller prior to the Closing, and all such obligations and liabilities shall
remain and be the obligations and liabilities solely of Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida. Seller has all requisite power and authority (i) to own,
lease, and use the Assets as now owned, leased, and used, (ii) to conduct the
business and operations of the Station as now conducted, and (iii) to execute
and deliver this Agreement and the documents contemplated hereby, and to perform
and comply with all of the terms, covenants, and conditions to be performed and
complied with by Seller hereunder. Seller is not a participant in any joint
venture or partnership with any other person or entity with respect to any part
of the operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Seller have been duly authorized by all
necessary actions on the part of Seller and its shareholder. This Agreement has
been duly executed and delivered by Seller and constitutes the legal, valid, and
binding obligation of Seller, enforceable against it in accordance with its
terms, except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the documents contemplated hereby (with or without the giving
of notice, the lapse of time, or both): (i) do not require the consent of any
third party; (ii) will not conflict with any provision of the Articles of
Incorporation or Bylaws of Seller; (iii) will not conflict with, result in a
breach of, or constitute a default under, any law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; (iv) will not conflict with, constitute grounds for termination
of, result in a breach of, constitute a default under, or accelerate or permit
the acceleration of any performance required by the terms of, any agreement,
instrument, license, or permit to which Seller is a party or by which Seller may
be bound; and (v) will not create any claim, liability, mortgage, lien, pledge,
condition, charge, or encumbrance of any nature whatsoever upon any of the
Assets.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete
list of the Licenses. Seller has delivered to Buyer true and complete copies of
the Licenses (including any amendments and other modifications thereto). The
Licenses have been validly issued, and Seller
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is the authorized legal holder thereof. The Licenses listed on Schedule 3.4
comprise all of the licenses, permits, and other authorizations required from
any governmental or regulatory authority for the lawful conduct of the business
and operations of the Station in the manner and to the full extent they are now
conducted, and none of the Licenses is subject to any restriction or condition
that would limit the full operation of the Station as now operated. The Licenses
are in full force and effect, and the conduct of the business and operations of
the Station is in accordance therewith in all material respects. Seller has no
reason to believe that any of the Licenses would not be renewed by the FCC or
other granting authority in the ordinary course. The Station's city of license,
as determined by the FCC, is located within the Orlando, Florida Area of
Dominant Influence as defined by the 1991-1992 Area of Dominant Influence Market
Guide published by The Arbitron Co. and the Orlando, Florida Designated Market
Area as defined by the 1995 United States Television Household Estimates
published by Nielsen Media Research. To the best of Seller's knowledge, on or
before October 1, 1996, the Station made a valid election of must carry with
respect to each cable system located within the Station's Area of Dominant
Influence. Except as disclosed on Schedule 3.4, no cable system on which the
Station is entitled to must carry status has advised the Station of any signal
quality or copyright indemnity or other prerequisite to cable carriage of the
Station's signal, and no cable system has declined or threatened to decline such
carriage or failed to respond to a request for carriage or sought any form of
relief from carriage from the FCC.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains a
complete and accurate description of all the Real Property and Seller's
interests therein. The Real Property listed on Schedule 3.5 comprises all real
property interests necessary to conduct the business and operations of the
Station as now conducted. Seller has good and marketable fee simple title,
insurable at standard rates, to all fee estates (including the improvements
thereon) included in the Real Property, free and clear of all liens, mortgages,
pledges, covenants, easements, restrictions, encroachments, leases, charges, and
other claims and encumbrances of any nature whatsoever, and without reservation
or exclusion of any mineral, timber, or other rights or interests, except for
liens for real estate taxes not yet due and payable and liens disclosed on
Schedule 3.5. With respect to each leasehold or subleasehold interest included
in the Real Property being conveyed under this Agreement, so long as Seller
fulfills its obligations under the lease therefor, Seller has enforceable rights
to nondisturbance and quiet enjoyment, and, to the best of Seller's knowledge,
no third party holds any interest in the leased premises with the right to
foreclose upon Seller's leasehold or subleasehold interest. All towers, guy
anchors, and buildings and other improvements included in the Assets are located
entirely on the Real Property listed in Schedule 3.5. Seller has delivered to
Buyer true and complete copies of all deeds pertaining to the Real Property. All
Real Property (including the improvements thereon) (i) is in good condition and
repair consistent with its present use, (ii) is available for immediate use in
the conduct of the business and operations of the Station, and (iii) complies in
all material respects with all applicable building or zoning codes and the
regulations of any governmental authority having jurisdiction. Seller has full
legal and practical access to the Real Property. To the best of Seller's
knowledge, all easements, rights-of-way, and real property licenses affecting or
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constituting part of the Real Property have been properly recorded in the
appropriate public recording offices.
3.6 Title to and Condition of Tangible Personal Property. Schedule 3.6
lists all material items of Tangible Personal Property. The Tangible Personal
Property listed on Schedule 3.6 comprises all material items of tangible
personal property necessary to conduct the business and operations of the
Station as now conducted. Except as described in Schedule 3.6, Seller owns and
has good title to each item of Tangible Personal Property, and none of the
Tangible Personal Property owned by Seller is subject to any security interest,
mortgage, pledge, conditional sales agreement, or other lien or encumbrance,
except for encumbrances permitted by Section 5.5 herein. Each item of Tangible
Personal Property is available for immediate use in the business and operations
of the Station. All items of transmitting and studio equipment included in the
Tangible Personal Property (i) have been maintained in a manner consistent with
generally accepted standards of good engineering practice, and (ii) will permit
the Station and any auxiliary broadcast stations used in the operation of the
Station to operate, in all material respects, in accordance with the terms of
the FCC Licenses and the rules and regulations of the FCC, and with all other
applicable federal, state, and local statutes, ordinances, rules, and
regulations.
3.7 Assumed Contracts. Schedule 3.7 is a true and complete list of all
Contracts. Seller has delivered to Buyer true and complete copies of all written
Contracts, true and complete memoranda of all oral Contracts (including any
amendments and other modifications to such Contracts). Other than the Contracts
listed on Schedule 3.7 or any other Schedule to this Agreement, Seller requires
no contract, lease, or other agreement to enable it to carry on its business as
now conducted. All of the Assumed Contracts are in full force and effect, and
are valid, binding, and enforceable in accordance with their terms. There is not
under any Assumed Contract any default by any party thereto or any event that,
after notice or lapse of time or both, could constitute a default. Seller is not
aware of any intention by any party to any Assumed Contract (i) to terminate
such contract or amend the terms thereof, (ii) to refuse to renew the Assumed
Contract upon expiration of its term, or (iii) to renew the Assumed Contract
upon expiration only on terms and conditions which are more onerous than those
now existing. Except for the need to obtain the Consents listed in Schedule 3.3,
Seller has full legal power and authority to assign its rights under the Assumed
Contracts to Buyer in accordance with this Agreement, and such assignment will
not affect the validity, enforceability, or continuation of any of the Assumed
Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1,
the other Consents described in Schedule 3.3, no consent, approval, permit, or
authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the
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business and operations of the Station in essentially the same manner as such
business and operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Seller has delivered to Buyer copies of
all documents establishing or evidencing all Intangibles. To the best knowledge
of Seller, Seller is not infringing upon or otherwise acting adversely to any
trademarks, trade names, service marks, service names, copyrights, patents,
patent applications, know-how, methods, or processes owned by any other person
or persons, and there is no claim or action pending, or to the knowledge of
Seller threatened, with respect thereto. The Intangibles listed on Schedule 3.9
comprise all intangible property interests necessary to conduct the business and
operations of the Station as now conducted.
3.10 Insurance. All policies of insurance covering the Assets are in
full force and effect and are adequate in amount with respect to, and for the
full value (subject to customary deductibles) of, the Assets, and insure the
Assets and the business of the Station against all customary and foreseeable
risks. During the past three years, no insurance policy of Seller on the Assets
or the Station has been canceled by the insurer and no application of Seller for
insurance has been rejected by any insurer.
3.11 Reports. To the best of Seller's knowledge, all Station returns,
reports, and statements required to be filed by Seller with the FCC or with any
other governmental agency have been filed, and all reporting requirements of the
FCC and other governmental authorities having jurisdiction over Seller and the
Station have been complied with by Seller in all material respects. All of such
returns, reports, and statements are substantially complete and correct as
filed. Seller has timely paid to the FCC all annual regulatory fees required to
be paid by Seller with respect to the FCC Licenses.
3.12 Personnel.
(a) Employees and Compensation. Schedule 3.12 contains a true
and complete list of all employees of Seller who are employed at the Station,
their job titles, date of hire and current salary. Schedule 3.12 also contains a
true and complete list as of the date of this Agreement of all employee benefit
plans or arrangements applicable to the employees of the Station and all fixed
or contingent liabilities or obligations of Seller with respect to any person
now or formerly employed by Seller at the Station, including pension or thrift
plans, individual or supplemental pension or accrued compensation arrangements,
contributions to hospitalization or other health or life insurance programs,
incentive plans, bonus arrangements, and vacation, sick leave, disability and
termination arrangements or policies, including workers' compensation policies.
Seller has furnished Buyer with true and complete copies of all employee
handbooks, employee rules and regulations, and summary plan descriptions of the
written plans and arrangements listed in Schedule 3.12, and with descriptions of
the unwritten plans and
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arrangements listed in Schedule 3.12. At Buyer's request, Seller will furnish
Buyer with true and complete copies of all applicable plan documents, trust
documents, and insurance contracts with respect to the plans and arrangements
listed on Schedule 3.12. All employee benefits and welfare plans or arrangements
listed in Schedule 3.12 were established and have been executed, managed and
administered in accordance with the Internal Revenue Code of 1986, as amended,
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
all other laws. Seller is not aware of the existence of any governmental audit
or examination of any of such plans or arrangements or of any facts which would
lead it to believe that any such audit or examination is pending or threatened.
No action, suit, or claim with respect to any of such plans or arrangements
(other than routine claims for benefits) is pending or, to the knowledge of
Seller, threatened, and Seller possesses no knowledge of any facts which could
give rise to any such action, suit or claim.
(b) Labor Relations. Seller is not a party to or subject to
any collective bargaining agreements with respect to the Station. Seller has no
written or oral contracts of employment with any employee of the Station, other
than those listed in Schedule 3.7. Seller has complied with all laws, rules, and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety, discrimination, and
the payment of social security and other payroll related taxes, and it has not
received any notice alleging that it has failed to comply in any material
respect with any such laws, rules, or regulations. No controversies, disputes,
or proceedings are pending or, to the best of its knowledge, threatened, between
it and any employee (singly or collectively) of the Station. No labor union or
other collective bargaining unit represents or claims to represent any of the
employees of the Station. To Seller's knowledge, there is no union campaign
being conducted to solicit cards from employees to authorize a union to request
a National Labor Relations Board certification election with respect to any
employees at the Station.
(c) Liabilities. Seller has no liability of any kind to or in
respect of any employee benefit plan, including withdrawal liability under
Section 4201 of ERISA. Seller has not incurred any accumulated funding
deficiency within the meaning of ERISA or Section 4971 of the Internal Revenue
Code. Seller has not failed to make any required contributions to any employee
benefit plan. The Pension Benefit Guaranty Corporation has not asserted that
Seller has incurred any liability in connection with any such plan. No lien has
been attached and no person has threatened to attach a lien on any property of
Seller as a result of a failure to comply with ERISA.
3.13 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local, or city tax returns
which are required to be filed, and it has paid or caused to be paid all taxes
shown on those returns or on any tax assessment received by it to the extent
that such taxes have become due, or has set aside on its books adequate reserves
(segregated to the extent required by generally accepted accounting principles)
with respect thereto. There are no governmental investigations or other legal,
administrative, or tax
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proceedings pursuant to which Seller is or could be made liable for any taxes,
penalties, interest, or other charges, the liability for which could extend to
Buyer as transferee of the business of the Station, and, to the best knowledge
of Seller, no event has occurred that could impose on Buyer any transferee
liability for any taxes, penalties, or interest due or to become due from
Seller.
3.14 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry or as listed on
Schedule 3.14 attached hereto, there is no claim, legal action, counterclaim,
suit, arbitration, governmental investigation or other legal, administrative, or
tax proceeding, nor any order, decree or judgment, in progress or pending, or to
the knowledge of Seller threatened, against or relating to Seller with respect
to its ownership or operation of the Station or otherwise relating to the Assets
or the business or operations of the Station, nor does Seller know or have
reason to be aware of any basis for the same. In particular, but without
limiting the generality of the foregoing, there are no applications, pending or,
to the best of Seller's knowledge, complaints or proceedings pending or
threatened (i) before the FCC relating to the business or operations of the
Station other than rule making proceedings which affect the television industry
generally, (ii) before any federal or state agency relating to the business or
operations of the Station involving charges of illegal discrimination under any
federal or state employment laws or regulations, or (iii) before any federal,
state, or local agency relating to the business or operations of the Station
involving zoning issues under any federal, state, or local zoning law, rule, or
regulation.
3.15 Environmental Matters.
(a) Seller has complied in all material respects with all
laws, rules, and regulations of all federal, state, and local governments (and
all agencies thereof) concerning the environment, public health and safety, and
employee health and safety, and Seller has received no notice of a charge,
complaint, action, suit, proceeding, hearing, investigation, claim, demand, or
notice having been filed or commenced against Seller in connection with its
ownership or operation of the Station alleging any failure to comply with any
such law, rule, or regulation.
(b) To the best of Seller's knowledge, Seller has no liability
relating to its ownership and operation of the Station that could reasonably be
expected to have a material adverse effect on the business or operations of the
Station (and there is no basis related to the present operations, properties, or
facilities of Seller for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against Seller giving rise
to any such liability) under any law, rule, or regulation of any federal, state,
or local government (or agency thereof) concerning release or threatened release
of hazardous substances, public health and safety, or pollution or protection of
the environment.
(c) To the best of Seller's knowledge, Seller has no liability
relating to its ownership and operation of the Station that could reasonably be
expected to have a material adverse effect on the business or operations of the
Station (and Seller has not handled or
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disposed of any substance, arranged for the disposal of any substance, or owned
or operated any property or facility in any manner that could form the basis for
any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand (under the common law or pursuant to any
statute) against Seller giving rise to any such liability) for damage to any
site, location, or body of water (surface of subsurface) or for illness or
personal injury.
(d) To the best of Seller's knowledge, Seller has no liability
relating to its ownership and operation of the Station that could reasonably be
expected to have a material adverse effect on the business or operations of the
Station (and there is no basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand against
Seller giving rise to any such liability) under any law, rule, or regulation of
any federal, state, or local government (or agency thereof) concerning employee
health and safety.
(e) To the best of Seller's knowledge, Seller has no liability
relating to its ownership and operation of the Station that could reasonably be
expected to have a material adverse effect on the business or operations of the
Station (and Seller has not exposed any employee to any substance or condition
that could form the basis for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand (under the common law
or pursuant to statute) against Seller giving rise to any such liability) for
any illness or personal injury to any employee.
(f) To the best of Seller's knowledge, in connection with its
ownership or operation of the Station, Seller has obtained and been in
compliance in all material respects with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are
contained in, all federal, state, and local laws, rules, and regulations
(including all codes, plans, judgments, orders, decrees, stipulations,
injunctions, and charges thereunder) relating to public health and safety,
worker health and safety, and pollution or protection of the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
(g) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by Seller in
connection with its ownership and operation of the Station or, to the best of
Seller's knowledge, by any other party on any Real Property.
3.16 Compliance with Laws. Seller has complied in all material
respects with the Licenses and all federal, state, and local laws, rules,
regulations, and ordinances applicable or
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relating to the ownership and operation of the Station. Neither the ownership or
use of the properties of the Station nor the conduct of the business or
operations of the Station conflicts with the rights of any other person or
entity.
3.17 Conduct of Business in Ordinary Course. Since December 31, 1996,
Seller has conducted the business and operations of the Station only in the
ordinary course and has not:
(a) Suffered any material adverse change in the assets or
properties of the Station, including any damage, destruction, or loss affecting
any assets used or useful in the conduct of the business of the Station;
(b) Made any sale, assignment, lease, or other transfer of any
of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(c) Canceled any debts owed to or claims held by Seller with
respect to the Station, except in the normal and usual course of business;
(d) Suffered any material write-down of the value of any Assets
or any material write-off as uncollectible of any accounts receivable of the
Station; or
(e) Transferred or granted any right under, or entered into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right relating to the Station.
3.18 Transactions with Affiliates. Seller has not been involved in any
business arrangement or relationship relating to the Station with any affiliate
of Seller, and no affiliate of Seller owns any property or right, tangible or
intangible, which is used in the business of the Station, other than such
arrangements and relationships between Seller and The Christian Network, Inc.
that have been disclosed to Buyer. As used in this paragraph, "affiliate" has
the meaning set forth in Rule 12b-2 promulgated under the Securities and
Exchange Act of 1934.
3.19 Broker. Neither Seller nor any person acting on Seller's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
3.20 Full Disclosure. No representation or warranty made by Seller in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Florida. Buyer has all requisite power and authority to execute and deliver this
Agreement and the documents contemplated hereby, and to perform and comply with
all of the terms, covenants, and conditions to be performed and complied with by
Buyer hereunder.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Buyer have been duly authorized by all
necessary actions on the part of Buyer. This Agreement has been duly executed
and delivered by Buyer and constitutes the legal, valid, and binding obligation
of Buyer, enforceable against Buyer in accordance with its terms, except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by judicial discretion in
the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the documents contemplated hereby (with or without the giving of notice, the
lapse of time, or both): (i) do not require the consent of any third party; (ii)
will not conflict with the Articles of Incorporation or Bylaws of Buyer; (iii)
will not conflict with, result in a breach of, or constitute a default under,
any law, judgment, order, injunction, decree, rule, regulation, or ruling of any
court or governmental instrumentality; or (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to which
Buyer is a party or by which Buyer may be bound, such that Buyer could not
acquire or operate the Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's behalf has
incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.5 Buyer Qualifications. Buyer is legally, financially and otherwise
qualified to be the licensee of, acquire, own and operate the Station under the
Communications Act of 1934, as now in effect, the Telecommunications Act of
1996, and the rules, regulations and policies of the FCC as now in effect.
Subject to obtaining a waiver of the FCC's one-to-a-market rule (47 C.F.R.
ss.73.35555(c)), Buyer knows of no fact that would, under existing law and the
existing rules, regulations, policies and procedures of the FCC disqualify Buyer
as an assignee of the FCC Licenses or as the owner and operator of the Station.
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4.6 Full Disclosure. No representation or warranty made by Buyer in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Buyer pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this Agreement
and the Closing Date, Seller shall operate the Station diligently in the
ordinary course of business in accordance with its past practices (except where
such conduct would conflict with the following covenants or with Seller's other
obligations under this Agreement), and in accordance with the other covenants in
this Section 5.
5.2 Compensation. Seller shall not increase the compensation, bonuses,
or other benefits payable or to be payable to any person employed in connection
with the conduct of the business or operations of the Station, except in
accordance with past practices.
5.3 Contracts. Seller will not, without the prior written consent of
Buyer, enter into any contract or commitment relating to the Station or the
Assets, or amend or terminate any Assumed Contract (or waive any material right
thereunder), or incur any obligation (including obligations relating to the
borrowing of money or the guaranteeing of indebtedness) that will be binding on
Buyer after Closing. Prior to the Closing Date, Seller shall deliver to Buyer a
list of all Contracts entered into between the date of this Agreement and the
Closing Date, together with copies of such Contracts.
5.4 Disposition of Assets. Seller shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except where no longer used
or useful in the business or operations of the Station or in connection with the
acquisition of replacement property of equivalent kind and value.
5.5 Encumbrances. Seller shall not create, assume or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets, except for (i) liens disclosed on
Schedule 3.5 and Schedule 3.6, which shall be removed on or prior to the Closing
Date, (ii) liens for current taxes not yet due and payable, and (iii) mechanics'
liens and other similar liens, which shall be removed on or prior to the Closing
Date.
5.6 Licenses. With the exception of the ATV Rulemaking proceeding (as
defined in Section 7.1(e) hereof), Seller shall not cause or permit, by any act
or failure to act, any of the Licenses to expire or to be revoked, suspended, or
modified, or take any action that could cause the FCC or any other governmental
authority to institute proceedings for the suspension,
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revocation, or adverse modification of any of the Licenses. Seller shall not
fail to prosecute with due diligence any applications to any governmental
authority in connection with the operation of the Station.
5.7 Rights. Seller shall not waive any right relating to the Station
or any of the Assets. Seller shall not take any action to intentionally cause
any cable system located within the Station's Area of Dominant Influence to
refuse to carry the Station's signal.
5.8 No Inconsistent Action. Seller shall not take any action that
is inconsistent with its obligations under this Agreement or that could hinder
or delay the consummation of the transactions contemplated by this Agreement.
5.9 Access to Information. Seller shall give Buyer and its authorized
representatives reasonable access to the Assets and to all other properties,
equipment, books, records, Contracts, and documents relating to the Station for
the purpose of audit and inspection.
5.10 Maintenance of Assets. Seller shall use its best efforts and take
all reasonable actions to maintain all of the Assets in good condition (ordinary
wear and tear excepted), and use, operate, and maintain all of the Assets in a
reasonable manner and in accordance with the terms of the FCC Licenses, all
rules and regulations of the FCC and generally accepted standards of good
engineering practice. Seller shall maintain inventories of spare parts and
expendable supplies at levels consistent with past practices. If any loss,
damage, impairment, confiscation, or condemnation of or to any of the Assets
occurs, other than any loss, damage or impairment resulting from actions taken
by Buyer pursuant to the Time Brokerage Agreement, Seller shall repair, replace,
or restore the Assets to their prior condition as represented in this Agreement
as soon thereafter as possible, and Seller shall use the proceeds of any claim
under any insurance policy solely to repair, replace, or restore any of the
Assets that are lost, damaged, impaired, or destroyed.
5.11 Insurance. Seller shall maintain the existing insurance
policies on the Station and the Assets through the Closing Date.
5.12 Consents. Seller shall use its best efforts to obtain the
Consents and the estoppel certificates described in Section 8.2(b), without any
change in the terms or conditions of any Contract or License that could be
materially less advantageous to the Station than those pertaining under the
Contract or License as in effect on the date of this Agreement; provided,
however, that Seller's failure to obtain any Consent or Estoppel Certificate
shall not constitute a material breach of this Agreement. Seller shall promptly
advise Buyer of any difficulties experienced in obtaining any of the Consents
and of any conditions proposed, considered, or requested for any of the
Consents. Upon Buyer's request, Seller shall cooperate with Buyer and use it
best efforts to obtain from the lessors under each Real Property lease such
estoppel
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certificates and consents to the collateral assignment of the lessee's interest
under each such lease as Buyer's lenders may reasonably request.
5.13 Books and Records. Seller shall maintain its books and records
relating to the Station in accordance with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing of
any unusual or material developments with respect to the business or operations
of the Station, and of any material change in any of the information contained
in Seller's representations and warranties contained in Section 3 of this
Agreement.
5.15 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Station.
5.16 Financing Leases. Seller will satisfy at or prior to Closing all
outstanding obligations under capital and financing leases with respect to any
of the Assets and obtain good title to the Assets leased by Seller pursuant to
those leases so that those Assets shall be transferred to Buyer at Closing free
of any interest of the lessors.
5.17 Programming. Seller shall not make any material changes in the
broadcast hours or in the percentages of types of programming broadcast by the
Station, or make any other material change in the Station's programming
policies, except such changes as in the good faith judgment of the Seller are
required by the public interest.
5.18 Preservation of Business. To the extent consistent with its
obligations under the Time Brokerage Agreement, Seller shall use its best
efforts to preserve the business and organization of the Station and use its
best efforts to keep available to the Station its present employees and the
Station's present relationships with suppliers and others having business
relations with it, to the end that the business and operations of the Station
shall be unimpaired at the Closing Date.
5.19 Collection of Accounts Receivable. Consistent with the terms of
the Time Brokerage Agreement, Seller shall collect the accounts receivable of
the Station only in the ordinary course consistent with its past practices and
will not take any action designed or likely to accelerate the collection of its
accounts receivable.
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SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an appropriate
application for the FCC Consent and shall file the application with the FCC
within ten (10) business days of the execution of this Agreement. The parties
shall prosecute the application with all reasonable diligence and otherwise use
their best efforts to obtain a grant of the application as expeditiously as
practicable. Each party agrees to comply with any condition imposed on it by the
FCC Consent, except that no party shall be required to comply with a condition
if (1) the condition was imposed on it as the result of a circumstance the
existence of which does not constitute a breach by the party of any of its
representations, warranties, or covenants under this Agreement, and (2)
compliance with the condition would have a material adverse effect upon it.
Buyer and Seller shall oppose any requests for reconsideration or judicial
review of the FCC Consent. If the Closing shall not have occurred for any reason
within the original effective period of the FCC Consent, and neither party shall
have terminated this Agreement under Section 9, the parties shall jointly
request an extension of the effective period of the FCC Consent. No extension of
the FCC Consent shall limit the exercise by either party of its rights under
Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of Seller until the Closing;
provided, however, that Buyer shall have such rights and responsibilities as
provided for in the Time Brokerage Agreement.
6.3 Risk of Loss.
(a) The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the Closing.
(b) If any damage or destruction of the Assets or any other
event occurs, other than any damage or destruction of the Assets or any other
event resulting, in whole or in part, from Buyer's conduct or actions under the
Time Brokerage Agreement, which (i) causes the Station to cease broadcasting
operations for a period of seven or more days or (ii) prevents in any material
respect signal transmission by the Station in the normal and usual manner and
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Seller fails to restore or replace the Assets so that normal and usual
transmission is resumed within 30 days of the damage, destruction or other
event, Buyer, in its sole discretion, may (x) terminate this Agreement forthwith
without any further obligations hereunder upon written notice to Seller or (y)
proceed to consummate the transaction contemplated by this Agreement and
complete the restoration and replacement of the Assets after the Closing Date,
in which event Seller shall deliver to Buyer all insurance proceeds received in
connection with such damage, destruction or other event.
6.4 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by such party from the other party in connection with the
transactions contemplated by this Agreement.
6.5 Environmental Audit. Buyer may, at its option and expense, retain
an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Station and such survey shall be
completed within 30 days from the date hereof. If the survey discloses any
material environmental hazard or material possibility of future liability for
environmental damages or clean-up costs, Buyer shall so notify Seller no later
than 40 days from the date hereof.
6.6 Engineering Study. Buyer may, at its option and expense, retain an
engineering firm to conduct a proof of performance study of the Station and to
prepare a report on the Station's compliance with customary engineering
practices and all applicable FCC rules, regulations, prescribed practices, and
technical standards and such study and report shall be completed within 30 days
from the date hereof. If the survey discloses any material deficiencies in the
operations or equipment of the Station, Buyer shall so notify Seller no later
than 40 days from the date hereof.
6.7 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, Buyer shall have no obligation (i) to expend
funds to obtain any of the Consents or (ii) to agree to any adverse change in
any License or Assumed Contract to obtain a Consent required with respect
thereto.
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6.8 Sales Tax Filings. Through the Closing Date, Seller shall
continue to file Florida sales tax returns with respect to the Station, if and
to the extent such returns are required to be filed by applicable law, and shall
concurrently deliver copies of all such returns to Buyer.
6.9 Access to Books and Records. Seller shall provide Buyer
reasonable access and the right to copy for a period of three years from the
Closing Date any books and records relating to the assets that are not included
in the Assets. Buyer shall provide Seller reasonable access and the right to
copy for a period of three years from the Closing Date any books and records
relating to the Assets.
6.10 Appraisal. Buyer and Seller agree to allocate the Purchase Price
for tax and recording purposes in accordance with an appraisal to be completed
within 90 days of closing and to be conducted by an appraisal firm selected and
paid for by Buyer with experience in the valuation and appraisal of television
station assets.
6.11 Buyer Conduct. Buyer shall take no action, or fail to take any
required action, that would disqualify Buyer from being the licensee of the
Station under the Communications Act of 1934, as now in effect, the
Telecommunications Act of 1996, and the rules, regulations and policies of the
FCC as now in effect or that would require Buyer to seek a waiver of the rules
in addition to that specified in Section 4.5 hereof. Buyer, in programming the
Station pursuant to the Time Brokerage Agreement, shall not cause or permit, by
any act or failure to act, any of the Licenses to expire or to be revoked,
suspended, or modified, or take any action that could cause the FCC or any other
governmental authority to institute proceedings for the suspension, revocation,
or adverse modification of any of the Licenses.
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at
the Closing are subject at Buyer's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Seller shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
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(c) Consents. All Consents designated as "material" on Schedule
3.3 shall have been obtained and delivered to Buyer without any adverse change
in the terms or conditions of any agreement or any governmental license, permit,
or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted without
the imposition on Buyer of any conditions other than the waiver requested
pursuant to Section 4.5 hereof that need not be complied with by Buyer under
Section 6.1 hereof, Seller shall have complied with any conditions imposed on it
by the FCC Consent, and the FCC Consent shall have become a Final Order.
(e) Governmental Authorizations. Seller shall be the holder of
all Licenses and, other than as a result of any decision or order issued by the
FCC in connection with the FCC rulemaking identified as In the Matter of
Advanced Television Systems, MM Docket No. 87- 268, and any subsequent FCC or
court proceeding relating to such rulemaking (the "ATV Rulemaking"), there shall
not have been any modification of any License that could have a material adverse
effect on the Station or the conduct of its business and operations. No
proceeding shall be pending the effect of which could be to revoke, cancel, fail
to renew, suspend, or modify adversely any License.
(f) Deliveries. Seller shall have made or stand willing to make
all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Subject to Section 6.3 hereof, between the
date of this Agreement and the Closing Date, there shall have been no material
adverse change in the assets, or properties of the Station, including any
damage, destruction, or loss affecting any assets used or useful in the conduct
of the business of the Station.
(h) Time Brokerage Agreement. The Time Brokerage Agreement shall
be in full force and effect, and Seller shall have complied, in all material
respects, with its obligations thereunder.
(i) Promissory Note. There shall exist no Event of Default as
defined in the Promissory Note.
7.2 Conditions to Obligations of Seller. All obligations of Seller
at the Closing are subject at Seller's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
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(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing to make
all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted without
the imposition on Seller of any conditions that need not be complied with by
Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
(e) Time Brokerage Agreement. The Time Brokerage Agreement shall
be in full force and effect, and Buyer shall have complied, in all material
respects, with its obligations thereunder.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00 a.m. on a
date, to be set by Buyer on at least ten days' written notice to Seller, that is
(1) not earlier than the first business day after the FCC Consent is effective,
and (2) not later than ten business days following the date upon which the FCC
Consent has become a Final Order.
(b) Closing Place. The Closing shall be held at the offices of
Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite 800, Washington,
D.C. 20036, or any other place that is agreed upon by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty bills of sale,
deeds, motor vehicle titles, assignments, and other transfer documents which
shall be sufficient to vest good and marketable title to the Assets in the name
of Buyer, free and clear of all mortgages, liens, restrictions, encumbrances,
claims, and obligations except for liens for current taxes not yet due and
payable;
(b) Estoppel Certificates. Estoppel certificates of the lessors
of all leasehold and subleasehold interests included in the Real Property
substantially in the form of Schedule 8.2(b) hereof;
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(c) Consents. An executed copy of any instrument evidencing
receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of the Closing
Date, executed on behalf of Seller by its Chairman or President, certifying (1)
that the representations and warranties of Seller contained in this Agreement
are true and complete in all material respects as of the Closing Date as though
made on and as of that date; and (2) that Seller has in all material respects
performed and complied with all of its obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to the
Closing Date;
(e) Licenses, Contracts, Business Records, Etc. Copies of all
Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans,
projections, engineering records, and all files and records used by Seller in
connection with its operations;
(f) Accounts Receivable. A complete and accurate list of the
Station's Accounts Receivable as of a date no more than five business days prior
to the Closing Date, including, with respect to each of the Accounts Receivable,
the account number, date of issuance, name and address of account debtor,
aggregate amount, and balance due;
(g) Opinion of Counsel. An Opinion of Seller's counsel dated as
of the Closing Date, substantially in the form of Schedule 8.2(g) hereto; and
(h) Lenders Certificates. Such certificates and confirmations to
Buyer's senior lenders executed by Seller as Buyer may reasonably request in
connection with obtaining financing for the performance of its payment
obligations hereunder; and
(i) Promissory Note. Payment of the outstanding principal and
interest on the Promissory Note.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price, as adjusted pursuant to
Section 2.3(a);
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations under the Licenses and Assumed Contracts as provided in Section 2.5;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by its Secretary, certifying (1) that
the representations and warranties of
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Buyer contained in this Agreement are true and complete in all material respects
as of the Closing Date as though made on and as of that date, and (2) that Buyer
has in all material respects performed and complied with all of its obligations,
covenants, and agreements set forth in this Agreement to be performed and
complied with on or prior to the Closing Date;
(d) Opinion of Counsel. An opinion of Buyer's counsel dated as
of the Closing Date, substantially in the form of Schedule 8.3(d) hereto;
(e) Affiliation Agreement. The Affiliation Agreement, duly
executed by Buyer;
(f) Tax, Lien and Judgment Searches. Results of a search for
tax, lien and judgment filings in the Secretary of State's records for the State
of Florida as well as the records of those counties in Florida in which any of
the Assets are located; and
(g) Promissory Note. The executed original of the Promissory
Note marked cancelled.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller, if Seller is not then in material default, upon written notice to Buyer,
upon the occurrence of any of the following:
(a) Conditions. If, on the date that would otherwise be the
Closing Date, Seller shall have notified Buyer in writing that one or more of
the conditions precedent to the obligations of Seller set forth in this
Agreement have not been satisfied or waived in writing by Seller and such
condition or conditions shall not have been satisfied by Buyer or waived in
writing by Seller within fifteen days following such notice.
(b) Judgments. If, on the date that would otherwise be the
Closing Date, Seller shall have notified Buyer that there is in effect any
judgment, decree, or order that would prevent or make unlawful the Closing and
such judgment, decree or order shall not have been satisfied by Buyer within
fifteen (15) days following such notice.
(c) Upset Date. If the Closing shall not have occurred by June
13, 1998.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer,
if Buyer is not then in material default, upon written notice to Seller, upon
the occurrence of any of the following:
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(a) Conditions. If, on the date that would otherwise be the
Closing Date, Buyer shall have notified Seller in writing that one or more of
the conditions precedent to the obligations of Buyer set forth in this Agreement
have not been satisfied or waived in writing by Buyer and such condition or
conditions shall not have been satisfied by Seller or waived in writing by Buyer
within fifteen (15) days following such notice.
(b) Judgments. If, on the date that would otherwise be the
Closing Date, Buyer shall have notified Seller that there is in effect any
judgment, decree, or order that would prevent or make unlawful the Closing and
such judgment, decree or order shall not have been satisfied by Seller within
fifteen (15) days following such notice.
(c) Upset Date. If the Closing shall not have occurred by June
13, 1998.
(d) Interruption of Service. If any event shall have occurred
that prevented signal transmission of the Station in the normal and usual manner
for a continuous period of seven days unless such interruption of service is
due, in whole or in part, to actions of Buyer under the Time Brokerage
Agreement.
9.3 Rights on Termination. Subject to Section 9.4, if this Agreement
is terminated pursuant to Section 9.1 or Section 9.2 and neither party is in
material breach of any provision of this Agreement, the parties hereto shall
have no liability to each other as a result of such termination. In addition to
its rights under Section 9.4, if this Agreement is terminated by Buyer due to
Seller's material breach of its obligations hereunder, Buyer shall have all
rights and remedies available at law or equity. If this Agreement is terminated
by Seller due to Buyer's material breach of its obligations hereunder, the
payment to Seller of the expenses (including reasonable attorneys' fees and
costs) incurred by Seller in the negotiation and preparation of this Agreement
and the performance by Seller of its obligations hereunder shall constitute full
payment and the exclusive remedy for any damages suffered by Seller by reason of
Buyer's material breach.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
twelve months. Any investigations by or on behalf of any party hereto shall not
constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
Seller shall affect Buyer's right to rely on any representation or warranty made
by Seller or relieve Seller of any obligations under this Agreement as the
result of a breach of any of its representations and warranties.
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10.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or any
information Buyer may have, Seller hereby agrees to indemnify and hold Buyer
harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any covenant
by Seller contained in this Agreement or in any certificate, document, or
instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to this Agreement, including any liabilities arising at any time under
any Contract not included in the Assumed Contracts.
(c) Subject to Section 10.3(d) hereof, any and all losses,
liabilities, or damages resulting from the operation or ownership of the Station
prior to the Closing, including any liabilities arising under the Licenses or
the Assumed Contracts which relate to events occurring prior the Closing Date.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer hereby agrees, subject to the limitation
in the last sentence of Section 9.3, to indemnify and hold Seller harmless
against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any covenant
by Buyer contained in this Agreement or in any certificate, document, or
instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer pursuant
to this Agreement.
(c) Any and all losses, liabilities or damages resulting from the
operation or ownership of the Station on and after the Closing.
(d) Any and all losses, liabilities or damages resulting from any
action taken by Buyer or its employees and agents with respect to the Station,
or any failure by Buyer or its
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employees and agents to take any action with respect to the Station, in
connection with the performance by Buyer of its obligations under the Time
Brokerage Agreement, including, without limitation, any and all losses,
liabilities or damages resulting from (i) violations by Buyer or its employees
and agents of the Communications Act of 1934, as amended, or any rule,
regulation or policy of the FCC, (ii) slander, defamation or other claims
relating to programming provided by Buyer for broadcast on the Station, and
(iii) Buyer's broadcast and sale of advertising time on the Station.
(e) Any and all losses, liabilities or damages resulting from
or arising under the Loan Agreement including any obligations of CNI.
(f) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within five days after
written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration provisions
of this Agreement, as applicable.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual
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<PAGE> 34
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 in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
(f) Notwithstanding any provision in this Agreement to the
contrary, Seller shall not be required to indemnify Buyer for any losses,
liabilities or damages relating to or arising from (i) a chose in action of
Seller relating to the Station unless Buyer promptly notifies Seller of such
chose in action, and thereupon Seller shall have sole responsibility for the
prosecution of such chose in action or (ii) any environmental or engineering
defect or other circumstance that is described in the environmental survey or
engineering study referred to in Sections 6.5 and 6.6 hereof, respectively, if
and to the extent such defect or circumstance is not a violation of Seller's
representations, warranties or covenants hereunder.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other remedies
that may be available, including money damages, to obtain specific performance
of the terms of this Agreement. If any action is brought by Buyer to enforce
this Agreement, Seller shall waive the defense that there is an adequate remedy
at law.
10.6 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or transfer
tax arising in connection with the conveyance of the Assets by Seller to Buyer
pursuant to this Agreement shall be paid by the party upon whom such tax is
imposed by law. Except as otherwise provided in this Agreement, each party shall
pay its own expenses incurred in connection with the
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<PAGE> 35
authorization, preparation, execution, and performance of this Agreement,
including all fees and expenses of counsel, accountants, agents, and
representatives, except that Buyer and Seller shall each pay one-half of all
filing fees required by the FCC, and each party shall be responsible for all
fees or commissions payable to any finder, broker, advisor, or similar person
retained by or on behalf of such party.
11.2 Arbitration. Except as otherwise provided to the contrary below,
any dispute arising out of or related to this Agreement that Seller and Buyer
are unable to resolve by themselves shall be settled by arbitration in
Washington, D.C. by a panel of three (3) neutral arbitrators who shall be
selected in accordance with the procedures set forth in the commercial
arbitration rules of the American Arbitration Association. The persons selected
as arbitrators shall have prior experience in the broadcasting industry but need
not be professional arbitrators, and persons such as lawyers, accountants,
brokers and bankers shall be acceptable. Before undertaking to resolve the
dispute, each arbitrator shall be duly sworn faithfully and fairly to hear and
examine the matters in controversy and to make a just award according to the
best of his or her understanding. The arbitration hearing shall be conducted in
accordance with the commercial arbitration rules of the American Arbitration
Association. The written decision of a majority of the arbitrators shall be
final and binding on Seller and Buyer. The costs and expenses of the arbitration
proceeding shall be assessed between Seller and Buyer in a manner to be decided
by a majority of the arbitrators, and the assessment shall be set forth in the
decision and award of the arbitrators. Judgment on the award, if it is not paid
within thirty days, may be entered in any court having jurisdiction over the
matter. No action at law or suit in equity based upon any claim arising out of
or related to this Agreement shall be instituted in any court by Seller or Buyer
against the other except (i) an action to compel arbitration pursuant to this
Section, (ii) an action to enforce the award of the arbitration panel rendered
in accordance with this Section, or (iii) a suit for specific performance
pursuant to Section 10.5.
11.3 Notices. All notices, demands, and requests required or permitted
to be given under the provisions of this Agreement shall be (a) in writing, (b)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, (c) deemed to have been
given on the date of personal delivery or the date set forth in the records of
the delivery service or on the return receipt, and (d) addressed as follows:
If to Seller: Mr. James L. West
The Christian Network, Inc.
14444 66th Street North
Clearwater, FL 34624
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<PAGE> 36
With a copy to: Alan C. Campbell, Esq.
Irwin, Campbell & Tannenwald
1730 Rhode Island Avenue, N.W.
Suite 200
Washington, D.C. 20036
If to Buyer: Mr. Lowell W. Paxson
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, FL 33401
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.3.
11.4 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto; provided,
however, that Buyer may assign its rights and obligations under this Agreement,
in whole or in part, to one or more subsidiaries or commonly controlled
affiliates of Buyer, prior to the filing of the FCC application, without seeking
or obtaining Seller's prior approval, provided that such assignment shall not
constitute a release of Buyer's obligations hereunder, and Buyer may
collaterally assign its rights and interests hereunder to its lenders without
seeking or obtaining Seller's prior approval. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
Seller, any additional bills of sale, deeds, or other transfer documents that,
in the reasonable opinion of Buyer, may be necessary to ensure, complete, and
evidence the full and effective transfer of the Assets to Buyer pursuant to this
Agreement.
11.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
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<PAGE> 37
11.8 Gender and Number. Words used in this Agreement, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.10.
11.11 Press Release. Prior to the Closing, neither party shall publish
any press release, make any other public announcement or otherwise communicate
with any news media concerning this Agreement or the transactions contemplated
hereby without the prior written consent of the other party; provided, however,
that nothing contained herein shall prevent either party from promptly making
all filings with governmental authorities as may, in its judgement be required
or advisable in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
11.12 Consent to Jurisdiction and Service of Process. All judicial
proceedings brought against Buyer or Seller arising out of or relating to this
Agreement may be brought in any state or federal court of competent jurisdiction
in the State of Florida and, by execution and delivery of this Agreement, Buyer
and Seller each accepts for itself and in connection with its properties,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts and waives any defense of forum non conveniens and irrevocably agrees to
be bound by any judgment rendered thereby in connection with this Agreement.
Seller designates and appoints James L. West, and Buyer designates and appoints
William L. Watson, and such other persons as may hereafter be selected by Buyer
or Seller, as its respective agent to receive on its behalf service of all
process in any such proceedings in any such court, such service being hereby
acknowledged by Buyer and Seller to be effective and binding service in every
respect. A copy of any such
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<PAGE> 38
process so served shall be mailed by registered mail to Buyer or Seller at its
address provided in Section 11.3, except that, unless otherwise provided by
applicable law, any failure to mail such copy shall not affect the validity of
service of process. If any agent appointed by Buyer or Seller refuses to accept
service, Buyer and Seller hereby agree that service upon it by mail shall
constitute sufficient notice. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of either
party to bring proceedings against the other in the courts of any other
jurisdiction.
11.13 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
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<PAGE> 39
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
PAXSON COMMUNICATIONS OF
ORLANDO-56, INC.
By:/s/ William L. Watson
------------------------------------
Name: William L. Watson
Title:Secretary
CHANNEL 56 OF ORLANDO, INC.
By:/s/ James L. West
------------------------------------
James L. West
Chairman
<PAGE> 1
EXHIBIT 10.177
================================================================================
LOAN AGREEMENT
BY AND BETWEEN
ROBERTS BROADCASTING COMPANY
OF ALBUQUERQUE
AND
PAXSON COMMUNICATIONS OF
ALBUQUERQUE-14, INC.
RELATING TO
TELEVISION STATION _______ (CHANNEL 14)
ALBUQUERQUE, NEW MEXICO
* * *
JUNE 30, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I AMOUNT AND TERMS OF THE LOANS.........................................................................2
Section 1.1 The Loan......................................................................2
Section 1.2 The Promissory Note...........................................................2
Section 1.3 Interest......................................................................2
Section 1.4 Principal.....................................................................2
Section 1.5 Mandatory Prepayment..........................................................2
Section 1.6 Information...................................................................2
Section 1.7 Prepayment....................................................................2
Section 1.8 Payment on Non-Business Days..................................................3
Section 1.9 Taxes.........................................................................3
ARTICLE II CLOSING...............................................................................................3
Section 2.1 Closing Date..................................................................3
ARTICLE III SECURITY..............................................................................................3
Section 3.1 Security Interest.............................................................3
Section 3.2 Mortgages.....................................................................3
ARTICLE IV CONDITIONS OF LENDING.........................................................4
Section 4.1 Conditions Precedent to Loan..................................................4
Section 4.2 Compliance....................................................................5
Section 4.3 Loan Disbursement.............................................................5
Section 4.4 Settlement....................................................................5
ARTICLE V REPRESENTATIONS AND WARRANTIES........................................................................6
Section 5.1 Existence and Standing........................................................6
Section 5.2 Authorizations, Compliance with Laws..........................................6
Section 5.3 No Consent....................................................................6
Section 5.4 Binding Obligations...........................................................6
Section 5.5 Litigation....................................................................7
Section 5.6 No Default....................................................................7
Section 5.7 Compliance with Laws..........................................................7
Section 5.8 Taxes.........................................................................7
Section 5.9 Title to Properties...........................................................7
Section 5.10 Absence of Undisclosed Liabilities............................................7
Section 5.11 Solvency......................................................................8
Section 5.12 Material Misstatement.........................................................8
ARTICLE VI COVENANTS OF BORROWER.........................................................8
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
Section 6.1 Affirmative Covenants.........................................................8
Section 6.2 Negative Covenants...........................................................10
Section 6.3 Reporting Requirements.......................................................12
ARTICLE VII EVENTS OF DEFAULT............................................................13
Section 7.1 Events of Default............................................................13
Section 7.2 Effect of Event of Default...................................................15
ARTICLE VIII MISCELLANEOUS................................................................15
Section 8.1 No Waiver; Cumulative Remedies...............................................15
Section 8.2 Amendments...................................................................16
Section 8.3 Conflicts....................................................................16
Section 8.4 Address for Notices..........................................................16
Section 8.5 Expenses.....................................................................16
Section 8.6 Binding Effect; Assignment...................................................17
Section 8.7 Governing Law................................................................17
Section 8.8 Severability of Provisions...................................................17
Section 8.9 Headings.....................................................................18
Section 8.10 Rights Affected by Extensions................................................18
Section 8.11 Survival of Representations and Warranties...................................18
Section 8.12 FCC Compliance...............................................................18
Section 8.13 Further Assurances...........................................................18
Section 8.14 Indemnification..............................................................19
Section 8.15 Waiver.......................................................................19
Section 8.16 Maximum Interest.............................................................19
</TABLE>
LIST OF EXHIBITS
<TABLE>
<S> <C>
Exhibit 1 -- Promissory Note
Exhibit 2 -- Security Agreement
Exhibit 3 -- Pledge Agreement
Exhibit 4 -- Construction Agreement
Exhibit 5 -- Lease Agreement
Exhibit 6 -- Time Brokerage Agreement
Exhibit 7 -- Option Agreement
</TABLE>
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<PAGE> 4
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 30th day of June, 1997, is by and
among PAXSON COMMUNICATIONS OF ALBUQUERQUE-14, INC., a Florida corporation
having its principal offices at 601 Clearwater Park Road, West Palm Beach,
Florida 33401 ("Lender"), and ROBERTS BROADCASTING COMPANY OF ALBUQUERQUE, a
Delaware corporation having its principal offices at 1408 N. Kingshighway
Boulevard, Suite 300, St. Louis, Missouri 63113 ("Borrower").
WITNESETH:
WHEREAS, Borrower has an application pending at the Federal
Communications Commission ("FCC") for a construction permit to construct a new
television station to operate on Channel 14 at Albuquerque, New Mexico (the
"Station").
WHEREAS, competing applications have been filed at the FCC
by KM Communications, Inc., Albuquerque Channel 14, Inc. and
Venture Technologies Group, Inc. that are mutually exclusive with
Borrower's application (the "Competing Applicants");
WHEREAS, Lender has agreed to make a loan to Borrower up to the
principal amount of Four Million Nine Hundred Thousand Dollars ($4,900,000) to
be used to obtain Settlement Agreements with the Competing Applicants subject to
the approval of the FCC that will provide for the FCC grant of Borrower's
application;
WHEREAS, such Loan shall be evidenced by a promissory note in the same
amount, which shall be issued by Borrower and dated as of the date hereof;
WHEREAS, the Borrower has agreed to guarantee its obligations under
this Agreement and the Note and to secure such guarantee by granting Lender a
first party security interest in the Station's assets and a pledge of the
Borrower's Stock;
WHEREAS, Lender and the Borrower have agreed to enter into a
Construction Agreement, Lease Agreement and a Time Brokerage Agreement relating
to the Station;
WHEREAS, Lender and the Borrower have agreed to enter into an Option
Agreement (the "Option Agreement"), pursuant to which, among other things,
Borrower would sell and Lender would purchase all of the assets used or useful
in the operations of the Station subject to the prior approval of the Federal
Communications Commission ("FCC") and the terms and conditions set forth in the
Option Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, Lender and Borrower agree as follows:
<PAGE> 5
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ARTICLE I AMOUNT AND TERMS OF THE LOANS
Section 1.1 The Loan. Lender agrees, upon the terms and conditions
hereinafter set forth, to make a loan or loans to Borrower in an aggregate
principal amount not to exceed at any one time outstanding Four Million Nine
Hundred Thousand Dollars ($4,900,000) (the "Loan").
Section 1.2 The Promissory Note. The outstanding principal amount of
the Loan shall be evidenced by and subject to the terms of a promissory note,
dated of even date herewith, substantially in the form set forth as Exhibit 1
hereto (as amended, renewed, restated, increased, consolidated or substituted
from time to time, the "Note"), payable to the order of Lender and representing
the obligation of Borrower to pay Lender the amount of the Loan, with interest
thereon, as prescribed in Section 1.4. All references to the "Note" in this Loan
Agreement and the Security Agreement (each as defined in this Loan Agreement)
and in such other agreements and documents executed and delivered in connection
with this Loan Agreement shall be deemed to be references to the Note referred
to in this Section.
Section 1.3 Interest. The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum at all times equal to eight percent
(8%). Interest shall be calculated on the basis of a year of three-hundred and
sixty (360) days and the actual number of days elapsed during the period for
which such interest is payable. Interest shall begin to accrue on the
outstanding principal amount of the Loan on the date of disbursement of all or a
portion of the Loan and shall be repaid pursuant to Section 1.4 hereof.
Section 1.4 Principal. The outstanding principal balance of the Loan
plus any accrued interest thereon shall be due and payable on [12 months after
Closing Date] (the "Maturity Date") except that upon the Closing pursuant to the
Option Agreement, all unpaid Principal and Accrued Interest shall be forgiven.
Section 1.5 Mandatory Prepayment. Notwithstanding anything in this
Agreement to the contrary, upon a termination of the Option Agreement for any
reason the entire outstanding principal balance and all accrued interest thereon
shall immediately be due and payable.
Section 1.6 Information. Borrower agrees to furnish to Lender such
information as Lender may reasonably request in connection with the Loan or the
Station.
Section 1.7 Prepayment. Borrower may prepay the Note in whole at any
time, or from time to time in part, with accrued interest to the date of
prepayment on the amount prepaid, without penalty, provided that each payment,
other than that for the full amount of
<PAGE> 6
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the outstanding balance, shall be in the amount of Ten Thousand Dollars
($10,000) or an integral multiple thereof, provided, however, that Borrower
shall reimburse Lender for any prepayment penalty imposed on Lender or its
affiliates under their debt agreements or instruments as a result of Borrower's
prepayment. Each prepayment on the Note shall be applied to installments of
principal payable on the Note in the inverse order of maturity.
Section 1.8 Payment on Non-Business Days. Whenever any payment to be
made hereunder or under the Note shall be due on a Saturday, Sunday or public
holiday, such payment may be made on the next succeeding business day, and such
extension of time in such case shall be included in the computation of interest
hereunder and under the Note.
Section 1.9 Taxes. All sums payable by Borrower hereunder or under the
Note, whether of principal, interest, fees, expenses or otherwise, shall be paid
in full, free of any deductions or withholdings for any and all present and
future taxes, levies, imposts, stamps, duties, fees, assessments, deductions,
withholdings, and other governmental charges and all liabilities with respect
thereto. If Borrower is prohibited by law from making payments hereunder or
under the Note free of such deductions or withholdings, then Borrower shall pay
such additional amount as may be necessary in order that the actual amount
received by Lender after such deduction or withholding shall equal the full
amount stated to be payable hereunder or under the Note.
ARTICLE II CLOSING
Section 2.1 Closing Date. Closing of the transactions contemplated by
this Agreement shall occur, subject to the satisfaction of all of the conditions
set forth in Article IV, within five business days following FCC approval of the
Settlement Agreements with the Competing Applicants (the "Closing Date").
ARTICLE III SECURITY
Section 3.1 Security Interest. As partial security for the Loan,
Borrower shall execute and deliver to Lender, on or before the Closing Date, a
security agreement in the form of Exhibit 2 hereto (the "Security Agreement")
and a pledge agreement in the form of Exhibit 3 hereto (the "Pledge Agreement").
Section 3.2 Mortgages. At such time as the Borrower acquires any parcel
of real estate, the Borrower shall execute a first mortgage or deed of trust in
favor of Lender on such parcel, in form and substance acceptable to Lender (a
"Mortgage"). If requested by Lender, the Borrower shall also deliver to Lender
with respect to such property one or more of the following documents, each of
which shall be in form and substance satisfactory to
<PAGE> 7
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Lender: (i) fixture filing UCC-1 financing statements, (ii) copies of any lease
relating to such property, if any, (iii) executed tenant subordination
agreements and estoppel certificates, if applicable, (iv) a survey of such real
property, (v) a mortgagee title insurance policy, with such coverage and with
such endorsements, including, without limitation, usury, first loss, last
dollar, revolving credit, variable rate, doing business, zoning comprehensive,
contiguity (as applicable) and survey, to the extent available in the state
where the property is located, as Lender may require, and (vi) any other
document required by applicable law to create or perfect a mortgage lien with
respect to such property or reasonably required by Lender.
ARTICLE IV CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to Loan. The obligation of Lender to
disburse the Loan hereunder is subject to the following conditions precedent:
(a) The Construction Agreement, Lease Agreement, Time
Brokerage Agreement and Option Agreement, in the form of Exhibits 4, 5, 6 and 7
hereto, shall be duly executed by Lender and the Borrower and shall be in full
force and effect;
(b) Lender shall have received all of the following, on or
before the Closing Date, in form and substance satisfactory to Lender:
(i) The Note, duly executed and delivered by Borrower;
(ii) The Pledge Agreement and Security Agreement,
together with appropriate UCC-1 forms duly executed and delivered by the
Borrower;
(iii) Copies of UCC, judgment and tax lien
searches in each jurisdiction in which Collateral covered by the Security
Agreement is located;
(iv) With respect to owned real property, if any,
the documents required by Section 3.2;
(v) Copies of the certificates evidencing the
insurance required to be maintained by the Borrower pursuant to Section 6.1(e);
(vi) Written evidence, satisfactory to Lender,
that the Borrower has been granted a construction permit by the FCC authorizing
construction of the Station and that Borrower has obtained all necessary FAA and
zoning approvals/permits for the site;
<PAGE> 8
- 5 -
(vii) Written evidence, satisfactory to Lender, that the
Borrower owns or holds a valid Lease for the Station's transmitter site
acceptable to Lender;
(viii) Such other agreements, certificates, opinions of
counsel and documents that Lender may reasonably require.
Section 4.2 Compliance. All of the representations and warranties of
Borrower in this Loan Agreement shall be true and accurate in all material
respects on and as of the Closing Date and the date of any subsequent
disbursement of any portion of the Loan, as if made on and as of such date and
time. Borrower shall be in compliance with all of the applicable terms and
provisions of this Agreement and no Event of Default or any event which with the
lapse of any applicable grace period or the giving of notice or both would
constitute an Event of Default shall have occurred and be continuing. Borrower
shall have performed all obligations and taken all actions to be performed or
taken by it hereunder on or prior to such date. On the Closing Date, Borrower
shall deliver to Lender a certificate, dated as of such date and signed by
Borrower, certifying compliance with the conditions of this Section 4.2. Each
disbursement of all or a portion of the Loan to Borrower shall in and of itself,
constitute a representation and warranty that Borrower as of the date of such
Loan, are in compliance with this Section and if Borrower is not in compliance
with this Section, Lender shall not be required to disburse such Loan to
Borrower.
Section 4.3 Loan Disbursement. On the Closing Date, Lender shall
deposit into an Escrow Account or Accounts, pursuant to Escrow Agreements
acceptable in form and substance to Lender, the funds necessary to pay the
Competing Applicants as approved by the FCC up to the amount of the Loan, with
the provision that such funds shall be released only upon the FCC approval of
the Settlement Agreements and the issuance of Borrower's construction permit for
the Station becoming Final Orders as defined in the Asset Purchase Agreement
attached to the Option Agreement.
Section 4.4 Settlement. The Borrower shall use its best efforts to
reach Settlement Agreements with the Competing Applicants and shall prepare and
file with the FCC the necessary documentation seeking FCC approval of such
Settlement Agreements and the FCC grant of Borrower's construction permit
application for the Station. The Borrower will further agree not to take any
action that is inconsistent with its obligations under this Agreement, or the
agreements contemplated hereby, or that could hinder or delay the consummation
of the transactions contemplated by this Agreement, or the agreements
contemplated hereby, including any actions that would interfere with its efforts
to reach a settlement with the Competing Applicants.
<PAGE> 9
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ARTICLE V REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and make the
Loan, Borrower represents and warrants as follows:
Section 5.1 Existence and Standing. Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is qualified to do business and in good standing under the laws
of any other jurisdiction in which it conducts its business, and has all
requisite power and authority, corporate or otherwise, to conduct its business,
to own its properties and to execute and deliver, and to perform all of its
obligations under this Agreement, the Note, any Mortgage or Leasehold Mortgage,
the Security Agreement, and all other documents that have been or will be
executed and delivered by the Borrower pursuant to this Agreement (the "Loan
Documents").
Section 5.2 Authorizations, Compliance with Laws. The execution,
delivery and performance by the Borrower of this Agreement, the Note, any
Mortgage or Leasehold Mortgage, the Security Agreement, and all other documents
required to be executed and delivered by the Borrower pursuant to this Agreement
have been duly authorized by all necessary corporate action and do not and will
not (i) violate (A) any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to the Borrower or (B) any provision of the charter or by-laws of
the Borrower; or (ii) result in a breach of or constitute a default under any
agreement or instrument to which the Borrower is a party or by which its
properties may be affected; or (iii) result in the creation of a lien, charge or
encumbrance of any nature upon the Borrower's properties or assets other than as
contemplated by this Agreement.
Section 5.3 No Consent. No authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental department
or agency, except for filing with the FCC, is or will be necessary for the valid
execution, delivery and performance by the Borrower of this Agreement, the Note,
any Mortgage or Leasehold Mortgage, the Security Agreement, or any other
document required to be executed and delivered by the Borrower pursuant to this
Agreement.
Section 5.4 Binding Obligations. This Agreement, the Note, any
Leasehold Mortgage or Mortgage, the Security Agreement, the Pledge Agreement,
and all other documents required to be executed and delivered by the Borrower or
the Shareholder pursuant to this Agreement have been executed and delivered by a
duly authorized officer of the Borrower and constitute legal, valid and binding
obligations of the Borrower (or, in the
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case of this Agreement or the Pledge Agreement, of the Shareholder) enforceable
in accordance with their respective terms.
Section 5.5 Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or its properties before any court or governmental department or
agency which materially adversely affects the transactions contemplated by this
Agreement or which would have a material adverse effect on the business,
properties, prospects, operation or condition (financial or otherwise) of the
Borrower.
Section 5.6 No Default. The Borrower is not in default in the
performance, observance or fulfillment of any of the obligations or conditions
contained in any material agreement or instrument to which it is a party, nor
with respect to any order, judgment, writ, injunction or decree of any court,
governmental authority or arbitration board.
Section 5.7 Compliance with Laws. The Borrower has complied with all
applicable federal, state and local laws. The Borrower has obtained all
necessary licenses and permits required for the conduct of their business and
operations or such licenses and permits have been applied for and are now being
diligently pursued.
Section 5.8 Taxes. The Borrower has filed all tax returns and reports
(federal, state and local) required to be filed by it, and has paid all taxes
shown thereon, including interest and penalties, and all assessments received by
it (except to the extent that the same are being contested in good faith by
appropriate proceedings diligently prosecuted and as to which adequate reserves
have been set aside on the books of the Borrower in conformity with generally
accepted accounting principles).
Section 5.9 Title to Properties. The Borrower has good and marketable
title to all of its property and assets and valid and enforceable leasehold
interests in the property which it holds under lease, all such property, assets
and leasehold interests being free and clear of any and all mortgages, deeds of
trust, assignments, liens, security interests, charges or encumbrances of any
nature whatsoever, except for those created hereby, and no mortgages, deeds of
trust, financing statements or other evidences of security interests covering
all or any of the aforesaid property are on file among the records of any public
office, except those evidencing a security interest in favor of the Lender.
Section 5.10 Absence of Undisclosed Liabilities. Except for (i)
obligations arising under the Loan Documents, (ii) liabilities and obligations
incurred pursuant to the terms of the Option Agreement, and (iii) liabilities
incurred in the ordinary course of business (other than for borrowed money),
Borrower has on the date hereof no material liabilities or
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obligations relating to the Station or otherwise of any nature, whether accrued,
absolute, contingent or otherwise.
Section 5.11 Solvency. Borrower has received, or has the right to
receive, consideration which is the reasonable equivalent value of the
obligations and liabilities that Borrower has incurred to Lender. Borrower is
not insolvent as defined in Section 101 of Title 11 of the United States Code or
any applicable state insolvency statute, nor, after giving effect to the
consummation of the transactions contemplated herein, will Borrower be rendered
insolvent by the execution and delivery of this Agreement, the Note or the other
Loan Documents to Lender. Borrower is not engaged, and Borrower is not about to
engage, in any business or transaction for which the assets retained by it shall
be an unreasonably small capital, taking into consideration the obligations to
Lender incurred hereunder and under the Loan Documents. Borrower does not intend
to, and Borrower does not believe that it will, incur debts beyond its ability
to pay them as they mature.
Section 5.12 Material Misstatement. No statement made herein or
information, exhibit or report furnished by Borrower to Lender in connection
with this Agreement or its negotiation, contains any material misstatement of
fact or omits to state a material fact or any fact necessary to make the
foregoing not misleading.
ARTICLE VI COVENANTS OF BORROWER
Section 6.1 Affirmative Covenants. So long as the Note shall remain
unpaid, Borrower hereby covenants and agrees that it will, unless Lender shall
otherwise consent in writing:
(a) Payment of Obligations. Pay punctually and discharge when
due: (i) all indebtedness heretofore or hereafter incurred; (ii) all taxes,
assessments and governmental charges or levies imposed upon it or its income or
profits, or upon any properties belonging to it; (iii) claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like persons
which, if unpaid might become a lien or charge upon the property of the Station
or the Borrower; provided that this covenant shall not require the payment of
any of the matters set forth in (i), (ii) and (iii) above if the same shall be
contested in good faith and by proper proceedings diligently pursued and as to
which adequate reserves have been set aside on the books of the Borrower in
accordance with generally accepted accounting principles.
(b) Maintenance of Properties. Maintain and preserve all of
the Borrower's properties necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
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(c) Compliance with Laws. Comply in all material respects
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority.
(d) Maintenance of Insurance. Maintain with responsible and
reputable insurance companies policies on all of the Borrower's properties and
covering such risks, including public liability and workers' compensation, in
such amounts as are usually carried by companies engaged in similar businesses
and owning similar properties as the Borrower and promptly upon execution
thereof provide to Lender copies of all such policies and any riders or
amendments thereto. The policies of insurance required hereunder shall name
Lender as an additional loss payee or additional insured, as applicable, and
shall provide that Lender shall receive at least thirty (30) days' written
notice prior to the cancellation, termination or alteration of any such policy.
(e) Operations in Ordinary Course. Continue to operate the
Borrower's business in the ordinary course.
(f) Perfection of Liens. Do all things requested by Lender to
preserve and perfect as first liens and security interests the liens and
security interests of Lender arising pursuant to the Security Agreement, any
Mortgage or any other agreement required hereunder.
(g) FCC Approval. If counsel to Lender reasonably determines
that the consent of the FCC is required in connection with the execution,
delivery and performance of this Agreement, the Security Agreement, any Mortgage
or any other document delivered to Lender in connection herewith or therewith or
as a result of any action which may be taken pursuant hereto or thereto, then
Borrower, at its sole cost and expense, agree to use their best efforts to
secure such consent and to cooperate with Lender in any action commenced by
Lender to secure such consent.
(h) Agreements. Comply with the Borrower's obligations
under the Option Agreement, Time Brokerage Agreement, Construction Agreement
and Lease Agreement.
(i) Information and Inspection. Insure that the Borrower shall
furnish to Lender from time to time, upon request, full information pertaining
to any covenant, provision or condition hereof, or to any matter connected with
its books, records, operations, financial condition, properties, activities or
business. At all reasonable times, Borrower shall permit any authorized
representatives designated by Lender to visit and inspect any of the properties
of the Borrower and its books and records, and to take extracts therefrom and
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make copies thereof, and to discuss the Borrower's affairs, finances and
accounts with the management and independent accountants of the Borrower.
(j) Preservation of Existence. Preserve and maintain
its respective corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation.
Section 6.2 Negative Covenants. So long as the Note shall remain
unpaid and the Agreement shall not have been terminated, Borrower hereby
covenants that it will not, without Lender's prior written approval:
(a) Indebtedness. Create or incur, assume or suffer to exist
any indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, except for:
(i) indebtedness (other than for borrowed money) incurred in the ordinary course
of business not to exceed Twenty-Five Thousand Dollars ($25,000) in the
aggregate at any one time; (ii) obligations or liabilities arising under the
indemnification provisions of the Option Agreement.
(b) Liens. Create, assume or suffer to exist, directly or
indirectly, any security interest, mortgage, deed of trust, pledge, lien, charge
or other encumbrance, of any nature whatsoever upon any of its properties or
assets, now owned or hereafter as acquired, excluding, however, from the
operation of this covenant:
(i) any security interest or lien created pursuant to
or in connection with this Agreement or securing the Loan, the Security
Agreement, or any Mortgage;
(ii) liens for taxes or assessments either not
delinquent or the validity of which are being contested in good faith by
appropriate legal or administrative proceedings and as to which adequate
reserves shall have been set aside on its books, in conformity with generally
accepted accounting principles;
(iii) materialmen's, mechanics', carriers', workmen's,
repairmen's, warehousemen's or other like liens arising in the ordinary course
of business and either not yet due and payable or being contested in good faith
by appropriate legal proceedings and as to which adequate reserves shall have
been set aside on its books, in conformity with generally accepted accounting
principles;
(iv) deposits or pledges to secure payment of workers'
compensation, unemployment insurance or other social security benefits or
obligations; or
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(v) any judgment lien, singly or aggregated with
other judgment liens, in an amount less than Fifty Thousand Dollars ($50,000),
unless the judgment it secures shall not, within thirty (30) days after the
entry thereof, have been discharged, vacated, reversed, or execution thereof
stayed pending appeal, or shall not have been discharged, vacated or reversed
within thirty (30) days after the expiration of any such stay.
(c) Disposition of Assets. Except pursuant to the terms of
the Option Agreement, sell, transfer, lease or otherwise dispose of any of its
assets or properties other than sales of assets in the ordinary course of
business (which sales in the ordinary course of business shall expressly not
include any transfer or assignment of any FCC License).
(d) Merger. Enter into any consolidation or merger with, or
into any acquisition of all or substantially all of the properties or assets of
any person or entity.
(e) Transfer or Issuance of Ownership Interests. Issue or
permit the transfer of any shares of Capital Stock of Borrower or any options,
warrants, convertible securities or other rights to purchase the Borrower's
Stock. The preceding sentence shall not apply to issuances or transfers to the
Lender.
(f) Change of Business. Change, in any material respect,
the nature or character of its business as intended, or engage in any activity
not reasonably related to such business.
(g) Remove Assets. Remove any of the assets procured with
the proceeds of the borrowings provided for herein, or any replacements for such
assets, to a jurisdiction in which no financing statement on Form UCC-1 has been
filed by Lender with respect to such assets.
(h) Transactions with Affiliates. Enter into any
transaction or agreement, other than the Transaction Documents, with any
affiliate of the Borrower.
(i) Contracts. Enter into any contract or commitment
relating to its assets except for contracts involving aggregate payments of less
than Twenty Thousand Dollars ($20,000) and contracts which can be terminated
without penalty on thirty (30) days' notice or less, or amend or terminate any
material contract (or waive any substantial right thereunder), or incur any
obligation (including obligations relating to the borrowing of money or
guarantee of indebtedness).
(j) Adverse Change. Suffer any material adverse change in the
business, assets, properties, prospects or condition (financial or otherwise) of
the Borrower or the
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Station, or any damage, destruction or loss affecting any assets used or useful
in the conduct of the business of the Borrower.
(k) Cancellation of Debts. Cancel any debts owed to or
claims held by the Borrower.
(l) Write-Down. Suffer any significant write-down of the value
of any assets or any significant write-off as uncollectible of any accounts
receivable without the prior written consent of Lender except and as required by
generally accepted accounting principles as required to present accurate
financial information on the Borrower.
(m) Rights. Transfer or grant any right under, or enter into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, service mark, trade name, franchise, or similar right, or
modify any existing right relating to the Station.
(n) Agreements. Terminate, amend or commit any material
breach or default under the Option Agreement.
(o) Distributions or Dividends. Declare or make, directly or
indirectly, any payment or distribution, or incur any liability for the
purchase, acquisition, redemption or retirement of any capital stock of the
Borrower or as a dividend, return of capital or other payment or distribution of
any kind to a shareholder of the Borrower or any affiliate of the Borrower
(other than any stock dividend or stock split or similar distribution payable
only in capital stock of the Borrower) in respect of the Borrower's capital
stock.
Section 6.3 Reporting Requirements. So long as the Note shall remain
unpaid and the Agreement shall not have been terminated, the Borrower shall,
unless Lender shall otherwise consent in writing, furnish to Lender:
(a) Default Certificate. As soon as possible and in any event
within five (5) business days after the occurrence of each Event of Default (as
defined in Section 7.1) of which the Borrower has knowledge, the statement of
Borrower setting forth details of such Event of Default and the action which the
Borrower proposes to take with respect thereto.
(b) Financial Statements. Quarterly financial statements
within thirty (30) days after the end of each fiscal quarter; within ninety (90)
days after the end of each fiscal year of the Borrower, a copy of the audited
financial statements for such year for the Borrower, including therein a balance
sheet of the Borrower as of the end of such fiscal year, statements of income
and expense of the Borrower for such fiscal year, and a statement
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of cash flow of Borrowers for such fiscal year, in each case prepared by an
independent public accountant of recognized standing acceptable to Lender,
except that Lender may waive the audit requirement and accept a review of the
Borrower's financial records.
(c) Notice of Litigation. Promptly give written notice of all
actions, suits and proceedings before any court or governmental agency, domestic
or foreign, which may be commenced or threatened against the Borrower in which
the claim involved is Five Thousand Dollars ($5,000) or more and of any other
matter of the type described in Section 5.6.
(d) Other Information. Such other information respecting the
business, properties, operations or the condition, financial or otherwise, of
the Borrower or the Station as Lender may from time to time reasonably request.
ARTICLE VII EVENTS OF DEFAULT
Section 7.1 Events of Default. Under this Agreement, an Event of
Default shall be any of the following:
(a) Borrower shall fail to pay any installment of principal or
interest on the Note, or any other obligation to Lender when due whether at the
due date thereof or by acceleration or otherwise, and, in the case of any
installment of interest, such default shall remain unremedied for a period of
five (5) days; or
(b) The security interest or lien of Lender in any material
portion of the collateral covered by the Security Agreement, or any Mortgage
shall at any time not constitute a legal, valid and enforceable security
interest or lien; or
(c) Any representation or warranty made by Borrower herein, in
the Security Agreement or any Mortgage, or in any certificate, agreement,
instrument or statement contemplated by or made or delivered pursuant to or in
connection with this Agreement, the Note, any Mortgage, the Security Agreement
shall prove to have been incorrect in any material respect when made; or
(d) Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement, the Note, the Security
Agreement, any Mortgage, and any such failure remains unremedied for thirty (30)
days after written notice thereof shall have been given to Borrower by Lender;
or
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(e) The Borrower shall fail to pay any indebtedness for
borrowed money owing by the Borrower or any interest or premium thereon, when
due, whether such indebtedness shall become due by scheduled maturity, by
required prepayment, by acceleration, by demand or otherwise, or the Borrower
shall fail to perform any term, covenant or agreement under any agreement or
instrument evidencing or securing or relating to any such indebtedness owing by
the Borrower if the effect of such failure is to accelerate, or to permit the
holder of such indebtedness to accelerate the maturity of such indebtedness; or
(f) Either (i) the Borrower shall fail to pay its debts as
they mature in the ordinary course of business; or (ii) the Borrower shall file
a petition commencing a voluntary case concerning it under any Chapter of Title
11 of the United States Code entitled "Bankruptcy"; or (iii) the Borrower shall
apply for or consent to the appointment of any receiver, trustee, custodian or
similar officer for it or for all or any substantial part of its property; or
(iv) such receiver, trustee, custodian or similar officer shall be appointed
without the application or consent of the Borrower and such appointment shall
continue undischarged for a period of thirty (30) days; or (v) an involuntary
case is commenced against the Borrower under any Chapter of the aforementioned
Title 11 and an order for relief under such Title 11 is entered or the petition
commencing the case is controverted but is not dismissed within thirty (30) days
after the commencement of the case; or (vi) the Borrower shall institute (by
petition, application, answer, consent or otherwise) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution, liquidation or
similar proceeding relating to it under the laws of any jurisdiction; or (vii)
any such proceeding shall be instituted against the Borrower and shall remain
undismissed for a period of thirty (30) days; or (viii) the Borrower shall take
any action for the purpose of effectuating the foregoing; or
(g) Any court, government, or government agency shall condemn,
seize or otherwise appropriate or take custody or control of all or a
substantial portion of the property or assets of the Borrower; or
(h) There shall be a cancellation, denial or revocation of any
material FCC License for the Station (including the Construction Permit), the
Borrower shall be finally denied renewal of any such FCC License, or any such
FCC License shall be renewed on terms that materially adversely affect the
economic or commercial value or usefulness thereof; or
(i) Any money judgment, writ or warrant of attachment, or
similar process involving (i) in any individual case an amount in excess of
Fifty Thousand Dollars ($50,000), or (ii) in the aggregate at any time an amount
in excess of Fifty Thousand Dollars ($50,000),
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and in either case not adequately covered by insurance as to which the insurance
Borrower has acknowledged coverage, shall be entered or filed against the
Borrower or its assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 30 days or in any event later than five days prior to
the date of any proposed sale thereunder; or
(j) Any material adverse effect upon or change in (a) the
properties, assets, business, operations, financial condition, prospects or
liabilities of the Borrower or on the ability of the Borrower to conduct its
business, (b) the ability of the Borrower, or any other party to a Loan Document
(other than Lender) to perform its obligations hereunder, or under any other
Loan Document to which it is a party, (c) the validity or enforceability of this
Agreement, the Note, any other Loan Document, (d) the rights or remedies of
Lender under this Agreement, the Note, any other Loan Document, or at law or in
equity or (e) the value of any material collateral granted to Lender pursuant to
any Loan Document shall occur.
Section 7.2 Effect of Event of Default. Should any Event of Default
occur, Lender may at its option by written notice to Borrower declare the entire
unpaid principal amount of the Note, together with all unpaid interest and all
other amounts payable under this Agreement and every other obligation of
Borrower to Lender, immediately due and payable, whereupon the Note and all such
obligations shall become and be forthwith due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by Borrower, anything contained herein or in the Note or in such other
note or evidence of indebtedness to the contrary notwithstanding; provided,
however, that in case of an Event of Default under Section 7.1(g), all the
obligations of Borrower under this Agreement and the Note shall become
immediately due and payable as of the date of any such Event of Default
regardless of the cause of such Event of Default and without any notice to
Borrower required from Lender. Lender shall have, in addition to all other
rights and remedies allowed by law, the rights and remedies of a secured party
under the Uniform Commercial Code and, without limiting the generality of the
foregoing, the rights and remedies provided for in the Security Agreement, and
any Mortgage or Leasehold Mortgage, which provisions are hereby incorporated by
reference.
ARTICLE VIII MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies. No failure or delay on the
part of Lender in exercising any right, power or remedy hereunder shall operate
as a waiver, nor shall any single or partial exercise of any such right, power
or remedy hereunder. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
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Section 8.2 Amendments. No amendment, modification, termination or
waiver of any provision of this Agreement, the Note, the Security Agreement, or
any Mortgage, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless in writing, signed by Lender and then only in the
specific instance and for the specific purpose for which given. No notice to or
demand on Borrower in any case shall entitle it to any other or further notice
or demand in similar or other circumstances.
Section 8.3 Conflicts. In the event of any conflict or inconsistency
between any provision of this Agreement and a provision of the Note, the
Security Agreement, or any Mortgage, the provisions of this Agreement shall
control.
Section 8.4 Address for Notices. All notices and other communications
under this Agreement shall be in writing and shall be served by personal service
or by mailing a copy thereof by registered or certified mail, return receipt
requested, to the applicable party at the addresses indicated below:
If to Borrower: Messrs. Michael and Steven Roberts
Roberts Broadcasting Company of Albuquerque
1408 N. Kingshighway Boulevard, Suite 300
St. Louis, Missouri 63113
If to Lender: Mr. Lowell W. Paxson
Paxson Communications of Albuquerque-14, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
or at such other address as may be designated by either party in a written
notice to the other complying as to delivery with the terms of this Section. All
such notices and other communications shall be effective when deposited in the
mails.
Section 8.5 Expenses. Borrower agrees to pay on demand all costs and
expenses incurred by Lender directly in the enforcement of this Agreement, the
Note, the Security Agreement, any Mortgage, and other instruments and documents
to be delivered hereunder, including, without limitation, the reasonable fees
and expenses of any attorney to whom the Note is referred for collection
(whether or not litigation is commenced) or for representation out of court, in
trial, on appeal or in proceedings under any bankruptcy or insolvency law or
otherwise. In addition, Borrower shall pay any and all taxes and fees payable or
determined to be payable in connection with the execution, delivery or
recordation of any instruments and documents to be delivered hereunder. In
addition, Borrower agrees to pay (i) all the actual and reasonable costs and
expenses of Lender in connection with the negotiation,
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preparation and execution of the Loan Documents and all the costs of furnishing
all opinions by counsel for Borrower, and of Borrower performance of and
compliance with all agreements and conditions contained herein and in the other
Loan Documents on its part to be performed or complied with including, without
limitation, confirming compliance with environmental and insurance requirements;
(ii) the reasonable fees, expenses and disbursements of counsel to Lender
(including allocated costs of internal counsel) in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
the Loan and any consents, amendments, waivers or other modifications hereto or
thereto; and (iii) all the actual and reasonable costs and expenses of creating
and perfecting liens in favor of Lender pursuant to any Loan Document.
Section 8.6 Binding Effect; Assignment. This Agreement shall become
effective when executed and thereafter shall be binding upon and inure to the
benefit of Borrower, Lender and their respective successors and assigns, except
that Borrower shall not have the right to assign any rights or obligations
hereunder without the prior written consent of Lender. Lender shall be permitted
to assign, without Borrower's consent, all or any portion of Lender's rights and
interests hereunder and under each other document executed in connection with
this Loan Agreement (x) to one or more other affiliates of Lender, and, upon any
such assignment, each reference herein or in such other document to "Lender"
shall be deemed to be and include a reference to such other affiliate and (y) to
creditors of Lender or its affiliates as security for indebtedness of Lender or
such affiliates. For purposes of this section, the term affiliate shall mean, as
applied to any entity or individual, any other entity or individual directly or
indirectly controlling, controlled by, or under common control with, that entity
or individual. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and under "common
control with"), as applied to any entity or individual, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that entity or individual, whether through the
ownership of voting securities, partnership interests or otherwise by contract.
Section 8.7 Governing Law. This Agreement, the Note, the Security
Agreement, and related documents shall be governed by, and construed in
accordance with, the laws of the State of Florida with the exception of its
conflicts of laws provisions; provided that the effect of any recordation shall
be determined by the State thereof.
Section 8.8 Severability of Provisions. Any provision of this
Agreement, the Note, the Security Agreement, or any Mortgage that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions or affecting the validity or
enforceability of any provisions in any other jurisdiction.
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Section 8.9 Headings. Article and Section headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
Section 8.10 Rights Affected by Extensions. The rights of Lender and
its assigns shall not be impaired by any indulgence, release, renewal, extension
or modification which Lender may grant with respect to the indebtedness or any
part thereof, or with respect to the collateral or with respect to any endorser,
guarantor, or surety without notice or consent of Borrower or any endorser,
guarantee, or surety.
Section 8.11 Survival of Representations and Warranties. All
representations and warranties made in this Agreement and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Agreement and the Note and the making of the Loan hereunder
and continue in full force and effect, as of the respective dates as of which
they were made, until all of the obligations of Borrower to Lender hereunder
have been paid in full.
Section 8.12 FCC Compliance. Notwithstanding anything herein or in any
of the other Loan Documents to the contrary, but without limiting or waiving
Borrower's obligations hereunder or under any of the other Loan Documents,
Lender's remedies hereunder and under the other Loan Documents are subject to
compliance with the Communications Act of 1934, as amended, and all applicable
rules, regulations and policies of the FCC, and Lender will not take any action
pursuant to this Agreement or any of the other Loan Documents that would
constitute or result in any assignment of any FCC authorization held by the
Borrower or any change of control of the Station if such assignment or change of
control would require under then existing law (including the written rules and
regulations promulgated by the FCC), the prior approval of the FCC, without
first obtaining such approval of the FCC. This Agreement, the other Loan
Documents and the transactions contemplated hereby and thereby do not and will
not constitute, create, or have the effect of constituting or creating, directly
or indirectly, actual or practical ownership of Borrower by Lender or control,
affirmative or negative, direct or indirect, of Borrower by Lender, over the
programming, management or any other aspect of the operation of Borrower, which
ownership and control remain exclusively and at all times in Borrower until such
time as Lender has complied with such law, rules, regulations and policies.
Section 8.13 Further Assurances. From time to time, Borrower shall
execute and deliver to Lender such additional documents as Lender may reasonably
require to carry out the purposes of this Agreement or any of the documents
entered into in connection herewith, or to preserve and protect the rights of
Lender hereunder or thereunder.
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Section 8.14 Indemnification. Borrower hereby indemnifies and holds
harmless Lender and its directors, officers, shareholders, employees, agents,
counsel, subsidiaries and affiliates (the "Indemnified Persons") from and
against any and all losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against any
Indemnified Person in any way relating to or arising out of this Agreement, the
documents entered into in connection herewith, or any of them or any of the
transactions contemplated hereby or thereby; provided, however, that Borrower
shall not be liable to any Indemnified Person, if there is a judicial
determination that such losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the gross negligence or willful misconduct of such Indemnified Person.
Section 8.15 Waiver. EACH OF LENDER AND BORROWER HEREBY AGREES TO WAIVE
ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND THE
LENDER/BORROWERS RELATIONSHIP THAT IS BEING ESTABLISHED. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, REPLACEMENTS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN.
Section 8.16 Maximum Interest. Lender and Borrower intend that this
Agreement and the other Loan Documents conform to all applicable usury laws.
Accordingly, no provisions of the Loan Documents shall require the payment or
permit the collection of interest in excess of the maximum rate permitted by
applicable law ("Maximum Rate"), or obligate Borrower to pay any taxes,
assessments, charges, insurance premiums or other amounts which are held to
constitute interest to the extent that such payments, when added to the other
obligations under the Loan Documents, would be held to constitute contracting
for, or the payment by Borrower of, interest at a rate greater than the Maximum
Rate. Lender and Borrowers further agree that:
(i) if any excess of interest in such respect is herein
or in any such other instrument provided for, or shall be adjudicated to
be so provided for herein or in any such instrument, the provisions of this
subsection 8.16 shall govern, and neither Borrowers nor its successors or
assigns shall be obligated to pay the amount of such interest to the extent it
is in excess of the Maximum Rate;
<PAGE> 23
- 20 -
(ii) if at any time the amount of interest under
any of the Loan Documents for a calendar year exceeds the Maximum Rate had the
Maximum Rate at all times been in effect, the interest chargeable under any such
Loan Document shall be limited to the amount of interest that could have been
charged if the Maximum Rate had at all times been in effect, but any subsequent
reductions in the interest due shall not reduce the rate of interest chargeable
under any such Loan Document below the Maximum Rate until the total amount of
interest accrued under any such Loan Document equals the amount of interest that
would have accrued if the interest provided for in any such Loan Document had at
all times been in effect and collectible;
(iii) if the maturity of any Loan Document is accelerated
for any reason, or in the event of any prepayment by Borrower, or in any other
event, earned interest may never include more than the Maximum Rate, computed
from the date of disbursement of the funds evidenced by such Loan Document until
payment, and any interest otherwise payable under such Loan Document that is in
excess of the Maximum Rate shall be canceled automatically as of such
acceleration or such other event and (if theretofore paid) shall be credited
against principal;
(iv) if it should be held that any interest payable or
chargeable under any Loan Document is in excess of the Maximum Rate, the
interest payable or chargeable under such Loan Document shall be reduced to the
maximum amount permitted by applicable federal or state law, whichever shall
permit the higher lawful interest, as construed by courts having jurisdiction
thereof; and
(v) the spreading, prorating and amortizing of interest
over the Maturity Date of the Loan Documents shall be allowed to the fullest
extent permitted by applicable law.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be executed by their respective duly authorized officers as of the date first
above written.
PAXSON COMMUNICATIONS
OF ALBUQUERQUE-14, INC.
By: /s/ William L. Watson
----------------------------
Name: William L. Watson
Title: Secretary
ROBERTS BROADCASTING
COMPANY OF ALBUQUERQUE
By: /s/ Michael V. Roberts
----------------------------
Name: Michael V. Roberts
Title: Secretary/Treasurer
and Director
<PAGE> 1
EXHIBIT 10.178
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
JOHN W. HYDE,
AS CHAPTER 11 TRUSTEE OF THE
CHAPTER 11 DEBTOR ESTATE OF
RIKLIS BROADCASTING CORPORATION,
AKA KADY-TV, AKA PACIFIC RIM VIDEO
AND
PAXSON COMMUNICATIONS
OF LOS ANGELES - 63, INC.
As of June 25, 1997
<PAGE> 2
ASSET PURCHASE AGREEMENT
SUMMARY OF BASIC TERMS
1. Buyer: Paxson Communications of Los Angeles - 63, Inc.
2. Purchase Price: $8,000,000, all cash
3. Deposit: $350,000, paid at execution of Agreement, Trustee has the right to
use the Deposit: See Section 2.7.
4. Assets Sold: Station Assets, see Section 2.2
5. Assumed Contracts: See Section 1.4 (Station Lease can be subsequently
rejected: See Section 2.6)
6. Assumed Liabilities: See Section 2.5
7. Excluded Assets: See Section 2.3
8. AS IS
9. Conditions Precedent:
(a) Bankruptcy Approval
(b) FCC Approval
10. All sales taxes and transfer fees and costs (including FCC filing costs)
paid by Buyer
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1 DEFINITIONS...................................................................................................... 2
ARTICLE 2 PURCHASE OF ASSETS............................................................................................... 5
2.1 Closing.................................................................................................. 5
2.2 Transfer of Assets....................................................................................... 5
2.3 Excluded Assets.......................................................................................... 6
2.4 Identification of Assumed Contracts...................................................................... 7
2.5 Inspection of Property................................................................................... 8
2.6 Studio Lease............................................................................................. 8
2.7 Deposit.................................................................................................. 8
2.8 Liabilities.............................................................................................. 8
2.9 Purchase Price........................................................................................... 8
2.10 Prorations and Adjustments............................................................................... 9
2.11 Allocation............................................................................................... 9
2.12 Guarantee of PCC......................................................................................... 9
ARTICLE 3 CONSENTS AND APPROVALS........................................................................................... 9
3.1 Court Approval........................................................................................... 9
3.2 FCC Consent.............................................................................................. 10
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER.......................................................................... 11
4.1 Organization and Standing................................................................................ 11
4.2 Authorization and Binding Obligation..................................................................... 11
4.3 FCC Qualifications....................................................................................... 11
4.4 Absence of Conflicting Agreements or Required Consents................................................... 11
4.5 Litigation............................................................................................... 11
4.6 Financial Information.................................................................................... 12
4.7 Full Disclosure.......................................................................................... 12
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF TRUSTEE........................................................................ 12
5.1 Governmental Authorization............................................................................... 12
5.2 Personal Property........................................................................................ 13
5.3 Intellectual Property.................................................................................... 13
5.4 Compliance with Laws..................................................................................... 13
5.5 Operating Statements..................................................................................... 13
5.6 Absence of Changes or Events............................................................................. 13
5.7 Insurance................................................................................................ 13
5.8 Title to and Condition of Real Property.................................................................. 14
5.9 Personnel and Employee Benefits.......................................................................... 14
5.10 Environmental Matters.................................................................................... 14
5.11 Material Contracts....................................................................................... 14
5.12 Governmental Consents.................................................................................... 14
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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5.13 Full Disclosure.......................................................................................... 14
ARTICLE 6 COVENANTS OF TRUSTEE............................................................................................. 15
6.1 Interim Operation........................................................................................ 15
6.2 Access to Station and Operating Statements............................................................... 15
6.3 Notification............................................................................................. 16
6.4 No Inconsistent Action................................................................................... 16
ARTICLE 7 ADDITIONAL COVENANTS............................................................................................. 16
7.1 Reasonable Best Efforts.................................................................................. 16
7.2 Control of Station....................................................................................... 16
7.3 Certain Employees........................................................................................ 16
7.4 Renewal of Assumed Contracts............................................................................. 17
7.5 Post-Closing Covenants................................................................................... 17
7.6 Approval Order........................................................................................... 17
7.7 Governmental Consents.................................................................................... 17
ARTICLE 8 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.............................................................. 18
8.1 Representations, Warranties and Covenants................................................................ 18
8.2 Court Approval........................................................................................... 18
8.2.1 Title. The Station Assets...................................................................... 18
8.2.2 Taxes........................................................................................... 18
8.2.3 Assumed Contracts............................................................................... 18
8.2.4 Successor Liability............................................................................. 19
8.2.5 Employees....................................................................................... 19
8.2.6 Good Faith Purchaser............................................................................ 19
8.3 FCC Order................................................................................................ 19
8.4 Governmental Consents.................................................................................... 19
8.5 Adverse Proceedings...................................................................................... 19
8.6 Deliveries............................................................................................... 19
ARTICLE 9 CONDITIONS PRECEDENT TO TRUSTEE'S OBLIGATION TO CLOSE............................................................ 20
9.1 Representations, Warranties and Covenants................................................................ 20
9.2 Court Approval........................................................................................... 20
9.3 FCC Consent.............................................................................................. 20
9.4 Governmental Consents.................................................................................... 20
9.5 Paxson Guarantee......................................................................................... 20
9.6 Adverse Proceedings...................................................................................... 20
9.7 Deliveries............................................................................................... 20
</TABLE>
ii
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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ARTICLE 10 DOCUMENTS TO BE DELIVERED AT THE CLOSING........................................................................ 20
10.1 Documents to be Delivered by Trustee..................................................................... 20
10.2 Documents to be Delivered by Buyer....................................................................... 21
ARTICLE 11 TAXES; FEES AND EXPENSES........................................................................................ 22
11.1 Transfer Taxes and Similar Charges....................................................................... 22
11.2 Expenses................................................................................................. 22
11.3 Personal Property Taxes.................................................................................. 22
ARTICLE 12 BROKER'S COMMISSION OR FINDER'S FEE............................................................................. 22
12.1 Buyer's Representation and Agreement to Indemnify........................................................ 22
12.2 Trustee's Representation and Estate's Agreement to Indemnify............................................. 22
ARTICLE 13 INDEMNIFICATION................................................................................................. 23
13.1 Indemnification by Buyer................................................................................. 23
13.2 Indemnification by the Estate............................................................................ 23
13.3 Survival; Limitations.................................................................................... 24
13.4 Indemnification Fund; Procedure for Indemnification...................................................... 24
13.5 Procedures for Indemnification........................................................................... 24
13.6 Attorneys' Fees.......................................................................................... 25
13.7 Administrative Expense................................................................................... 25
ARTICLE 14 TERMINATION RIGHTS.............................................................................................. 25
14.1 Termination.............................................................................................. 25
14.2 Liability................................................................................................ 27
ARTICLE 15 REMEDIES UPON DEFAULT........................................................................................... 27
15.1 Buyer's Remedies......................................................................................... 27
15.2 Trustee's Remedies....................................................................................... 27
ARTICLE 16 OTHER PROVISIONS................................................................................................ 28
16.1 Disclaimer of Representations and Warranties; Trustee's Knowledge; As Is................................. 28
16.2 Risk of Loss............................................................................................. 28
16.3 Benefit and Assignment................................................................................... 29
16.4 Entire Agreement; Amendments............................................................................. 29
16.5 Headings................................................................................................. 29
16.6 Choice of Law; Jurisdiction; Venue....................................................................... 29
16.7 Attorneys' Fees.......................................................................................... 29
16.8 Notices.................................................................................................. 30
</TABLE>
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(CONTINUED)
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16.9 Counterparts............................................................................................. 31
16.10 Time of the Essence...................................................................................... 31
</TABLE>
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<PAGE> 7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
June __, 1997, by and between Paxson Communications of Los Angeles-63, Inc.
("Buyer") and John W. Hyde ("Trustee") as Chapter 11 Trustee of the Chapter 11
debtor estate of Riklis Broadcasting Corporation, aka KADY-TV, aka Pacific Rim
Video (the "Estate"), now operating under the protection of Chapter 11, Title 11
United States Code (the "Code") in Case No. 96-11086-RR (the "Bankruptcy
Proceeding") in the United States Bankruptcy Court for the Central District of
California (the "Bankruptcy Court").
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein, and of the mutual benefits to be
derived hereby, the parties hereto agree as follows:
RECITALS
A. On March 22, 1996 an involuntary Chapter 11 petition was
filed with the Bankruptcy Court, and the Bankruptcy Court entered the Order for
relief effective July 8, 1996, and appointed the Trustee effective July 9, 1996.
Upon entry of the Order for Relief, all assets of Riklis Broadcasting
Corporation ("RBC") became the property of the Estate pursuant to the Code. On
November 5, 1996, the Bankruptcy Court entered its order substantively
consolidating three affiliates of RBC, to wit, HBC Holdings, Inc., VCNN, and
KADE Broadcasting, Inc., into the Estate, so that their assets comprised
property of the Estate nunc pro tunc to the Petition date.
B. Buyer desires to purchase certain assets and assume certain
liabilities of the Estate as set forth in this Agreement.
C. As soon as is practicable after the execution of this
Agreement, Trustee intends to file with the Bankruptcy Court a Notice of Motion
to approve the sale and over bidding procedures attached hereto as Exhibit A
(the "Sale Procedure Motion").
D. Following the approval of the Sale Procedure Motion, the
Trustee intends to file a motion to seek approval of the Bankruptcy Court of the
transactions contemplated by this Agreement, subject to the overbid procedures
set forth in the Sale Procedure Motion.
1
<PAGE> 8
ARTICLE 1
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms
when used herein shall have the meanings assigned to them below:
1.1 "Affiliate" shall mean a Person that is an affiliate (as
defined under Section 101(2) of the Code) of the Person specified.
1.2 "Appointment Date" shall mean July 9, 1996, the date on
which Trustee was appointed as trustee of the Estate by the Bankruptcy Court.
1.3 "Approval Order" shall mean the order of the Bankruptcy
Court approving the sale of the Station Assets to Buyer and the assumption of
the Assumed Liabilities by Buyer pursuant to the terms of this Agreement and
Sections 363(b) and 365 of the Code, which order has not been stayed.
1.4 "Assumed Contracts" shall have the meaning set forth in
Section 2.4.
1.5 "Assumed Liabilities" shall have the meaning set forth in
Section 2.8(a).
1.6 "Broker" shall mean Media Services Group.
1.7 "Business Day" shall mean every day of the week excluding
Saturdays, Sundays and Federal holidays.
1.8 Intentionally omitted.
1.9 "Closing" shall mean the closing of the transactions
contemplated by this Agreement pursuant to Section 2.1.
1.10 "Closing Date" shall mean the date on which the Closing
is completed.
1.11 "Confidentiality Agreement" shall mean that certain
Confidentiality Agreement dated as of February 28, 1997 by and between Trustee
and Paxson Communications Corporation ("PPC").
1.12 "Contracts" shall mean all Real Property Leases,
contracts, agreements, purchase orders and leases of whatever nature, whether
written or oral, used in, held for use in connection with or necessary for the
conduct of, the business or operations of the Station or the Station Assets.
1.13 "Cut-Off Time" shall mean 12:01 a.m., local time, on the
date on which the Estate actually receives the Purchase Price in full.
2
<PAGE> 9
1.14 "Deposit" shall mean the sum of $350,000.
1.15 "Employee Costs" shall have the meaning set forth in
Section 7.3.
1.16 "Employee Plans" shall mean all employee or retiree
benefit or compensation plan within Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or compensation, bonus, incentive, deferral, equity
based, severance, termination, retention, change in control, employment or other
similar program, agreement, arrangement, trust or other funding arrangement,
whether or not subject to the provisions of ERISA, to which the Estate is bound
or that is or has been established or maintained or in respect of which the
Estate has ever had any obligation to contribute.
1.17 "Estate Indemnitees" shall have the meaning set forth in
Section 13.1.
1.18 "Excluded Assets" shall have the meaning set forth in
Section 2.3.
1.19 "FCC" shall mean the Federal Communications Commission.
1.20 "FCC Applications" shall mean the application or
applications that the Estate and Buyer must file with the FCC requesting its
consent to the assignment of the Station Licenses from the Estate to Buyer.
1.21 "FCC Consent" shall mean the action by the FCC granting
the FCC Application.
1.22 "FCC Order" shall mean the FCC Consent (i) which has not
been vacated, reversed, stayed, set aside, annulled or suspended, (ii) with
respect to which no timely appeal, request for stay or petition for rehearing,
reconsideration or review by any party or by the FCC on its own motion, is
pending, and (iii) as to which the time for filing any such appeal, request,
petition, or similar document or for the reconsideration or review by the FCC on
its own motion under the Communications Act of 1934, as amended, and the rules
and regulations of the FCC, has expired.
1.23 "Indemnification Fund" shall have the meaning set forth
in Section 13.4.
1.24 "Information" shall have the meaning set forth in Section
16.1(b).
1.25 "Intellectual Property" shall mean all United States and
foreign trademarks, service marks, trade names, trade dress, copyrights, and
similar rights, including registrations and applications to register or renew
the registration of any of the foregoing, United States and foreign letters
patent and patent applications, and inventions, processes, designs, formulae,
trade secrets, jingles, know-how, confidential business and technical
information, computer software, data and documentation, and all similar
intangible property rights, tangible embodiments of any of the foregoing (in any
medium including electronic media), and licenses or permits to use any of the
foregoing used in, held for use in
3
<PAGE> 10
connection with or necessary for the conduct of, the business or operations of
the Station or the Station Assets.
1.26 "Material Adverse Effect" shall mean the occurrence of an
event which has or will have a material adverse effect on the Station Assets or
the business or operations of the Station.
1.27 "Operating Statements" shall mean the unaudited monthly
statements of operations of the Station for the period of July 8, 1996 to the
month ended immediately prior to date which is 30 days prior to the Closing
Date.
1.28 "Ordinary Course" shall mean the ordinary course of
business within the meaning of Section 363 of the Code.
1.29 "Person" shall mean an individual, corporation,
partnership, limited liability company, association, trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
1.30 "Personal Property" shall mean all equipment, office
furniture and fixtures, office materials and supplies, inventory, spare parts
and other tangible personal property owned, leased or held by the Estate and
used in, held for use in connection with or necessary for the conduct of, the
business or operations of the Station or the Station Assets.
1.31 "Purchase Price" shall have the meaning set forth in
Section 2.9.
1.32 "Real Property" shall mean any estates or interests in
real property owned by the Estate and used in, held for use in connection with
or necessary for the conduct of, the business or operations of the Station or
the Station Assets.
1.33 "Real Property Leases" shall mean the leases, subleases,
licenses and occupancy agreements, including any amendments thereto, pursuant to
which any the Estate is the lessee, sublessee, licensee or occupant of real
property used in, held for use in connection with or necessary for the conduct
of, the business or operations of the Station or the Station Assets.
1.34 "Settlement Agreement" shall mean that certain Settlement
Agreement between Trustee, KTIE-TV and SDS Investments.
1.35 "Station" shall mean the television broadcast station
KADY-TV, Oxnard, California.
1.36 "Station Assets" shall have the meaning set forth in
Section 2.2.
1.37 "Station Lease" shall have the meaning set forth in
Section 2.6.
1.38 "Station Licenses" shall mean the licenses, permits and
other authorizations issued by the FCC, and any other federal, state or local
governmental or
4
<PAGE> 11
regulatory authorities to the Estate and used in, held for use in connection
with or necessary for the conduct of, the business or operations of the Station
or the Station Assets, including, without limitation, those specified in
Schedule 5.1.
1.39 "Tax" shall mean any federal, state, local or foreign
income, alternative, minimum, accumulated earnings, personal holding company,
franchise, unincorporated business, capital stock, profits, windfall profits,
gross receipts, sales, use, value added, transfer, registration, stamp, premium,
excise, customs duties, severance, environmental, real property, personal
property, ad valorem, occupancy, license, occupation, employment, payroll,
social security, disability, unemployment, workers' compensation, withholding,
estimated or similar tax, duty, fee, assessment or other governmental charge or
deficiencies thereof (including all interest and penalties thereon and additions
thereto).
1.40 "Tax Code" shall mean the Internal revenue code of 1986,
as amended, and all regulations and ruling promulgated thereunder.
1.41 "Trustee's Knowledge" shall mean Trustee's own present
actual knowledge after limited investigation consisting only of consulting with
present employees of the Station and Trustee's representatives, agents and
counsel.
ARTICLE 2
PURCHASE OF ASSETS
2.1 Closing. Subject to the terms and conditions of this
Agreement, the Closing shall take place on a Business Day that is no later than
10 Business Days after the later of (i) receipt of the FCC Order, or (ii)
receipt of the Approval Order, or on such other date as the parties may agree.
Buyer shall designate the date of Closing in accordance with the terms of the
preceding sentence by giving the Estate at least four Business Days prior
written notice of such Closing. The Closing shall be held at 10:00 a.m. in the
offices of Kelley Drye & Warren LLP, 515 South Flower Street, Suite 1100, Los
Angeles, California 90071 or at such other place or time as the parties may
agree.
2.2 Transfer of Assets. At the Closing, the Estate shall
sell, assign, transfer and convey (or cause to be sold, assigned, transferred or
conveyed) to Buyer and Buyer shall purchase from the Estate all of the assets
(whether real, personal and mixed, tangible and intangible) owned or held by the
Estate and used in, held for use in connection with or necessary for the
broadcast or cable transmission from the Station, other than the Excluded Assets
(collectively, the "Station Assets"). The Station Assets shall include:
(a) all of the Estate's rights in and to the Station
Licenses (including renewals or modifications of such licenses and applications
therefor) and all its rights in and to the call letters "KADY";
5
<PAGE> 12
(b) all of the Estate's rights in and to the Personal
Property and the Real Property, provided that, in the case of a leasehold
interest, Buyer assumes the underlying lease;
(c) such right to occupy the studio facility of the
Station as the Trustee may assign pursuant to Section II of the Settlement
Agreement;
(d) all of the Estate's rights in and to the Assumed
Contracts (as amended by Section 2.6, as applicable); provided, however, the
Estate shall be entitled to the benefits of the Assumed Contracts which accrue
up to and including the Cut-Off Time;
(e) all manufacturers' and vendors' warranties relating
to the Station Assets;
(f) all of the Estate's rights in and to the Intellectual
Property and any programs and programming materials of whatever form or nature
owned by the Estate and used in, held for use in connection with or necessary
for the conduct of, the business and operations of the Station;
(g) all files, records, books of account, computer
programs and software and logs used in, held for use in connection with or
necessary for the conduct of, the business and operations of the Station,
including, without limitation, receivable records and statements, all traffic
material for media and Contracts, programming information and studies, technical
information and engineering data, news and advertising studies or consulting
reports, marketing and demographic data, sales correspondence, lists of
advertisers, promotional materials, credit and sales reports and the files for
the Station required to be maintained by the FCC.
2.3 Excluded Assets. The Station Assets shall not include,
and Buyer shall not purchase from the Estate, the following (collectively, the
"Excluded Assets"):
(a) all Contracts other than the Assumed Contracts;
(b) all books and records that Trustee or the Estate is
required by law to retain, and all payables records and invoices, provided that,
at Buyer's request, Trustee shall provide Buyer, at the Estate's expense, with
copies of such records covering the period during which the Estate was licensee
of the Station and prior periods to the extent that such records are in the
possession of the Trustee.
(c) all books, records, and other intangible assets
related solely to the Estate's internal corporate matters and not related to the
operation of the Station;
(d) all claims, rights, and interest in and to any
refunds for federal, state, or local franchise, income, or other Taxes or fees
of any nature whatsoever for periods prior to the Cut-Off Time;
6
<PAGE> 13
(e) all accounts receivable arising out of or relating to
the operation of the Station which accrue in respect of period prior to the
Cut-Off Time.
(f) the Estate's cash on hand as of the Cut-Off Time and
all other cash in any bank account of the Estate; any and all cash equivalents,
certificates of deposit, bonds, repurchase agreements, letters of credit,
marketable securities, utility deposits and other similar items;
(g) subject to the requirements of Section 6.1(b), all
personal property which is consumed, retired or disposed of by the Estate in the
ordinary course of their businesses up to the Cut-Off Time or as otherwise
permitted by this Agreement;
(h) all insurance policies, except for any rights
thereunder that may be assigned to Buyer pursuant to Section 16.2;
(i) all Employee Plans (other than Employee Costs),
including all trusts and other funding arrangements and the assets thereof;
(j) the benefits of the Assumed Contracts which accrue up
to and including the Cut-Off Time;
(k) any interest in the Estate's right or option to
purchase the television broadcast station KADE-TV from Community Media
Corporation;
(l) any interest in the Estate's claims against John and
Erica Huddy and/or their Affiliates, including, but not limited to, claims
relating to the following: (i) intercompany transfers; (ii) breaches of
fiduciary duty, fraud and mismanagement; and (iii) fraudulent transfers of
conveyances and preferences.
(m) any interest in the Estate's claims with reference to
any avoidance actions under the Code or applicable state law for pre-petition
transfers, including any claims for preferential transfers or fraudulent
transfers or conveyances;
(n) any interest in the Estate's claims against any
insurance company; and
(o) any interest in the Estate's claims against the
Estate's former officers and directors.
2.4 Identification of Assumed Contracts. Within 15 days of
the execution of this Agreement, Buyer will identify which of the contracts
listed on Schedule 5.11 it wishes to assume and have continued. Between the date
of this Agreement and the Approval Date, Trustee will periodically provide Buyer
with lists of new contracts which Trustee has entered into in the Ordinary
Course, together with copies of such contracts, and Buyer shall likewise have 15
days within which to identify which of the new contracts it wishes to assume and
have continued. All contracts so identified by Buyer (and renewals pursuant to
Section 7.4) at least 21 days prior to the Bankruptcy Court hearing on final
approval of the
7
<PAGE> 14
sale of the Station Assets to and assumption of Assumed Liabilities by Buyer
shall be referred to in this Agreement as the "Assumed Contracts."
Notwithstanding the foregoing, the Station Lease will be part of the Assumed
Contracts unless and until Buyer elects not to assume the Station Lease as set
forth in Section 2.6.
2.5 Inspection of Property. Buyer has received an Offering
Memorandum dated January 1997 which contains reports and information about the
Station Assets (including the Personal Property and Real Property) and has had
an opportunity to make a physical inspection of the Personal Property and Real
Property. Trustee shall maintain such Personal Property and Real Property in its
current condition, in the Ordinary Course of the business of the Estate.
2.6 Studio Lease. Pursuant to Part 11.A.7 of the Settlement
Agreement, Buyer has a period of time (the lesser of 90 days after the FCC Order
or 6 months after Closing) to make a final election to assume that certain lease
of the Station studio facilities located at 633 Maulhardt, Oxnard, California
(the "Station Lease"). In the event that Buyer elects not to assume the Station
Lease pursuant to the terms of the Settlement Agreement then the Assumed
Contracts shall be deemed not to include the Station Lease.
2.7 Deposit. Concurrently with the execution of this
Agreement, Buyer has deposited with Trustee the amount of Three Hundred Fifty
Thousand Dollars ($350,000) (the "Deposit"), which Deposit, together with the
balance of the Indemnification Fund, shall be held by Trustee in a segregated,
interest-bearing account and disbursed by the Trustee in accordance with
Sections 13 and 15 of this Agreement; provided, however, that if Trustee accepts
another bid for the Station Assets as described in Section 3.1, Trustee shall
promptly return the Deposit, together with interest, to Buyer.
2.8 Liabilities.
(a) The Station Assets shall be sold and conveyed to Buyer
free and clear of all liens pursuant to Sections 363(b) and (f) of the Code,
except for the Employee Costs assumed by Buyer pursuant to Section 7.3 hereof,
and the burdens of the Assumed Contracts which accrue after the Cut-Off Time,
including, in the event Buyer elects to assume the Station Lease pursuant to
Section 2.4, all Deferred Rent which may be payable pursuant to the Settlement
Agreement and which accrued from and after Cut-Off Time; the foregoing
liabilities, costs and burdens are collectively referred to herein as the
"Assumed Liabilities".
(b) Except for the Assumed Liabilities or as otherwise
expressly stated in this Agreement, Buyer shall not assume or be liable for any
liability or obligation arising out of the business or operations of the Estate,
the Station or the Station Assets prior to the Closing Date.
2.9 Purchase Price. In consideration for the sale, assignment,
transfer and conveyance of the Station Assets by the Estate to Buyer, Buyer
shall pay an additional amount sufficient to make the sum of such additional
amount, plus the Deposit, plus interest accrued on the Deposit to the Closing
Date equal to $8,000,000 as adjusted pursuant to
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Section 2.10, (such sum being referred to herein as the "Purchase Price") to the
Estate at Closing by wire transfer of immediately available funds to such
account of Trustee as Trustee shall have designated to Buyer at least two
Business Days before Closing, and Buyer shall assume the Assumed Liabilities at
the Closing. An aggregate of $500,000 (the "Indemnification Fund") will be held
by the Trustee for the purposes of indemnifying Buyer for any claim Buyer may
have against the Trustee or the Estate under this Agreement, and shall be
disbursed by the Trustee pursuant to Section 13 of this Agreement.
2.10 Prorations and Adjustments. All items of income and
expense which accrue up to the Cut-Off Time and which relate to the Station
Assets shall be for the account of the Estate, and all items of income and
expense which accrue from and after the Cut-Off Time and which relate to the
Station Assets shall be for the account of Buyer. Trustee shall have the sole
and exclusive right to bill and collect any receivables accruing up to the
Cut-Off Time with respect to the Assumed Contracts and Buyer shall have the sole
and exclusive right to bill and collect any receivables accruing from and after
the Cut-Off Time with respect to the Assumed Contracts. All offsets claimed by
any party to the Assumed Contracts shall be attributed to the particular time
period in respect of which the offset is claimed and no other period. All other
income and expense items (including, without limitation, rents, prepaids
(excluding however non-cash prepayments such as prepayments arising from the
performance of services), deposits, utility charges, commissions, and payables)
shall be prorated at the Closing and shall be an adjustment to the Purchase
Price. All such prorations shall be made on the basis of the actual number of
days elapsed as of the Closing Date and shall be based upon a 365 day year. The
amount of such prorations shall be subject to adjustment, in cash, after the
Closing as and when complete and accurate information becomes available. Trustee
and Buyer agree to cooperate in obtaining such information and all such
adjustments shall be made no later than 60 days after the Closing.
2.11 Allocation. Buyer and Trustee agree to allocate the
Purchase Price for tax and recording purposes in accordance with an appraisal to
be conducted by an appraisal firm selected and paid for by Buyer with experience
in the valuation and appraisal of television station assets. Buyer and the
Estate shall (i) prepare and file all statements or other information required
to be furnished to any taxing authority pursuant to section 1060 of the Tax Code
or other applicable tax law in a manner consistent with such allocation and (ii)
prepare all tax returns and reports required to be filed by them in a manner
consistent with such allocation, and neither Buyer nor Trustee shall not take
any position contrary to such allocation with any government agency or taxing
authority.
2.12 Guarantee of PCC. Concurrently with the execution and
delivery of this Agreement, PCC will execute and deliver a continuing guarantee,
in form and substance satisfactory to Trustee, guarantying all the obligations
of Buyer under this Agreement.
ARTICLE 3
CONSENTS AND APPROVALS
3.1 Court Approval. As soon as is practicable after the
execution of this Agreement Trustee shall file the Sale Procedure Motion with
the Bankruptcy Court. Trustee
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and Buyer shall prosecute the hearing of the Sale Procedure Motion by the
Bankruptcy Court (the "Hearing") with all reasonable diligence and otherwise use
their reasonable best efforts to obtain the Approval Order. Buyer shall have the
right to bid at the Hearing and to over bid the Purchase Price. In the event
Buyer's overbid is accepted by the Bankruptcy Court this Agreement shall be
modified accordingly. Buyer acknowledges at the Hearing the Trustee may be
required to accept another bid for the Station Assets and in such event this
Agreement shall terminate and the Deposit (with accrued interest) shall be
returned to Buyer. Upon a termination hereof pursuant to the preceding sentence,
Trustee shall pay to Buyer a "breakup" fee of One Hundred Twenty Thousand
Dollars ($120,000), payable out of the successful over-bidder's deposit upon
entry of the Bankruptcy Court's order approving the sale to such overbidder.
Trustee shall use its best efforts to ensure that any other bid which may be
accepted shall be secured by an escrow deposit not less than the amount of
Buyer's Deposit. Trustee hereby agrees not to accept any higher bids for the
Station Assets that do not exceed the amount of the Purchase Price plus
$200,000.
3.2 FCC Consent. The assignment of the Station Licenses as
contemplated by this Agreement is subject to the prior consent and approval of
the FCC. Buyer and Trustee shall be responsible for the preparation of their
respective portions of the FCC Application and for the filing of the application
with the FCC within seven (7) Business Days after the execution of this
Agreement. Buyer and Trustee shall thereafter prosecute the FCC Application with
all reasonable diligence and otherwise use their reasonable best efforts to
obtain the grant of the FCC Application as expeditiously as practicable. Buyer
and Trustee shall share equally all filing fees required by the FCC in
connection with the FCC Consent with each party bearing its own legal,
accounting, engineering and management costs and expenses. Buyer shall
periodically report to Trustee the progress of the FCC Application. Neither
Trustee nor Buyer shall have any obligation to satisfy any complaint of the FCC
by taking any steps which would have a material adverse effect upon the Estate
or Buyer or upon any Affiliate, but neither the expense nor inconvenience to a
party of defending against a complainant or an inquiry by the FCC shall be
considered a material adverse effect on such party. If the FCC Consent imposes
any condition on any party hereto, such party shall use its reasonable best
efforts to comply with such condition; provided, however, that neither Trustee
nor Buyer shall be required to comply with any condition that would have a
material adverse effect upon the Estate or Buyer or upon any Affiliate and the
party that would otherwise be adversely affected shall have the right to elect
to terminate this Agreement. If reconsideration or judicial review is sought
with respect to the FCC Consent, the party or parties affected shall vigorously
oppose such efforts for reconsideration or judicial review; provided further,
however, such opposition shall be without prejudice to such party's right to
terminate this Agreement pursuant to the preceding sentence.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Estate as follows:
4.1 Organization and Standing. Buyer is a corporation duly
formed, validly existing and in good standing under the laws of the State of
Florida, and as of the Closing Date, will be duly qualified to do business in,
and is in good standing in the State of California. Buyer has all necessary
corporate power and authority to own, lease and operate the Station Assets and
to hold the Station Licenses and to carry on the business of the Station as
proposed to be conducted by Buyer after the Closing Date.
4.2 Authorization and Binding Obligation. Buyer has all
necessary corporate power and authority to enter into and perform its
obligations under this Agreement and the transactions contemplated hereby, and
Buyer's execution, delivery and performance of this Agreement have been duly and
validly authorized by all necessary corporate action on its part. This Agreement
has been duly executed and delivered by Buyer and constitutes its valid and
binding obligations, enforceable against it in accordance with its terms, except
as limited by laws affecting the enforcement of creditors' rights generally or
equitable principles.
4.3 FCC Qualifications. Except as provided in Schedule 4.3, to
the best of Buyer's knowledge, there are no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations of
the FCC, would disqualify Buyer from becoming the assignee of the Station
Licenses or from consummating the transactions contemplated herein within the
times contemplated herein or therein. Buyer is financially qualified (as defined
by the FCC) and in all other respects to consummate the transactions
contemplated hereby.
4.4 Absence of Conflicting Agreements or Required Consents.
Except as set forth in Article 3 with respect to consents and approvals, the
execution, delivery and performance of this Agreement by Buyer: (a) do not
require the consent of any third party; (b) will not violate any provision of
Buyer's articles or bylaws; (c) will not violate any applicable law, judgment,
order, injunction, decree, rule, regulation or ruling of any governmental
authority to which Buyer is a party or is bound; and (d) will not, either alone
or with the giving of notice or the passage of time, or both, conflict with,
constitute grounds for termination of or result in a breach of the terms,
conditions or provisions of, or constitute a default under or accelerate or
permit the acceleration of any performance required by the terms of any
agreement, instrument, license or permit to which Buyer is now subject such that
Buyer could not acquire or operate the Station Assets.
4.5 Litigation. There is no claim, litigation, proceeding or
investigation pending or, to the best of Buyer's knowledge, threatened, which
seeks to enjoin or prohibit, or otherwise questions the validity of, any action
taken or to be taken by Buyer in connection with this Agreement.
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4.6 Financial Information. Buyer has delivered to Trustee a
copy of the 1996 Annual Report of Paxson Communications Corporation ("PCC"), of
which Buyer is an indirect, wholly owned subsidiary. The financial statements
included in such annual report have been prepared in accordance with United
States generally accepted accounting principles consistently applied and fairly
present the financial condition of PCC as of December 31, 1996, and for the
twelve-month period then ended.
4.7 Full Disclosure. No representation or warranty made by
Buyer in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TRUSTEE
Trustee represents and warrants to Buyer as follows:
5.1 Governmental Authorization. Schedule 5.1 contains a true
and complete list of the Station Licenses issued by the FCC or, to Trustee's
Knowledge, any other governmental authority, and, to Trustee's Knowledge there
are no other licenses, permits or other authorizations from governmental or
regulatory authorities required for the lawful conduct of the business and
operations of the Station in the manner and to the full extent it is now
conducted. Trustee has delivered or made available to Buyer true and complete
copies of the Station Licenses listed on Schedule 5.1, including any and all
amendments and other modifications thereto. Except as set forth on Schedule 5.1,
since the Appointment Date the Station has been operated in all material
respects in accordance with the terms and conditions of the Station Licenses and
the rules and regulations of the FCC. All ownership reports, renewal
applications and other reports and documents required to be filed with the FCC
after the Appointment Date by or on behalf of the Estate with respect to the
Station have been timely filed with the FCC, and all such reports, applications
and other documents are true and complete. The Estate maintains an appropriate
public inspection file at the Station in accordance with FCC rules. The Station
Licenses have been validly issued, and the Trustee is the authorized legal
holder thereof. None of the Station Licenses is subject to any restriction or
condition that would limit the full operation of the Station as now operated.
The Station Licenses are in full force and effect, and the conduct of the
business and operations of the Station is in accordance therewith. Trustee has
not received any notice from the FCC or any other granting authority that there
is a problem with respect to renewal of any Station License by the FCC in the
ordinary course. Schedule 5.1 lists all elections of must carry made on or
before December 31, 1996, by Trustee with respect to each cable system located
within the Station's Area of Dominant Influence, and except as disclosed on
Schedule 5.1, no cable system has advised Trustee of any signal quality or
copyright indemnity or other prerequisite to cable carriage of the Station's
signal, and no cable system has declined or threatened to decline such carriage
or failed to respond to a request for carriage or sought any form of relief from
carriage from the FCC.
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5.2 Personal Property. Schedule 5.2 lists all the Personal
Property which has an individual value of $500 or more.
5.3 Intellectual Property. Schedule 5.3 contains a true and
complete list and description of the Intellectual Property. The Intellectual
Property is either owned or validly licensed by the Estate and Schedule 5.3
identifies which Intellectual Property is so owned and which is so licensed.
Schedule 5.3 lists all of the Intellectual Property which have been duly
registered with, filed in or issued by, as the case may be, the United States
Patent and Trademark Office and United States Copyright Office or other filing
offices, domestic or foreign. Trustee has delivered to Buyer copies of all
documents establishing or evidencing all Intellectual Property. The Estate is
not infringing upon or otherwise acting adversely to any trademarks, trade
names, service marks, service names, copyrights, know-how, methods, or other
intellectual property owned by any other persons or persons.
5.4 Compliance with Laws.
(a) Since the Appointment Date, the Estate has operated
and is operating in material compliance with all laws, regulations and
governmental orders applicable to the conduct of the business and operations of
the Station, and its use of the Station Assets does not violate any such laws,
regulations or orders in any material respect. Except as set forth in Schedule
5.4, the Trustee has not received any notice asserting any noncompliance with
any applicable statute, rule or regulation in connection with the business or
operations of the Station.
(b) Since the Appointment Date (i) the Station is not
causing interference in violation of FCC rules to the transmission of any other
broadcast station or communications facility and has not received any complaints
with respect thereto and (ii) no other broadcast station or communications
facility is causing interference in violation of FCC rules to the Station's
transmissions or the public's reception of such transmissions.
5.5 Operating Statements. Schedule 5.5 contains true and
complete copies of the Operating Statements. The Operating Statements set forth
on Schedule 5.5 and the Operating Statements delivered to Buyer pursuant to
Section 6.1 hereof have been and will be prepared in accordance with the
requirements of the Office of the United States Trustee for the Central District
of California. The Operating Statements accurately reflect and fairly present
the financial condition and the results of the operations and cash flows of the
Station for the periods indicated.
5.6 Absence of Changes or Events. Except as disclosed in
Schedule 5.6, since the Appointment Date, the operations and business of the
Station have been conducted in all material respects only in the Ordinary Course
and the Estate has not, except in the Ordinary Course, purchased, sold, assigned
or transferred any of the Station Assets.
5.7 Insurance. The business, properties (including the Station
Assets) and employees of the Station are insured against loss, damage or injury
in amounts listed in Schedule 5.7, which shows all insurance policies held by
the Estate relating to such business, properties and employees, together with
the policy limits, type of coverage, location of the
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property covered, annual premium, premium payment dates and expiration date of
each of the policies. Copies of all such insurance policies have been furnished
or made available to Buyer. All such insurance policies are in full force and
effect.
5.8 Title to and Condition of Real Property. Schedule 5.8
contains a complete and accurate description of all real property used by the
Estate in the operation of the Station, including, specifically, the studio
facilities and the transmitter site, and the Estate's interests therein
(including street address, legal description, owner, and sue and the location of
all improvements thereon). All towers, guy anchors, and buildings and other
improvements included in the Station Assets are located entirely on the real
property listed in Schedule 5.8.
5.9 Personnel and Employee Benefits. Schedule 5.9 contains a
true and complete list of all employees of the Station, their job titles, and
date of hire, and Trustee has delivered to Buyer a schedule of the current
salary and, to Trustee's Knowledge, date and amount of last salary increase of
each such employee.
5.10 Environmental Matters. Except as disclosed in Schedule
5.10 hereto, (i) the Estate's operations with respect to the Station comply in
all material respects with all applicable Environmental Laws; (ii) the Estate
has not used the Real Property for the manufacture, transportation, treatment,
storage or disposal of Hazardous Substances; and (iii) the use of the real
property used in connection with the operation of the Station complies in all
material respects with all applicable Environmental Laws. Except as described in
Schedule 5.10 hereto, no surface impoundments or underground storage tanks are
located on such real property. For purposes of the foregoing, "ENVIRONMENTAL
LAW" means any law pertaining to land use, air, soil, surface water, groundwater
(including the protection, cleanup, removal, remediation or damage thereof), or
any other environmental matter, including, without limitation, the following
laws as the same may be amended from time to time: (a) Clean Air Act (42 U.S.C.
Section 7401, et seq.); (b) Clean Water Act (33 U.S.C. Section 1251, et seq.);
(c) Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.);
(d) Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601, et seq.); (e) Safe Drinking Water Act (42 U.S.C. 300f, et
seq.); and (f) Toxic Substances Control Act (15 U.S.C. Section 2601, et seq.),
and "HAZARDOUS SUBSTANCE" means any pollutant, contaminant, hazardous or toxic
substance, material constituent or waste or any pollutant that is labeled or
regulated as such by any governmental authority pursuant to an Environmental
Law.
5.11 Material Contracts. To Trustee's Knowledge Schedule 5.11
sets forth a list of all material executory Contracts in which the Estate has an
interest.
5.12 Governmental Consents. Schedule 5.12 sets forth a list of
all consents, approvals and waivers, other than those described in Sections 3.1
and 3.2, required in order to transfer the Station Assets to Buyer.
5.13 Full Disclosure. No representation or warranty made by
Trustee in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Trustee pursuant hereto contains or will contain
any untrue statement of a material fact,
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or omits or will omit to state any material fact required to make any statement
made herein or therein not misleading.
ARTICLE 6
COVENANTS OF TRUSTEE
6.1 Interim Operation. Between the date of this Agreement and
the Closing Date, except as expressly permitted by this Agreement or with the
prior written consent of Buyer:
(a) Trustee shall operate the business of the Station in
the Ordinary Course, and Trustee shall take no action which could adversely
effect the ongoing operations and assets of the Station;
(b) Trustee shall not sell, assign, lease or otherwise
transfer or dispose of any of the Station Assets, unless the same shall be
replaced with assets of equal or greater value and utility, if replacement is
necessary to the operation of the Station in the Ordinary Course;
(c) Trustee shall operate the Station in all material
respects in accordance with the FCC's rules and regulations and the Station
Licenses and with all other laws, regulations, rules and orders; and shall not
fail to prosecute with due diligence any pending application to the FCC, and
shall not cause or permit by any act, or failure to act, any of the Station
Licenses to expire, be surrendered, adversely modified, or otherwise terminated,
or the FCC to institute any proceeding for the suspension, revocation or
material adverse modification of any of the Station Licenses;
(d) Trustee shall maintain the insurance policies on the
Station and the Station Assets listed in Schedule 5.7 or their equivalent;
(e) If the broadcast transmissions of the Station from its
main broadcast antenna at full authorized power is interrupted or impaired,
Trustee shall use his reasonable best efforts to restore transmissions at full
authorized power as soon as reasonably possible;
(f) From and after the date of the Approval Order, neither
Trustee nor the Estate will enter into any contract or commitment relating to
the Station or the Station Assets (except time sales agreements in the Ordinary
Course), or amend or terminate any Assumed Contract (or waive any material right
thereunder) without the prior written consent of Buyer.
6.2 Access to Station and Operating Statements. Between the
date of this Agreement and the Closing Date, Trustee shall give Buyer and
Buyer's counsel, accountants, lenders, engineers and other representatives,
reasonable access during normal business hours to all of the Estate's
properties, records and employees relating in any material respect to the
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Station and the Station Assets, including the data underlying the Operating
Statements, and shall furnish Buyer with all information that Buyer reasonably
requests concerning the Station including, without limitation, copies of all
Operating Statements within 25 days of the end of each calendar month occurring
prior to the Closing Date. The rights of Buyer under this Section shall not be
exercised in such a manner as to interfere unreasonably with the business of the
Station and shall be exercised solely for the purpose of (i) verifying the
accuracy of the Trustee's representations and warranties set forth in Article 5,
(ii) verifying Trustee's compliance with Section 6.1, (iii) obtaining financing
with respect to its acquisition of the Station, or (iv) preparing for Closing
and its operation of the Station thereafter.
6.3 Notification. At all times prior to the Closing, Trustee
shall promptly notify Buyer in writing of any fact, condition, event or
occurrence that will or could reasonably be expected to result in the failure of
any representation or warranty of Trustee made in this Agreement to be true and
complete in all material respects, promptly upon becoming aware of the same.
6.4 No Inconsistent Action. Trustee shall not take any action
which is inconsistent with its obligations under this Agreement or that would
hinder or delay the consummation of the transactions contemplated by this
Agreement. Between the date of this Agreement and the Hearing on the Sale
Procedure Motion, Trustee will not seek to enter into and present to the
Bankruptcy Court an agreement with another purchaser for the purchase and sale
of the assets contemplated by this Agreement; provided, however, that at all
times Trustee may solicit additional prospective purchasers to bid at the
Hearing on the Approval Order.
ARTICLE 7
ADDITIONAL COVENANTS
Buyer and Trustee covenant and agree that for the applicable
periods set forth below, they shall act in accordance with the following:
7.1 Reasonable Best Efforts. Prior to the Closing, each party
shall use its reasonable best efforts to cause the fulfillment at the earliest
practicable date of all of the conditions to the obligations of the other party
to consummate the sale and purchase under this Agreement.
7.2 Control of Station. Prior to the Closing, Buyer shall not,
directly or indirectly, control, supervise or direct the operations of the
Station. Such operations shall be the sole responsibility of Trustee and,
subject to the provisions of Article 6, shall be in Trustee's complete
discretion.
7.3 Certain Employees. Buyer shall assume and be liable for
all severance and vacation obligations of the Estate ("Employee Costs") to all
persons currently employed by the Station whom Buyer hires on the Closing Date,
with Trustee reimbursing Buyer as a
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proration under Section 2.10 for the amount of such Employee Costs assumed by
Buyer at Closing.
7.4 Renewal of Assumed Contracts. Prior to the Closing,
Trustee shall use its reasonable best efforts to renew any Assumed Contract
which by its terms expires or terminates between the date of this Agreement and
the Closing Date, provided that any such renewal shall be on terms and
conditions reasonably satisfactory to Buyer. The list of Assumed Contracts
delivered by Buyer pursuant to Section 2.4 shall be amended to reflect such
renewal.
7.5 Post-Closing Covenants. For a period of three years after
the Closing Date, each party agrees to make available to the other party after
Closing, upon request, any records, files, documents and correspondence of the
Station or the Station Assets that are reasonably determined by such party to be
necessary or appropriate in connection with the filing of any report with a
governmental agency or the prosecution or defense of any claim, legal action,
counterclaim, suit, arbitration, governmental investigation, or other legal,
administrative, or tax proceeding, to which the requesting party is a party. The
requesting party shall reimburse the other party for any expenses incurred
pursuant to this Section 7.5, including reimbursement for the time of any of
such party's employees, including any employees of the Station. Each party shall
exercise its rights under this Section 7.5 so as not to unreasonably interfere
with or disrupt the operations of the other party.
7.6 Approval Order. The purchase and sale of the Station
Assets pursuant to this Agreement are subject to the receipt of the Approval
Order. As expeditiously as practicable following the execution of this
Agreement, but in no event later than ten (10) business days after such
execution, the Trustee shall file with the Court the Sale Procedure Motion,
setting forth, among other things, the terms and conditions of this Agreement.
Trustee shall use its best efforts to obtain as expeditiously as possible the
Court's approval of the Sale Procedure Motion and the entry of the Approval
Order. Trustee shall comply with all requirements imposed by the Code and the
Bankruptcy Court in connection with the approval of the Sale Procedure Motion
and the entry of the Approval Order, including, without limitation, providing
appropriate notice of the transactions contemplated by this Agreement to all
known creditors of the Estate (with affidavits of service of such notice being
provided to Buyer). Trustee shall oppose any objections to the issuance of the
Approval Order and any requests for reconsideration or review of the Approval
Order. Trustee shall promptly provide Buyer with a copy of the docket in the
Bankruptcy Proceeding, and Trustee shall promptly provide Buyer with copies, at
Buyer's expense, of any documents on the docket which Buyer may from time to
time specify. Trustee will place Buyer's name and address on the Special Notice
List in the Bankruptcy Proceeding.
7.7 Governmental Consents. Promptly following the execution of
this Agreement, the parties shall prepare and file with the appropriate
governmental authorities any requests for approval or waiver not referred to in
Sections 3.1 and 3.2 that are required from such governmental authorities in
connection with the transactions contemplated hereby and shall diligently and
expeditiously prosecute, and shall cooperate fully with each other in the
prosecution of, such requests for approval or waiver and all proceedings
necessary to secure such approvals and waivers.
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ARTICLE 8
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer at the Closing are subject to
satisfaction of each of the following conditions:
8.1 Representations, Warranties and Covenants.
(a) All representations and warranties of Trustee
made in this Agreement shall be true and complete in all material respects on
and as of the Closing Date as if made on and as of that date.
(b) All of the covenants to be complied with and
performed by Trustee on or prior to Closing Date shall have been complied
with or performed in all material respects.
8.2 Court Approval. The Bankruptcy Court shall have entered
the Approval Order, in form and substance reasonably satisfactory to Buyer and
its counsel, approving the sale of the Station Assets to Buyer. The Approval
Order shall include the following provisions:
8.2.1 Title. The Station Assets shall be sold and conveyed
to Buyer free and clear of all debts, liens, claims, financing leases,
mortgages, security interests, pledges, conditions, charges, encumbrances or
liabilities of any kind or nature except for Assumed Liabilities and liens for
current taxes not yet due and payable pursuant to Section 363 of the Code.
Unless reflected in a document executed by Buyer, Buyer shall not assume or be
liable for (a) any programming contract or other contract, agreement or lease
not expressly assumed by Buyer hereunder, (b) any obligation of Seller arising
out of any contract of insurance, any pension, retirement or profit sharing
plan, or any trust or other benefit plan; (c) any litigation, proceeding, or
claim relating to the business or operation of the Station prior to the Closing,
regardless of whether such litigation, proceeding, or claim is pending,
threatened, or asserted before, on, or after the Closing; or (d) any obligation
(including but not limited to wages, salaries, vacation pay, payroll taxes,
COBRA coverage or severance payments) to or for persons employed by Trustee or
the Station.
8.2.2 Taxes. Buyer shall have no liability for any claims,
obligations or liabilities for taxes, interest and penalties attributable to the
Estate's ownership or operation of the Station or the Estate's ownership or
holding of the Station Assets prior to the Closing Date.
8.2.3 Assumed Contracts. The Assumed Contracts shall be
assigned to and assumed by Buyer pursuant to Section 365 of the Code. As to each
of the Assumed Contracts, the Bankruptcy Court will have entered findings of
fact that Trustee has provided for the prompt cure of all defaults, the prompt
compensation for any actual pecuniary loss resulting from any such defaults and
has provided adequate assurance of future performance
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on the part of Buyer, and the Bankruptcy Court will have entered conclusions of
law that, as of the Closing, all such Assumed Contracts shall be valid, binding,
and enforceable by Buyer in accordance with their respective terms, and the
estate is discharged of any further liability thereunder. Notwithstanding the
foregoing, Buyer's assumption of the Station Lease shall be subject to Section
2.6 of this Agreement.
8.2.4 Successor Liability. Buyer will not be deemed to (a)
be the successor of Riklis Broadcasting Corporation, a/k/a KADY-TV, a/k/a
Pacific Rim Video (the "Debtor") or of the Estate, (b) have de facto or
otherwise merged with or into the Debtor or the Estate or (c) be a continuation
or substantial continuation of the Debtor or the Estate.
8.2.5 Employees. Buyer will have no liabilities (1) for
any taxes or Payments or penalties which have not been paid or made for
employment or persons by Station, (2) for any claims of discrimination or
wrongful termination or hiring, including, without limitation, violations of
federal or state law relating to civil rights, regulations of the United States
Equal Employment Opportunity Commission, or the Americans With Disabilities Act
of 1990, (3) for any claims for severance (recognizing that Buyer has no
obligation to employ any of Station's employees), and (4) for any other claims
by employees of the Station relating to or arising from their employment (or
severance therefrom).
8.2.6 Good Faith Purchaser. The Approval Order shall
provide that the Buyer shall be accorded protection as a "good faith" purchaser
within the meaning of Section 363(m) of the Code.
8.3 FCC Order. The FCC Order shall have been obtained and
shall contain no condition that has or will have a Material Adverse Effect or a
material adverse effect on the business or operations of Buyer.
8.4 Governmental Consents. The governmental approvals and
waivers specified in Section 5.12 shall have been obtained.
8.5 Adverse Proceedings. No action, suit, proceeding,
litigation or investigation shall be pending or threatened by any governmental
authority which questions the validity or legality of this Agreement or any
action taken or to be taken in connection herewith or the consummation of the
transactions contemplated hereby. No injunction or other order issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated by this Agreement shall be in effect.
8.6 Deliveries. Trustee shall have made all the deliveries set
forth in Section 10.1.
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ARTICLE 9
CONDITIONS PRECEDENT TO TRUSTEE'S OBLIGATION TO CLOSE
The obligations of Trustee at the Closing are subject to
satisfaction of each of the following conditions:
9.1 Representations, Warranties and Covenants.
(a) All representations and warranties of Buyer in Article
5 hereof shall be true and complete in all material respects on and as of the
Closing Date as if made on and as of that date.
(b) All the covenants to be complied with and performed by
Buyer on or prior to the Closing Date shall have been complied with or performed
in all material respects.
9.2 Court Approval. The Bankruptcy Court shall have entered
the Approval Order.
9.3 FCC Consent. The FCC Consent shall have been obtained.
9.4 Governmental Consents. The governmental approvals and
waivers specified in Section 5.12 shall have been obtained.
9.5 Paxson Guarantee. The guarantee of PCC delivered under
Section 2.12 will be in full force and effect, and PCC will have made no attempt
to limit or revoke the guarantee.
9.6 Adverse Proceedings. No action, suit, proceeding,
litigation or investigation shall be pending or threatened by any governmental
authority which questions the validity or legality of this Agreement or any
action taken or to be taken in connection herewith or the consummation of the
transactions contemplated hereby. No injunction or other order issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated by this Agreement shall be in effect.
9.7 Deliveries. Buyer shall have made all the deliveries set
forth in Section 10.2.
ARTICLE 10
DOCUMENTS TO BE DELIVERED AT THE CLOSING
10.1 Documents to be Delivered by Trustee. At the Closing,
Trustee shall deliver or cause to be delivered to Buyer the following:
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(a) instruments of conveyance and transfer, in form and
substance reasonably satisfactory to counsel to Buyer, effecting the sale,
assignment, transfer and conveyance of the Station Assets to Buyer, including,
but not limited to, the following:
(i) assignments of the Station Licenses;
(ii) bills of sale for all Personal Property;
(iii) assignment of the Intellectual Property set
forth on Schedule 5.3;
(iv) assignments of the Assumed Contracts;
(v) assignments of all intangible personal property
of the Estate including all books, records, logs and similar assets which do not
constitute Excluded Assets;
(b) a certificate, dated as of the Closing Date, executed
by Trustee, certifying his fulfillment of the closing condition set forth in
Section 8.1;
(c) opinions of counsel to Trustee, dated the Closing
Date, in form and substance reasonably satisfactory to Buyer;
(d) a certified copy of the Approval Order; and
(e) such other documents as may reasonably be requested by
Buyer's counsel.
10.2 Documents to be Delivered by Buyer. At the Closing, Buyer
shall deliver or cause to be delivered to Trustee the following:
(a) immediately available wire-transferred funds as
provided in Section 2.9;
(b) instruments, in form and substance reasonably
satisfactory to counsel to Trustee, pursuant to which Buyer assumes the Assumed
Contracts and the Assumed Liabilities;
(c) the guarantee of PCC required by Section 2.12;
(d) a certificate, dated as of the Closing Date, executed
by an officer of Buyer, certifying Buyer's fulfillment of the closing condition
set forth in Section 9.1;
(e) opinion of counsel to Buyer, dated the Closing Date,
in form and substance reasonably satisfactory to Trustee;
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(f) certified resolutions of the board of directors of
Buyer, authorizing the execution, delivery and performance of this Agreement;
and
(g) such other documents as may be reasonably requested by
Trustee's counsel.
ARTICLE 11
TAXES; FEES AND EXPENSES
11.1 Transfer Taxes and Similar Charges. Buyer shall pay all
recordation, transfer, sales and documentary taxes and fees in respect of
transferring the Station Assets in accordance with this Agreement.
11.2 Expenses. Except as set forth in Section 12.1, each party
hereto shall be solely responsible for all costs and expenses incurred by it in
connection with the negotiation, preparation and performance of and compliance
with the terms of this Agreement.
11.3 Personal Property Taxes. All personal property taxes owed
or prepaid by the Trustee for real or personal property included in the Station
Assets shall be prorated pursuant to Section 2.10.
ARTICLE 12
BROKER'S COMMISSION OR FINDER'S FEE
12.1 Buyer's Representation and Agreement to Indemnify. Buyer
represents and warrants to Trustee that neither it nor any person or entity
acting on its behalf has agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity, nor has it or any person or entity acting on its behalf taken
any action on which a claim for any such payment could be based. Buyer further
agrees to indemnify and hold Trustee and the Estate harmless from and against
any and all claims, losses, liabilities and expenses (including reasonable
attorney's fees) arising out of a claim by any person or entity based on any
such arrangement or agreement made or alleged to have been made by Buyer.
12.2 Trustee's Representation and Estate's Agreement to
Indemnify. Trustee represents and warrants to Buyer that, except for the
agreement with Broker, neither he nor any person or entity acting on its behalf
has agreed to pay a commission, finder's fee or similar payment in connection
with this Agreement or any matter related hereto to any person or entity, nor
has he or any person or entity acting on his behalf taken any action on which a
claim for any such payment could be based. Any commission, fee or payment due
Broker in connection with the transactions contemplated by this Agreement shall
be paid by
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the Estate. Trustee on behalf of the Estate agrees that the Estate shall
indemnify and hold Buyer harmless from and against any and all claims, losses,
liabilities and expenses (including reasonable attorneys' fees) arising out of a
claim by any person or entity based on any such arrangement or agreement made or
alleged to have been made by the Estate.
ARTICLE 13
INDEMNIFICATION
13.1 Indemnification by Buyer. Buyer agrees to indemnify and
hold harmless Trustee and the Estate, their Affiliates and the officers,
directors, employees, agents, advisers and representatives of each such Person
(the "Estate Indemnitees") from and against, and pay or reimburse the Estate
Indemnitees for, any and all claims, liabilities, obligations, losses, fines,
costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in connection with the investigation or defense
thereof or in asserting any of their respective rights hereunder resulting from
or arising out of:
(a) any inaccuracy in any representation or warranty made
by Buyer herein or in any certificate, document or instrument delivered to the
Estate hereunder;
(b) any failure of Buyer to perform any covenant or
agreement hereunder or fulfill any other obligation in respect hereof;
(c) any Assumed Liability; and
(d) the ownership of the Station Assets or the operation
of the Station subsequent to the Closing.
13.2 Indemnification by the Estate. Notwithstanding the
Closing, the Estate shall indemnify and hold harmless Buyer, its Affiliates and
the officers, directors, employees, agents, advisers and representatives of each
such Person (the "Buyer Indemnitees") from and against, and pay or reimburse
each Buyer Indemnitee for, any and all claims, liabilities, obligations, losses,
fines, costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or nor resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in connection with the investigation or defense
thereof or in asserting any of their respective rights hereunder resulting from
or arising out of:
(a) any inaccuracy in any representation or warranty made
by Trustee herein or in any certificate, document or instrument delivered to
Buyer hereunder;
(b) any failure of the Trustee or the Estate to perform
any covenant or agreement hereunder or fulfill any other obligation in respect
hereof;
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(c) any liabilities arising under the Station Licenses or
the Assumed Contracts which relate to events occurring prior to the Closing
Date; and
(d) the ownership of the Station Assets or the operation
of the Station prior to the Closing.
13.3 Survival; Limitations. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the Closing for a period of six (6) months. Any
amounts remaining in the Indemnification Fund at the end of such six month
period, and not held in reserve for a claim made prior to the expiration of such
period, shall be retained by the Trustee as part of the Purchase Price free of
any further claims by Buyer.
13.4 Indemnification Fund; Procedure for Indemnification. An
aggregate of $500,000, consisting of the Deposit and $150,000 of the Purchase
Price paid to Trustee by Buyer at Closing pursuant to Section 2.9, plus all
interest earned thereon (the "Indemnification Fund") shall be held by the
Trustee and applied to pay Buyer's claims for indemnification under this Section
13 in accordance with the terms of this Section 13. The Indemnification Fund
shall be placed by the Trustee in an interest bearing account and segregated
from all other funds held by the Trustee. The indemnification fund will be
disbursed in accordance with this Section 13, Section 14.2 and Section 15. The
procedure of indemnification shall be as set forth in this Section 13. Buyer's
remedy hereunder for claims against Trustee or the Estate under this Agreement
shall be solely recoverable from the Indemnification Fund, except as approved by
the Bankruptcy Court for claims for which the only recourse is against the
Estate.
13.5 Procedures for Indemnification.
(a) The party claiming indemnification (the "Claimant")
shall promptly give written notice of the claim to the party from whom
indemnification is claimed (the "Indemnifying Party"), whether involving a claim
between the parties or brought by a third party, specifying (i) in reasonable
detail the factual basis for the claim, and (ii) the amount of the
Indemnification Fund to be reserved against the claim (if Buyer is the
Claimant). If the claim relates to an action, suit or proceeding filed by a
third party against the Claimant, such notice shall be given by the Claimant
within ten days after written notice of such action, suit, or proceeding was
given to the Claimant. Following receipt of notice from the Claimant of a claim,
the Indemnifying Party shall have thirty days to make such investigation of the
claim as the Indemnifying Party deems necessary or desirable. For the purposes
of such investigation, the Claimant agrees to make available to the Indemnifying
Party and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If Buyer and Trustee agree at or prior to
the expiration of the thirty-day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, Trustee shall immediately
disburse to Buyer such portion of the Indemnification Fund as shall be necessary
to reimburse Buyer for such claim, if Buyer is the Claimant, or Buyer shall
reimburse the Estate for such claim, if the Estate is the Claimant. If the
Claimant and the Indemnifying Party do not agree within the thirty-day period
(or any
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mutually agreed upon extension thereof), the Claimant may seek from the Court an
appropriate remedy at law or inequity.
(b) 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.
(c) 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.
(d) The indemnifications rights provided in this Section shall
extend to the shareholders, directors, officers, employees, and representatives
of any Claimant, although for the purpose of the procedures set forth in this
Section 13.5, any indemnification claims by such parties shall be made by and
through the Claimant.
13.6 Attorneys' Fees. In the event of a default by either
party which results in a lawsuit or other proceeding for any remedy available
under this Agreement, the prevailing party shall be entitled to reimbursement
from the other party of its reasonable legal fees and expenses.
13.7 Administrative Expense. In the event that Buyer makes a
claim against the Estate pursuant to this Section 13, Trustee acknowledges and
agrees that such a claim shall constitute an administrative expense under
Section 503 of the Bankruptcy Code.
ARTICLE 14
TERMINATION RIGHTS
14.1 Termination. This Agreement may be terminated by Buyer or
Trustee as set forth below, upon written notice to the other upon the occurrence
of any of the following, provided that the party seeking to terminate is not in
material default or breach of this Agreement:
(a) by either Buyer or Trustee:
(i) if the Closing has not occurred within one year
of the date of the Approval Order.
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(ii) if the Bankruptcy Court fails to issue the
Approval Order in favor of Buyer as provided in Section 3.1 within 6 months of
the date of this Agreement;
(iii) if the FCC denies the FCC Application or any
part thereof or designates any part of it for a trial-type hearing or if either
party elects to terminate this Agreement pursuant to Section 3.2; or
(iv) if there shall be in effect any final judgment,
final decree or order that would prevent or make unlawful the Closing.
(b) by Buyer:
(i) pursuant to Section 16.2;
(ii) if the regular broadcast transmission of the
Station from its main broadcasting antenna at full authorized effective radiated
power is interrupted for a period of more than 5 consecutive days in any 30 day
period;
(iii) if any material representation or warranty of
Trustee made in Article 5 is untrue or incomplete in any respect and such breach
is not cured within 10 Business Days of Trustee's receipt of written notice from
Buyer that such breach exists or has occurred;
(iv) if Trustee defaults in the performance of any
material covenant or agreement hereunder, including, without limitation, its
obligation to close under this Agreement, and such breach is not cured within 10
Business Days of Trustee's receipt of written notice from Buyer that such
default exists or has occurred;
(v) if any other condition contained in Article 8
has not been performed or satisfied; or
(vi) if the final contents of the Sale Procedure
Motion approved by the Bankruptcy Court varies from the contents of the form of
the Sale Procedure Motion attached hereto and such variation has a material
adverse effect on the interests of Buyer.
(c) by Trustee:
(i) if any material representation or warranty of
Buyer made herein or in any certificate, document or instrument delivered by
Buyer hereunder is untrue or incomplete in any respect and such breach is not
cured within 10 Business Days of Buyer's receipt of written notice from Trustee
that such breach exists or has occurred;
(ii) if Buyer defaults in the performance of any
material covenant or agreement hereunder, including, without limitation, its
obligation to close under this Agreement, and such breach is not cured within 10
Business Days, or in the case of
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payment of the Purchase Price one Business Day, of Buyer's receipt of written
notice from Trustee that such default exists or has occurred; or
(iii) if any other condition contained in Article 9
has not been performed or satisfied.
14.2 Liability. In the event of the termination of this
Agreement under Section 14.1, this Agreement shall become void and have no
effect, without any liability to any Person in respect hereof, except that the
provisions of Section 11.2, Article 12, Article 13, Article 15, Sections 16.6,
16.7 and 16.8 and the Confidentiality Agreement shall survive any such
termination. In the event of the termination of this Agreement by Buyer pursuant
to Section 14.1(b) or by Buyer or Trustee pursuant to Section 14.1(a), then
Trustee shall return the Deposit, with accrued interest, to Buyer promptly
following the date of such termination. In the event of any other termination of
this Agreement the Deposit (and accrued interest) shall be non refundable and be
retained by Trustee. The retention of the Deposit by Trustee shall be without
prejudice to Trustee's right to seek any and all other remedies available at
law, including without limitation, a suit for monetary damages, except that the
Deposit (and accrued interest) shall be credited against the amount of any
damages recoverable by Trustee or the Estate from Buyer.
ARTICLE 15
REMEDIES UPON DEFAULT
15.1 Buyer's Remedies. If the transactions contemplated by
this Agreement are not consummated due to the default of Trustee and Buyer shall
not be in material breach or default hereunder, Buyer shall be entitled to (i)
elect to terminate this Agreement under Section 14.1, (ii) recover the Deposit,
with accrued interest, pursuant to Section 14.2, and (iii) seek any remedies at
law or in equity that it may have against the Estate arising from such default
by Trustee, including without limitation, the right to bring a suit for monetary
damages; provided, however, that monetary damages shall be limited to actual
damages and shall be recoverable only against the Estate; and provided, further,
that Buyer may seek specific performance only to require Trustee to consummate
the transaction contemplated by this Agreement if every condition precedent has
been satisfied, but Buyer may not require Trustee to incur any material expenses
or liabilities to satisfy any condition precedent.
15.2 Trustee's Remedies. If the transactions contemplated by
this Agreement are not consummated due to the default of Buyer and Trustee shall
not be in material breach or default hereunder and Trustee shall, on behalf of
the Estate, be entitled to seek any and all remedies available at law, including
without limitation, a suit for monetary damages, except that the Deposit (and
accrued interest) shall be credited against the amount of any damages
recoverable by Trustee or the Estate from Buyer.
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ARTICLE 16
OTHER PROVISIONS
16.1 Disclaimer of Representations and Warranties; Trustee's
Knowledge; As Is.
(a) Trustee is a trustee in bankruptcy and makes no title
warranties as to the Station Assets, but conveys only such right, title, and
interest as is conveyed by the Approval Order.
(b) Other than as expressly set forth in Article 5 hereof
or the Schedules, Trustee does not make, and has not made, any representations
or warranties, express or implied, relating to the Estate, the Station, the
Station Assets, the business or operations of the Station or otherwise in
connection with the transactions contemplated by this Agreement. Trustee
expressly disclaims all other warranties including, but not limited to the
warranties of merchantability and fitness for a particular purpose. Without
limiting the generality of the foregoing, Trustee has not made, and shall not be
deemed to have made, any representations or warranties in any information which
is made available to Buyer or its representatives by or on behalf of Trustee
(including, without limitation, any Confidential Offering Memorandum) prior to
the date hereof in any presentation in connection with the transactions
contemplated hereby (collectively, the "Information"). It is understood that any
revenue or cost estimates, projections or other predictions, any data, any
financial information or any memoranda or offering materials or presentations
included in the Information, are not and shall not be deemed to be or to include
representations or warranties of Trustee except to the extent that such
information is included in the Schedules. No person has been authorized by
Trustee to make any representation or warranty relating to the Estate, the
Station, the Station Assets, the business or operations of the Station or
otherwise in connection with the transactions contemplated by this Agreement and
if made, such representation or warranty must not be relied upon as having been
authorized by Trustee.
(c) Notwithstanding anything to the contrary contained in
this Agreement or in any of the Schedules, any information disclosed in one
Schedule shall be deemed to be disclosed in all Schedules.
16.2 Risk of Loss. The risk of loss or damage to any of the
Personal Property or improvements on Real Property comprising part of the
Station Assets prior to the Closing shall be upon the Estate. The Estate shall
repair, replace and restore to its prior condition any material damage to or
loss of such Personal Property as soon as possible. If the Estate is unable or
fails to restore or replace a lost or damaged material Personal Property prior
to the Closing, Buyer may elect (i) to terminate this Agreement, but only if the
failure to restore or replace a lost or damaged material Station Assets
continues for a period in excess of 60 days from the date that would be the
Closing Date without consideration of this Section 16.2, (ii) to consummate the
transactions contemplated by this Agreement on the Closing Date, in which event
Trustee shall assign to Buyer at Closing the Estate's rights under any insurance
policy or pay over to Buyer all proceeds of insurance covering such Personal
Property's damage, destruction or loss, or (iii) delay the Closing
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<PAGE> 35
Date until a date within 15 Business Days after Trustee gives written notice to
Buyer of completion of the restoration or replacement of such Station Assets. If
the delay in the Closing Date under this Section 16.2 would cause the Closing to
occur at any time after the period permitted by the FCC Consent, Trustee and
Buyer shall file an appropriate request with the FCC for an extension of time
within which to complete the Closing.
16.3 Benefit and Assignment. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Buyer may not assign this Agreement without the prior
written consent of Trustee except that Buyer may assign its rights and
obligations under this Agreement to one or more of its Affiliates designated by
Buyer in writing to Trustee prior to the Closing Date; provided, however, that
any such assignment shall not relieve Buyer from any of its obligations under
this Agreement and provided that any such assignment does not delay the Closing
Date.
16.4 Entire Agreement; Amendments. This Agreement, the
Confidentiality Agreement and the exhibits and schedules hereto and thereto
embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein or therein. No amendment, waiver of
compliance with any provision or condition hereof, or consent pursuant to this
Agreement shall be effective unless evidenced by an instrument in writing signed
by the party against whom enforcement of any amendment, waiver or consent is
sought.
16.5 Headings. The headings set forth in this Agreement are
for convenience only and will not control or affect the meaning or construction
of the provisions of this Agreement.
16.6 Choice of Law; Jurisdiction; Venue. The construction and
performance of this Agreement shall be governed by and construed in accordance
with the laws of the State of California without giving effect to principles of
conflicts of law. Each of the parties hereto hereby irrevocably and
unconditionally consents and submits to the exclusive jurisdiction of the
Bankruptcy Court (or if the Bankruptcy Court declines jurisdiction such other
federal or state courts as are located in the County of Ventura, State of
California) for any actions, suits or proceedings arising out of or relating to
this Agreement and the transactions contemplated hereby (and each of the parties
hereto agrees not to commence any action, suit or proceeding relating thereto
except in such courts), and each of the parties hereto further agrees that
service of any process, summons, notice or document pursuant to Section 16.8
below shall be effective service of process for any action, suit or proceeding
brought against such parties in any such courts. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in the foregoing courts, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such courts that any such action, suit or proceeding brought in any such courts
has been brought in an inconvenient forum.
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16.7 Attorneys' Fees. If any legal action is necessary to
enforce the terms and conditions of this Agreement, the prevailing party shall
be entitled to recover all costs of suit and reasonable attorneys' fees as
determined by a court of competent jurisdiction.
16.8 Notices. All notices, requests, demands, letters, waivers
and other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid, or
(c) sent by next-day or overnight mail or delivery as follows:
To the Trustee: John W. Hyde, Trustee
c/o Ann K. Jacobus, Esq.
Crossroads V Communications
1888 Century Park East, Suite 1777
Los Angeles, California 90067-1721
Copy to: Kelley Drye & Warren LLP
515 South Flower Street, Suite 1100
Los Angeles, California 90071
Attention: William H. Kiekhofer, Esq.
To Buyer: Paxson Communications of Los Angeles-63, Inc.
c/o Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson
Copy to: Dow Lohnes & Albertson, PLLC
1200 New Hampshire Avenue N.W., Suite 800
Washington, D.C. 20036-6802
Attention: John H. Pomeroy, Esq.
or to such other person or address as any party shall specify by notice in
writing to the party entitled to notice. All such notices, requests, demands,
letters, waivers and other communications shall be deemed to have been received
(w) if by personal delivery on the day after such delivery, (x) if by certified
or registered mail, on the fifth Business Day after the mailing thereof, or (y)
if by next-day or overnight mail or delivery, on the day delivered.
16.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
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16.10 Time of the Essence. Time is of the essence of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
By: /s/ John W. Hyde
--------------------------------------
John W. Hyde, Trustee
Paxson Communications
of Los Angeles-63, Inc.
By: /s/ James B. Bocock
--------------------------------------
Name: James B. Bocock
Title: PRESIDENT
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<PAGE> 38
WILLIAM H. KIEKHOFER, III, ESQ. (Bar No. 94022)
KATHERINE M. WINDLER, ESQ. (Bar No. 15889)
KELLEY DRYE & WARREN LLP
515 South Flower Street, Suite 1100
Los Angeles, California 90071-2213
(213) 689-1300
Attorneys for John Hyde, Chapter 11
Trustee of Riklis Broadcasting Corporation,
aka KADY-TV, aka Pacific Rim Video, and
Consolidated Entities HBC Holdings, Inc.
and KADE Broadcasting, Inc.
UNITED STATES BANKRUPTCY COURT
CENTRAL DISTRICT OF CALIFORNIA
In re: ) CASE NO. ND 96-11086
)
) CHAPTER 11
)
RIKLIS BROADCASTING ) [Memorandum Of Points And Authorities,
CORPORATION, aka KADY-TV, aka ) Declaration Of John W. Hyde In Support
PACIFIC RIM VIDEO, ) Thereof, Application for Order
) Shortening Time, Order Shortening Time
) filed concurrently herewith]
)
Debtor. ) [11 U.S.C. section 327]
)
) DATE:
) TIME:
) PLACE: Courtroom 104
) 222 East Carrillo Street
________________________________) Santa Barbara, CA 93101
NOTICE OF MOTION AND TRUSTEE'S MOTION (1) TO APPROVE OVERBID
PROCEDURES AND BREAKUP FEE FOR SALE OF DEBTOR'S BROADCAST
ASSETS AND STATION LICENSE AND TO SCHEDULE SALE HEARING, AND
(2) TO SHORTEN TIME ON THE TRUSTEE'S MOTION TO ASSUME AND
ASSIGN CONTRACTS TO OVERBIDDERS
TO THE HONORABLE ROBIN L. RIBLET, UNTIED STATES BANKRUPTCY JUDGE AND ALL
PARTNERS REQUESTING SPECIAL NOTICE, AND THE OFFICE OF THE UNITED STATES
TRUSTEE:
<PAGE> 39
PLEASE TAKE NOTICE that on the date set forth in the Court's Order
Shortening Time on this Motion, in Courtroom 104, 222 East Carrillo Street,
Santa Barbara, California, John W. Hyde, Chapter 11 Trustee (the "Trustee") of
Riklis Broadcasting Corporation, aka KADY-TV, aka Pacific Rim Video, and
Consolidated Entities HBC Holdings, Inc. ("HBC") and KADE Broadcasting, Inc.
("KBI") will move and does hereby move that the Court enter an order approving
the Trustee's Motion (1) To Approve Overbid Procedures And Breakup Fee For Sale
Of Debtor's Broadcast Assets And Station License And To Schedule Sale Hearing,
And (2) To Shorten time on the Trustee's Motion to Assume And Assign Contracts
To Overbidders ("Motion"). By the Motion, the Trustee seeks to obtain an order
(i) authorizing the overbid procedures ("Overbid Procedures") which are set
forth in paragraph 1 of this Motion and Section 3.1 of the draft Asset Purchase
Agreement between Paxson Communications of Los Angeles-63, Inc. ("Paxson") and
the Trustee ("Asset Purchase Agreement") for the sale of the Debtor's broadcast
license and station assets (all as defined in Section 2.2 of the Asset Purchase
Agreement) used in connection with the broadcast and transmission of KADY-TV,
Oxnard, California ("KADY" or the "Station"); (ii) authorizing the Trustee to
incur and pay a breakup fee obligation ("Breakup Fee") to Paxson if Paxon is
not the successful purchaser of the station assets as described in paragraph 1
of this Motion and Section 3.1 of the Asset Purchase Agreement; (iii)
scheduling a hearing for August 14, 1997 at 2:00 p.m. on the Trustee's motion
to approve the sale of assets to Paxson pursuant to the terms of the Asset
Purchase Agreement; and (iv) shortening the time on the Trustee's Motion, if
any, to assume and assign contracts to overbidders to seven (7) calendar days
prior to the hearing on the approval of the sale of the Station (the "Approval
Hearing"), and the extending the time for the filing by any third parties of
objections to the assumption and assignment of such contract to two Court days
prior to the Approval Hearing.
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I.
BACKGROUND
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This case was commenced as an involuntary case on March 22, 1996. The
order for relief was entered, a Chapter 11 trustee was ordered appointed, on
July 8, 1996, and immediately thereafter, John W. Hyde was appointed Chapter 11
trustee.
The Trustee immediately determined that the appropriate business plan
was to arrange a sale as a going concern of the Debtor's broadcast license and
broadcast assets as a going concern. However, the Trustee needed to resolve
certain operational and legal issues prefatory to arranging a sale, which have
now been accomplished through substantive consolidation of HBC and KBI with RBC
and through the Trustee's efforts to repair deferred maintenance and correct
certain licensing deficiencies.
In November, 1996, the Trustee obtained a Court order authorizing the
retention of a media broker, Media Services Group ("Broker"), to market the
Station, and in February, 1997, the Trustee and the Broker completed marketing
materials. The Broker publicized the availability of the Station and
disseminated marketing materials to approximately 90 interested persons and
groups, each of which signed a confidentiality agreement governing the further
dissemination of such documents.
II.
THE ASSET PURCHASE AGREEMENT
----------------------------
In early April, 1996, the Trustee received two offers to purchase the
broadcast assets of the Station, including its licenses. Upon further
negotiation and due diligence concerning the offers, the Trustee has concluded
that Paxson's offer is the preferable offer.
Pursuant to the Asset Purchase Agreement, Paxon has offered to purchase
the Station assets for a total purchase price of $8,000,000, plus the
assumption of Assumed Contracts as this term is defined in the Asset Purchase
Agreement, including the post-closing obligations due under the personal
property leases related to the operation of the Station, subject to the
election not to assume the Station lease pursuant to Section 2.6 of the Asset
Purchase Agreement and the KTIE Settlement Agreement. The entirety of the
$8,000,000 is
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to be paid in cash at or before the closing, provided, however, that the sum of
$500,000 shall be retained by the Trustee in a separate and segregated account
for a period of six months after the closing to provide a fund for the payment
of indemnity claims arising in favor of Paxson and against the estate
post-closing, as more particularly set forth in Section 13.4 of the Asset
Purchase Agreement.
The Asset Purchase Agreement contains provisions for overbidding by
qualified third parties that may be interested in offering more consideration
than Paxson to buy the assets provided that such overbidders comply with the
Overbid Procedures set forth in paragraph 1 below and Section 3.1 of the Asset
Purchase Agreement. In addition, the Asset Purchase Agreement provides for a
$120,000 Breakup Fee to be paid to Paxson if it is not a successful purchaser
of the Station assets. The Overbid Procedure and Breakup Fee include the
following:
1. The Trustee shall not accept, or be required to accept, any bid
or combination of bids ("Overbid"), except for a Qualifying Overbid (as defined
below) by any overbidder ("Overbidder") for a sale of less than all of the
Station assets. In order to constitute a Qualifying Overbid, and Overbid must
meet the following terms and conditions:
(a) All Overbids shall be in the same form as the Asset
Purchase Agreement and shall show, by appropriate and legible notations of
deletions, insertions and other modifications, all changes from the Asset
Purchase Agreement, provided, however, that there shall be no materials changes
to the Trustee's representation, warranties, covenants, or other obligations
thereunder.
(b) At least 10 calendar days prior to any hearing on the
sale, all Overbidders, in order to qualify, must deposit with the Trustee a
$200,000 cash deposit, unless the Trustee waives the ten (10)-day requirement
as to any one or more bidders, in the Trustee's sole and absolute discretion.
At or before the conclusion of the P Approval Hearing, any such Overbidder must
deliver to the Trustee, by way of a cashiers's check tendered at the Approval
Hearing (or a wire transfer received by the Trustee before the Approval
Hearing) an additional sum of $270,000, to create a total deposit by such
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<PAGE> 42
Overbidder of $470,000. Such deposit will be non-refundable and credited toward
the purchase price if such Overbidder is the successful bidder or will serve as
a damage deposit if such Overbidder is the successful bidder but defaults in
the purchase of the Station assets.
(c) The initial Overbid must exceed the purchase price
offered by Paxson by at least $200,000, must contain a cash component of at
least $8,200,000, and must (i) identify with the particularity the contracts
which the Overbidder desires to assume (the "Overbidder's Contracts"), (ii)
include either assumption of all of the Assumed Contracts in the Asset Purchase
Agreement or payment of an amount sufficient to satisfy any Assumed Contract(s)
which the Overbidder intends to reject, and (iii) shall contain financial
information sufficient in the sole opinion of the Trustee to enable the Court
to order assumption and assignment of Overbidder's Contracts to the Overbidder.
(d) After the initial Overbid, all Overbids must be in
minimum incremental amounts of $20,000. The Overbidder must seek to acquire all
of the Station assets, on terms and conditions not less favorable to the
Trustee than the terms and conditions set forth in the Asset Purchase
Agreement.
(e) All Overbidders must demonstrate, on or before 10
calendar days prior to the hearing (unless such ten-day requirement is waived
by the Trustee), their financial qualifications to purchase the Station and
provide adequate assurance of future performance of the Overbidder's Contracts
to Trustee's sole satisfaction.
(f) The Trustee shall pay a Breakup Fee to Paxson if Paxson
is not the successful purchaser of the Station assets by reason of the
Bankruptcy Court's approval of a Qualifying Overbid. The amount of the Breakup
Fee shall be $120,000, payable out of the successful Overbidder's deposit upon
entry of the Bankruptcy Court's order approving the sale to such Overbidder.
The Bankruptcy Court's order approving the sale motion shall specifically
authorize payment of the breakup fee to Paxson.
(g) The Trustee proposes to send notice of the proposed
motion to approve sale to Paxson and the order setting such motion and
approving overbidding procedures (the "Sale Procedure and Overbid Order") by
first class mail to all creditors and
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<PAGE> 43
parties in interest, and to cause the Broker to send a one-page summary of the
Sale Procedure and Overbid Order to all of the approximately 800 parties on the
Broker's contact list, and take the order actions set forth in the Broker's
letter to Ann Jacobus dated June 2, 1997, a copy of which is attached as Exhibit
"2" to the Declaration of John W. Hyde filed concurrently herewith.
2. In order to facilitate the assumption and assignment to an
Overbidder of such Overbidder's Contracts, the Trustee also requests that the
Court shorten time on the filing of a motion by the Trustee to assume and assign
an Overbidder's Contracts to an Overbidder until seven (7) calendar days before
the Approval Hearing. Overbids are due at least 10 calendar days before
Approval Hearing, and the Trustee believes that this shortening of time will
enable any Overbids to be heard and ruled upon at the time of the Approval
Hearing. Since the Trustee will have already scrutinized the financial
capacity of the Overbidder in determining whether the bid constitutes a
Qualified Bid, and the Court in approving the sale will be making a
determination of an Overbidder's ability to consummate the sale transaction,
the Trustee believes that this provides the third party with an adequate
opportunity to object to the assumption and assignment of the Overbidder's
Contracts. Accordingly, the Trustee requests that the Court shorten the time
for the filing and service by personal delivery of a motion to assume and
assign contracts identified by the Overbidder for assumption and assignment
until seven (7) calendar days prior to the Approval Hearing, and to allow third
parties to such contracts to interpose objections to the Overbidder's adequacy
of assurance of future performance until two Court days prior to the Approval
Hearing.
3. Subject to the possibility of generating an Overbid by other
qualified buyers, the Trustee believes that the Paxson proposal represents a
good faith and fair offer for the Station assets negotiated at arm's length and
that this is an appropriate time to sell the Station assets. Accordingly, the
Trustee believes that the foregoing Overbid Procedures and Breakup Fee are
reasonable, in the best interest of creditors and the estate, and that they will
ensure the expeditious closing of sale of the assets which will then facilitate
the proposal of a plan in this case.
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<PAGE> 44
4. As the Court is aware, the Trustee has always intended to sell the
Station as a going concern as an integral part of this business plan. The
proposed sale to Paxson, subject to the Overbid Procedures, provides a fair,
reasonable and efficient sale of the Station assets and will facilitate proposal
of a plan in the Debtor's case.
5. This Motion is based upon the Memorandum of Points and Authorities
and Declaration of John W. Hyde filed in support hereof, and such other matters
as the Court may consider at or prior to the hearing on the Motion.
PLEASE TAKE FURTHER NOTICE that any party in interest intending to oppose
the relief sought in this Motion must file and serve opposition no later than
the date specified in the order setting the hearing on the Motion. Failure to
file and serve the opposition as set forth above may constitute to the relief
requested.
The Trustee believes that appropriate notice of this Motion would be by
service by facsimile or overnight delivery on parties who received the
application for the order shortening time on this Motion, of the order setting
the hearing on this Motion.
WHEREFORE, the Trustee respectfully requests that the Court enter its
order:
(1) granting this Motion;
(2) approving the Overbid Procedures and the payment of the Breakup
Fee;
(3) setting the hearing on the Trustee's motion to approve the sale of
the Station assets pursuant to the Asset Purchase Agreement;
(4) finding that notice of this Motion is adequate under the
circumstances;
(5) finding that notice of the proposed sale to Paxson and the Overbid
Procedures as set forth in paragraph 1(f) hereof is appropriate;
(6) shortening the time for the Trustee's motion to assume and assign
the Overbidder's Contracts until seven calendar days prior to
Approval Hearing and for a third party's objection to the adequacy
of assurance of further performance until two Court days prior to
the Approval Hearing, and that any such motions and oppositions be
served by facsimile or overnight delivery; and
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<PAGE> 45
(7) granting such other and further relief as the Court deems just and
proper.
DATED: June __, 1997 WILLIAM H. KIEKHOFER, III
KATHERINE M. WINDLER
KELLEY DRYE & WARREN LLP
By:
--------------------------------------
William H. Kiekhofer, III
Attorneys for John Hyde, Chapter 11 Trustee
of Riklis Broadcasting Corporation, aka
KADY-TV, aka Pacific Rim Video, and
Consolidated Entities HBC Holdings, Inc.
and KADE Broadcasting, Inc.
8
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