<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 April 30, 1997:
<TABLE>
<CAPTION>
CLASS OF STOCK NUMBER OF SHARES
- ---------------------------- ----------------
<S> <C>
COMMON STOCK-CLASS A, $0.001
PAR VALUE PER SHARE ........................ 40,481,482
COMMON STOCK-CLASS B, $0.001
PAR VALUE PER SHARE ........................ 8,311,639
</TABLE>
<PAGE> 2
PAXSON COMMUNICATIONS CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
--------------------
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996 3
Consolidated Statements of Operations
Three Months Ended March 31, 1997 and 1996 4
Consolidated Statements of Changes in
Common Stockholders' Equity 5
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996 6-7
Notes to Consolidated Financial Statements 8-9
Item 2. Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations 10-20
---------------------------------------------
Part II - Other Information
Item 1. Legal Proceedings 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>
March 31, December 31,
1997 1996
------------- -------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 42,914,912 $ 61,748,788
Accounts receivable, less allowance for doubtful
accounts of $1,418,284 and $1,576,593 respectively 26,499,352 29,860,998
Prepaid expenses and other current assets 4,164,169 2,713,565
Current program rights 1,383,524 1,512,019
------------- -------------
Total current assets 74,961,957 95,835,370
Property and equipment, net 153,105,125 144,415,412
Intangible assets, net 306,084,264 220,409,421
Investments in broadcast properties 73,159,860 53,297,022
Program rights, net 796,693 1,075,536
Other assets, net 26,230,157 28,149,699
------------- -------------
Total assets $ 634,338,056 $ 543,182,460
============= =============
LIABILITIES, REDEEMABLE SECURITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 10,469,748 $ 10,676,692
Accrued interest 14,693,070 6,684,373
Current portion of program rights payable 1,420,247 1,628,959
Current portion of long-term debt 649,302 644,509
------------- -------------
Total current liabilities 27,232,367 19,634,533
Program rights payable 765,561 1,000,260
Deferred gain 12,100,000 --
Long-term debt 83,208,980 3,407,688
Senior subordinated notes, net 227,728,199 227,655,096
Redeemable Cumulative Compounding Junior preferred stock, $0.001 par value; 12%
dividend rate per annum,
33,000 shares authorized, issued and outstanding 38,200,431 36,780,496
Redeemable Exchangeable Preferred stock, $.001 par value;
12.5% dividend rate per annum, 440,000 shares authorized,
150,000 shares issued and outstanding 152,731,836 147,929,150
Class A common stock, $0.001 par value; one vote per share; 150,000,000 shares
authorized, 40,480,482 shares issued and outstanding 40,480 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 2,335,528
Stock subscription notes receivable (2,713,250) (1,873,139)
Additional paid-in capital 209,751,163 209,621,241
Deferred option plan compensation (5,361,685) (6,397,916)
Accumulated deficit (118,552,513) (103,821,878)
Commitments and contingencies
------------- -------------
Total liabilities, redeemable securities and
common stockholders' equity $ 634,338,056 $ 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 Three Months
Ended March 31,
----------------------------------
1997 1996
------------ ------------
(Unaudited)
-----------
<S> <C> <C>
Revenue:
Local and national advertising $ 41,006,119 $ 26,035,309
Other 1,207,880 866,803
Trade and barter 861,896 685,987
------------ ------------
Total revenue 43,075,895 27,588,099
Operating expenses:
Direct 9,929,765 6,077,210
Programming 5,853,899 3,184,957
Sales and promotion 3,278,965 2,175,058
Technical 3,077,169 1,392,600
General and administrative 10,491,044 6,022,966
Trade and barter 659,574 511,419
Time brokerage agreement fees 1,251,780 478,547
Sports rights fees 794,395 758,961
Option plan compensation 1,027,471 1,758,368
Depreciation and amortization 7,982,145 4,924,751
------------ ------------
Total operating expenses 44,346,207 27,284,837
------------ ------------
Operating (loss) income (1,270,312) 303,262
Other income (expense):
Interest expense (8,749,416) (7,724,778)
Interest income 1,443,232 831,072
Other income, net 107,696 (43,186)
------------ ------------
Loss from continuing operations (8,468,800) (6,547,258)
Income (loss) from discontinued operations 9,804 (71,402)
------------ ------------
Net loss (8,458,996) (6,618,660)
Dividends and accretion on preferred stock and common stock warrants
(6,271,639) (4,947,949)
------------ ------------
Net loss attributable to common stock and common stock equivalents
$(14,730,635) $(11,566,609)
============ ============
Per share data:
Loss from continuing operations $ (0.17) $ (0.19)
Income (loss) from discontinued operations -- --
------------ ------------
Net loss (0.17) (0.19)
Dividends and accretion on preferred stock and
common stock warrants (0.13) (0.14)
------------ ------------
Net loss attributable to common stock and
common stock equivalents $ (0.30) $ (0.33)
============ ============
Weighted average shares outstanding; primary and fully
diluted 48,777,893 34,556,861
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
4
<PAGE> 5
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Changes in Common Stockholders' Equity
<TABLE>
<CAPTION>
Class
Common Stock A & B Class Stock Deferred
-------------- Common C Subscription Additional Option
Class Class Class Stock Stock Notes Paid-in Plan Accumulated
A B C Warrants Warrants Receivable Capital Compensation Deficit
------- ------ ---- ---------- ---------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $26,227 $8,312 $ -- $ -- $5,338,952 $ (115,714) $ 34,342,086 $(1,384,267) $ (55,694,393)
Release of Put option on Class
A&B common stock warrants 9,116,399
Issuance of common stock, net
of issuance costs 10,300 154,789,700
Exercise of Class A,B&C common
stock warrants 3,623 (2,253,752) (3,003,424) 5,253,548
Stock issued for Todd
Communications acquisition 139 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 (1,873,139)
Stock options exercised 153 768,434
Repayment of stock subscription
note receivable 115,714
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 40,442 8,312 -- 6,862,647 2,335,528 (1,873,139) 209,621,241 (6,397,916) (103,821,878)
Option plan compensation
(unaudited) 1,036,231
Stock options exercised
(unaudited) 38 129,922
Increase in stock subscription
receivable (unaudited) (840,111)
Dividends on redeemable
preferred stock (unaudited) (5,941,050)
Accretion on Junior preferred
stock (unaudited) (166,385)
Accretion on Redeemable
Exchangeable preferred stock
(unaudited) (164,204)
Net loss (unaudited) (8,458,996)
Balance at March 31, 1997
(unaudited)
------- ------ ----- ---------- ---------- ----------- ------------ ----------- -------------
$40,480 $8,312 $ -- $6,862,647 $2,335,528 $(2,713,250) $209,751,163 $(5,361,685) $(118,552,513)
======= ====== ==== ========== ========== =========== ============ =========== =============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
5
<PAGE> 6
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
-----------------------------
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (8,458,996) $ (6,618,660)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 8,738,098 5,671,742
Option plan compensation 1,036,231 1,758,368
Program rights amortization 302,825 386,671
Provision for doubtful accounts 356,485 174,223
Gain on sale of assets (153,577) (133,883)
Decrease in accounts receivable 3,005,161 1,357,174
Increase in prepaid expenses and other current assets (1,450,604) (783,405)
Increase in other assets (2,399,573) (160,663)
Decrease (increase) in accounts payable and accrued liabilities (373,334) 658,636
Increase in accrued interest 8,008,697 6,871,342
------------- ------------
Net cash provided by operating activities 8,611,413 9,181,545
------------- ------------
Cash flows from investing activities:
Acquisitions of broadcast properties (94,184,131) (42,960,785)
Decrease in deposits on broadcast properties 4,200,000 1,890,000
Proceeds from sale of fixed assets 751,050 220,622
Increase in investments in broadcast properties (4,862,838) (8,376,376)
Purchase of property and equipment (12,106,406) (2,639,383)
------------- ------------
Net cash used in investing activities (106,202,325) (51,865,922)
------------- ------------
Cash flows from financing activities:
Proceeds from long-term debt 80,000,000 17,700,000
Payments of long-term debt (193,915) (108,061)
Payments of loan origination costs -- (516,232)
Proceeds from exercise of common stock options 129,960 92,527
Increase in stock subscription notes receivable (840,111) --
Repayments of stock subscription notes receivable -- 53,747
Payments for program rights (338,898) (383,904)
------------- ------------
Net cash provided by financing activities 78,757,036 16,838,077
------------- ------------
Decrease in cash and cash equivalents (18,833,876) (25,846,300)
------------- ------------
Cash and cash equivalents at beginning of period 61,748,788 68,070,990
------------- ------------
Cash and cash equivalents at end of period $ 42,914,912 $ 42,224,690
============= ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
6
<PAGE> 7
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows (continued)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
------------------------
1997 1996
----------- ----------
(Unaudited)
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid for interest $ 245,082 $ 429,399
=========== ==========
Cash paid for income taxes $ -- $ --
=========== ==========
Non-cash operating and financing activities:
Accretion of discount on senior subordinated notes $ 73,103 $ 60,371
=========== ==========
Dividends accreted on redeemable preferred stock $ 5,941,050 $2,031,241
=========== ==========
Accretion on redeemable securities $ 330,589 $2,916,708
=========== ==========
Trade and barter revenue $ 1,012,528 $ 835,462
=========== ==========
Trade and barter expense $ 983,841 $ 644,979
=========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of the consolidated financial statements.
7
<PAGE> 8
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
Paxson Communications Corporation's (the "Company") financial information
contained in the financial statements and notes thereto as of March 31, 1997 and
for the three month periods ended March 31, 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.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements, footnotes, and
discussions should be read in conjunction with the December 31, 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, which
was filed with the United States Securities and Exchange Commission.
2. Discontinued Operations
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 and thus discontinue the operations
of the Paxson Network Affiliated Television segment. Because of the decision to
sell both stations, the results of operations for the Paxson Network Affiliated
Television segment, 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 Paxson Network
Affiliated Television segment is expected to be sold for aggregate
consideration of approximately $119,000,000. The Company sold WPBF-TV as
discussed in the following paragraph. The WTVX-TV transaction is expected to
close during the third quarter of 1997 subject to the receipt of all necessary
regulatory approvals and will result in a pre-tax gain to the Company of
approximately $13,000,000. The Company does not anticipate a 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"), entered into an
asset purchase agreement (the "Asset Sale Agreement") with The Hearst
Corporation ("Hearst") pursuant to which the subsidiaries agreed to sell
substantially all of their assets to Hearst for $85 million. The Asset Sale
Agreement is expected to be consummated during the second half of 1997 after,
among other things, receipt of all necessary Federal Communications Commission
and other regulatory approvals.
On April 29, 1997, the Company sold its interests in WPBF-TV, which sale was
consummated through a merger of WPBF-25 with and into WPBF Merger, Inc. ("WPBF
Merger"), and the merger of Palm Beach License with and into WPBF
License, Inc. ("WPBF License"), a wholly-owned subsidiary of WPBF Merger, for
consideration payable to Paxson Communications of Florida, Inc., a wholly-owned
subsidiary of the 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"). The Note bears interest at the Federal
Funds Rate plus three percent and is payable upon the earlier of (i) April 29,
2007 and (ii) or the closing of the sale of WPBF-TV to Hearst under the Asset
Sale Agreement. WPBF Merger is controlled by Lowell W. Paxson ("Mr. Paxson"),
the Chairman of the Board and Chief Executive Officer of the Company.
WPBF Merger and WPBF License obtained a loan to finance the Merger from Banque
Paribas. Neither the Company nor any of its Subsidiaries is liable for the
repayment of such loan.
In connection with the Merger, the Company entered into a time brokerage
agreement with WPBF Merger pursuant to which the Company acquired the right
to sell substantially all of the air-time of WPBF-TV and agreed to provide
certain management and other services to WPBF Merger. The amounts payable under
such time brokerage agreement are expected to approximate WPBF-TV's operating
costs and the interest and fees payable in connection with
8
<PAGE> 9
the aforementioned loan until the Asset Sale Agreement is closed. An effect of
the Merger was the Company received a majority of the consideration payable
in connection with the sale of WPBF-TV on April 29, 1997 rather than some time
in the second half of 1997 or later. This sale will result in a pre-tax gain to
the Company of approximately $56,000,000.
The Paxson Network Affiliated Television operations generated revenues of
approximately $5,284,000 and $4,541,000 for the three months ended March 31,
1997 and 1996, respectively.
The components of net assets of discontinued operations included in the
consolidated balance sheets at March 31, 1997 and December 31, 1996, are as
follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Current assets $ 1,496,753 $ 1,580,249
Noncurrent assets 28,035,286 28,878,167
----------- -----------
Total assets 29,532,039 30,458,416
=========== ===========
Current liabilities 1,962,996 2,610,503
Noncurrent liabilities 765,561 1,000,260
Total liabilities 2,728,557 3,610,763
---------- -----------
Total net assets $26,803,482 $26,847,653
=========== ===========
</TABLE>
Net assets of discontinued operations at March 31, 1997 and December 31, 1996
excludes cash and cash equivalents and accounts receivable 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. Long-Term Debt
In connection with the WPBF-TV merger transaction discussed above, the Company
was released from its unconditional guarantee of Whitehead Media, Inc.'s
("Whitehead") third party financing by Banque Paribas of Whitehead's
acquisitions of WTVX-TV, WOAC-TV and WNGM-TV. The Company operates these
stations pursuant to time brokerage agreements and as a result of the
third party financing provided to Whitehead, has an option to purchase each of
these stations, which options to purchase would otherwise be prohibited under
FCC rules and regulations as each of such stations serves a market in which the
Company owns another television station serving the same market. During February
and March 1997, the Company contracted to sell its interests in these stations
as discussed elsewhere herein.
9
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Since its inception in 1991, the Company has grown primarily through the
acquisition or management of radio and television broadcast stations and radio
networks, as well as the subsequent improvement of these properties' operations.
Certain of the Company's radio and television stations were and continue to be
operated 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 operates three business segments: (1) inTV, a
nationwide network of owned, operated or affiliated television stations
carrying its proprietary network, which broadcasts long form paid programming
consisting primarily of infomercials; (2) Paxson Radio, consisting of radio
broadcasting stations, radio news and sports networks and billboard operations;
and (3) Paxson Network-Affiliated Television, consisting of network-affiliated
television broadcasting stations in West Palm Beach, Florida. As a result of
the agreements entered into in February and March 1997 to sell WPBF-TV and
WTVX-TV, the Paxson Network Affiliated Television segment has been classified
as discontinued operations for financial reporting purposes. 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 and mix of radio, television and inTV
acquisitions. Operating revenues are derived from the sale of advertising to
local and national advertisers. The Company's primary operating expenses
involved in owning and operating Paxson Radio are syndicated program rights
fees, commissions on revenues, employee salaries, news gathering, promotion and
administrative expenses. Comparatively, operation of an inTV station involves
low operating expenses relative to traditional television station operation.
The costs of operating an inTV station do not vary significantly with revenue,
with the exception of costs associated with sales commissions and agency fees.
As such, upon obtaining a certain level of revenue sufficient to cover fixed
costs, additional revenue levels have a significant impact on the operating
results of an individual inTV station.
The Company's past results are not necessarily indicative of future performance
due to various risks and uncertainties which may significantly reduce revenues
and increase operating expenses. For example, a reduction in expenditures by
radio and television advertisers in the Company's markets may result in lower
revenues. The Company may be unable to reduce expenses, including certain
variable expenses, in an amount sufficient in the short term to offset lost
revenues caused by poor market conditions. The broadcasting industry continues
to undergo rapid technological change which may increase competition within the
Company's markets as new delivery systems, such as direct broadcast satellite
and computer networks, attract customers. The changing nature of audience tastes
and viewing and listening habits may affect the continued attractiveness of the
Company's broadcasting stations to advertisers, upon whom the Company is
dependent for its revenue.
The Company currently expects to continue acquiring additional stations which
may have similar effects on the comparability of revenues, operating expenses,
interest expense and operating cash flow as those described above. Preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amount (contingent or otherwise) of assets and liabilities at the date
of the financial statements and the reported amount of revenues and expenses
during the reporting period. The fair value of the Company's investments in
broadcast properties and programming rights payable were based upon the net
present value of applicable estimated future cash flows using a discounted rate
approximating market rates. The fair values of the Company's long-term debt and
the senior subordinated notes were estimated based on market rates and
instruments with similar risks and maturities. The fair value estimates
presented are based on pertinent information available to management as of March
31, 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 inTV network 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 considering strategic alternatives with respect to these
television stations, including the possible creation of a new television
network in tandem with a major programming provider as well as a national cable
multiple system operator. The Company is in a preliminary stage of this
process, however, and has not entered into any binding agreements or commitments
relating to a change in the use or character of its group of television
stations.
10
<PAGE> 11
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 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 businesses 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 business, including the restrictions
on multiple broadcast property ownership, the broadcast licensing renewal
requirements and the status of the Federal Communications Commission's "must
carry" regulations, the risks of industry and economic conditions which could
adversely affect the Company's business operations, 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 inTV 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 inTV stations" below.
(Television and cable households in thousands.)
<TABLE>
<CAPTION>
NATIONAL STATION CABLE CURRENT TOTAL CURRENT TOTAL
TV MARKET COMMENCEMENT CARRIAGE AT STATION CABLE MARKET CABLE STATION CABLE MARKET TV
MARKET (1) RANK STATION OF OPERATIONS COMMENCEMENT(2) CARRIAGE(3) HOUSEHOLDS CARRIAGE %(3) HOUSEHOLDS
- ------ ---- ------- ------------- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Owned or Operated
New York, NY 1 WHAI TV 3/96 626 785 4,663 16.8% 6,712
Los Angeles, CA 2 KZKI TV 5/95 1,453 2,445 3,049 80.2% 4,942
Philadelphia, PA 4 WTGI TV 2/95 1,225 1,644 2,015 81.6% 2,654
San Francisco, CA 5 KLXV TV 6/95 650 1,189 1,620 73.4% 2,279
Boston, MA 6 WGOT TV 5/95 604 949 1,665 57.0% 2,150
Boston, MA* 6 WHRC TV(5) 6/97 0 0 1,665 0.0% 2,150
Washington, D.C. 7 WSHE TV(6)(10) 10/96 0 118 1,301 9.1% 1,909
Dallas, TX 8 KINZ TV 12/96 0 634 954 66.5% 1,849
Atlanta, GA 10 WTLK TV 4/94 300 964 1,089 88.5% 1,625
Atlanta, GA* 10 WNGM TV(10) 4/96 182 247 1,089 22.7% 1,625
Houston, TX 11 KTFH TV 3/95 647 829 894 92.7% 1,595
Cleveland, OH 13 WAKC TV 3/96 560 708 1,001 70.7% 1,461
Cleveland, OH* 13 WOAC TV(10) 10/95 332 367 1,001 36.7% 1,461
Minneapolis, MN 14 KXLI TV 10/96 605 655 722 90.7% 1,428
Tampa, FL* 15 WFCT TV 8/94 0 975 1,014 96.2% 1,411
Miami, FL* 16 WCTD TV 4/94 396 1,009 1,009 100.0% 1,363
Phoenix, AZ 17 KWBF TV 3/96 23 26 694 3.7% 1,213
Phoenix, AZ 17 KAJW TV(4)(8) 7/97 n/a n/a 694 n/a 1,213
Denver, CO 18 KUBD TV 8/95 430 474 725 65.4% 1,185
Sacramento, CA* 20 KCMY TV 7/95 624 640 711 90.0% 1,116
St. Louis, MO 21 WCEE TV 1/96 23 91 583 15.6% 1,110
Orlando, FL* 22 WIRB TV(5) 12/94 468 757 779 97.2% 1,022
Hartford, CT* 27 WTWS TV(5) 3/95 661 775 790 98.1% 916
Raleigh, NC* 29 WRMY TV(5)(6) 6/96 0 297 505 58.8% 815
Milwaukee, WI 31 WHKE TV 7/96 257 321 468 68.6% 787
Kansas City, MO 32 KINB TV 5/97 397 397 515 77.1% 787
Grand Rapids, MI* 37 WJUE TV(8) 9/96 0 299 404 74.0% 648
Oklahoma City, OK 43 KMNZ TV 10/96 0 0 367 0.0% 588
Greensboro, NC 46 WAAP TV 7/96 323 340 357 95.2% 568
Providence, RI 47 WOST TV(4)(7) 7/97 0 0 423 0.0% 558
Birmingham, AL * 51 WNAL TV 10/96 31 79 347 22.8% 526
Albany, NY 52 WOCD TV 5/96 251 272 368 73.9% 507
Dayton, OH 53 WTJC TV 10/95 298 312 349 89.4% 503
Little Rock, AR* 57 KVUT TV(4)(8) 7/97 n/a n/a 298 n/a 480
Tulsa, OK* 58 KGLB TV(4)(8) 6/97 0 0 288 0.0% 461
Cedar Rapids, IA* 86 KTVC TV n/a n/a 191 n/a 307
Puerto Rico NR WSJN TV 2/96 285 285 298 95.6% 1,064
Puerto Rico NR WKPV TV 2/96
Puerto Rico NR WJWN TV 2/96
Total Owned or Operated(9) 11,651 18,883 30,456 62.4% 46,538
Affiliates
Philadelphia, PA 4 WTVE TV 10/96 414 539 2,015 26.7% 2,654
Indianapolis, IN 25 WIIB TV 1/96 401 424 606 70.0% 939
Norfolk, VA 40 WJCB TV 8/95 343 399 467 85.4% 632
Fresno, CA 55 KGMC TV 1/96 179 164 265 61.9% 491
------ ------ ------ ----- ------
1,336 1,526 3,353 45.5% 4,716
------ ------ ------ ----- ------
Total Owned, Operated and Affiliates(9) 12,574 20,409 31,794 64.6% 48,600
====== ====== ====== ===== ======
Announced inTV Stations
New York, NY 1 WBIS TV 4,663 6,712
San Francisco 5 KWOK TV(4)(6) 1,620 2,279
Washington, D.C. 7 WVVI TV 1,301 1,909
Detroit, MI 9 WBSX TV 1,174 1,772
Seattle, WA 12 KBCB TV(4) 1,071 1,492
Pittsburgh, PA 19 Channel 40 987 1,149
Salt Lake City, UT 36 KOOG TV(4) 372 671
Buffalo, NY 39 WAQF TV(4) 464 633
West Palm Beach, FL 44 WHBI TV(4)(6) 486 587
Wilkes Barre, PA 49 WSWB TV(4) 444 553
Fresno, CA 55 KKAG TV 265 491
Green Bay, WI 70 WSCO TV 216 376
------ ------
Total Announced inTV Stations(9) 5,214 7,233
------ ------
Total inTV Network(9) 37,008 55,833
====== ======
</TABLE>
* Operated or to be operated pursuant to a time brokerage agreement;
except as noted, the Company has an 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.
Source: A.C. Nielsen
(3) Cable households reached at 4/97, to be billed in 5/97, and as a
percentage of the total market cable households. Source: A.C. Nielson
(4) Station is currently under construction or not operating commercially.
(5) No option to acquire any ownership.
(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.
NR Not ranked.
11
<PAGE> 12
The following table sets forth certain information about the radio stations the
Company owns or has agreements to acquire:
<TABLE>
<CAPTION>
National
Radio Audience Share
Market (persons 25 -54)(3) Revenue (2)
Markets/Station (1) Rank (5) Format 1997 Share Rank
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Miami/Ft. Lauderdale 11
WZTA-FM Active Rock 3.7%
WIOD-AM Hot Talk 2.7%
WLVE-FM Smooth Jazz 4.9%
WPLL-FM Modern Adult Contemporary 2.5%
WINZ-AM News/Talk 1.3%
WFTL-AM Hot Talk 0.3%
----
TOTAL MARKET 15.4% 20.9% 1
Tampa/St. Petersburg 21
WSJT-FM Smooth Jazz 4.8%
WHPT-FM Rock Alternative 6.3%
WZTM-AM Sports 1.3%
WHNZ-AM News/Talk 0.6%
WKES-FM (4) To Be Determined
----
TOTAL MARKET 13.0% 13.0% 3
Orlando 38
WMGF-FM Soft Adult Contemporary 6.9%
WTKS-FM Hot Talk 6.8%
WJRR-FM Active Rock 3.4%
WSHE-FM Modern AC 3.2%
WQTM-AM Sports 1.4%
WWNZ-AM News/Talk 0.5%
----
TOTAL MARKET 22.2% 28.2% 1
Jacksonville, FL 53
WROO-FM Country 6.9%
WFSJ-FM Smooth Jazz 3.0%
WPLA-FM Alternative 2.8%
WNZS-AM Sports 1.5%
WTLK-FM Hot Talk 0.8%
WZNZ-AM News 0.1%
----
TOTAL MARKET 15.1% 16.5% 3
Pensacola, FL 125
WYCL-FM Gold 6.0%
WTKX-FM Active Rock 4.6%
----
TOTAL MARKET 10.6% 16.8% 3
Tallahassee, FL 167
WTNT-FM Country 9.2%
WSNI-FM Gold 6.7%
WXSR-FM Active Rock 3.7%
WJZT-FM Smooth Jazz 2.1%
WNLS-AM Sports 1.2%
----
TOTAL MARKET (6) 22.9% n/r 1
Panama City, FL 225
WPAP-FM Country 10.5%
WFSY-FM Adult Contemporary 8.8%
WSHF-FM Modern Adult Contemporary 4.4%
WPBH-FM Gold 3.5%
WDIZ-AM Adult Standards n/r
----
TOTAL MARKET (6) 27.2% n/r 1
Cookeville, TN N/C
WGSQ-FM Country 27.0%
WGIC-FM Soft Adult Contemporary 14.9%
WPTN-AM Talk 4.1%
WHUB-AM Country 4.1%
----
TOTAL MARKET(6) 50.1% n/r 1
Florida Keys N/C
WFKZ-FM Hot Adult Contemporary n/c
WAVK-FM Adult Contemporary n/c
WKRY-FM Soft Adult Contemporary n/c
TOTAL MARKET n/r 1
</TABLE>
(1) Each station is licensed by the FCC to serve a specific community
within the market, which may differ from the listed market.
(2) Source: Miller, Kaplan Market Revenue Report, a monthly publication of
Miller, Kaplan, Anase & Co., Certified Public Accountants ("Miller
Kaplan").
(3) Adults 25-54 Monday-Sunday 6 AM-Midnight in radio market per Winter
1997 Arbitron Radio Market Reports, Fall 1996 for Pensacola and
Tallahassee, Spring 1996 for Cookeville an Panama City.
(4) Pending Acquisition.
(5) Source: BIA's Radio Yearbook 1997.
(6) Revenue shares not reported; rank based upon Company estimates.
n/c Market not covered by Arbitron.
n/r Revenue not independently reported.
<PAGE> 13
Purchases of Broadcast Properties:
During January 1997, the Company completed its purchases of WSJN-TV, WKPV-TV,
WJWN-TV, WPLL-FM (formerly WSHE-FM), WSRF-AM and WTKS-FM for aggregate cash
consideration of $89,500,000.
During January 1997, the Company acquired a 49% interest in KAJW-TV for
$5,400,000.
During February 1997, the Company exercised its option to acquire WHKE-TV from
The Christian Network, Inc. ("CNI") for $100,000 plus forgiveness of related
notes and interest receivable totaling approximately $3,900,000. The Company
also purchased a 50% interest in WOST-TV for $1,000,000 less prior advances of
$168,000.
During March 1997, the Company entered into an agreement to purchase WBSX-TV for
$35,000,000.
During April 1997, the Company exercised its options and entered into agreements
to purchase television stations WCTD-TV and WFCT-TV from CNI for $191,000 and
$100,000, respectively, and forgiveness of outstanding loans aggregating
approximately $1,120,000. As part of the purchase consideration for WCTD-TV, the
Company will repay the remaining principal balance on a third party note payable
with an outstanding balance of approximately $510,000 at March 31, 1997.
During April 1997, the Company entered into agreements to purchase television
stations KKAG-TV, KTVC-TV, WAQF-TV, Channel 40 in Pittsburgh and WSCO-TV for
$7,960,000, $5,000,000, $3,000,000, $35,000,000 and $4,750,000, respectively. On
May 3, 1997, the Company began operating KTVC-TV pursuant to a TBA pending
completion of the acquisition.
During May 1997, the Company entered into an agreement to purchase WBIS-TV in
New York City for $257,500,000. The Company intends to begin operating this
station pursuant to a TBA on June 30, 1997.
Sales of Broadcast Properties:
During February 1997, the Company restructured its investment in WTWS-TV, as
required by the FCC in connection with its prior acquisition of WHAI-TV, by
selling WTWS-TV to Roberts Broadcasting in exchange for a $15,000,000 note
receivable and entered into a five year time brokerage agreement to operate the
station. The note bears interest at LIBOR plus 3.5%. Interest is payable
monthly with principal payments commencing February 1998 and payable monthly in
84 equal installments. The Company expects to recognize a pre-tax gain on the
sale of approximately $12,100,000 using the installment method.
During March 1997, the Company entered into agreements to sell its interests in
television stations WOAC-TV and WNGM-TV, each of which is currently operated
under time brokerage agreements with Whitehead, for aggregate consideration of
$73,500,000, in separate agreements with the same buyer. To date, the Company
has only received the required escrow deposit for the WOAC-TV sale. Accordingly,
the Company may have to terminate the WNGM-TV contract and seek a new buyer.
These stations operate in the Cleveland and Atlanta television markets where the
Company owns and will continue to operate stations WAKC-TV and WTLK-TV,
respectively.
During March 1997, the Company entered into an agreement to sell the assets of
WSRF-AM in the Miami Radio market for aggregate consideration of approximately
$500,000. The sales
12
<PAGE> 14
price includes $100,000 in cash with a note receivable for the remaining
$400,000 bearing interest at 9.5% payable over 48 months in equal monthly
payments of principal and interest commencing on the first day of the thirteenth
month following the sale closing. The buyer began operating the station pursuant
to a time brokerage agreement with the Company on May 1, 1997 pending the sale
closing.
The Company has also entered into an agreement to restructure its investment in
WSHE-TV (formerly WYVN-TV) pursuant to which DP Media, Inc. ("DP Media") will
acquire WSHE-TV for $2,470,000 in the form of a promissory note. The note bears
interest at 8.25% payable monthly with the entire principal due twenty four
months from the date of close. The Company plans to operate the station
pursuant to an affiliation agreement.
Other:
The Company, DP Media and Roberts Broadcasting have entered into agreements
whereby the Company will loan DP Media approximately $10,000,000 (of which
approximately $7,500,000, to be assumed by DP Media, has been advanced to
Roberts Broadcasting as of March 31, 1997 and has been recorded as investments
in broadcast properties), allowing DP Media to purchase a 100% ownership
interest in WRMY-TV. The Company plans to operate the station pursuant to an
affiliation agreement.
The Company has amended its agreements with Roberts Broadcasting for KZAR-TV,
Salt Lake City, Utah, to terminate its option to acquire 50% of this station. In
addition, Roberts Broadcasting has agreed to apply a portion of the proceeds
from its sale of WRMY-TV to DP Media to repay the Company substantially all of
the amounts advanced to Roberts Broadcasting as loans or option payments in
respect of KZAR-TV.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected financial
information as a percentage of revenues.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------
1997 1996
---- ----
<S> <C> <C>
Revenues 100.0% 100.0%
Operating Expenses:
Direct 23.1 22.0
Programming 13.6 11.5
Sales and promotion 7.6 7.9
Technical 7.1 5.0
General and administrative 24.4 21.8
Trade and barter 1.5 1.9
Time brokerage agreement fees 2.9 1.7
Sport rights fees 1.8 2.8
Option plan compensation 2.4 6.4
Depreciation and amortization 18.5 17.9
----- -----
Total operating expenses 102.9 98.9
----- -----
Operating income (loss) (2.9) 1.1
Other income (expense):
Interest expense (20.3) (28.0)
Interest income 3.3 3.0
Other income, net 0.2 0.2
----- -----
Loss from continuing operations (19.7) (23.7)
Income (loss) from discontinued operations 0.1 (0.3)
----- -----
Net loss (19.6) (24.0)
===== =====
</TABLE>
13
<PAGE> 15
The following sets forth, for the periods indicated, selected information for
the Company's business segments:
<TABLE>
<CAPTION>
As of and for the three
months ended March 31,
-----------------------
1997 1996
---- ----
<S> <C> <C>
INTV
Total revenue $ 18,524,655 $ 12,715,920
Operating expenses, less
depreciation, amortization
and option plan compensation 11,534,015 6,633,622
Depreciation and amortization 3,746,655 2,070,930
Option plan compensation 89,961 3,563
------------- -------------
Operating income $ 3,154,024 $ 4,007,805
============= =============
Operating cash flow $ 8,002,000 $ 6,525,000
============= =============
Total identifiable assets $ 275,533,858 $ 156,675,990
============= =============
Capital expenditures $ 8,754,303 $ 1,520,666
============= =============
PAXSON RADIO
Total revenue $ 24,138,555 $ 14,535,690
Operating expenses, less
depreciation, amortization
and option plan compensation 20,395,808 12,115,096
Depreciation and amortization 3,902,415 2,589,026
Option plan compensation 313,466 33,404
------------- -------------
Operating loss $ (473,134) $ (201,836)
============= =============
Operating cash flow $ 3,780,000 $ 2,346,000
============= =============
Total identifiable assets $ 231,454,329 $ 68,510,770
============= =============
Capital expenditures $ 2,694,722 $ 743,357
============= =============
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 $ 39,363,643 $ 37,351,207
============= =============
Capital expenditures $ 149,560 $ 119,941
============= =============
CORPORATE AND OTHER
Total revenue $ 412,685 $ 336,489
Operating expenses, less
depreciation, amortization
and option plan compensation 3,406,768 1,853,000
Depreciation and amortization 333,075 264,795
Option plan compensation 624,044 1,721,401
------------- -------------
Operating loss $ (3,951,202) $ (3,502,707)
============= =============
Operating cash flow $ (2,994,000) $ (1,517,000)
============= =============
Total identifiable assets $ 87,986,228 $ 51,438,115
============= =============
Capital expenditures $ 507,821 $ 255,419
============= =============
CONSOLIDATED
Total revenue $ 43,075,895 $ 27,588,099
Operating expenses, less
depreciation, amortization
and option plan compensation 35,336,591 20,601,718
Depreciation and amortization 7,982,145 4,924,751
Option plan compensation 1,027,471 1,758,368
------------- -------------
Operating (loss) income $ (1,270,312) $ 303,262
============= =============
Operating cash flow $ 8,788,000 $ 7,354,000
============= =============
Total identifiable assets $ 634,338,056 $ 313,976,082
============= =============
Capital expenditures $ 12,106,406 $ 2,639,383
============= =============
</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.
14
<PAGE> 16
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Consolidated revenues for the three months ended March 31, 1997 increased 56%
(or $15.5 million) to $43.1 million from $27.6 million for the three months
ended March 31, 1996. This increase was primarily due to new television station
acquisitions and time brokerage operations ($5.0 million), new radio stations
($8.3 million) and increased revenues from existing television stations ($0.8
million) and radio stations ($1.5 million).
Operating expenses for the three months ended March 31, 1997 increased 62% (or
$17.0 million) to $44.3 million from $27.3 million for the three months ended
March 31, 1996. The increase was primarily due to higher direct expenses such as
commissions which rise in proportion to revenues ($3.9 million), other
non-direct costs of operating new television stations ($2.9 million) and radio
stations ($5.2 million), higher depreciation and amortization primarily related
to assets acquired ($3.1 million), and increased time brokerage agreement fees
($0.8 million).
Operating cash flow for the three months ended March 31, 1997 increased 19% (or
$1.4 million) to $8.8 million, from $7.4 million for the three months ended
March 31, 1996. The increase in operating cash flow was primarily a result of
television station acquisitions and time brokerage operations ($0.9 million),
new radio stations ($0.6 million) and improved performance of existing
television ($0.6 million) and radio stations ($0.8 million), all of which were
partially offset by increased corporate overhead and other costs.
Interest expense for the three months ended March 31, 1997 increased to $8.7
million from $7.7 million for the three months ended March 31, 1996, an increase
of 13% primarily due to a greater level of debt throughout the period and higher
borrowing rates. As a result of acquisitions, at March 31, 1997, total long-term
debt and senior subordinated notes were $311.6 million, compared with the
balance of $257.9 million outstanding a year prior.
Interest income for the three months ended March 31, 1997 increased to $1.4
million from $0.8 million, primarily due to greater levels of cash and cash
equivalents invested throughout the period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at March 31, 1997 and December 31, 1996 was $47.7
million and $76.2 million, respectively, and the ratio of current assets to
current liabilities was 2.75:1 and 4.88:1 on such dates, respectively. Working
capital decreased primarily due to the acquisitions previously discussed and the
greater accrued interest payable.
Cash provided by operations of $8.6 million and $9.2 million for the three
months ended March 31, 1997 and 1996, respectively, reflects the improvement in
operating results of existing properties, acquisitions and time brokerage
properties net of increased interest expense and increases in other assets. Cash
used for investing activities primarily reflects the acquisitions and
investments discussed above, and purchases of equipment for these and existing
properties. Cash provided by financing activities primarily reflects the
proceeds from the long term debt borrowings net of debt repayments. In addition,
the Company has advanced $550,000 to CNI during the three months ended March 31,
1997 under a demand note bearing interest at the prime rate (currently 8.50%).
At March 31, 1997 the Company had total advances to CNI outstanding of
approximately $3,543,000 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 discussed elsewhere herein 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.
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 $80 million 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 it will require additional financing to complete the
acquisitions discussed below (including the expected capital expenditures
associated therewith), and to meet its anticipated short term and long term
working capital
15
<PAGE> 17
requirements for its existing properties. The timing and amount of additional
financing needs will depend, among other things, upon the completion and timing
of the completion of the television station sales previously discussed, the
amount of net proceeds to the Company from the television station sales
(estimated to be $150 million after repayment of associated indebtedness and
transaction expenses and prior to payment of taxes), whether the Company
completes a sale of its billboard operations and the timing and net proceeds
thereof, the timing of closings of pending acquisitions (which are dependent
upon the satisfaction of closing conditions, some of which are beyond the
control of the Company), and the amount of borrowing capacity available to the
Company under the Senior Facility. While the Company currently has maximum
additional borrowing capacity of $120 million under its Senior Facility, the
amount actually available to the Company for borrowing is subject to covenant
compliance, including limitations on indebtedness and other financial ratios.
The Company has recently obtained an amendment to these covenant borrowing
limitations and as of March 31, 1997, based upon these amended covenants, had
approximately $50 million of additional borrowing capacity under the amended
Senior Facility. The amount available for borrowing under the Senior Facility
will be affected by changes in the Company's cash flow position, including cash
flow generated by acquired stations and cash flow reductions from station sales.
The anticipated proceeds of the asset sales previously discussed and the
available borrowings under the Company's Senior Facility will not be adequate
to fund the Company's commitments for pending acquisitions. The Company is
therefore considering additional sources of financing, including public and
private sales of equity and debt securities. The Company has discussed
financing sources with potential underwriters and, based on those discussions
and the receipt of a "highly confident letter", management believes that
sufficient funds can be secured. There can be no assurance that the Company
will be able to obtain additional financing which could adversely affect the
Company's ability to complete such acquisitions.
The Company will require additional financing to enable it to continue its
acquisition strategy and to fund capital expenditures on existing and acquired
properties. The failure to raise funds necessary to finance the Company's
future cash requirements could adversely affect the Company's ability to pursue
its business strategy. In addition, should the Company suffer a significant
impairment to its cash flow from operations due to the occurrence of one or
more adverse events, 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.
16
<PAGE> 18
ACQUISITION 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 acquisitions 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>
inTV:
WBIS-TV New York City, NY (1) $257,500,000
WVVI-TV Washington, DC (2) $ 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
KINB-TV Kansas City, MO (4) $ 16,400,000
WHRC-TV Boston, MA $ 15,000,000
WNAL-TV Birmingham, AL (5) $ 10,000,000
KBCB-TV Seattle, WA $ 8,000,000
KKAG-TV Fresno, CA $ 7,960,000
KOOG-TV Salt Lake City, UT $ 7,500,000
WHBI-TV West Palm Beach, FL (6) $ 7,000,000
KAJW-TV Phoenix, AZ (7) $ 6,600,000
WSWB-TV Wilkes-Barre, Scranton, PA $ 6,160,000
KTVC-TV Cedar Rapids, IA (8) $ 5,000,000
WSCO-TV Green Bay, WI $ 4,750,000
KWOK-TV San Francisco, CA (6) $ 4,500,000
WOST-TV Providence, RI (9) $ 3,000,000
WAQF-TV Buffalo, NY (10) $ 3,000,000
WRMY-TV Raleigh, Durham, NC $ 2,500,000
KVUT-TV Little Rock, AR (11) $ 2,500,000
WFCT-TV, WCTD-TV Tampa and Miami, FL $ 801,000
WJUE-TV Grand Rapids, MI (12) $ 500,000
KGLB-TV Tulsa, OK (7) $ 421,000
Paxson Radio:
WKES-FM Tampa, FL $ 35,323,000
WFKZ-FM Plantation Key, FL (13) $ 3,500,000
WAVK-FM Marathon, FL
WKRY-FM Key West, FL
</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 includes $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 completed the purchase on April 25, 1997.
(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 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 March 31,
1997, the Company had advanced approximately $3,250,000 to Cocola. The
Company plans to provide programming for the stations pursuant to
affiliation agreements upon Cocola's acquisitions and commencement of
operations.
(7) The Company has acquired a 49% interest in this property; commitment
represents purchase price for the remaining 51%.
(8) On May 3, 1997, the Company began operating the station pursuant to a
TBA. The purchase price reflects cash portion only and does not
include 600,000 shares of Class A Common Stock consideration.
(9) The Company has acquired a 50% ownership interest for $1,000,000 and
has committed to loan up to $3 million for capital improvements and
relocation of the station's tower. The station is currently being
relocated.
(10) Includes the purchase of two low power television stations, W69CS and
W63BM.
(11) Station is currently under construction. The Company purchased a 49%
interest during 1996 with an option to acquire the remaining 51%.
17
<PAGE> 19
(12) The Company has a 49% interest in the property and has entered into a
contract to acquire the remaining 51% for approximately $1,250,000 plus
forgiveness of amounts advanced to date. At March 31, 1997, the Company
had advanced approximately $1,450,000.
(13) The Company completed the purchase on May 7, 1997.
18
<PAGE> 20
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No material legal proceedings are pending to which the Company or any of
its property is subject. To the knowledge of the Company, no such legal
proceedings are contemplated by any governmental authority.
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits:
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 Second amendment, dated May 2, 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
10.158 Loan agreement, dated March 26, 1996, by and between Paxson
Communications Corporation and Cocola Media Corporation of San
Francisco for television station KWOK-TV, Novato, California
10.159 Asset purchase agreement, dated April 1, 1997, by and between
Paxson Communications Corporation and The Kralowec Children's
Family Trust and KKAK-TV, Inc. for television station
KKAG(TV), Porterville, California
10.160 Asset purchase agreement, dated May 5, 1997, by and among
Paxson Communications of Cedar Rapids-48, Inc., Fant
Broadcasting Company of Iowa, Inc. and Paxson Communications
Corporation for television station KTVC-TV, Cedar Rapids, Iowa
10.161 Asset purchase agreement, dated April 15, 1997, by and among
Paxson Communications of Buffalo-51, Inc., Fant Broadcasting
of New York, L.L.C., Anthony Fant and Paxson Communications
Corporation for television station WAQF-TV
10.162 Assignment and acceptance agreement, dated April 18, 1997,
among WQED Pittsburgh and Paxson Communications of
Pittsburgh-40, Inc.
10.163 Merger agreement, dated as of April 29, 1997 among WPBF
Merger, Inc. and WPBF License, Inc. and Paxson Communications
of West Palm Beach-25, Inc. and Paxson West Palm Beach
License, Inc. *****
10.163.1 Paxson Communications of West Palm Beach - 25, Inc. and Paxson
West Palm Beach License, Inc. Subordinated Promissory Note,
dated April 29, 1997 *****
10.163.2 Time brokerage agreement, dated April 29, 1997 by and between
Paxson Communications of West Palm Beach - 25, Inc., and
Paxson West Palm Beach License, Inc., and Paxson
Communications of Florida, Inc. *****
10.164 Asset purchase agreement, dated April 22, 1997, by and between
Paxson Communications of Miami-35, Inc. and Channel 35 of
Miami, Inc.
10.165 Asset purchase agreement, dated April 22, 1997, by and between
Paxson Communications of Tampa-66, Inc. and Channel 66 of
Tampa, Inc.
10.166 Asset purchase agreement, dated April 30, 1997, by and between
Paxson Communications of Green Bay-14, Inc and VCY America,
Inc. for television station WSCO(TV), Green Bay, Wisconsin
19
<PAGE> 21
10.167 Asset purchase agreement, dated May 12, 1997, by and between
The Company, Paxson Communications of New York City, ITT-Dow
Jones Television, ITT Corporation, and Dow Jones & Company
for television station WBIS(TV), New York City, New York
10.167.1 Time brokerage agreement, dated May, 1997, by and between
ITT-Dow Jones Television and Paxson Communications of New
York-31, Inc. for Television Station WBIS(TV), New York
City, New York
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.
***** Filed with the Company's Form 8-K, dated April 29, 1997, under
Item 7. Financial Statements and Exhibits and incorporated
herein by reference.
(b) Reports on Form 8-K.
The Company filed a Form 8-K, dated January 10, 1997, under Item 2, Acquisition
or Disposition of Assets and Item 7. Financial Statements and Exhibits in
connection with the acquisition of the Fort Lauderdale Radio Stations, WPLL-FM
(formerly WSHE-FM) and WSRF-AM.
20
<PAGE> 22
PAXSON COMMUNICATIONS CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAXSON COMMUNICATIONS CORPORATION
Date: May 15, 1997 By: /s/ James B. Bocock
-----------------------------------
James B. Bocock
President, Chief Operating
Officer, Director
Date: May 15, 1997 By: /s/ Arthur D. Tek
-----------------------------------
Arthur D. Tek
Vice President, Chief
Financial Officer, Director
21
<PAGE> 1
EXHIBIT 4.2
SECOND AMENDMENT, dated as of May 2, 1997 (this "Second Amendment"),
with respect to the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November
19, 1996 (as amended by the Waiver and First Amendment, dated as of February
11, 1997 and as the same may be further 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"), and UNION BANK OF
CALIFORNIA, N.A., as Agent.
WITNESSETH:
-----------
WHEREAS, the parties hereto wish to amend certain provisions of the
Credit Agreement, but only on the terms and subject to the conditions set
forth herein;
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, all capitalized
terms defined in the Credit Agreement and used herein are so used as so
defined.
2. Amendments to Credit Agreement.
A. Subsection 1.1 of the Credit Agreement is hereby amended by
inserting at the end of the definition of "Leverage Ratio" the following:
For the purposes of calculating the Leverage Ratio for the 1997
fiscal year of the Borrower, Consolidated Total Debt shall be
determined without regard to any "Permitted Indebtedness", as such
term is defined in the Senior Subordinated Note Indenture, provided
that the aggregate principal amount of such Permitted Indebtedness
excluded from such calculation of Consolidated Total Debt shall not be
in excess of $30,000,000.
B. Subsection 2.6(d) of the Credit Agreement is hereby amended
by deleting the date "June 30, 1997" in the fourth line thereof and
substituting in lieu thereof the date "September 30, 1997".
C. Subsection 6.1(a) of the Credit Agreement is hereby amended
by deleting the table therein and inserting in its place the following new
table:
<PAGE> 2
<TABLE>
<CAPTION>
PERIOD ENDED LEVERAGE RATIO
============ ==============
<S> <C>
Closing Date - September 30, 1997 6.35:1.00
------------------------------------ ---------
October 1, 1997 - September 30, 1998 5.50:1.00
------------------------------------ ---------
October 1, 1998 - thereafter 5.00:1.00
==================================== =========
</TABLE>
D. Subsection 6.1(b) of the Credit Agreement is hereby
amended by deleting the table therein and inserting in its place the following
new table:
<TABLE>
<CAPTION>
CASN INTEREST
PERIOD COVERAGE RATIO
====== ==============
<S> <C>
Closing Date -
March 31, 1997 1.40:1.00
------------------------------------ ---------
April 1, 1997 - September 30, 1997 1.30:1.00
------------------------------------ ---------
October 1, 1997 - December 31, 1998 1.50:1.00
------------------------------------ ---------
Thereafter 2.00:1.00
==================================== =========
</TABLE>
3. Effect of Issuance or Sale of Equity Securities. If (a)
any class of equity Securities of the Borrower or any of its Subsidiaries shall
be issued or sold during the 1997 fiscal year of the Borrower and (b) the Net
Cash Proceeds received by the Borrower or any of its Subsidiaries from such
issuance or sale are in an amount such that the application of such Net Cash
Proceeds to the reduction of the Consolidated Total Debt of the Borrower would
enable the Borrower to be in compliance with subsection 6.1(a) of the Credit
Agreement as such subsection was in effect prior to this Second Amendment, then
the amendments to the Credit Agreement contained in subsections 2A and 2C of
this Second Amendment shall cease to be in effect and the provisions of the
Credit Agreement amended by subsections 2A and 2C of the Second Amendment shall
be in effect as such provisions were in effect prior to the Second Amendment,
except as such provisions may be amended, modified or supplemented subsequent
to the date hereof in accordance with the Credit Agreement.
4. Effective Date. This Second 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 Second
Amendment (a) this Second 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
<PAGE> 3
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 Borrower in the Loan Documents are
true and correct in all material respects on and as of the date hereof before
and after giving effect to the terms hereof (except to the extent that 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 nor would result
herefrom.
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 SECOND AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
8. Counterparts. This Second 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 Administrative Agent for all of its out-of-pocket costs and
reasonable expenses incurred in connection with this Second Amendment,
including without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed and delivered by their property and duly
authorized officers as of the day and year first above written.
PAXSON COMMUNICATIONS
CORPORATION
By: /s/
------------------------------
Title:
UNION BANK OF CALIFORNIA, N.A., as
Agent
By: /s/Christine P. Ball
------------------------------
Title: Vice President
THE BANK OF NEW YORK
By: /s/
------------------------------
Title
CIBC, INC.
By: /s/
------------------------------
Title
THE FIRST NATIONAL BANK OF BOSTON
By: /s/
------------------------------
Title
<PAGE> 5
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By: /s/
------------------------------
Title: Senior Vice President
ABN-AMRO BANK N.V.
ABN AMRO NORTH AMERICA, INC.
By: /s/
------------------------------
BANK OF AMERICA ILLINOIS
By: /s/
------------------------------
Title
BANK OF MONTREAL
By: /s/
------------------------------
Title
BARNETT BANK, N.A.
By: /s/
------------------------------
Title
<PAGE> 6
ABN AMRO BANK NV
By: /s/Javier M. Rosio
---------------------------
Name: Javier M. Rosio
Title: Group Vice President
By: /s/Michel A. Bibler
---------------------------
Name: Michel A. Bibler
Title: Vice President
<PAGE> 7
FLEET NATIONAL BANK
By: /s/
----------------------------------
Title:
LTCB TRUST COMPANY
By:
----------------------------------
Title:
THE SUMITOMO BANK LIMITED
By: /s/ ALLEN L. HARVELL, JR.
----------------------------------
Title: ALLEN L. HARVELL, JR.
VICE PRESIDENT & MGR.
By: /s/ M. PHILLIP FREEMAN
----------------------------------
Title: M. PHILLIP FREEMAN
VICE PRESIDENT
SUNTRUST BANK, CENTRAL FLORIDA, N.A.
By: /s/
----------------------------------
Title:
VICE PRESIDENT
<PAGE> 1
EXHIBIT 10.158
LOAN AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS CORPORATION
AND
COCOLA MEDIA CORPORATION OF SAN FRANCISCO
FOR
TELEVISION STATION KWOK-TV,
NOVATO, CALIFORNIA
MARCH 26, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. 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 Information............................................... 3
Section 1.7 Prepayment................................................ 3
Section 1.8 Payment on Non-Business Days.............................. 3
ARTICLE 2. CLOSING............................................................. 3
Section 2.1 Closing Date.............................................. 3
ARTICLE 3. SECURITY............................................................ 3
Section 3.1 Security Interest......................................... 3
Section 3.2 Pledge Agreement.......................................... 3
Section 3.3 Leasehold Mortgages....................................... 4
Section 3.4 Mortgages................................................. 4
ARTICLE 4. CONDITIONS OF LENDING............................................... 4
Section 4.1 Conditions Precedent to Loan.............................. 4
Section 4.2 Compliance................................................ 5
ARTICLE 5. REPRESENTATIONS AND WARRANTIES...................................... 5
Section 5.1 Representations and Warranties of Borrower................ 5
(a) Existence and Standing............................... 6
(b) Authorizations, Compliance with Laws................. 6
(c) No Consent........................................... 6
(d) Binding Obligations.................................. 6
(e) Litigation........................................... 6
(f) No Default........................................... 6
(g) Compliance with Laws................................. 7
(h) Taxes................................................ 7
(i) Title to Properties.................................. 7
(j) Material Misstatement................................ 7
ARTICLE 6. COVENANTS OF THE BORROWER........................................... 7
Section 6.1 Affirmative Covenants..................................... 7
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
(a) Payment of Obligations................................ 7
(b) Preservation of Existence............................. 8
(c) Maintenance of Properties............................. 8
(d) Compliance with Laws.................................. 8
(e) Maintenance of Insurance.............................. 8
(f) Operations in Ordinary Course......................... 8
(g) Perfection of Liens................................... 8
(h) FCC Approval.......................................... 8
(i) North Bay Agreements.................................. 8
Section 6.2 Negative Covenants......................................... 9
(a) Indebtedness.......................................... 9
(b) Liens................................................. 9
(c) Disposition of Assets................................. 9
(d) Merger................................................ 9
(e) Transfer or Issuance of Shares....................... 10
(f) Change of Business................................... 10
(g) Remove Assets........................................ 10
(h) Distributions or Dividends........................... 10
(i) Transactions with Affiliates......................... 10
(j) Contracts............................................ 10
(k) Adverse Change....................................... 10
(l) Employee Compensation................................ 11
(m) Cancellation of Debts................................ 11
(n) Write-Down........................................... 11
(o) Rights............................................... 11
(p) North Bay Agreements................................. 11
Section 6.3 Reporting Requirements.................................... 11
(a) Default Certificate.................................. 11
(b) Financial Statements................................. 11
(c) Notice of Litigation................................. 12
(d) Budget............................................... 12
(e) Other Information.................................... 12
ARTICLE 7. EVENTS OF DEFAULT................................................... 12
Section 7.1 Events of Default......................................... 12
Section 7.2 Effect of Event of Default................................ 13
ARTICLE 8. MISCELLANEOUS....................................................... 14
Section 8.1 No Waiver; Cumulative Remedies............................ 14
Section 8.2 Amendments................................................ 14
Section 8.3 Conflicts................................................. 14
Section 8.4 Address for Notices....................................... 14
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 8.5 Expenses.................................................. 15
Section 8.6 Binding Effect; Assignment................................ 15
Section 8.7 Governing Law............................................. 15
Section 8.8 Severability of Provisions................................ 16
Section 8.9 Headings.................................................. 16
Section 8.10 Rights Affected by Extensions............................ 16
Section 8.11 Survival of Representations and Warranties............... 16
Section 8.12 Attorneys' Fees.......................................... 16
Section 8.13 Further Assurances....................................... 16
Section 8.14 Indemnification.......................................... 16
Section 8.15 Non-Recourse............................................. 17
</TABLE>
- iii -
<PAGE> 5
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of March 26, 1996, is by and between
PAXSON COMMUNICATIONS CORPORATION, a Delaware corporation having its principal
offices at 601 Clearwater Park Road, West Palm Beach, Florida 33401 (the
"Lender"), and COCOLA MEDIA CORPORATION OF SAN FRANCISCO, a Delaware corporation
having its principal offices at 706 W. Herndon Avenue, Fresno, California 93650
(the "Borrower").
W I T N E S S E T H:
WHEREAS, North Bay Television, Inc. ("North Bay") is the permittee of
Television Station KWOK-TV, Channel 68, Novato, California (the "Station")
pursuant to authorizations issued by the Federal Communications Commission
("FCC").
WHEREAS, the Borrower is willing to provide an equity interest to Marin
TV Service Partners, Ltd., ("Marin") a former applicant for the Station in
return for Marin's withdrawal of its opposition to North Bay's Permit.
WHEREAS, the Borrower wishes to loan North Bay funds and to construct
and program the Station for North Bay;
WHEREAS, Borrower will obtain an Option to purchase the Station from
North Bay, subject to FCC approval; and
WHEREAS, the Borrower desires to borrow funds from the Lender to
finance the construction, 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 1. 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 Four Million Five
Hundred Thousand ($4,500,000.00) plus such additional amounts that are
reasonably requested by Borrower for the purposes set forth in Section 1.05 and
are approved by Lender in its sole discretion (the "Loan").
SECTION 1.2 THE PROMISSORY NOTE. The outstanding principal amount of
the Loan shall be evidenced by and subject to the terms of a promissory note,
dated of even date herewith, substantially in the form set forth as Exhibit 1
hereto (the "Note") payable to the order of the Lender and representing the
obligation of the Borrower to pay the Lender the
<PAGE> 6
amount of the Loan, with interest thereon, as prescribed in Section 1.4. The
Lender is authorized to endorse the date and amount of the Loan and each
repayment of principal and/or interest with respect thereto on the Schedule A
annexed to and constituting a part of the Note.
SECTION 1.3 INTEREST. The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum at all times equal to one-half
percent (1/2%) above the rate charged Lender by its senior lenders as adjusted
from time to time. Interest shall be calculated on the basis of a year of three
hundred sixty (360) days and 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 each
portion of the Loan pursuant to Section 1.5. The first payment of interest to
the Lender shall be due Ninety (90) days after the acquisition of the Station by
the Borrower pursuant to FCC authority at which time all interest accrued shall
become due and payable; thereafter, accrued interest shall be paid monthly, on
the same date as the principal payments are due pursuant to Section 1.4 hereof.
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 due date
thereof until paid in full.
SECTION 1.4 REPAYMENT OF THE LOAN. In the event that any portion of the
Loan is used by the Borrower to fund an escrow deposit or similar payment toward
the purchase of the Station (the "Deposit"), and such deposit is returned to the
Borrower, the amount of such deposit shall be immediately repaid to Lender
together with all interest earned on such deposit and paid to the Borrower. One
Hundred Twenty (120) days after the acquisition of the Station by the Borrower
pursuant to FCC authority, the Borrower shall begin repayment to the Lender of
the Loan by making consecutive, equal monthly payments of principal and interest
on the basis of an eighty-four (84) month amortization schedule.
SECTION 1.5 USE OF PROCEEDS AND ADVANCEMENT OF FUNDS.
(a) The proceeds of the Loan are to be used by the Borrower
exclusively for financing the construction, purchase and operation of the
Station and for working capital and operating expenses relating to the Station
as set forth below:
(b) The Lender shall loan to Borrower the funds required of
Borrower pursuant to the agreements with North Bay and Marin as follows:
(i) $500,000 shall be provided as a Loan to North Bay
pursuant to the Loan Agreement between the Borrower and North Bay;
(ii) $100,000 shall be used to pay for Borrower's
option to purchase the Station from North Bay;
- 2 -
<PAGE> 7
(iii) $600,000 shall be used to pay North Bay
pursuant to the Time Brokerage Agreement between Borrower and North Bay;
(iv) $500,000 shall be paid to North Bay as the
Purchase Price for the Station following FCC approval;
(v) $2,150,000 for construction costs for the
Station;
(vi) $150,000 for station operating expenses; and
(vii) $500,000 to repurchase Marin's equity interest
in Borrower.
SECTION 1.6 INFORMATION. The Borrower agrees to furnish to the Lender
such information as the Lender may reasonably request in connection with the
Loan or the Station.
SECTION 1.7 PREPAYMENT. The Borrower may prepay the Note in whole at
any time, or from time to time in part, with accrued interest to the date of
prepayment on the amount prepaid, without penalty, provided that each payment,
other than 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.
Each partial prepayment on the Note shall be applied first to accrued interest
and then to the payment of principal in the inverse order of maturity.
SECTION 1.8 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made hereunder or under the Note shall become due on a Saturday, Sunday or
public holiday, such payment may be made on the next succeeding business day,
and such extension of time in such case shall be included in the computation of
interest hereunder and under the Note.
ARTICLE 2. CLOSING
SECTION 2.1 CLOSING DATE. Closing of this transaction shall occur on a
date agreed upon by the parties hereto (the "Closing Date").
ARTICLE 3. 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, duly executed by Gary Cocola (the
"Shareholder"), the sole voting shareholder of the Borrower (the "Pledge
Agreement").
- 3 -
<PAGE> 8
SECTION 3.3 LEASEHOLD MORTGAGES. At such time as the Borrower enters
into any lease, it shall execute with respect to such lease a leasehold mortgage
in form and substance satisfactory to Lender (the "Leasehold Mortgage"),
granting the Lender a lien on its leasehold interest under such lease. In
particular, and without limiting the generality of the foregoing, the Borrower
shall execute a Leasehold Mortgage with respect to each lease, if any, that it
assumes as part of the acquisition of the Station. 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 (i) evidence of the filing of a memorandum of lease
in form and substance satisfactory to Lender, (ii) an executed estoppel
certificate in form and substance satisfactory to Lender, (iii) an executed
landlord's consent and waiver in form and substance satisfactory to Lender, and
(iv) an ALTA mortgagee's policy of title insurance in customary form with
respect to such lease.
SECTION 3.4 MORTGAGES. As 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 satisfactory to the
Lender. If requested by the Lender, the Borrower shall also deliver to the
Lender an ALTA mortgagee's policy of title insurance in customary form with
respect to such parcel.
ARTICLE 4. CONDITIONS OF LENDING
SECTION 4.1 CONDITIONS PRECEDENT TO LOAN. The obligation of the Lender
to disburse from time to time any portion of the Loan hereunder is subject to
the condition precedent that the Lender shall have received all of the
following, on or before the Closing Date, in form and substance satisfactory to
the Lender:
(a) The Note, duly executed and delivered by the Borrower;
(b) The Security Agreement, together with appropriate UCC-1
forms, duly executed and delivered by the Borrower;
(c) The Pledge Agreement, duly executed and delivered by the
Shareholder together with stock certificates and blank stock powers;
(d) A certified copy of the resolutions of the Board of
Directors of Borrower evidencing approval of the execution, delivery and
performance of this Agreement, the Note and the Security Agreement and other
matters contemplated hereby;
(e) A Certificate of Good Standing for the Borrower;
(f) Copies of all Station documents, including, without
limitation, Borrower's Agreements with North Bay and Marin including Loan
Agreement By and Between North Bay and Borrower; Option Agreement By and Between
North Bay and
- 4 -
<PAGE> 9
Borrower; Construction Agreement Between North Bay and Borrower; and, Time
Brokerage Agreement By and Between North Bay and Borrower.
(g) Such other agreements, certificates, opinions of counsel
and documents that the Lender may reasonably require;
(h) Leasehold Mortgages, to the extent required by Section
3.3;
(i) Copies of the certificates evidencing the insurance
required to be maintained by the Borrower pursuant to Section 6.1(e);
(j) Any memorandum of lease, to the extent required by Section
3.3;
(k) Executed estoppel certificates, to the extent required by
Section 3.3;
(l) Executed landlord's consents and waivers, to the extent
required by Section 3.3; and
(m) Evidence, in form and substance acceptable to Lender, that
Borrower has been approved by the FCC to acquire the Station and that the FCC
approval is a final, non-appealable order (for purposes of 1.5(b)(iv) hereof);
SECTION 4.2 COMPLIANCE. All of the representations and warranties of
the Borrower in this Agreement shall be true and accurate in all material
respects on and as of the Closing Date and the date of any subsequent
disbursement of any portion of the Loan, as if made on and as of such date and
time. The Borrower shall be in compliance with all of the applicable terms and
provisions of this Agreement and no Event of Default or any event which with the
lapse of any applicable grace period or the giving of notice or both would
constitute an Event of Default shall have occurred and be continuing. The
Borrower shall have performed all obligations and taken all actions to be
performed or taken by it hereunder on or prior to such date. On the Closing
Date, the Borrower shall deliver to the Lender a certificate, dated as of such
date and signed by an executive officer of the Borrower, 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 as of the date of such Loan, is in compliance
with this Section and if the Borrower is not in compliance with this Section,
the Lender shall not be required to disburse such Loan to the Borrower.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to
induce the Lender to enter into this Agreement and make the Loan, Borrower
represents and warrants as follows:
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<PAGE> 10
(a) 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 the State of California, 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 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.
(b) Authorizations, Compliance with Laws. The execution,
delivery and performance by the Borrower of this Agreement, the Note, any
Leasehold Mortgage, the Security Agreement and all other documents required to
be executed and delivered by the Borrower pursuant to this Agreement have been
duly authorized by all necessary corporate action and do not and will not (i)
violate (A) any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower or (B) any provision of the charter or by-laws of
the Borrower; or (ii) result in a breach of or constitute a default under any
agreement or instrument to which the Borrower is a party or by which its
properties may be affected; or (iii) result in the creation of a lien, charge or
encumbrance of any nature upon the Borrower's properties or assets other than as
contemplated by this Agreement.
(c) No Consent. No authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental department
or agency, except for filing with the FCC, is or will be necessary to the valid
execution, delivery and performance by the Borrower of this Agreement, the Note,
any Leasehold Mortgage, the Security Agreement or any other document required to
be executed and delivered by the Borrower pursuant to this Agreement.
(d) Binding Obligations. This Agreement, the Note, any
Leasehold Mortgage, the Security Agreement and all other documents required to
be executed and delivered by the Borrower pursuant to this Agreement have been
or will be executed and delivered by duly authorized officers of the Borrower
and constitute or will constitute, legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms.
(e) Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or its properties before any court or governmental department or
agency which materially adversely affects the transactions contemplated by this
Agreement or which would have a material adverse effect on the business,
properties, operation or condition of the Borrower.
(f) No Default. The Borrower is not in default in the
performance, observance or fulfillment of any of the obligations or conditions
contained in any material
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<PAGE> 11
agreement or instrument to which it is a party, nor with respect to any order,
judgment, writ, injunction or decree of any court, governmental authority or
arbitration board.
(g) Compliance with Laws. To its best knowledge, Borrower is
in compliance with all applicable federal, state and local laws. The Borrower
has obtained all necessary licenses and permits required for the conduct of its
business and operations or such licenses and permits have been applied for and
are now being diligently pursued.
(h) Taxes. The Borrower has filed all tax returns and reports
(federal, state and local) required to be filed by it, and has paid all taxes
shown thereon, including interest and penalties, and all assessments received by
it (except to the extent that the same are being contested in good faith by
appropriate proceedings diligently prosecuted and as to which adequate reserves
have been set aside on the books of the Borrower in conformity with generally
accepted accounting principles).
(i) Title to Properties. The Borrower has good and marketable
title to all of its property and assets and valid and enforceable leasehold
interests in the property which it holds under lease. All such property, assets
and leasehold interests being free and clear of any and all mortgages, deeds of
trust, assignments, liens, security interests, charges or encumbrances of any
nature whatsoever, except for those created hereby. No mortgages, deeds of
trust, financing statements or other evidences of security interests covering
all or any of the aforesaid property are on file among the records of any public
office, except those evidencing a security interest in favor of the Lender.
(j) Material Misstatement. No statement made herein or
information, exhibit or report furnished by the Borrower to the Lender in
connection with this Agreement or its negotiation, contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the foregoing not misleading.
ARTICLE 6. COVENANTS OF THE BORROWER
SECTION 6.1 AFFIRMATIVE COVENANTS. So long as the Note shall remain
unpaid, the Borrower hereby covenants and agrees that it will, unless the Lender
shall otherwise consent in writing:
(a) Payment of Obligations. Pay punctually and discharge when
due: (i) all indebtedness heretofore or hereafter incurred; (ii) all taxes,
assessments and governmental charges or levies imposed upon it or its income or
profits, or upon any 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
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<PAGE> 12
adequate reserves have been set aside on the books of the Borrower in accordance
with generally accepted accounting principles.
(b) Preservation of Existence. Preserve and maintain its
respective corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation.
(c) Maintenance of Properties. Maintain and preserve all of
its properties necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(d) Compliance with Laws. Comply in all material respects with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority.
(e) Maintenance of Insurance. Maintain with responsible and
reputable insurance companies policies on all of its properties and covering
such risks, including public liability and workers' compensation, in such
amounts as are usually carried by companies engaged in similar businesses and
owning similar properties as the Borrower, and promptly upon execution thereof
provide to the Lender copies of all such policies and any riders or amendments
thereto. The policies of insurance required hereunder shall name the Lender as
an additional loss payee or additional insured, as applicable, and shall provide
that the Lender shall receive at least thirty (30) days' written notice prior to
the cancellation, termination or alteration of any such policy.
(f) Operations in Ordinary Course. Continue to operate its
business in the ordinary course.
(g) Perfection of Liens. Do all things requested by the Lender
to preserve and perfect the liens and security interests of the Lender arising
pursuant to the Security Agreement, the Pledge Agreement, any Leasehold Mortgage
or any other agreement required hereunder as first liens and security interests.
(h) FCC Approval. If counsel to the Lender reasonably
determines that the consent of the FCC is required in connection with the
execution, delivery and performance of this Agreement, the Pledge Agreement, the
Security Agreement or any other document delivered to the Lender in connection
herewith or therewith or as a result of any action which may be taken pursuant
hereto or thereto, then the Borrower, at its sole cost and expense, agrees to
use its best efforts to secure such consent and to cooperate with the Lender in
any action commenced by the Lender to secure such consent.
(i) North Bay Agreements. Borrower shall execute and deliver
the Agreements with North Bay as listed in Section 4.1(f) hereof and comply with
its obligations thereunder.
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<PAGE> 13
SECTION 6.2 NEGATIVE COVENANTS. So long as the Note shall remain unpaid
and the Agreement shall not have been terminated, the Borrower hereby covenants
that it will not, without the Lender's prior written approval:
(a) Indebtedness. Create or incur, assume or suffer to exist
any indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, except for:
(i) indebtedness evidenced by the Note; and (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.
(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
this Agreement;
(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, unless the judgment it secures
shall not, within thirty (30) days after the entry thereof, have been
discharged, vacated, reversed, or execution thereof stayed pending appeal, or
shall not have been discharged, vacated or reversed within thirty (30) days
after the expiration of any such stay.
(c) Disposition of Assets. Sell, transfer, lease or otherwise
dispose of all or any material part of its assets other than in the ordinary
course of business and in exchange for collateral of like value in which the
Lender shall have a security interest.
(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.
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<PAGE> 14
(e) Transfer or Issuance of Shares. Permit the issuance or
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 (i) transfers to the Lender;
(ii) transfers resulting from the death of the Shareholder; and (iii) transfers
effected by the Shareholder with the prior written consent of the Lender (which
shall not be unreasonably withheld), solely for estate planning purposes of the
Shareholder.
(f) Change of Business. Change, in any material respect, the
nature or character of its business as intended, or engage in any activity not
reasonably related to such business.
(g) Remove Assets. Remove any of the assets procured with the
proceeds of the borrowings provided for herein, or any replacements for such
assets, to a jurisdiction in which no financing statement on Form UCC-1 has been
filed by the Lender with respect to such assets.
(h) Distributions or Dividends. Declare or make, directly or
indirectly, any payment or distribution, or incur any liability for the
purchase, acquisition, redemption or retirement of any capital stock of the
Borrower or as a dividend, return of capital or other payment or distribution of
any kind to a shareholder of the Borrower or any affiliate of the Borrower
(other than any stock dividend or stock split or similar distribution payable
only in capital stock of the Borrower) in respect of the Borrower's capital
stock, except that the Borrower may declare one annual dividend per year on all
classes of its capital stock with the prior written consent of the Lender.
Notwithstanding the foregoing, Borrower shall be permitted to distribute to a
shareholder of Borrower, any payments as received by Borrower pursuant to
Attachment I of the Time Brokerage Agreement between Borrower and Lender for the
operation of the Station.
(i) Transactions with Affiliates. Enter into any transaction
or agreement with any affiliate of the Borrower.
(j) Contracts. Enter into any contract or commitment relating
to its stock or assets except for contracts involving aggregate payments of less
than Twenty Thousand Dollars ($20,000.00) and contracts which can be terminated
without penalty on thirty (30) days' notice or less, or amend or terminate any
material contract (or waive any substantial right thereunder), or incur any
obligation (including obligations relating to the borrowing of money or
guarantee of indebtedness).
(k) Adverse Change. Suffer any material adverse change in the
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 that is not promptly repaired or
replaced in accordance with 6.01(c).
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<PAGE> 15
(l) Employee Compensation. Suffer any material increase in
excess of the reasonable range in the broadcast industry in the same or similar
markets in compensation payable or to become payable to any employees, or any
bonus payment made or promised to any employee, or any material change in
personnel policies, insurance benefits or other compensation arrangements
affecting any employees, provided that nothing in this clause shall be construed
to limit or restrict the commission compensation of employees who may be selling
brokered time for the Borrower.
(m) Cancellation of Debts. Cancel any debts owed or claims
held by the Borrower.
(n) Write-Down. Suffer any significant write-down of the value
of any assets without the prior written consent of the Lender except and as
required by generally accepted accounting principles as required to present
accurate financial information on the Borrower.
(o) Rights. Transfer or grant any right under, or enter into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, service mark, trade name, franchise, or similar right, or
modify any existing right relating to the Borrower.
(p) North Bay Agreements. Terminate, materially amend, commit
any material breach or default under or waive any term of the North Bay
Agreements.
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:
(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
the President of the Borrower setting forth details of such Event of Default and
the action which the Borrower proposes to take with respect thereto.
(b) Financial Statements. Beginning with the making of the
Final Installment, quarterly financial statements within thirty (30) days after
the end of each fiscal quarter; within ninety (90) days after the end of each
fiscal year of the Borrower, a copy of the reviewed 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. Lender shall accept a review of
the Borrower's financial records.
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<PAGE> 16
(c) Notice of Litigation. Promptly give written notice of all
actions, suits and proceedings before any court or governmental agency, domestic
or foreign, which may be commenced or threatened against the Borrower in which
the claim involved is Five Thousand Dollars ($5,000.00) or more and of any other
matter of the type described in Section 5.1(e).
(d) Budget. An annual budget to the Lender within thirty (30)
days of the beginning of each fiscal year of the Borrower.
(e) 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 7. EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT. Under this Agreement, an Event of
Default shall be any of the following:
(a) The Borrower shall fail to pay any installment of
principal or interest on the Note, or any other obligation to the Lender when
due whether at the due date thereof or by acceleration or otherwise, and such
default shall remain unremedied for a period of ten (10) days after notice
thereof shall have been given to the Borrower; or
(b) The security interest or lien of the Lender in any
material portion of the collateral covered by the Security Agreement, Pledge
Agreement or any Leasehold Mortgage shall at any time not constitute a legal,
valid and enforceable security interest or lien; or
(c) Any representation or warranty made by the Borrower (or
any of its officers) herein, in the Security 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 the
Security Agreement, or by the Shareholder in the Pledge Agreement shall prove to
have been incorrect in any material respect when made; or
(d) The Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement, the Note, the Security
Agreement, any Leasehold Mortgage or any Time Brokerage Agreement relating to
the Station or the Shareholder shall fail to perform or observe any term,
covenant or agreement contained in the Pledge Agreement, and any such failure
remains unremedied for thirty (30) days after written notice thereof shall have
been given to the Borrower by the Lender; or
(e) The Borrower 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
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<PAGE> 17
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) The Borrower shall expend the proceeds of the Loan for any
purpose other than the purchase of the Station and the operation of the
Station's business without the prior written consent of the Lender, which may be
withheld in the Lender's sole discretion; or
(g) The Borrower shall (i) fail to pay its debts as they
mature in the ordinary course of business; (ii) 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 ninety (90) 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 ninety (90) 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 ninety (90) days; or (viii) the Borrower shall take any action
for the purpose of effectuating the foregoing; or
(h) Any court, government, or government agency shall condemn,
seize or otherwise appropriate or take custody or control of all or a
substantial portion of the property or assets of the Borrower; or
(i) There shall be an irrevocable and unappealable denial or
revocation of the broadcast license for the Station.
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(g), all the obligations of the
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<PAGE> 18
Borrower under this Agreement and the Note shall become immediately due and
payable as of the date of any such Event of Default regardless of the cause of
such Event of Default and without any notice to the Borrower required from the
Lender. The Lender shall have, in addition to all other rights and remedies
allowed by law, the rights and remedies of a secured party under the Uniform
Commercial Code as in effect in the State of Florida and, without limiting the
generality of the foregoing, the rights and remedies provided for in the
Security Agreement, Pledge Agreements, and any Leasehold Mortgage, which
provisions are hereby incorporated by reference.
ARTICLE 8. 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.
SECTION 8.2 AMENDMENTS. No amendment, modification, termination or
waiver of any provision of this Agreement, the Note, the Security Agreement or
any 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 or any 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:
Mr. Gary Cocola
Cocola Media Corporation of San Francisco
706 W. Herndon Avenue
Fresno, CA 93650
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<PAGE> 19
with a copy (which shall not constitute notice) to:
Alan C. Campbell, Esq.
Irwin, Campbell & Tannenwald
1730 M Street N.W., Suite 200
Washington, D.C. 20036
If to the Lender:
Mr. Lowell W. Paxson
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, FL 33401
with a copy (which shall not constitute notice) to:
Anthony L. Morrison, Esq.
General Counsel
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, FL 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 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 in proceedings under any bankruptcy or
insolvency law. In addition, the Borrower shall pay any and all taxes and fees
payable or determined to be payable in connection with the execution, delivery
and recordation of any instruments and documents to be delivered hereunder.
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.
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
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<PAGE> 20
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. The parties agree to the exclusive jurisdiction and venue of the state
and federal district courts for the district including Palm Beach, Florida.
SECTION 8.8 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement, the Note, the Security Agreement, or any 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 including for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose.
SECTION 8.10 RIGHTS AFFECTED BY EXTENSIONS. The rights of the Lender
and its assigns shall not be impaired by any indulgence, release, renewal,
extension or modification which the Lender may grant with respect to the
indebtedness or any part thereof, or with respect to the collateral or with
respect to any endorser, guarantor, or surety without notice or consent of the
Borrower or any endorser, guarantee, or surety.
SECTION 8.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Agreement and the Note and the making of the Loan hereunder
and continue in full force and effect, as of the respective dates as of which
they were made, until all of the obligations of the Borrower to the Lender
hereunder have been paid in full.
SECTION 8.12 ATTORNEYS' FEES. If any litigation arises between the
parties in connection with the transactions contemplated by this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees in
addition to all other damages and remedies.
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
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<PAGE> 21
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 or in part from the gross negligence or willful misconduct of such
Indemnified Person.
SECTION 8.15 NON-RECOURSE. Notwithstanding anything to the contrary
herein, in any action or proceeding commenced with reference to this Loan
Agreement, no judgment shall be sought or obtained against Gary Cocola
personally or enforced against any of his separate assets, other than his
shareholder interests in Borrower, and such liability under this Loan Agreement
shall be limited to his shareholder interests in Borrower. In any legal action
or suit in equity which the Lender may undertake to enforce its rights and
remedies under the Loan Agreement, any judgment may be satisfied by recourse
only to Gary Cocola's shareholder interests therein and not by recourse to Gary
Cocola personally or by execution on any of his separate and/or joint assets,
other than his shareholder interests in Borrower.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 22
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.
WITNESS: COCOLA MEDIA CORPORATION OF
SAN FRANCISCO
By: /s/ Gary M. Cocola
- ---------------------------------- --------------------------------
Name: GARY M. COCOLA
Title: PRESIDENT
WITNESS: PAXSON COMMUNICATIONS
CORPORATION
By: /s/ Lowell W. Paxson
- ---------------------------------- --------------------------------
Name: Lowell W. Paxson
Title: Chairman
<PAGE> 1
EXHIBIT 10.159
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS CORPORATION
AND
THE KRALOWEC CHILDREN'S FAMILY TRUST AND
KKAK-TV, INC.
FOR
TELEVISION STATION KKAG(TV)
PORTERVILLE, CALIFORNIA
APRIL 1, 1997
<PAGE> 2
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 1ST day of April,
1997, by and between (i) Paxson Communications Corporation, a Delaware
corporation ("Buyer"), and (ii) Kralowec Children's Family Trust, Arthur C.
Kralowec as sole Trustee (the "Trust"), and (iii) KKAK-TV, Inc., a California
Corporation ("KKAK-TV", and collectively with the Trust, "Seller").
R E C I T A L S
A. Seller owns and operates television station KKAG(TV), Channel 61 in
Porterville, California serving the Fresno/Visalia, California market (the
"Station") under construction permit and Program Test Authority issued by the
Federal Communications Commission (the "FCC"), and,
B. Seller has pending with the FCC an application for issuance of a
license to cover the construction permit issued for Station, and,
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 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.
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"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7 that
are specifically designated on Schedule 3.7 as Contracts that are to be assumed
by Buyer upon its purchase of the Station, (ii) any Contracts entered into by
Seller between the date of this Agreement and the Closing Date that Buyer agrees
in writing to assume, and (iii) time sales contracts entered into by Seller in
compliance with Section 5.3.
"Closing" means the consummation of the purchase and sale of the assets
pursuant to this Agreement in accordance with the provisions of Section 8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer or
otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses, and
other agreements (including leases for personal or real property and employment
agreements), written or oral (including any amendments and other modifications
thereto) to which Seller is a party or which are binding upon Seller and which
relate to or affect the Assets or the business or operations of the Station, and
(i) which are in effect on the date of this Agreement or (ii) which are entered
into by Seller between the date of this Agreement and the Closing Date.
"Escrow Agent" means First Union National Bank of Florida.
"Escrow Agreement" means the Escrow Agreement dated as of the date
hereof among Buyer, Seller and the Escrow Agent.
"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 or 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
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property rights and interests (and any goodwill associated with any of the
foregoing) applied for, issued to, or owned by Seller or under which Seller is
licensed or franchised and which are used or useful in the business and
operations of the Station, together with any additions thereto between the date
of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations issued
by the FCC, the Federal Aviation Administration, or any other federal, state, or
local governmental authorities to Seller in connection with the conduct of the
business or operations of the Station or K09XA, 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 Licenses;
(c) The Assumed Contracts;
(d) 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
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Station, if any;
(e) 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;
(f) All choses in action of Seller relating to the Station;
and
(g) 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 and accounts receivable as of the
Closing and all other cash in any of Seller's bank or savings accounts; any
insurance policies, letters of credit, or other similar items and cash surrender
value in regard thereto; and any stocks, bonds, certificates of deposit and
similar investments;
(b) Any right or entitlement to the corporate entity "KKAK-TV,
Inc." or to "The Kralowec Children's Family Trust," or, except as otherwise
provided herein, books and records pertaining to those entities;
(c) Any pension, profit-sharing, or employee benefit plans,
and any collective bargaining agreements; and
(d) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets and the covenants
of Seller shall be the sum of Seven Million Nine Hundred and Sixty Thousand
Dollars ($7,960,000.00) 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
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
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accordance with Section 2.5.
(b) Manner of Determining Adjustments. Any adjustments will,
insofar as feasible, be determined and paid on the Closing Date, with final
settlement and payment by the appropriate party occurring no later than ninety
(90) days after the Closing Date or such other date as the parties shall
mutually agree upon. Seller shall prepare and deliver to Buyer not later than
five (5) days before the Closing Date a preliminary settlement statement which
shall set forth Seller's good faith estimate of the adjustments to the Purchase
Price under Section 2.3(a). The preliminary settlement statement (i) shall
contain all information reasonably necessary to determine the adjustments to the
Purchase Price under Section 2.3(a), to the extent such adjustments can be
determined or estimated as of the date of the preliminary settlement statement,
and such other information as may be reasonably requested by Buyer, and (ii)
shall be certified by Seller to be true and complete in all material respects as
of the date thereof.
2.4 Payment of Purchase Price. Except as provided in Section 9.5, the
Purchase Price, as adjusted, shall be paid by Buyer to Seller at Closing by wire
transfer of same-day funds pursuant to wire instructions which shall be
delivered by Seller to Buyer, at least two (2) days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date,
Buyer shall assume and undertake to pay, discharge, and perform all obligations
and liabilities of Seller under the Licenses and the Assumed Contracts insofar
as they relate to the time on and after the Closing Date, and arise out of
events related to Buyer's ownership of the Assets or its operation of the
Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or proceedings
relating to the operation of the Station prior to the Closing, (iv) any
obligations or liabilities arising under capitalized leases or other financing
agreements, (v) any obligations or liabilities arising under agreements entered
into other than in the ordinary course of business, (vi) any obligations or
liabilities of Seller under any employee pension, retirement, health and welfare
or other benefit plans or collective bargaining agreements, (vii) any obligation
to any employee of the Station for severance benefits, vacation time, or sick
leave accrued prior to the Closing Date, or (viii) any obligations or
liabilities caused by, arising out of, or resulting from any action or omission
of Seller prior to the Closing, and all such obligations and liabilities shall
remain and be the obligations and liabilities solely of Seller.
2.6 Time Brokerage Agreement, Lease. As additional consideration for
the obligations contained herein, Buyer agrees to enter into a Time Brokerage
Agreement calling for brokerage of broadcast time on KKAG(TV) by Buyer,
consideration for which will be the payment of $25,000 per month plus
reimbursement of reasonable net operating expenses.
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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. The Trust is a trust duly
organized, validly existing, and in good standing under the laws of the State of
California. KKAK-TV is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. Seller collectively has
all requisite power and authority (i) to own, lease, and use the Assets as now
owned, leased, and used, (ii) to conduct the business and operations of the
Station as now conducted, and (iii) to execute and deliver this Agreement, the
Escrow Agreement, Time Brokerage Agreement, Studio-Master Control Agreement, and
the documents contemplated hereby and thereby, and to perform and comply with
all of the terms, covenants, and conditions to be performed and complied with by
Seller hereunder and thereunder. Seller is not a participant in any joint
venture or partnership with any other person or entity with respect to any part
of the operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement and the Escrow Agreement and the other documents
mentioned and contemplated herein have been duly approved by all necessary
actions, including but not limited to all necessary actions by the Trust and its
Trustee, and this Agreement constitutes the valid and binding obligation of
Seller enforceable against it in accordance with its terms. This Agreement, the
Escrow Agreement, and the Time Brokerage Agreement have been duly executed and
delivered by Seller and constitute the legal, valid, and binding obligations of
Seller, enforceable against it in accordance with their respective terms except
as the enforceability of this Agreement and the Escrow Agreement may be affected
by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally, and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the Escrow Agreement and the documents contemplated hereby
and thereby (with or without the giving of notice, the lapse of time, or both):
(i) do not require the consent of any third party; (ii) will not conflict with
any provision of either the Articles of Incorporation of KKAK-TV, or the Trust
Agreement of the Trust; (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, Permits, Authorizations. 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
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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. Except as indicated in Schedule 3.4(a), the Licenses
are in full force and effect, and the conduct of the business and operations of
the Station is in accordance therewith. Other than as disclosed on Schedule
3.4(a), there is no pending or, to the knowledge of Seller, threatened action by
the FCC or any other entity or person to revoke, rescind, modify or refuse to
renew in the ordinary course any of the Licenses. The Station's city of license,
as determined by the FCC, is located within the Fresno Area of Dominant
Influence as defined by the 1991-1992 Area of Dominant Influence Market Guide
published by The Arbitron Co. and the Fresno Designated Market Area as defined
by the 1994 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. Other than as provided on Schedule 3.4(b), 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 Real Property; Lease of Studio-Master Control Area. No real
property is being conveyed hereby. However, in consideration hereof, Buyer is
Leasing to Seller for a period of 120 days after Closing, space for Studio,
Master Control and other operations as more particularly described in that
certain "Lease Agreement" attached as Schedule 3.5 and dated as of the date
hereof between Buyer and the Kralowec Children's Family Trust.
3.6 Title to and Condition of Tangible Personal Property. Schedule 3.6
lists all material items of Tangible Personal Property being conveyed hereby.
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
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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 and authority to assign its rights
under the Assumed Contracts to Buyer in accordance with this Agreement, and such
assignment will not affect the validity, enforceability, or continuation of any
of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1
and the other Consents described in Schedule 3.3, no consent, approval, permit,
or authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Station in essentially the same manner as
such business and operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Seller has delivered to Buyer copies of
all documents establishing or evidencing all Intangibles. Seller is not
infringing upon or otherwise acting adversely to any trademarks, trade names,
service marks, service names, copyrights, patents, patent applications,
know-how, methods, or processes owned by any other person or persons, and there
is no claim or action pending, or to the knowledge of Seller threatened, with
respect thereto. The Intangibles listed on Schedule 3.9 comprise all intangible
property interests necessary to conduct the business and operations of the
Station as now conducted.
3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of financial statements including balance sheets, statements of
operations and a statement of changes in financial position for the period
ending November 30, 1996 (collectively, the "Financial Statements"). Except as
disclosed in the Financial Statements, the Financial Statements have been
prepared from the books and records of Seller, have been prepared in accordance
with generally accepted accounting principles consistently applied and
maintained throughout the periods indicated, accurately reflect the books,
records, and accounts of the Station (which books, records, and accounts are
complete and correct), are complete and correct in all material respects, and
present
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fairly the financial condition of the Station as at their respective dates and
the results of operations for the periods then ended. None of the Financial
Statements understates the true costs and expenses of conducting the business or
operations of the Station, fails to disclose any material contingent
liabilities, or inflates the revenues of the Station. It is expressly understood
that Buyer is not relying on the financial condition or the financial aspects of
Seller's prior or future operation of the Station in executing this Agreement.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the business
of the Station. All policies of insurance listed in Schedule 3.11 are in full
force and effect. The insurance policies listed in Schedule 3.11 are adequate in
amount with respect to, and for the full value (subject to customary
deductibles) of, the Assets, and insure the Assets and the business of the
Station against all customary and foreseeable risks. During the past three
years, no insurance policy of Seller on the Assets or the Station has been
canceled by the insurer and no application of Seller for insurance has been
rejected by any insurer.
3.12 Reports. All returns, reports, and statements that the Station is
currently required to file with the FCC or with any other governmental agency
have been filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction over Seller and the Station have
been complied with. All of such returns, reports, and statements are
substantially complete and correct as filed. Seller has timely paid to the FCC
all annual regulatory fees payable with respect to the FCC Licenses.
3.13 Personnel.
(a) All of Seller's Employee Plans and Compensation
Arrangements are listed in Schedule 3.13, and complete and accurate copies of
any such written Employee Plans and Compensation Arrangements (or related
insurance policies) have been furnished to Buyer, along with copies of any
employee handbooks or similar documents describing such Employee Plans and
Compensation Arrangements. Descriptions of any unwritten Employee Plans or
Compensation Arrangements also are provided in Schedule 3.13. Schedule 3.13 also
contains a true and complete list of all employees of the Station, their job
description, date of hire, salary and amount and date of last salary increase.
(b) Each Employee Plan and Compensation Arrangement has been
administered in compliance with its own terms and in material compliance with
the provisions of ERISA, the Code, the Age Discrimination in Employment Act and
any other applicable Federal or state laws. Seller is not aware of the existence
of any governmental audit or examination of any Employee Plan or Compensation
Arrangement or of any facts which would lead it to believe that any such audit
or examination is pending or threatened. There exists no action, suit or claim
(other than routine claims for benefits) with respect to any Employee Plan or
Compensation Arrangement pending or, to the best knowledge of Seller, threatened
against any of such plans or arrangements, and Seller possesses no knowledge of
any facts which could give rise to any such action, suit or claim.
(c) Seller does not contribute to and is not required to
contribute to any
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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 to) 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 3.13, neither Seller nor
any other trade or business under common control with Seller (within the meaning
of Sections 414(b), (c), (m) or to) of the Code) sponsors, maintains or
contributes to any Employee Plan or Compensation Arrangement that provides
retiree medical or retiree life insurance coverage to former employees of Seller
at the Station.
(e) Except as described in Schedule 3.13, with respect to each
Employee Plan and, to the extent applicable, each Compensation Arrangement: (i)
each Employee Plan that is intended to be tax-qualified, and each amendment
thereto, is the subject of a favorable determination letter, and no plan
amendment that is not the subject of a favorable determination letter would
affect the validity of an Employee Plan's letter; (ii) no prohibited
transaction, within the definition of section 4975 of the Code or Title 1, Part
4 of ERISA, has occurred which would subject Seller to any liability; and (iii)
all contributions, premiums or payments accrued, in whole or in part, under each
Employee Plan or Compensation Arrangement or with respect thereto as of the
Closing will be paid by the Seller prior to the Closing, including, but not
limited to, contributions thereto with respect to the plan year ending
immediately prior to the Closing.
(f) For purposes of this Agreement, the following terms shall
have the meaning indicated: (i) "Employee Plan" shall mean any pension,
profit-sharing, deferred compensation, vacation, bonus, incentive, medical,
vision, dental, disability, life insurance or any other employee benefit plan as
defined in Section 3(3) of ERISA to which Seller or any entity related to Seller
(under the terms of Section 414(b), (c), (m) or to) of the Code) contributes or
to which Seller or any entity related to Seller (under the terms of Sections
414(b), (c), (m) or to) 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 to)
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.
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(g) Seller is not a party to or subject to any collective
bargaining agreements with respect to the Station. Seller has no written or oral
contracts of employment with any employee of the Station, other than those
listed in Schedule 3.7. Seller has complied with all laws, rules, and
regulations relating to the employment of labor, including those related to
wages, hours, collective bargaining, occupational safety, discrimination, and
the payment of social security and other payroll related taxes, and Seller has
not received any notice alleging that it has failed to comply in any material
respect with any such laws, rules, or regulations. No controversies, disputes,
or proceedings are pending or, to the best of Seller's knowledge, threatened,
between Seller and any employee (singly or collectively) of the Station. No
labor union or other collective bargaining unit represents or claims to
represent any of the employees of the Station. To the best of Seller's
knowledge, there is no union campaign being conducted to represent any employees
of the Station or to solicit cards from employees to authorize a union to
request a National Labor Relations Board certification election with respect to
any employees at the Station.
3.14 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local, or city tax returns
which are required to be filed, and it has paid or caused to be paid all taxes
shown on those returns or on any tax assessment received by it to the extent
that such taxes have become due, or has set aside on its books adequate reserves
(segregated to the extent required by generally accepted accounting principles)
with respect thereto. There are no governmental investigations or other legal,
administrative, or tax proceedings pursuant to which Seller is or could be made
liable for any taxes, penalties, interest, or other charges, the liability for
which could extend to Buyer as transferee of the business of the Station, and no
event has occurred that could impose on Buyer any transferee liability for any
taxes, penalties, or interest due or to become due from Seller.
3.15 Claims and Legal Actions. Except as provided in Schedule 3.4(a),
and except for any FCC rulemaking proceedings generally affecting the
broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative, or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to the
knowledge of Seller threatened, against or relating to Seller with respect to
its ownership or operation of the Station or otherwise relating to the Assets or
the business or operations of the Station, nor does Seller know or have reason
to be aware of any basis for the same. In particular, but without limiting the
generality of the foregoing, except as provided in Schedule 3.4(a), 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.
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3.16 Environmental Matters.
(a) Seller has complied in all material respects with all
laws, rules, and regulations of all federal, state, and local governments (and
all agencies thereof) concerning the environment, public health and safety, and
employee health and safety, and no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been filed or commenced
against Seller in connection with its ownership or operation of the Station
alleging any failure to comply with any such law, rule, or regulation.
(b) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and there is no basis related to the past or present operations,
properties, or facilities of Seller for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand against
Seller giving rise to any such liability) under any law, rule, or regulation of
any federal, state, or local government (or agency thereof) concerning release
or threatened release of hazardous substances, public health and safety, or
pollution or protection of the environment.
(c) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station and 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,
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state, and local laws, rules, and regulations (including all codes, plans,
judgments, orders, decrees, stipulations, injunctions, and charges thereunder)
relating to public health and safety, worker health and safety, and pollution or
protection of the environment, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes into ambient air, surface
water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
(g) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by Seller in
connection with its ownership and operation of the Station or, to the best of
Seller's knowledge, after due investigation, by any other party on any Real
Property.
3.17 Compliance with Laws. Seller has complied in all material respects
with the Licenses and all federal, state, and local laws, rules, regulations,
and ordinances applicable or relating to the ownership and operation of the
Station. Neither the ownership or use of the properties of the Station nor the
conduct of the business or operations of the Station conflicts with the rights
of any other person or entity.
3.18 Conduct of Business in Ordinary Course. Seller has conducted the
business and operations of the Station only in the ordinary course and, except
as provided on Schedule 3.18, 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
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name, franchise, or similar right, or modified any existing right relating to
the Station.
3.19 Transactions with Affiliates. Seller has not been involved in any
business arrangement or relationship relating to the Station with any affiliate
of Seller, and no affiliate of Seller owns any property or right, tangible or
intangible, which is used in the business of the Station. As used in this
paragraph, "affiliate" has the meaning set forth in Rule 12b-2 promulgated under
the Securities and Exchange Act of 1934.
3.20 Broker. Neither Seller nor any person acting on Seller's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement, except for a
commission payable by Seller to Media Venture Partners. The claims of Patrick
Communications Corporation, if any, will be the sole responsibility of Buyer.
3.21 Full Disclosure. No representation or warranty made by Seller in
this Agreement or in any certificate, document, or other instrument furnished or
to be furnished by Seller pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization; Standing; and Authority. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and at Closing will be duly qualified to conduct business as a foreign
corporation in the State of California. Buyer has all requisite power and
authority to execute and deliver this Agreement, the Escrow Agreement, Time
Brokerage Agreement, Studio-Master Control Lease Agreement and the documents
contemplated hereby and thereby, and to perform and comply with all of the
terms, covenants, and conditions to be performed and complied with by Buyer
hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery, and
performance by Buyer of this Agreement, the Escrow Agreement and the other
documents mentioned and contemplated herein have been duly authorized by all
necessary actions on the part of Buyer. This Agreement, the Escrow Agreement and
the Time Brokerage Agreement have been duly executed and delivered by Buyer and
constitute the legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms except as the
enforceability of thereof 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,
the Escrow Agreement and the other agreements and documents contemplated hereby
and thereby (with or without the giving of notice, the lapse of time, or both):
(i) do not require the consent of
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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, if any, to Patrick Communications Corporation.
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), or in accordance with the Time Brokerage
Agreement to be entered into, 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.
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5.5 Encumbrances. Seller shall not create, assume or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets, except for (i) liens disclosed on
Schedule 3.5 and Schedule 3.6, which shall be removed as provided in Section
9.5, (ii) liens for current taxes not yet due and payable, and (iii) mechanics'
liens and other similar liens, which shall be removed prior to the Closing Date.
5.6 Licenses. Seller shall not cause or permit, by any act or failure
to act, any of the Licenses to expire or to be revoked, suspended, or modified,
or take any action that could cause the FCC or any other governmental authority
to institute proceedings for the suspension, revocation, or adverse modification
of any of the Licenses. Seller shall not fail to prosecute with due diligence
any applications to any governmental authority in connection with the operation
of the Station. Notwithstanding the foregoing, Seller is under no obligation to
construct K09XA, for which a request for extension of time in which to commence
construction has been filed with the FCC, but not yet acted on.
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.
5.9 Access to Information. Seller shall give Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
to the Assets and to all other properties, equipment, books, records, Contracts,
and documents relating to the Station for the purpose of audit and inspection,
including inspections incident to the environmental study described in Section
6.5 and the engineering study described in Section 6.6, and will furnish or
cause to be furnished to Buyer or its authorized representatives all information
with respect to the affairs and business of the Station that Buyer may
reasonably request (including any financial reports and operations reports
produced with respect to the affairs and business of the Station). Without
limiting the generality of the foregoing, Seller shall give Buyer and its
counsel, accountants and other authorized representatives reasonable access to
Seller's financial records and Seller's employees, counsel, accountants and
other representatives for the purpose of preparing and auditing such financial
statements as Buyer determines, in its sole judgment, are required or advisable
to comply with federal or state securities laws and the rules and regulations of
securities markets as a result of the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
5.10 Maintenance of Assets. Seller shall use its best efforts and take
all reasonable actions to maintain all of the Assets in their present 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
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practices. If any loss, damage, impairment, confiscation, or condemnation of or
to any of the Assets occurs, Seller shall repair, replace, or restore the Assets
to their prior condition as represented in this Agreement as soon thereafter as
possible, and Seller shall use the proceeds of any claim under any insurance
policy solely to repair, replace, or restore any of the Assets that are lost,
damaged, impaired, or destroyed.
5.11 Insurance. Seller shall maintain the existing insurance policies
on the Station and the Assets.
5.12 Consents. Seller shall obtain the Consents and the estoppel
certificates described in Section 8.2(b), without any change in the terms or
conditions of any Contract or License that could be less advantageous to the
Station than those pertaining under the Contract or License as in effect on the
date of this Agreement. Seller shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon Buyer's request, Seller
shall cooperate with Buyer and use its best efforts to obtain from the lessors
under each Real Property lease such estoppel certificates and consents to the
collateral assignment of the lessee's interest under each such lease as Buyer's
senior lenders may request.
5.13 Books and Records. Seller shall maintain its books and records
relating to the Station in accordance with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing of any
unusual or material developments with respect to the business or operations of
the Station, and of any material change in any of the information contained in
Seller's representations and warranties contained in Section 3 of this
Agreement.
5.15 Financial Information. Seller shall furnish to Buyer within twenty
days after the end of each month ending between the date of this Agreement and
the Closing Date a Monthly Profit and Loss Statement for the month just ended in
the form of Schedule 5.15 and such other financial information as Buyer may
reasonably request. However, as provided in Section 3.10, it is expressly
understood that Buyer is not relying on the financial condition or the financial
aspects of Seller's prior or future operation of the Station in executing this
Agreement.
5.16 Compliance with Laws. Seller shall comply in all material respects
with all laws, rules, and regulations applicable or relating to the ownership
and operation of the Station.
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
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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 or which are in accordance with the Time Brokerage Agreement.
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 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 filed by third parties. 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
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indirectly, control, supervise, direct, or attempt to control, supervise, or
direct, the operations of the Station except consistent with the provisions of
the Time Brokerage Agreement being entered into contemporaneously herewith; 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 sixty 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 sixty 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 10 days advance written notice to Seller, in which
event all funds held by the Escrow Agent pursuant to the Escrow Agreement,
including all interest and other proceeds from the investment of such funds,
shall be immediately returned to Buyer, or (y) proceed to consummate the
transaction contemplated by this Agreement and complete the restoration and
replacement of the Assets after the Closing Date, in which event Seller shall
deliver to Buyer all insurance proceeds received in connection with such damage,
destruction or other event, provided, however, that in the event of any damage
or destruction, Buyer shall cooperate with Seller to restore normal operations
of the Station as soon as possible and Seller shall promptly apply all insurance
proceeds to restoring such service.
6.4 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, inducing Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Environmental Audit. Buyer may, at its option and expense, retain
an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Station. If the survey discloses
any material environmental hazard or material possibility of future liability
for environmental damages or clean-up costs, Buyer shall so notify Seller as
soon as practicable.
6.6 Engineering Study. Buyer may, at its option and expense, retain an
engineering firm to conduct a proof of performance study of the Station and to
prepare a
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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
California shall be complied with by Seller. Any loss, liability, obligation, or
cost suffered by Seller or Buyer as the result of the failure of Seller or Buyer
to comply with the provisions of any bulk sales law applicable to the transfer
of the Assets as contemplated by this Agreement shall be borne by Seller.
6.9 Title Insurance and Surveys.
(a) Title Insurance on Fee Property. With respect to each
parcel of Real Property that Seller owns, Seller will obtain and deliver to
Buyer, at Seller's expense, at or prior to Closing, an ALTA Owner's Policy of
Title Insurance Form B-1987 (or equivalent policy acceptable to Buyer), issued
by a title insurer satisfactory to Buyer, in an amount equal to the fair market
value of the property and any improvements thereon (as reasonably determined by
Buyer), insuring title to such parcel to be in the name of Buyer as of the
Closing, subject only to liens or encumbrances expressly permitted by this
Agreement.
(b) General Requirements as to Title Insurance Policies. Each
title insurance policy obtained and delivered to Buyer pursuant to this
Agreement shall (1) insure title to the Real Property described in the policy
and all recorded easements benefitting such Real Property, (2) contain an
"extended coverage endorsement" insuring over the general exceptions customarily
contained in title policies, (3) contain an ALTA Zoning Endorsement 3.1 (or
equivalent), (4) contain an endorsement insuring that the Real Property
described in the policy is the same real estate shown in the survey delivered
with respect to such property, (5) contain an inflation endorsement, (6) contain
a "contiguity" endorsement with respect to any Real Property consisting of more
than one record parcel, and (7) not be subject to any survey exception or any
defect or encroachment disclosed by a survey delivered with respect to the
property.
(c) Surveys. With respect to each parcel of Real Property, as
to which a title insurance policy is to be procured pursuant to this Agreement,
Seller will procure a current survey of the parcel, prepared by a licensed
surveyor and conforming to current
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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 Sales Tax Filings. Seller has not operated the Station in a manner
that requires the filing of California sales tax returns with respect to the
Station.
6.11 Access to Books and Records. Seller shall provide Buyer access and
the right to copy for a period of three years from the Closing Date any books
and records relating to the Assets that are not included in the Assets. Buyer
shall provide Seller access and the right to copy for a period of three years
from the Closing Date any books and records relating to the Assets.
6.12 Allocation of Purchase Price. Buyer and Seller hereby agree that
for state and federal income tax reporting purposes the Purchase Price shall be
allocated among the Acquired Assets as set forth in Schedule 3.14. With regard
to such allocation, Buyer and Seller agree to file Form 8594 and all other
required forms, if any, with the Internal Revenue Service when due.
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 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 conditions other than those 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
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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 which loss is not covered by insurance and/or which has been repaired as
called for herein.
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 other than those 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,
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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 following removal of liens as provided in Section 9.5 to
vest good and marketable title to the Assets in the name of Buyer, free and
clear of all claims, liabilities, security interests, mortgages, liens, pledges,
conditions, charges or encumbrances, except for liens for current taxes not yet
due and payable;
(b) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property and estoppel certificates of contracting parties to those Assumed
Contracts listed in Schedule 3.7 that are designated to indicate that estoppel
certificates are required under this paragraph;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Seller by an officer of KKAG-TV, Inc and the
trustee of the Kralowec Children's Family Trust, certifying (1) that the
representations and warranties of Seller contained in this Agreement are true
and complete in all material respects as of the Closing Date as though made on
and as of that date; and (2) that Seller has in all material respects performed
and complied with all of its obligations, covenants, and agreements set forth in
this Agreement to be performed and complied with on or prior to the Closing
Date;
(e) Title Insurance and Surveys. The title insurance and
surveys described in Section 6.9;
(f) Tax, Lien. and Judgment Searches. Results of a search for
tax, lien, and judgment filings in the Secretary of State's records of the State
of California as well as the records of those counties in California in which
any of the Assets are located, such searches having been made no earlier than
fifteen days prior to the Closing Date;
(g) Licenses, Contracts, Business Records. Etc. Copies of all
Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans,
projections, engineering records, and all files and records used by Seller in
connection with its operations ;
(h) 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;
(i) Lenders Certificates. Such certificates and confirmations
to Buyer's senior lenders as Buyer may reasonably request in connection with
obtaining financing for the performance of its payment obligations hereunder.
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(j) Lease Agreement. The Lease Agreement Studio, Master
Control and other operations, in the form attached hereto as as Schedule 3.5.
8.3 Deliveries by Buyer. Prior to or on the Closing Date,
Buyer shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in Section
2.3;
(b) Assumption Agreements. Appropriate assumption agreements
pursuant to which Buyer shall assume and undertake to perform Seller's
obligations under the Licenses and Assumed Contracts insofar as they relate to
the time on and after the Closing Date and arise out of events related to
Buyer's ownership of the Assets or its operation of the Station on or after the
Closing Date;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by an officer of Buyer, certifying (1)
that 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) the 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) Lease Agreement. The Lease Agreement Studio, Master
Control and other operations, in the form attached hereto as as Schedule 3.5.
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 24
months from the date hereof.
(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
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Buyer received written notice of such breach from Seller.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer and
the purchase and sale of the Station abandoned, if Buyer is not then in material
default, upon written notice to Seller, upon the occurrence of any of the
following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Buyer set
forth in this Agreement have not been satisfied or waived in writing by Buyer.
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by 24
months from the date hereof.
(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 sixty 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 45 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 45 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.
(a) Seller's Right to Terminate. In the event of a material
breach hereunder by Buyer prior to Closing of any Buyer agreement, covenant,
representation, or warranty hereunder, and the continuation of said breach
without cure for a period of thirty (30) consecutive days following the date on
which Seller shall have given to Buyer written notice of such breach, then
Seller may in its discretion terminate this Agreement by giving written notice
of termination to Buyer. The rights conferred by the above sentence may not be
exercised unless Seller is not in material breach hereunder and Seller has given
Buyer thirty (30) days written notice of the specific nature of such breach and
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Buyer has failed to correct such breach within that period. In the event of
Seller's termination hereof pursuant to this Section 9.3(a) Seller shall be
entitled to seek all available legal and equitable relief that Seller may have
against Buyer.
(b) Buyer's Right to Terminate. In the event of a material
breach hereunder by Seller prior to Closing of any Seller agreement, covenant,
representation, or warranty hereunder, and the continuation of said breach
without cure for a period of thirty (30) consecutive days following the date on
which Buyer shall have given to Seller written notice of such breach, then Buyer
may in its discretion, by giving written notice of termination to Seller,
terminate this Agreement without cost, penalty, or liability on Buyer's part of
any kind, whereupon Buyer shall be entitled to seek all available legal and
equitable relief that Buyer may have against Seller. The rights conferred by the
above sentence may not be exercised unless Buyer is not in material breach
hereunder and Buyer has given Seller thirty (30) days written notice of the
specific nature of such breach and Seller has failed to correct such breach
within that period. In the event of Buyer's termination hereof pursuant to this
Section 9.3(b), Buyer shall be entitled to seek all available legal and
equitable relief that Buyer may have against Seller.
9.4 Specific Performance. Notwithstanding anything to the contrary set
out above, as an alternative to the remedies set forth in Sections 9.3(a) and
9.3(b), each party shall have the right specifically to enforce the other
party's performance under this Agreement so long as the party enforcing such
right is not then in material breach of this Agreement, and each party agrees to
waive the defense in any such suit that the other party has an adequate remedy
at law and to interpose no opposition, legal or otherwise, as to the propriety
of specific performance as a remedy.
9.5 Escrow Deposit. Upon closing, Buyer will deposit with the Escrow
Agent the sum of $1,200,000.00 at the date of close to insure discharge of all
liens and encumbrances set out in Schedule 3.5 and 3.6. All such funds deposited
with the Escrow Agent shall be held and disbursed in accordance with the terms
of the Escrow Agreement and the following provisions:
(a) At the Closing, after payments of the liens set out on
Schedule 3.5, and after satisfying Buyer that all the Tangible Property can be
conveyed to Buyer free of liens and encumbrances, all amounts held by the Escrow
Agent pursuant to the Escrow Agreement, including any interest or other proceeds
from the investment of funds held by the Escrow Agent, shall be disbursed to or
at the direction of Buyer.
(b) If this Agreement is terminated pursuant to Section 9.1 or
9.2 and Buyer is not in material breach of this Agreement, all amounts held by
the Escrow Agent pursuant to the Escrow Agreement, including any interest or
other proceeds from the investment of funds held by the Escrow Agent, shall be
disbursed to or at the direction of Buyer.
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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, 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
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in this Agreement or in any certificate, document, or instrument delivered to
Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting from
the operation or ownership of the Station on and after the Closing.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within five days after
written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying Party
shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty-day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration provisions
of this Agreement, as applicable.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate in the defense of any third
party claim, it shall be
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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 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
10.6 Must Carry. Buyer hereby acknowledges its awareness of the
existence of litigation concerning the legality of the FCC's must-carry rules
currently in effect. Buyer agrees that any modification or extinguishment of any
such rights shall not constitute grounds for modification, rescission, or
failure to comply with this Agreement.
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 Buyer. Buyer and Seller shall each
pay one-half of any fees payable to the Escrow Agent and all filing fees
required by the FCC in connection with the FCC Consent. Except as otherwise
provided in this Agreement, each party shall pay its own expenses incurred in
connection with the authorization, preparation, execution, and performance of
this Agreement, including all fees and expenses of counsel, accountants, agents,
and representatives. However, the parties shall share the costs of defending
this Agreement and the Assignment Application at the FCC and elsewhere. Seller
shall pay at the Closing all brokerage fees and commissions payable to Media
Venture Partners, and Buyer shall be responsible for all fees or commissions
payable to any other finder, broker, advisor, or similar person retained by or
on behalf of Buyer.
11.2 Venue. Venue for any action to interpret or enforce any of the
provisions hereof, including all Schedules related hereto, shall be in the
Superior or Federal Courts of Florida.
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:
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If to Seller: Arthur C. Kralowec, Esq., Trustee/President
1077 West Morton Avenue
Porterville, California 93257
With a copy to: Dan J. Alpert, Esq.
Law Office of Dan J. Alpert
2120 N. 21st Road
Arlington, Virginia 22201
If to Buyer: Lowell W. Paxson, Chairman
Paxson Communications Corporation
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 Assignment, Benefit and Binding Effect.
(a) Assignment. With the exception of Seller's assignment to a
qualified intermediary as provided below, 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 hereunder without the
consent of Seller, on five (5) days prior written notice to Seller, to one or
more subsidiaries or commonly controlled affiliates of Buyer, whereupon Buyer
shall be relieved of all obligations hereunder except the obligation to
guarantee the performance of such entity under this Agreement, including its
Schedules, the Escrow Agreement and the Time Brokerage Agreement. Each attempted
assignment, if any, not in compliance with this Section 11.4 shall be null and
void.
(b) Seller's IRS Section 1031 Election. Seller intends to
appoint a qualified intermediary or qualified escrow in accordance with the
"safe harbor" Rules under Section 1031 of the Internal Revenue Code. Buyer shall
provide reasonable cooperation to Seller in order to accomplish Seller's IRS
Section 1031 Election and the realization by Seller of a tax free exchange in
connection with the transaction contemplated hereunder, it being understood,
however, that such realization of a tax free exchange shall not be a condition
precedent to Seller's and/or Buyer's obligation to consummate the transaction
contemplated hereunder.
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
30
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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 CALIFORNIA (WITHOUT REGARD
TO THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless of the
gender and number specifically used, shall be deemed and construed to include
any other gender, masculine, feminine, or neuter, and any other number, singular
or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in its judgment be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
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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.
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
BUYER:
PAXSON COMMUNICATIONS
CORPORATION
By: /s/ Lowell Paxson
-----------------------------------------
Lowell Paxson
Chairman
SELLER:
THE KRALOWEC CHILDREN'S FAMILY
TRUST
By: /s/ Arthur C. Kralowec
-----------------------------------------
Arthur C. Kralowec,
Trustee
KKAK-TV, INC.
By: /s/ Arthur C. Kralowec
-----------------------------------------
Arthur C. Kralowec,
President
32
<PAGE> 1
EXHIBIT 10.160
================================================================================
ASSET PURCHASE AGREEMENT
BY AND AMONG
PAXSON COMMUNICATIONS OF CEDAR RAPIDS-48, INC.,
FANT BROADCASTING COMPANY OF IOWA, INC.
AND
PAXSON COMMUNICATIONS CORPORATION
FOR
TELEVISION STATION KTVC-TV
CEDAR RAPIDS, IOWA
* * *
May 5, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS...........................................................................................1
"Accounts Receivable"....................................................................................1
"Assets".................................................................................................1
"Assumed Contracts"......................................................................................1
"Closing"................................................................................................1
"Closing Date"...........................................................................................2
"Consents"...............................................................................................2
"Contracts"..............................................................................................2
"Escrow Agent"...........................................................................................2
"Escrow Agreement".......................................................................................2
"FCC"....................................................................................................2
"FCC Consent"............................................................................................2
"FCC Licenses"...........................................................................................2
"Final Order"............................................................................................2
"Intangibles"............................................................................................2
"Licenses"...............................................................................................3
"LPTV Purchase Agreement"................................................................................3
"PCC Shares".............................................................................................3
"Purchase Price".........................................................................................3
"Real Property"..........................................................................................3
"Tangible Personal Property".............................................................................3
"Time Brokerage Agreement"...............................................................................3
"To the best knowledge of Seller"........................................................................3
SECTION 2. PURCHASE AND SALE OF ASSETS...........................................................................4
2.1 Agreement to Sell and Buy.......................................................................4
2.2 Excluded Assets.................................................................................4
2.3 Purchase Price..................................................................................5
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 Organization, Standing, and Authority...........................................................7
3.2 Authorization and Binding Obligation............................................................7
3.3 Absence of Conflicting Agreements...............................................................8
3.4 Governmental Licenses...........................................................................8
3.5 Title to and Condition of Real Property.........................................................9
3.6 Title to and Condition of Tangible Personal Property............................................9
3.7 Contracts......................................................................................10
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3.8 Consents.......................................................................................10
3.9 Intangibles....................................................................................10
3.10 Accredited Investor; Investment Knowledge; Distribution........................................10
3.11 Reports........................................................................................11
3.12 Personnel......................................................................................11
3.13 Taxes..........................................................................................12
3.14 Claims and Legal Actions.......................................................................12
3.15 Environmental Matters..........................................................................13
3.16 Compliance with Laws...........................................................................14
3.17 Full Disclosure................................................................................14
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................14
4.1 Organization, Standing, and Authority..........................................................14
4.2 Authorization and Binding Obligation...........................................................14
4.3 Absence of Conflicting Agreements..............................................................15
4.4 PCC Shares.....................................................................................15
4.5 Buyer Qualifications...........................................................................15
4.6 Full Disclosure................................................................................15
SECTION 5. OPERATIONS OF THE STATION PRIOR TO CLOSING...........................................................15
5.1 Generally......................................................................................15
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.........................................................................................16
5.8 No Inconsistent Action.........................................................................16
5.9 Access to Information..........................................................................16
5.10 Maintenance of Assets..........................................................................17
5.11 Insurance......................................................................................17
5.12 Consents.......................................................................................17
5.13 Books and Records..............................................................................17
5.14 Notification...................................................................................18
5.15 Compliance with Laws...........................................................................18
5.16 Financing Leases...............................................................................18
5.17 Preservation of Business.......................................................................18
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS.....................................................................18
6.1 FCC Consent....................................................................................18
6.2 Control of the Station.........................................................................19
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6.3 Risk of Loss...................................................................................19
6.4 Confidentiality................................................................................19
6.5 Environmental Audit............................................................................19
6.6 Engineering Study..............................................................................19
6.7 Cooperation....................................................................................19
6.8 Bulk Sales Law.................................................................................20
6.9 Title Insurance and Surveys....................................................................20
6.10 Sales Tax Filings..............................................................................21
6.11 Access to Books and Records....................................................................21
6.12 Noncompetition Agreement.......................................................................21
6.13 HSR Act Filing.................................................................................21
6.14 Broker.........................................................................................21
6.15 Cable Proceedings..............................................................................21
6.16 Allocation of Purchase Price...................................................................22
6.17 Parent Guaranty................................................................................22
6.18 Registration Rights............................................................................22
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING.....................................................................................22
7.1 Conditions to Obligations of Buyer.............................................................22
7.2 Conditions to Obligations of Seller............................................................23
SECTION 8. CLOSING AND CLOSING DELIVERIES.......................................................................24
8.1 Closing........................................................................................24
8.2 Deliveries by Seller...........................................................................24
8.3 Deliveries by Buyer............................................................................25
SECTION 9. TERMINATION..........................................................................................26
9.1 Termination by Seller..........................................................................26
9.2 Termination by Buyer...........................................................................27
9.3 Rights on Termination..........................................................................28
9.4 Escrow Deposit.................................................................................28
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES............................................................29
10.1 Representations and Warranties.................................................................29
10.2 Indemnification by Seller......................................................................29
10.3 Indemnification by Buyer.......................................................................29
10.4 Procedure for Indemnification..................................................................30
10.5 Specific Performance...........................................................................31
10.6 Attorneys' Fees................................................................................31
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
10.7 Limitation.....................................................................................31
SECTION 11. MISCELLANEOUS.......................................................................................31
11.1 Fees and Expenses..............................................................................31
11.2 Arbitration....................................................................................32
11.3 Notices........................................................................................32
11.4 Benefit and Binding Effect.....................................................................33
11.5 Further Assurances.............................................................................33
11.6 Governing Law..................................................................................33
11.7 Headings.......................................................................................34
11.8 Gender and Number..............................................................................34
11.9 Entire Agreement...............................................................................34
11.10 Waiver of Compliance; Consents.................................................................34
11.11 Press Release..................................................................................34
11.12 Counterparts...................................................................................34
</TABLE>
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<PAGE> 6
LIST OF SCHEDULES AND EXHIBITS
------------------------------
Schedule 2.2 -- Excluded Assets
Schedule 2.4 -- Form of Promissory Note
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 6.12 -- Form of Noncompetition Agreement
Schedule 8.2(g) -- Form of Opinion of Seller's Counsel
Schedule 8.3(d) -- Form of Opinion of Buyer's Counsel
- v -
<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the ___ day of
_________,1997, by and between Paxson Communications of Cedar Rapids-48,
Inc., a Florida corporation ("Buyer"), Fant Broadcasting Company of Iowa,
Inc., an Alabama corporation ("Seller"), and, for purposes of Section 6.17
hereof, Paxson Communications Corporation, a Delaware corporation ("PCC").
R E C I T A L S
A. Seller is the licensee of and owns and operates television
station KTVC(TV), Cedar Rapids, Iowa (the "Station") pursuant to licenses issued
by the Federal Communications Commission ("FCC").
B. Seller desires to sell, and Buyer desires to buy,
substantially all the assets that are used or useful in the business or
operations of the Station, for the price and on the terms and conditions set
forth in this Agreement.
A G R E E M E N T S
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Seller, intending to be bound
legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means the rights to payment for the sale of
advertising time run on the Station prior to the Closing Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"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, and (ii) any Contracts entered into
by Seller between the date of this Agreement and the Closing Date that Buyer
agrees in writing to assume.
"Closing" means the consummation of the purchase and sale of the Assets
pursuant to this Agreement in accordance with the provisions of Section 8.
<PAGE> 8
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"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer or
otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses, and
other agreements (including leases for personal or real property and employment
agreements), written or oral (including any amendments and other modifications
thereto) to which Seller is a party or which are binding upon Seller and which
relate to or affect the Assets or the business or operations of the Station, and
(i) which are in effect on the date of this Agreement or (ii) which are entered
into by Seller between the date of this Agreement and the Closing Date.
"Escrow Agent" means First Union National Bank of Florida.
"Escrow Agreement" means the Escrow Agreement dated as of the date
hereof among Buyer, Seller and the Escrow Agent.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment warranties,
and other similar intangible property rights and interests (and any goodwill
associated with any of the foregoing) applied for, issued to, or owned by Seller
or under which Seller is licensed or franchised and which are used or useful
<PAGE> 9
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in the business and operations of the Station, together with any additions
thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations issued
by the FCC, the Federal Aviation Administration, or any other federal, state, or
local governmental authorities to Seller in connection with the conduct of the
business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date.
"LPTV Purchase Agreement" means the Asset Purchase Agreement dated as
of the date hereof, among Paxson Communications of Buffalo-51, Inc., Fant
Broadcasting of New York, L.L.C. and Anthony J. Fant concerning the sale of the
construction permit for WAQF-TV, Batavia, New York, and the assets used or
useful in the business or operations of Low Power Television Stations W69CS,
Buffalo, New York, and W63BM, Rochester, New York.
"PCC Shares" means Six Hundred Thousand (600,000) shares of the Class A
Common Stock of Paxson Communications Corporation, par value $.001 per share,
listed for trading on the American Stock Exchange under the symbol "PXN."
"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 owned by Seller and
is used or useful in the conduct of the business or operations of the Station,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"Time Brokerage Agreement" means the Time Brokerage Agreement dated as
of the date hereof between Buyer and Seller pursuant to which Buyer shall
provide programming for broadcast on the Station.
"To the best knowledge of Seller" means to the actual knowledge of
Anthony J. Fant after reasonable inquiry, including, where appropriate, inquiry
to the employee or agent of Seller with responsibility for the construction or
operation of the Station.
<PAGE> 10
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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;
(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., Cedar
Rapids, Iowa 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 (other than those books and records described in
Section 2.2(b)), 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
<PAGE> 11
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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 and all books and
records that are required by Seller to prepare its tax returns or to
substantiate information reported to federal and state governmental authorities;
(c) Any pension, profit-sharing, or employee benefit
plans, and any collective bargaining agreements; and
(d) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets and the
covenants of Seller set forth in the Noncompetition Agreement referred to in
Section 6.12 shall be Five Million Dollars ($5,000,000), adjusted as provided
below (as adjusted, the "Cash Purchase Price"), plus the PCC Shares:
(a) Prorations. The Cash Purchase Price shall be
increased or decreased as required to effectuate the proration of expenses,
other than expenses for which Buyer is obligated to reimburse Seller under the
Time Brokerage Agreement. All expenses arising from the operation of the Station
that are prepaid or deferred by Seller, including business and license fees,
utility charges, real and personal property taxes and assessments levied against
the Assets, property and equipment rentals, applicable copyright or other fees,
sales and service charges, taxes (except for taxes arising from the transfer of
the Assets under this Agreement), FCC annual regulatory fees and similar prepaid
and deferred items, other than any such expenses for which Buyer is obligated to
reimburse Seller under the Time Brokerage Agreement, shall be prorated between
Buyer and Seller in accordance with the principle that Seller shall be
responsible for all expenses, costs, and liabilities allocable to the period
prior to the Closing Date (subject to reimbursement by Buyer to the extent
provided in the Time Brokerage Agreement), and Buyer shall be responsible for
all expenses, costs, and obligations allocable to the period on and after the
Closing Date. Notwithstanding the preceding sentence, there shall be no
adjustment for, and Seller shall remain solely liable with respect to, any
Contracts not included in the Assumed Contracts and any other obligation or
liability not being assumed by Buyer in accordance with Section 2.5.
(b) Manner of Determining Adjustments. Any adjustments
will, insofar as feasible, be determined and paid on the Closing Date, with
final settlement and payment by the appropriate party occurring no later than
ninety (90) days after the Closing Date or such other date as the parties shall
mutually agree upon. Seller shall prepare and deliver to Buyer not later than
five (5) days before the Closing Date a preliminary settlement statement which
shall set forth Seller's good faith estimate of the adjustments to the Cash
Purchase Price
<PAGE> 12
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under Section 2.3(a). The preliminary settlement statement (i) shall contain all
information reasonably necessary to determine the adjustments to the Cash
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.
(c) Non-Dilution. If at any time after the date hereof
and prior to the Closing Date, PCC shall effect (i) a dividend or other
distribution upon the Class A Common Stock of PCC payable in Class A Common
Stock of PCC or other property (other than cash), including common stock,
preferred stock or other securities of PCC, (ii) a combination of the
outstanding shares of Class A Common Stock of PCC into a smaller number of such
shares, (iii) a subdivision of the outstanding shares of Class A Common Stock of
PCC into a larger number of such shares, or (iv) any other reorganization,
restructuring, recapitalization or reclassification of the Class A Common Stock
of PCC (or any merger, consolidation, business combination or other similar
transaction involving another entity), such that in any such event set forth in
(i)-(iv) the holders of the outstanding shares of Class A Common Stock of PCC
shall be entitled to receive (either directly or upon subsequent liquidation)
any combination of shares of stock, other securities, cash or other property
with respect to or in exchange for such shares of Class A Common Stock of PCC
(any such event set forth in (i)-(iv) above shall be referred to as a "Diluting
Event"), then Seller shall be entitled to receive on the Closing Date (under the
same terms and conditions otherwise applicable to its receipt of the PCC
Shares), the following:
(1) if the Diluting Event results in an exchange
of shares of Class A Common Stock of PCC for any combination of shares of stock,
other securities, cash or other property, Seller shall receive, in lieu of the
shares of Class A Common Stock of PCC to which it is entitled pursuant to the
terms of this Agreement, such shares of stock, other securities, cash or other
property as may be issued or payable by virtue of the Diluting Event in exchange
for that number of shares of Class A Common Stock of PCC which Seller would have
received had the Closing occurred immediately prior to the Diluting Event;
(2) if the Diluting Event results in an issuance
or payment with respect to the Class A Common Stock of PCC, Seller shall
receive, in addition to the shares of Class A Common Stock of PCC to which it is
entitled pursuant to the terms of this Agreement, such shares of stock, other
securities, cash or other property (or any combination thereof) as may be issued
or payable by virtue of the Diluting Event on the basis of the number of shares
of Class A Common Stock of PCC which Seller would have received had the Closing
occurred immediately prior to the Diluting Event.
2.4 Payment of Purchase Price. The Purchase Price shall be paid
by Buyer to Seller on the Closing Date as follows: (a) Buyer shall deliver to
Seller its Demand
<PAGE> 13
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Promissory Note in the principal amount of the Cash Purchase Price, which Demand
Promissory Note shall be substantially in the form of Schedule 2.4 hereto, and
(b) Buyer shall cause PCC to issue and deliver to Seller the PCC Shares.
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 and not included in the
Assumed Contracts, (vi) any obligations or liabilities of Seller under any
employee pension, retirement, health and welfare or other benefit plans or
collective bargaining agreements, (vii) any obligation to any employee of Seller
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 Alabama. Seller has all requisite power and authority (i) to own,
lease, and use the Assets as now owned, leased, or used, (ii) to conduct the
business and operations of the Station as now conducted, and (iii) to execute
and deliver this Agreement, the Escrow Agreement and the documents contemplated
hereby and thereby, and to perform and comply with all of the terms, covenants,
and conditions to be performed and complied with by Seller hereunder and
thereunder. Seller is not a participant in any joint venture or partnership with
any other person or entity with respect to any part of the operations of the
Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement and the Escrow Agreement by Seller have been
duly authorized by all necessary actions on the part of Seller and its
shareholder. This Agreement and the Escrow Agreement have been duly executed and
delivered by Seller and constitute the legal, valid, and binding obligations of
Seller, enforceable against it in accordance with
<PAGE> 14
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their respective terms except as the enforceability of this Agreement and the
Escrow Agreement may be affected by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally, and by judicial discretion in the
enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3 and making any filing required under the HSR
Act, the execution, delivery, and performance of this Agreement and the Escrow
Agreement and the documents contemplated hereby and thereby (with or without the
giving of notice, the lapse of time, or both): (i) do not require the consent of
any third party; (ii) will not conflict with any provision of the Articles of
Incorporation or Bylaws of Seller; (iii) will not conflict with, result in a
breach of, or constitute a default under, any law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; (iv) 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, other than such conflicts, terminations, breaches, defaults or
accelerations that would not (x) have a material adverse effect on the Assets,
business or operations of Seller and (y) delay or prevent the Closing; 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 Cedar Rapids-Waterloo-Dubuque Area of Dominant Influence as
defined by the 1991-1992 Area of Dominant Influence Market Guide published by
The Arbitron Co. and the Cedar Rapids-Waterloo-Dubuque Designated Market Area as
defined by the 1996 United States Television Household Estimates published by
Nielsen Media Research. As of the date hereof, Seller has 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 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.
<PAGE> 15
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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 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), to the best knowledge of
Seller, (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 not received any notice that it does not have full
legal and practical access to the Real Property. All easements, rights-of-way,
and real property licenses have been properly recorded in the appropriate public
recording offices, except for those the failure of which to be recorded will not
adversely affect the full legal and practical access to the Real Property.
3.6 Title to and Condition of Tangible Personal Property. Schedule
3.6 lists all material items of Tangible Personal Property. The Tangible
Personal Property listed on Schedule 3.6 comprises all material items of
tangible personal property necessary to conduct the business and operations of
the Station as now conducted. Except as described in Schedule 3.6, Seller owns
and has good title to each item of Tangible Personal Property, and none of the
Tangible Personal Property owned by Seller is subject to any security interest,
mortgage, pledge, conditional sales agreement, or other lien or encumbrance,
except for liens for current taxes not yet due and payable. Each item of
Tangible Personal Property is available for immediate use in the business and
operations of the Station. All items of transmitting and studio equipment
included in the Tangible Personal Property (i) is in good condition and repair
consistent with its present use 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.
<PAGE> 16
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3.7 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), 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, 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 Seller or, to the best knowledge of
Seller, any other party thereto or any event that, after notice or lapse of time
or both, could constitute a default. Seller is not aware of any intention by any
party to any Assumed Contract (i) to terminate such contract or amend the terms
thereof, (ii) to refuse to renew the Assumed Contract upon expiration of its
term, or (iii) to renew the Assumed Contract upon expiration only on terms and
conditions which are more onerous than those now existing. Except for the need
to obtain the Consents listed in Schedule 3.3, Seller has full legal power and
authority to assign its rights under the Assumed Contracts to Buyer in
accordance with this Agreement, and such assignment will not affect the
validity, enforceability, or continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section
6.1 and the other Consents described in Schedule 3.3, and any filing required
under the HSR Act, no consent, approval, permit, or authorization of, or
declaration to or filing with any governmental or regulatory authority, or any
other third party is required (i) to consummate this Agreement and the
transactions contemplated hereby, including, without limitation, the assignment
and transfer of the Assets to Buyer, or (ii) 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. 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 Accredited Investor; Investment Knowledge; Distribution.
Seller is an accredited investor within the meaning of Rule 501 promulgated
under the Securities Act of 1933, as amended (the "Securities Act"). Seller has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the risks and merits of its investment in PCC, and it
is capable of bearing the economic risks of such investment.
<PAGE> 17
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Seller has had an opportunity to discuss the business, management and financial
affairs of PCC with PCC's representatives and has had its questions concerning
PCC and its business answered to its full satisfaction. The PCC Shares to be
transferred hereunder to Seller are being acquired for Seller's own account for
the purpose of investment and not with a view to or for resale (other than to an
affiliate of Seller) in connection with any distribution thereof or interest
therein. Seller understands that (i) such PCC Shares have not been registered
under the Securities Act by reason of their issuance in a transaction exempt
from the registration requirements of the Securities Act pursuant to Section
4(2) thereof, (ii) such PCC Shares must be held indefinitely unless subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration, and (iii) such PCC Shares shall bear a legend to such effect.
3.11 Reports. All returns, reports, and statements that the Station
is currently required to file with the FCC or with any other governmental agency
have been filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction over Seller and the Station have
been complied with. All of such returns, reports, and statements are
substantially complete and correct as filed.
3.12 Personnel.
(a) Except as listed on Schedule 3.12, Seller does not
have any Employee Plan or Compensation Arrangement with respect to any employee
of the Station. 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) 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
<PAGE> 18
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plan; and (iv) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, any successor thereto and any regulations promulgated
thereunder.
(c) 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. 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 knowledge of Seller, 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 adequate
reserves (segregated to the extent required by generally accepted accounting
principles) with respect thereto. There are no governmental investigations or
other legal, administrative, or tax proceedings pursuant to which Seller is or
could be made liable for any taxes, penalties, interest, or other charges, the
liability for which could extend to Buyer as transferee of the business of the
Station, and no event has occurred that could impose on Buyer any transferee
liability for any taxes, penalties, or interest due or to become due from
Seller.
3.14 Claims and Legal Actions. Except for any FCC rulemaking
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 best 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 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 knowledge of Seller,
threatened (i) before the FCC relating to the business or operations of the
Station other than rule making proceedings which affect the broadcasting
industry generally, (ii) before any federal or state agency relating to the
business or operations of the Station involving charges of illegal
discrimination under any federal or state employment laws or regulations, or
(iii) before any federal, state, or local agency relating to the business or
operations of the Station involving zoning issues under any federal, state, or
local zoning law, rule, or regulation.
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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, to the best
of Seller's knowledge, 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 (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) To the best of Seller's knowledge, 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) 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
<PAGE> 20
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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.
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. To the best knowledge of Seller, 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 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 the
State of Florida and at Closing will be duly qualified to conduct business as a
foreign corporation in the State of Iowa. Buyer has all requisite power and
authority to execute and deliver this Agreement and the Escrow Agreement and the
documents contemplated hereby and thereby, and to perform and comply with all of
the terms, covenants, and conditions to be performed and complied with by Buyer
hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement and the Escrow Agreement by Buyer have been
duly authorized by all necessary actions on the part of Buyer. This Agreement
and the Escrow Agreement have been duly executed and delivered by Buyer and
constitute the legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms except as the
enforceability of this Agreement and the Escrow Agreement
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may be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally and by judicial discretion in the enforcement of equitable
remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents and making any filing required under the HSR Act, the execution,
delivery, and performance by Buyer of this Agreement and the Escrow Agreement
and the documents contemplated hereby and thereby (with or without the giving of
notice, the lapse of time, or both): (i) do not require the consent of any third
party; (ii) will not conflict with the Articles of Incorporation or Bylaws of
Buyer; (iii) will not conflict with, result in a breach of, or constitute a
default under, any law, judgment, order, injunction, decree, rule, regulation,
or ruling of any court or governmental instrumentality; or (iv) will not
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license, or
permit to which Buyer is a party or by which Buyer may be bound, such that Buyer
could not acquire or operate the Assets.
4.4 PCC Shares. The PCC Shares to be transferred to Seller under
Section 2.3 will be duly authorized, validly issued, fully paid and
nonassessable when transferred to Seller pursuant to 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, and the rules,
regulations and policies of the FCC as now in effect. Buyer knows of no fact
that would, under existing law and the existing rules, regulations, policies and
procedures of the FCC, disqualify Buyer as an assignee of the FCC Licenses or as
the owner and operator of the Station.
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 (except where such conduct (a) has been
delegated to Buyer pursuant to the terms of the Time Brokerage Agreement or (b)
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.
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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 or as disclosed in writing to Buyer.
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 to prosecute with due
diligence any applications to any governmental authority in connection with the
operation of the Station.
5.7 Rights. Seller shall not waive any right relating to the
Station or any of the Assets.
5.8 No Inconsistent Action. Subject to Seller's obligations under
Section 5.15 hereof, Seller shall not take any action that is inconsistent with
its obligations under this Agreement or that could hinder or delay the
consummation of the transactions contemplated by this Agreement.
5.9 Access to Information. Seller shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives reasonable
access to the Assets and to all
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other properties, equipment, books, records, Contracts, and documents relating
to the Station for the purpose of audit and inspection, including inspections
incident to the environmental study described in Section 6.5 and the engineering
study described in Section 6.6, and will furnish or cause to be furnished to
Buyer or its authorized representatives all information with respect to the
affairs and business of the Station that Buyer may reasonably request (including
any financial reports and operations reports produced with respect to the
affairs and business of the Station). Without limiting the generality of the
foregoing, Seller shall give Buyer and its counsel, accountants and other
authorized representatives reasonable access to Seller's financial records and
Seller's employees, counsel, accountants and other representatives for the
purpose of preparing and auditing such financial statements as Buyer determines,
in its sole judgment, are required or advisable to comply with federal or state
securities laws and the rules and regulations of securities markets as a result
of the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
5.10 Maintenance of Assets. Subject to the Time Brokerage
Agreement, 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 as contemplated by the Time Brokerage
Agreement.
5.12 Consents. Seller shall obtain the Consents and the estoppel
certificates described in Section 8.2(b), without any change in the terms or
conditions of any Contract or License that could be less advantageous to the
Station than those pertaining under the Contract or License as in effect on the
date of this Agreement. Seller shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon Buyer's request, Seller
shall cooperate with Buyer and use it best efforts to obtain from the lessors
under each Real Property lease such estoppel certificates and consents to the
collateral assignment of the lessee's interest under each such lease as Buyer's
senior lenders may request.
5.13 Books and Records. Seller shall maintain its books and records
relating to the Station in accordance with past practices.
<PAGE> 24
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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.
5.15 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Station.
5.16 Financing Leases. Seller will satisfy at or prior to Closing
all outstanding obligations under capital and financing leases with respect to
any of the Assets and obtain good title to the Assets leased by Seller pursuant
to those leases so that those Assets shall be transferred to Buyer at Closing
free of any interest of the lessors.
5.17 Preservation of Business. Subject to 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 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.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with
the purchase and sale of the Assets pursuant to this Agreement shall be subject
to the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an
appropriate application for the FCC Consent and shall file the application with
the FCC within five (5) business days of the execution of this Agreement. The
parties shall prosecute the application with all reasonable diligence and
otherwise use their best efforts to obtain a grant of the application as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on it by the FCC Consent, except that no party shall be required to
comply with a condition if (1) the condition was imposed on it as the result of
a circumstance the existence of which does not constitute a breach by the party
of any of its representations, warranties, or covenants under this Agreement,
and (2) compliance with the condition would have a material adverse effect upon
it. Buyer and Seller shall oppose any requests for reconsideration or judicial
review of the FCC Consent. If the Closing shall not have occurred for any reason
within the original effective period of the FCC Consent, and neither party shall
have terminated this Agreement under Section 9, the parties shall jointly
request an extension of the effective period of the FCC Consent. No extension of
the FCC Consent shall limit the exercise by either party of its rights under
Section 9.
<PAGE> 25
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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 be entitled to provide programming to the
Station pursuant to the Time Brokerage Agreement.
6.3 Risk of Loss. The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing; provided, however,
that any such loss or damage that is caused by Buyer's actions while the Time
Brokerage Agreement is in effect shall not relieve Buyer of its obligations to
acquire the Assets in accordance with the terms hereof.
6.4 Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 Environmental Audit. Buyer may, at its option and expense,
retain an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Station. If the survey discloses
any material environmental hazard or material possibility of future liability
for environmental damages or clean-up costs, Buyer shall so notify Seller as
soon as practicable.
6.6 Engineering Study. Buyer may, at its option and expense,
retain an engineering firm to conduct a proof of performance study of the
Station and to prepare a report on the Station's compliance with customary
engineering practices and all applicable FCC rules, regulations, prescribed
practices, and technical standards. If the survey discloses any material
deficiencies in the operations or equipment of the Station, Buyer shall so
notify Seller as soon as practicable.
6.7 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding
<PAGE> 26
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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 Iowa shall be complied with by Seller. Any loss, liability, obligation, or
cost suffered by Seller or Buyer as the result of the failure of Seller or Buyer
to comply with the provisions of any bulk sales law applicable to the transfer
of the Assets as contemplated by this Agreement shall be borne by Seller.
6.9 Title Insurance and Surveys.
(a) Title Insurance on Fee Property. With respect to each
parcel of Real Property that Seller owns, Seller will cooperate with Buyer to
enable Buyer to 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 and delivered to Buyer pursuant to this
Agreement shall (1) insure title to the Real Property described in the policy
and all recorded easements benefitting such Real Property, (2) contain an
"extended coverage endorsement" insuring over the general exceptions customarily
contained in title policies, (3) contain an ALTA Zoning Endorsement 3.1 (or
equivalent), (4) contain an endorsement insuring that the Real Property
described in the policy is the same real estate shown in the survey delivered
with respect to such property, (5) contain an inflation endorsement, (6) contain
a "contiguity" endorsement with respect to any Real Property consisting of more
than one record parcel, and (7) not be subject to any survey exception or any
defect or encroachment disclosed by a survey delivered with respect to the
property.
(c) Surveys. With respect to each parcel of Real
Property, as to which a title insurance policy is to be procured pursuant to
this Agreement, Seller will cooperate with Buyer to enable Buyer to procure, at
Buyer's 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.
<PAGE> 27
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6.10 Sales Tax Filings. Seller shall file Iowa sales tax returns
with respect to the Station as required by law and shall concurrently deliver
copies of all such returns to Buyer.
6.11 Access to Books and Records. Seller shall provide Buyer access
and the right to copy for a period of three years from the Closing Date any
books and records relating to the Assets that are not included in the Assets.
Buyer shall provide Seller access and the right to copy for a period of three
years from the Closing Date any books and records relating to the Assets.
6.12 Noncompetition Agreement. At Closing, Buyer and Seller shall
enter into a Noncompetition Agreement in the form of Schedule 6.12, and $100,000
of the Purchase Price shall be allocated to the covenants of Seller set forth
therein on the Closing Date.
6.13 HSR Act Filing. Seller and Buyer agree to (a) file, or cause
to be filed, with the U.S. Department of Justice ("DOJ") and Federal Trade
Commission ("FTC") all filings, if any, which are required in connection with
the transactions contemplated hereby under the HSR Act within ten (10) business
days of the date of this Agreement; (b) submit to the other party, prior to
filing, their respective HSR Act filings to be made hereunder, and to discuss
with the other any comments the reviewing party may have; (c) cooperate with
each other in connection with such HSR Act filings, which cooperation shall
include furnishing the other with any information or documents in such party's
possession that may be reasonably required in connection with such filings; (d)
promptly file, after any request by the FTC or DOJ, any information or documents
requested by the FTC or DOJ; and (e) furnish each other with any correspondence
from or to, and notify each other of any other communications with, the FTC or
DOJ which relates to the transactions contemplated hereunder, and to the extent
practicable, to permit each other to participate in any conferences with the FTC
or DOJ.
6.14 Broker. Buyer 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. Seller shall be solely responsible for any
brokerage commissions due and payable with respect to this transaction and shall
hold Buyer harmless from any such liability.
6.15 Cable Proceedings. Seller shall promptly provide Buyer with
copies of all pleadings, correspondence and other documents filed or received by
Seller that involve the rights of the Station to be carried on cable television
systems and shall promptly advise Buyer of any material developments with
respect to such carriage. Seller shall consult with Buyer prior to making the
election regarding must-carry/retransmission consent for cable systems within
the Cedar Rapids-Waterloo-Dubuque ADI, and Seller shall not make any such
election without Buyer's approval, which shall not be unreasonably withheld.
<PAGE> 28
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6.16 Allocation of Purchase Price. Seller and Buyer shall use their
good faith efforts to agree to an allocation of the Purchase Price among the
Assets for purposes of Section 1060 of the Code and Temporary Treasury
Regulation Section 1.1060-1T. Subject to such agreement, Buyer and Seller agree
to use such allocation in filing as part of their respective federal income tax
returns, an initial asset acquisition statement and any supplemental statements
on Internal Revenue Service Form 8594 required by Temporary Treasury Regulation
Section 1.1060-1T.
6.17 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.
6.18 Registration Rights. Buyer agrees to cause PCC to register
with the Securities and Exchange Commission the PCC Shares to be issued and
delivered to Buyer hereunder pursuant to the Securities Act in accordance with
and subject to the terms and conditions set forth on Schedule 6.18.
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 (other than any Consents for
Contracts that are not designated as "Material Consents" on Schedule 3.7) 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 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.
<PAGE> 29
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(e) Governmental Authorizations. Seller shall be the
holder of all Licenses and there shall not have been any modification of any
License that could have a material adverse effect on the Station or the conduct
of its business and operations. No proceeding shall be pending or threatened the
effect of which would be reasonably likely 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) Material 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) Time Brokerage Agreement. Seller shall not be in
material default of its obligations under the Time Brokerage Agreement (taking
into account any applicable cure period thereunder).
(i) HSR Act. The waiting period under the HSR Act shall
have expired without unresolved action by the DOJ or the FTC to prevent the
Closing.
(j) Concurrent Closing. The transactions contemplated by
the LPTV 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 conditions that need not be complied
with by Seller under Section
<PAGE> 30
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6.1 hereof and Buyer shall have complied with any conditions imposed on it by
the FCC Consent.
(e) Time Brokerage Agreement. Buyer shall not be in
material default of its obligations under the Time Brokerage Agreement (taking
into account any applicable cure period thereunder).
(f) HSR Act. The waiting period under the HSR Act shall
have expired without unresolved action by the DOJ or the FTC to prevent the
Closing.
(g) Concurrent Closing. The transactions contemplated by
the LPTV 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 at 10:00
a.m. on a date, to be set by Buyer on at least five days' written notice to
Seller, that is (1) not earlier than the first business day after the FCC
Consent is granted, and (2) not later than ten business days following the date
upon which the FCC Consent has become a Final Order, subject to satisfaction or
waiver of all other conditions precedent to the holding of the Closing. If Buyer
fails to specify the date for Closing prior to the fifth business day after the
date upon which the FCC Consent becomes a Final Order, the Closing shall take
place on the tenth business day after the date upon which the FCC Consent
becomes a Final Order. Notwithstanding the foregoing, if the waiting period
under the HSR Act shall not have expired on or before the date that is tenth
business day after the date on which the FCC Consent becomes a Final Order, the
Closing shall take place at 10:00 a.m. on a date to be set by Buyer, on at least
five days' written notice to Seller, that is not earlier than the first business
day and not later than the tenth business day after the date such waiting period
shall have expired.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place that is agreed upon by Buyer and
Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty bills of
sale, deeds, motor vehicle titles, assignments, and other transfer documents
which shall be sufficient to
<PAGE> 31
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vest good and marketable title to the Assets in the name of Buyer, free and
clear of all claims, liabilities, security interests, mortgages, liens, pledges,
conditions, charges or encumbrances, except for liens for current taxes not yet
due and payable;
(b) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property and estoppel certificates of contracting parties to those Assumed
Contracts listed in Schedule 3.7 that are designated to indicate that estoppel
certificates are required under this paragraph;
(c) Consents. A 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 the President or any Vice
President of Seller, certifying (1) that the representations and warranties of
Seller contained in this Agreement are true and complete in all material
respects as of the Closing Date as though made on and as of that date; and (2)
that Seller has in all material respects performed and complied with all of its
obligations, covenants, and agreements set forth in this Agreement to be
performed and complied with on or prior to the Closing Date;
(e) Tax, Lien, and Judgment Searches. Results of a search
for tax, lien, and judgment filings in the Secretary of State's records of the
State of Iowa as well as the records of those counties in Iowa in which any of
the Assets are located, such searches having been made no earlier than fifteen
days prior to the Closing Date;
(f) Licenses, Contracts, Business Records, Etc. Copies of
all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by
Seller in connection with its operations;
(g) Opinion of Counsel. An Opinion of Seller's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.2(g)
hereto;
(h) Noncompetition Agreement. The Noncompetition
Agreement in the form as Schedule 6.12, duly executed on behalf of Seller; and
(i) Lenders Certificates. Such certificates and
confirmations to Buyer's senior lenders as Buyer may reasonably request in
connection with obtaining financing for the performance of its payment
obligations hereunder.
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 Demand Promissory Note in the
form of Schedule 2.4 and the PCC Shares, as provided in Section 2.3;
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Seller's obligations under the Licenses and Assumed Contracts insofar as they
relate to the time on and after the Closing Date and arise out of events related
to Buyer's ownership of the Assets or its operation of the Station on or after
the Closing Date;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by an officer of Buyer, certifying (1)
that the representations and warranties of Buyer contained in this Agreement are
true and complete in all material respects as of the Closing Date as though made
on and as of that date, and (2) that Buyer has in all material respects
performed and complied with all of its obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to the
Closing Date;
(d) Opinion of Counsel. An opinion of Buyer's counsel
dated as of the Closing Date, substantially in the form of Schedule 8.3(d)
hereto.
(e) Noncompetition Agreement. The Noncompetition
Agreement in the form of Schedule 6.12 duly executed by Buyer and the payment of
$100,000 to Seller thereunder.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not then
in material default, upon written notice to Buyer, upon the occurrence of any of
the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Seller
set forth in this Agreement have not been satisfied or waived in writing by
Seller.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
June 1, 1998.
(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,
<PAGE> 33
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warranties or covenants under this Agreement within fifteen days after Buyer
received written notice of such breach from Seller.
(e) Time Brokerage Agreement. Upon Seller's termination
of the Time Brokerage Agreement in accordance with the terms thereof.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Station abandoned, if Buyer is not then
in material default, upon written notice to Seller, upon the occurrence of any
of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer set
forth in this Agreement have not been satisfied or waived in writing by Buyer.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
June 1, 1998.
(d) Interruption of Service. If any event shall have
occurred, other than any event resulting from any action taken by Buyer under
the Time Brokerage Agreement, that prevented signal transmission of the Station
in the normal and usual manner for a continuous period of three 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.
<PAGE> 34
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(h) Time Brokerage Agreement. Upon Buyer's termination of
the Time Brokerage Agreement in accordance with the terms thereof.
9.3 Rights on Termination.
(a) 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.
(b) If this Agreement is terminated by Seller due to
Buyer's material breach of this Agreement and Seller has fully complied in all
material respects with the terms of this Agreement, the payment to Seller of
$500,000 pursuant to Section 9.4 below shall be liquidated damages and shall
constitute full payment and the exclusive remedy for any damages suffered by
Seller by reason of Buyer's material breach of this Agreement. Seller and Buyer
agree in advance that actual damages would be difficult to ascertain and that
the amount of $500,000 is a fair and equitable amount to reimburse Seller for
damages sustained due to Buyer's material breach of this Agreement. If this
Agreement is terminated by Buyer due to Seller's material breach of this
Agreement, Buyer shall have all rights and remedies available at law or equity.
9.4 Escrow Deposit. Buyer has deposited with the Escrow Agent the
sum of $500,000 in accordance with the Escrow Agreement. All such funds
deposited with the Escrow Agent shall be held and disbursed in accordance with
the terms of the Escrow Agreement and the following provisions:
(a) At the Closing, all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, shall be disbursed to or at
the direction of Buyer.
(b) If this Agreement is terminated pursuant to Section
9.1 or 9.2 and Buyer is not in material breach of this Agreement, all amounts
held by the Escrow Agent pursuant to the Escrow Agreement, including any
interest or other proceeds from the investment of funds held by the Escrow
Agent, shall be disbursed to or at the direction of Buyer.
(c) If this Agreement is terminated by Seller due to
Buyer's material breach of this Agreement, then $500,000 of the amount held by
the Escrow Agent pursuant to the Escrow Agreement shall be disbursed to or at
the direction of Seller as liquidated damages under Section 9.3 above and any
interest or other proceeds from the investment of funds held by the Escrow Agent
shall be disbursed by the Escrow Agent to or at the direction of Buyer.
<PAGE> 35
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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> 36
- 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 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> 37
- 31 -
(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.
10.7 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 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Seller
to Buyer pursuant to this Agreement shall be paid by Seller. Buyer and Seller
shall each pay one-half of any fees payable to the
<PAGE> 38
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Escrow Agent, all filing fees required by the FCC in connection with the FCC
Consent, and any filing fee required by the FTC under the HSR Act. Except as
otherwise provided in this Agreement, each party shall pay its own expenses
incurred in connection with the authorization, preparation, execution, and
performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and representatives. Seller shall pay at the Closing any
brokerage commissions due and payable with respect to this transaction.
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: Anthony J. Fant, President
Fant Broadcasting Company
2154 Highland Avenue
Birmingham, Alabama 35205
<PAGE> 39
- 33 -
With a copy to: Michael A. King, Esq.
Brown & Wood, LLP
One World Trade Center
New York, NY 10048
If to Buyer: Mr. Lowell W. Paxson
Paxson Communications of Cedar Rapids-48, 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, DC 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 or any other entity qualified to hold the FCC
Licenses (provided, however, that Buyer shall guarantee such assignee's
performance hereunder) 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
<PAGE> 40
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STATE OF FLORIDA (WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS
THEREOF).
11.7 Headings. The headings in this Agreement are included for ease
of reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation, warranty,
covenant, agreement, or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in its judgement be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
<PAGE> 41
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 CEDAR
RAPIDS-48, INC.
By:
-------------------------------------
Name:
Title:
FANT BROADCASTING COMPANY OF
IOWA, INC.
By:
-------------------------------------
Name:
Title:
PAXSON COMMUNICATIONS CORPORATION JOINS IN THE EXECUTION OF THE FOREGOING ASSET
PURCHASE AGREEMENT SOLELY FOR THE PURPOSE OF SECTION 6.17 THEREOF.
PAXSON COMMUNICATIONS CORPORATION
By:
-------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.161
================================================================================
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>
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<S> <C> <C>
RECITALS........................................................................1
AGREEMENTS......................................................................1
SECTION 1. DEFINITIONS.........................................................1
"Accounts Receivable"..................................................1
"Assets"...............................................................1
"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"..........................................................2
"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...............................................4
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..........................7
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
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3.3 Absence of Conflicting Agreements..............................8
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.....................................................12
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
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6.6 Access to Books and Records...................................14
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...................................16
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...................................17
(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.............................18
SECTION 9. TERMINATION.........................................................19
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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............................................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......................................................24
11.9 Gender and Number.............................................24
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
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
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ASSET PURCHASE AGREEMENT
This 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 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
Stations and the Construction Permit, for the price and on the terms and
conditions set forth in this Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, Buyer and Seller, intending to be bound
legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Accounts Receivable" means the right of Seller to payment for the sale
of advertising and/or programming time on the Station prior to the Closing Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under the Agreement, as specified in Section 2.1.
<PAGE> 8
"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.
"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.
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"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 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.
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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.
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;
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<PAGE> 11
(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 Dollars ($2,000,000) plus such
expenses incurred in connection with obtaining the Construction Permit as
approved by the FCC but not to exceed, in any event, One Million Dollars
($1,000,000) (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 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.
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<PAGE> 12
(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 pursuant to wire instructions delivered by Seller at
least two (2) Business Days prior to the Closing Date.
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(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.
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
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<PAGE> 14
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
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.
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<PAGE> 15
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 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
- 9 -
<PAGE> 16
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 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.
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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 obligations under this Agreement), and in
accordance with the other covenants in this Section 5.
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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.
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.
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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 within five (5) days of the execution of this Agreement. The parties
shall prosecute the applications with all reasonable diligence and otherwise use
their reasonable commercial efforts to obtain a grant of the applications as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on it by the FCC Consent, except that no party shall be required to
comply with a condition if (1) the condition was imposed on it as the result of
a circumstance the existence of which does not constitute a breach by such party
of any of its representations, warranties, or covenants under this Agreement,
and (2) compliance with the condition would have a material adverse effect upon
it. Buyer and Seller shall oppose any requests for reconsideration or judicial
review of the FCC Consent, provided, however, that the parties shall continue to
have all rights available to them pursuant to Section 9 hereof. If the Closing
shall not have occurred for any reason within the original effective period of
the
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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.
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
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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 ability to construct the Channel 51
television station in Batavia, New York. No proceeding
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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.
(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.
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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;
(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;
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(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;
(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.
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SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by Seller
and the purchase and sale of the 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 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
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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:
(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.
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(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 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.
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(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 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
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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
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
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<PAGE> 30
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).
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.
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<PAGE> 31
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 Asset
Purchase Agreement as of the day and year first above written.
PAXSON COMMUNICATIONS OF
BUFFALO-51, INC.
By:
-----------------------------------------
Name:
Title:
FANT BROADCASTING COMPANY OF NEW
YORK, L.L.C.
By:
-----------------------------------------
Name:
Title:
--------------------------------------------
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:
-----------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.162
EXECUTION COPY
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT ("Agreement") is made as
of this 18th day of April, 1997, by and between WQED Pittsburgh ("QED"), a
Pennsylvania nonprofit corporation, and Paxson Communications of Pittsburgh-40,
Inc. ("Buyer"), a Florida corporation. All capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Asset Exchange
Agreement dated May 23, 1996, by and between QED and Cornerstone TeleVision,
Inc. ("Cornerstone"), as amended by the Amendment to Asset Exchange Agreement
executed contemporaneously herewith by QED and Cornerstone (together, the
"Exchange Agreement"), which is attached hereto as Exhibit A to this Agreement.
RECITALS
WHEREAS, pursuant to the Exchange Agreement, QED has the right to
exchange the WQEX Assets for the Channel 40 Assets, and contemporaneous with
the exchange, pursuant to an assignment of certain of QED's rights under the
Exchange Agreement, to cause the transfer and assignment of the Channel 40
Assets to a Third Party Buyer directly from Cornerstone, such transaction
constituting the Third Party Sale;
THEREFORE, the foregoing premises considered, the parties, intending
to be legally bound, for good and valuable consideration including the mutual
promises contained herein, the receipt and sufficiency of which are hereby
acknowledged, do hereby agree to proceed with the Third Party Sale as follows:
ARTICLE 1
ASSIGNMENT
QED hereby selects Buyer as the Third Party Buyer for the Channel 40
Assets in accordance with Article 5 of the Exchange Agreement. Subject to
fulfillment of Buyer's obligations and undertakings hereunder, QED hereby
assigns, transfers and conveys to Buyer all of its rights, interests, and
remedies relating to the acquisition of the Channel 40 Assets under the
Exchange Agreement, including the benefit of all representations, warranties,
covenants, deliveries, indemnities and other obligations of Cornerstone
thereunder relating
<PAGE> 2
2
to the purchase and sale of the Channel 40 Assets. Cornerstone's consent
thereto shall be evidenced by the Consent and Assignment Agreement in the form
attached hereto as Exhibit B, executed copies of which have been delivered to
QED and Buyer on the date hereof (the "Consent and Assignment Agreement").
ARTICLE 2
ASSETS
2.1. CLOSING. Subject to the terms, conditions and limitations in
the Exchange Agreement, the consummation of the transactions contemplated by
this Agreement (the "Closing") shall occur simultaneously with, and contingent
on, the closing of the sale of the WQEX Assets from QED to Cornerstone on such
date and at such place as QED, Cornerstone and Buyer mutually agree pursuant to
Section 1.1 of the Exchange Agreement, provided that the QED Closing Conditions
and the Buyer Closing Conditions, as hereinafter defined, shall have been
fulfilled or waived by the party entitled to waive such condition.
2.2. CHANNEL 40 ASSETS. Subject to the terms, conditions and
limitations in the Exchange Agreement, at the Closing, simultaneous with and
contingent on the assignment of the WQEX Assets from QED to Cornerstone,
Cornerstone shall assign, transfer and convey to Buyer, and Buyer shall acquire
from Cornerstone, the Channel 40 Assets, and no others.
In addition, simultaneously herewith Buyer and Cornerstone are
entering into the Development Agreement substantially in the form of Exhibit C
to this Agreement.
In accordance with the Exchange Agreement, the Channel 40 Assets shall
be transferred by Cornerstone to Buyer in "as is, where is" condition free and
clear of all debts, liens, security interests, pledges, mortgages, trusts,
claims, liabilities and encumbrances of any nature whatsoever.
ARTICLE 3
CONSIDERATION
3.1. PURCHASE PRICE. The aggregate purchase price for the Channel
40 Assets shall be $35,000,000 (the "Purchase Price"), which shall be the total
consideration for the Channel 40 Assets. Simultaneous with the execution of
this Agreement, the parties hereto shall enter into an escrow agreement (the
"WQED Escrow Agreement"), attached hereto as Exhibit D-1, pursuant to which,
subject to satisfaction of the condition set forth in Section 18.1(a) hereof
<PAGE> 3
3
and in the manner provided in Section 18.1(b) hereof, Buyer shall place the sum
of $1,750,000 (the "WQED Escrow Deposit") in escrow with First Union National
Bank of Florida as escrow agent (the "Escrow Agent"), and Buyer and Cornerstone
shall enter into an escrow agreement (the "Cornerstone Escrow Agreement"),
attached hereto as Exhibit D-2, pursuant to which, subject to satisfaction of
the condition set forth in Section 18.1(a) hereof and in the manner provided in
Section 18.1(b) hereof, Buyer shall place the sum of $1,750,000 (the
"Cornerstone Escrow Deposit") in escrow with the Escrow Agent. At the Closing,
Buyer shall deliver $35,000,000 by wire transfer in immediately available
funds, to be allocated between QED and Cornerstone in the manner set forth at
Section 2.2(b) of the Exchange Agreement pursuant to joint instructions
executed by QED and Cornerstone and delivered to Buyer at least two business
days prior to the Closing Date. At Buyer's election, QED and Buyer shall
jointly instruct the Escrow Agent to deliver the WQED Escrow Deposit to QED or
Cornerstone at the Closing as a credit toward the payment of the Purchase
Price, and to deliver all interest earned thereon to Buyer, and Cornerstone and
Buyer shall jointly instruct the Escrow Agent to deliver the Cornerstone Escrow
Deposit to QED or Cornerstone at the Closing as a credit toward the payment of
the Purchase Price, and to deliver all interest earned thereon to Buyer.
3.2. TRANSFER TAXES. Any sales, transfer or other taxes and fees
arising by reason of Buyer's acquisition of the Channel 40 Assets as
contemplated hereby shall be borne exclusively by Buyer. Buyer shall have no
liability for any past due or delinquent taxes owing by either QED or
Cornerstone.
3.3. PURCHASE PRICE ALLOCATION. Buyer and QED agree, and Buyer and
QED agree to use their commercially reasonable efforts to obtain Cornerstone's
agreement, to allocate the Purchase Price for tax and recording purposes in
accordance with an appraisal to be conducted by Broadcast Investments Analysts,
Inc. ("BIA"). Buyer shall be responsible for all fees payable to BIA in
connection with such appraisal.
ARTICLE 4
ACCEPTANCE OF RIGHTS AND ASSUMPTION OF OBLIGATIONS
Subject to fulfillment of QED's obligations and undertakings
hereunder, Buyer accepts the assignment described in this Agreement and shall
assume all obligations, and be entitled to exercise all rights, of QED under
the Exchange Agreement relating to the acquisition of the Channel 40 Assets.
Except as provided in the preceding sentence, as otherwise explicitly
contemplated by this Agreement, as required by the FCC, or as otherwise
required by law, Buyer shall not be required to assume any liabilities of QED
or
<PAGE> 4
4
Cornerstone of any nature in connection with the transactions contemplated
hereunder. Nothing contained in this Agreement or in the Consent and Assignment
Agreement shall relieve QED of its obligations and liabilities under the
Exchange Agreement.
ARTICLE 5
REQUIRED CONSENTS
5.1. FCC APPLICATIONS. The assignment of the Channel 40 Licenses
listed in Schedule 1.3(a) of the Exchange Agreement as contemplated by this
Agreement and by the Exchange Agreement is subject to, among other things, the
consent and approval of the FCC. Within fifteen (15) days following the
execution of this Agreement, QED and Buyer shall cooperate to cause the filing
of their respective FCC Exchange Applications contemplated by Section 4.1 of
the Exchange Agreement (collectively, the "FCC Applications"). QED and Buyer
thereafter shall prosecute and cooperate fully with each other in the
prosecution of their respective FCC Applications in accordance with the
provisions set forth in Section 4.1 of the Exchange Agreement as the same are
applicable to QED and Buyer.
5.2. OTHER GOVERNMENTAL CONSENTS. Within 15 days following the
execution of this Agreement, QED and Buyer shall prepare and file with the
appropriate governmental authorities any other requests for approval or waiver
that are required from such governmental authorities in connection with this
Agreement and the Exchange Agreement, including such consents listed on
Schedule 4.2 to the Exchange Agreement, 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.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF QED
QED represents and warrants to Buyer as follows:
6.1. ORGANIZATION AND STANDING. QED is a corporation duly
organized, validly existing and in good standing under the Nonprofit
Corporation Law of the Commonwealth of Pennsylvania.
6.2. AUTHORIZATION AND BINDING OBLIGATION. QED has all necessary
power and authority to enter into and perform this Agreement and the Exchange
Agreement and the transactions contemplated by this Agreement and the Exchange
Agreement. Except as
<PAGE> 5
5
provided in Section 18.1(a) hereof, QED's execution, delivery and performance
of this Agreement and the Exchange Agreement have been duly and validly
authorized by all necessary corporate action on its part. Subject to
satisfaction of the condition set forth at Section 18.1(a) hereof, this
Agreement and the Exchange Agreement have been duly executed and delivered by
QED and constitute its valid and binding obligation, enforceable in accordance
with their respective terms, except as limited by laws affecting creditors'
rights or equitable principles generally.
6.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except
as set forth in Article 5 with respect to FCC and other governmental consents,
and except for receipt of the consent of QED's Board of Trustees as
contemplated by Section 18.1(a) hereof, the execution, delivery and performance
of this Agreement and the Exchange Agreement and the consummation of the
transactions contemplated hereby and thereby by QED: (a) do not and will not
require the consent, approval, authorization or other action by, or filing with
or notification to, any third party or governmental authority other than QED's
senior lender Mellon Bank, N.A.; (b) do not and will not violate any provisions
of QED's articles of incorporation or bylaws; (c) do not and will not violate
any applicable law, judgment, order, injunction, decree, rule, regulation or
ruling of any governmental authority to which QED is a party, or by which it or
the WQEX Assets are bound; and (d) do not and 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 any contract, agreement,
instrument, license or permit to which QED or the WQEX Assets are subject. QED
has (i) obtained the consent of its senior lender Mellon Bank, N.A. to the
execution, delivery and performance of this Agreement and the Exchange
Agreement and the consummation of the transactions contemplated hereby and
thereby, and delivered a copy of such consent to Buyer and Cornerstone; (ii)
obtained all consents from Cornerstone required by the terms of the Exchange
Agreement as a result of the transactions contemplated by this Agreement,
evidenced by the Consent and Assignment Agreement; and (iii) provided Buyer
with written evidence that Cornerstone's Board of Directors has approved the
delivery of the Consent and Assignment Agreement.
6.4. ABSENCE OF LITIGATION. Except as set forth in Schedule 6.4
hereto, there is no claim, litigation, proceeding or investigation pending or,
to the best of QED's knowledge, threatened against QED which seeks to enjoin or
prohibit, or which otherwise questions the validity of, any action taken or to
be taken in connection with this Agreement.
<PAGE> 6
6
6.5. EXCHANGE AGREEMENT. QED has furnished a true and correct copy
of the Exchange Agreement to Buyer and all amendments, modifications and
waivers relating thereto.
6.6. DISCLAIMER. Except as set forth in this Article 6, QED makes
no representations or warranties to Buyer.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to QED as follows:
7.1. ORGANIZATION AND STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida, and has all necessary corporate power and authority to own, lease and
operate the Channel 40 Assets.
7.2. AUTHORIZATION AND BINDING OBLIGATION. Buyer has all necessary
power and authority to enter into and perform this Agreement and the
transactions contemplated by this Agreement, and Buyer's execution, delivery
and performance of this Agreement has been duly and validly authorized by all
necessary corporate action on its part. This Agreement has been duly executed
and delivered by Buyer and, subject to satisfaction of the condition set forth
at Section 18.1(a) hereof, constitutes its valid and binding obligation,
enforceable in accordance with its terms, except as limited by laws affecting
creditors' rights or equitable principles generally.
7.3. FCC QUALIFICATIONS. To the best of Buyer's knowledge after
reasonable inquiry, there are no facts which, under the Communications Laws,
could reasonably be expected to disqualify Buyer as assignee of the Channel 40
Licenses, and Buyer is able to and will certify on FCC Form 314 to its
financial qualifications.
7.4. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except
as set forth in Article 5 with respect to FCC and other governmental consents,
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby by Buyer: (a) do not and will not
require the consent, approval, authorization or other action by, or filing with
or notification to, any third party or governmental authority; (b) do not and
will not violate any provisions of Buyer's articles of incorporation or bylaws;
(c) do not and will not violate any applicable law, judgment, order,
injunction, decree, rule, regulation or ruling of any governmental authority to
which Buyer
<PAGE> 7
7
is a party, or by which it is bound; and (d) do not and 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 any contract,
agreement, instrument, license or permit to which it is now subject.
7.5. ABSENCE OF LITIGATION. Except as set forth in Schedule 6.4
hereto, there is no claim, litigation, proceeding or investigation pending or,
to the best of Buyer's knowledge, threatened against Buyer which seeks to
enjoin or prohibit, or which otherwise questions the validity of, any action
taken or to be taken in connection with this Agreement.
7.6. FINANCIAL QUALIFICATION. Buyer is and shall be at the Closing
financially qualified to meet all terms, conditions and undertakings
contemplated by this Agreement.
7.7. DISCLAIMER. Except as set forth in this Article 7, Buyer makes
no representations or warranties to any party.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO CHANNEL 40 ASSETS
QED makes no representations or warranties with respect to the Channel
40 Assets, except as expressly set forth in this Agreement.
ARTICLE 9
JOINT COVENANTS
9.1. NO INCONSISTENT ACTION. Neither Buyer nor QED shall take any
action inconsistent with its obligations under this Agreement, or inconsistent
with the terms and conditions of this Agreement, including any such action that
would hinder, delay or interfere with the consummation of the transactions
contemplated by this Agreement.
9.2. NOTIFICATION. Buyer and QED shall each notify the other and
Cornerstone of any material litigation, arbitration or administrative
proceeding pending or, to its knowledge, threatened which challenges the
transactions contemplated by this Agreement and the Exchange Agreement or
adversely affects the Channel 40 Assets, including any challenges to any FCC
application contemplated hereby or thereby, and shall take such steps as may
reasonably be necessary to remove any such impediment to the transactions
contemplated by this Agreement.
<PAGE> 8
8
ARTICLE 10
ADDITIONAL COVENANT OF BUYER
Buyer shall cooperate with QED in the formulation and implementation
of an engineering plan of transition that will protect the broadcast operations
of Cornerstone from interruption for a period of no longer than six (6) hours
as a consequence of the transition contemplated by the Exchange Agreement,
which interruptions shall occur at times of minimum viewership.
ARTICLE 11
ADDITIONAL COVENANT OF QED
QED shall perform such of its obligations under the Exchange Agreement
as are not assigned herein to Buyer in accordance with the terms thereof,
including the obligations set forth in Section 2.2 of the Exchange Agreement.
Except with the prior written consent of Buyer (which consent shall not be
unreasonably withheld), QED will not (a) amend or modify in any manner any term
or condition of the Exchange Agreement or give any consent, waiver or approval
thereunder or waive any default under any term or condition of the Exchange
Agreement, or (b) take any other action in connection with the Exchange
Agreement that would impair in any material respect, in the case of (a) or (b)
above, the value of the interests or rights of Buyer under the Exchange
Agreement or this Agreement.
ARTICLE 12
CONDITIONS PRECEDENT TO QED'S OBLIGATION TO CLOSE
The obligations of QED hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions (the "QED Closing Conditions"):
12.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties of Buyer 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 terms, covenants and conditions to be complied
with and performed by Buyer under this Agreement and the Exchange Agreement on
or prior to the Closing Date shall have been complied with or performed in all
material respects.
<PAGE> 9
9
12.2. GOVERNMENTAL CONSENTS. The FCC consents to the FCC
Applications shall each have become a Final Order as defined at Section 11.2 of
the Exchange Agreement without conditions materially adverse to QED, and all
other governmental consents referred to in Section 5.2 hereof shall have been
obtained.
12.3. CLOSING DELIVERIES OF BUYER. Buyer shall have made or stand
willing to make the following deliveries, in form and substance reasonably
satisfactory to QED:
(a) the Purchase Price, in the amount and manner provided in
Section 3.1 hereof;
(b) a certificate of an officer of Buyer, dated the Closing
Date, in form and substance reasonably satisfactory to QED, certifying to the
fulfillment of the conditions set forth in Section 12.1(a) and (b) hereof;
(c) resolutions of the board of directors of Buyer authorizing
the execution, delivery and performance of this Agreement and the Exchange
Agreement, certified by the secretary of Buyer; and
(d) such other documents as may reasonably be requested by
QED's counsel, including documents to enable QED to fulfill its obligations
under Section 12.6 of the Exchange Agreement.
ARTICLE 13
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer hereunder and under the Exchange Agreement
are, at its option, subject to satisfaction, at or prior to the Closing Date,
of each of the following conditions (the "Buyer Closing Conditions"):
13.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties of QED 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.
<PAGE> 10
10
(b) All of the terms, covenants and conditions to be complied
with and performed by QED under this Agreement and the Exchange Agreement on or
prior to the Closing Date shall have been complied with or performed in all
material respects.
13.2. GOVERNMENTAL CONSENTS. The FCC consents to the FCC
Applications shall each have become a Final Order as defined at Section 11.2 of
the Exchange Agreement without conditions materially adverse to Buyer, and all
other governmental consents referred to in Section 5.2 hereof shall have been
obtained.
13.3. TOWER LEASE. Cornerstone and Buyer shall have entered into a
Lease Agreement substantially in the form of either Exhibit B to the Exchange
Agreement, as amended, or Annex 1 to the Development Agreement, whichever is
appropriate.
13.4. DELIVERIES.
(a) Cornerstone shall have made or stand willing to make
all the deliveries required under Section 13.1 of the Exchange Agreement
directly to Buyer, and such deliveries are in form and substance reasonably
satisfactory to Buyer.
(b) QED shall have made or stand willing to make the
following deliveries:
(i) a certificate of an officer of QED, dated the
Closing Date, in form and substance reasonably satisfactory to Buyer,
certifying to the fulfillment of the conditions set forth in Sections 13.1 and
13.2 hereof;
(ii) resolutions of the board of trustees of QED,
authorizing the execution, delivery and performance of this Agreement and the
Exchange Agreement, certified by the secretary of QED; and
(iii) such other documents as may reasonably be
requested by Buyer's counsel.
13.5. OTHER AGREEMENTS. QED shall stand ready to enter into the
following additional agreements, which agreements, and the consideration
payable to QED thereunder, shall be separate and apart from, and not constitute
consideration for, this Agreement or the acquisition of the Channel 40 Assets:
(a) a lease agreement between QED and Buyer providing Buyer
with the lease of approximately 4,000 square feet of office and studio space at
QED's office and studio
<PAGE> 11
11
facilities at 4802 Fifth Avenue, Pittsburgh, and appropriate space on the
premises for a microwave dish and a satellite receive dish of such weight and
size as can be accommodated on the existing roof or site without modification
thereof (together with shared use of QED's standby generator), for a 25-year
term at prevailing market rates (all such payments shall be considered separate
and distinct from, and not included within, either Gross Proceeds or Net
Proceeds as defined in Section 2.2 of the Exchange Agreement), which lease
agreement shall be in the form of Exhibit E hereto; and
(b) a three-year agreement between QED and Buyer whereby QED
will provide Buyer, and Buyer agrees to broadcast, up to five hours per week of
public affairs and children's core programming as defined by the FCC and
meeting FCC requirements (any payments made by Buyer to QED as may be agreed
upon by QED and Buyer in connection with the provision of such programming
shall be considered separate and distinct from, and not included within, either
Gross Proceeds or Net Proceeds as defined in Section 2.2 of the Exchange
Agreement), which agreement shall be in the form of Exhibit F hereto; provided,
however, that QED shall have the option to terminate the obligation to enter
into the agreement described in this Section 13.5(b) by providing written
notice of such termination to Buyer at least thirty (30) days prior to the
Closing Date.
ARTICLE 14
BROKER'S COMMISSION OR FINDER'S FEE
The parties hereto represent and warrant to each other that neither of
them, nor any person or entity acting on their 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 other than the fee payable
to Richard A. Foreman Associates, Inc., which was engaged by QED, nor have they
or any person or entity acting on their behalf taken any other action on which
a claim for any such payment could be based. The parties hereto further agree
to indemnify and hold each other 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 either QED or Buyer. QED is and
shall be solely responsible for any fees of Richard A. Foreman Associates, Inc.
<PAGE> 12
12
ARTICLE 15
TERMINATION RIGHTS
15.1. TERMINATION.
This Agreement may be terminated by QED or Buyer so long as the party
seeking to terminate is not in material default or breach of this Agreement,
upon written notice to the other upon the occurrence of any of the following:
(a) if, on or before the Closing Date, the other party
defaults in any material respect in the observance or in the due and timely
performance of any of its covenants, agreements or obligations contained herein
and fails to cure such default within ten (10) business days following receipt
of written notice thereof by the non- defaulting party;
(b) if the FCC denies one or both of the FCC Applications or
designates one or both of them for an evidentiary hearing;
(c) if there shall be in effect any final judgment, decree or
order that would prevent or make unlawful the Closing;
(d) if the Closing has not occurred by December 31, 1998; or
(e) if the Board of Trustees of QED shall have failed to
duly authorize the execution, delivery and performance by QED of this Agreement
and the Exchange Agreement (the "QED Consent") within thirty (30) days of the
date hereof.
15.2. BY BUYER. In addition to its rights set forth in Section 15.1,
this Agreement may be terminated by Buyer so long as Buyer is not in material
default or breach of this Agreement, upon written notice to QED, (a) if QED
shall have failed to deliver to Buyer, within thirty (30) days of the date
hereof, evidence of the QED Consent duly certified by the Secretary of QED in
form and substance reasonably satisfactory to Buyer (the "Certified Consent"),
and (b) upon any termination of the Exchange Agreement in accordance with its
terms. If Buyer terminates this Agreement pursuant to Section 15.1 or 15.2
hereof, Buyer shall have no further obligation or liability hereunder or under
the Exchange Agreement, except as provided in Section 15.3 hereof.
<PAGE> 13
13
15.3. LIABILITY. The termination of this Agreement under Sections
15.1 or 15.2 hereof shall not relieve any party of any liability for material
breach of this Agreement or the Exchange Agreement prior to the date of
termination.
15.4. ESCROW DEPOSITS. If this Agreement is terminated by either
party pursuant to this Article 15 and Buyer is not in material breach of this
Agreement, all amounts held by the Escrow Agent pursuant to the WQED Escrow
Agreement and the Cornerstone 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.
ARTICLE 16
INDEMNIFICATION
16.1. INDEMNIFICATION BY MISPERFORMING OR NONPERFORMING PARTY.
Notwithstanding the Closing, QED and Buyer hereby agree to indemnify, defend
and hold the other harmless against and with respect to, and shall reimburse
the other for:
(a) Any and all losses, liabilities, or damages resulting from
any untrue representation, breach of warranty, or nonfulfillment of any
covenant or obligation by such misperforming or nonperforming party contained
herein or in the Exchange Agreement or in any certificate, document or
instrument delivered to the other party hereunder or thereunder;
(b) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to the foregoing or incurred in investigating or attempting
to avoid the same or to oppose the imposition thereof, or in enforcing this
indemnity; and
(c) Interest at the Prime Rate on any reimbursable expense or
loss incurred by the indemnified party from the date of payment until the date
of reimbursement by the indemnifying party.
16.2. PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification shall be as follows:
(a) The party seeking indemnification under this Article 16
(the "Indemnified Party") shall give notice to the party from whom
indemnification is sought (the "Indemnitor") of any claim, whether solely
between the parties or brought by a third party,
<PAGE> 14
14
specifying (i) the factual basis for the claim, and (ii) the amount of the
claim or the Indemnified Party's reasonable estimate thereof, as set forth in a
certificate executed by an officer of the Indemnified Party. If the claim
relates to an action, suit or proceeding filed by a third party against the
Indemnified Party, notice shall be given by the Indemnified Party within
fifteen (15) business days after written notice of the action, suit or
proceeding was given to the Indemnified Party. In all other circumstances,
notice shall be given by the Indemnified Party within thirty (30) business days
after the Indemnified Party becomes, or should have become, aware of the facts
giving rise to the claim. Notwithstanding the foregoing, the Indemnified
Party's failure to give Indemnitor timely notice shall not preclude the
Indemnified Party from seeking indemnification from Indemnitor except to the
extent that the Indemnified Party's failure has materially prejudiced
Indemnitor's ability to defend the claim or litigation.
(b) With respect to any claim by a third party as to which the
Indemnified Party is entitled to indemnification hereunder, the Indemnitor
shall have the right at its own expense to participate in or assume control of
the defense of the claim, and the Indemnified Party shall cooperate fully with
the Indemnitor. If the Indemnitor elects to assume control of the defense of
any third-party claim, the Indemnified Party shall have the right to
participate in the defense of the claim at its own expense. The Indemnitor
shall not settle or compromise any third-party claim for which the Indemnified
Party seeks indemnification in respect of an indemnifiable claim hereunder, or
consent to entry of any judgment in litigation arising from such a claim,
without obtaining from the third party claimant a release of the Indemnified
Party from all liability in respect of such claim or litigation.
(c) If the Indemnitor does not elect to assume control or
otherwise participate in the defense of any third party claim or does not
assume control promptly upon notice thereof, the Indemnified Party may, but
shall have no obligation to, defend or settle such claim or litigation in such
manner as it deems appropriate, and in any event Indemnitor shall be bound by
the results obtained by the Indemnified Party with respect to the claim (by
default or otherwise) and shall promptly reimburse the Indemnified Party for
the amount of all losses, liabilities, claims and expenses (including the
amount of any judgment rendered), legal or otherwise, incurred in connection
with such claim or litigation. The Indemnitor shall be subrogated to all
rights of the Indemnified Party against any third party with respect to any
claim for which indemnity was paid.
16.3. LIMITATIONS. Neither party shall be required to indemnify the
other party under this Article 16 for any breach of any representation or
warranty contained in this Agreement
<PAGE> 15
15
unless written notice of a claim under this Article 16 was received by the
party within the pertinent survival period specified in Article 17 of this
Agreement.
ARTICLE 17
REMEDIES; SURVIVAL
17.1. REMEDIES.
(a) In the event of material breach of this Agreement, the
non-defaulting party shall be entitled to obtain specific performance of the
terms of this Agreement, subject, however, to the termination rights specified
in Article 15 hereof. In any action to specifically enforce the provisions of
this Agreement, the defaulting party shall waive the defense that there is an
adequate remedy at law or equity and shall agree that the non-defaulting party
shall have the right to obtain specific performance of the terms of this
Agreement without being required to prove actual damages, post bond or furnish
other security. In addition, the non-defaulting party shall be entitled to
obtain from the defaulting party court costs and reasonable attorneys' fees
incurred by it in enforcing its rights hereunder if it substantially prevails
in its claim.
(b) If the transactions contemplated by this Agreement are not
consummated as a result of Buyer's material breach and QED is not also in
material breach hereunder, QED, at its option, in lieu of obtaining specific
performance under Section 17.1(a) hereof, shall be entitled to payment of the
WQED Escrow Deposit in the amount of One Million Seven Hundred Fifty Thousand
Dollars ($1,750,000) and all interest earned thereon, as liquidated damages and
as QED's exclusive remedy in settlement of any damages of any nature or kind
that QED may suffer or allege to suffer as a result thereof. It is understood
and agreed that the amount of liquidated damages represents Buyer's and QED's
reasonable estimate of actual damages and does not constitute a penalty.
17.2. SURVIVAL. Survival of the representations, warranties,
covenants, indemnities and agreements contained in this Agreement or in any
certificate, document or instrument delivered pursuant to this Agreement shall
be governed at all times by the provisions set forth in Article 17 of the
Exchange Agreement. Any investigation by or on behalf of any party hereto
shall not constitute a waiver as to enforcement of any representation,
warranty, covenant or agreement contained herein.
<PAGE> 16
16
ARTICLE 18
OTHER PROVISIONS
18.1. CONDITION TO THE OBLIGATIONS OF QED AND BUYER.
(a) The parties have executed this Agreement subject to the
subsequent approval by QED's Board of Trustees of the execution, delivery and
performance hereof and of the Exchange Agreement, and to the delivery by QED to
Buyer and Cornerstone of the Certified Consent. If QED determines that it is
necessary or advisable to hold a public meeting in connection with the approval
by the QED Board of Trustees of such execution, delivery and performance, such
public meeting shall be held as soon as practicable following the date hereof.
Subject to the parties' rights under Article 15 hereof, QED shall seek to
obtain such consent and deliver to Buyer and Cornerstone the Certified Consent
as soon as practicable following the public meeting. Upon the delivery to
Buyer of the Certified Consent, the condition to the obligations of QED and
Buyer set forth in this Section 18.1(a) shall be deemed satisfied for all
purposes under this Agreement, and QED shall not be permitted to rescind or
revoke the QED Consent or deny or repudiate the satisfaction of such condition
for any reason whatsoever.
(b) Buyer shall not be required to place the WQED Escrow
Deposit or the Cornerstone Escrow Deposit in escrow with the Escrow Agent until
the second business day following delivery to Buyer of the Certified Consent.
(c) From the date hereof until termination of this Agreement
in accordance with the terms of Article 15 hereof, neither QED, any affiliate
of QED nor any principal, officer, trustee, employee, representative or agent
of QED or of any affiliate of QED shall directly or indirectly (a) solicit,
initiate, encourage or respond in any substantive manner to any proposal or
offer from any person relating to any acquisition or purchase of all or any
substantial amount of the WQEX Assets, or any equity interest in station WQEX,
or any other transaction that is materially inconsistent with the terms of this
Agreement or the Exchange Agreement, or (b) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any person to do or seek any
of the foregoing.
18.2. BENEFIT AND ASSIGNMENT. Subject to satisfaction of the
condition set forth in Section 18.1 hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither party may assign this Agreement, in
whole or in part, without the prior written consent of Cornerstone and the
other party hereto, except that either party may assign its rights hereunder or
under
<PAGE> 17
17
the Exchange Agreement without such consent to any person or entity that is
controlling, controlled by or under common control with the named person or
entity so long as such assignment does not impose any delay or loss of file
number with respect to any of the FCC Applications.
18.3. ACCESS TO CHANNEL 40. Between the date of this Agreement and
the Closing Date, QED shall use its best efforts to insure that Cornerstone
provides Buyer with the rights of access to the Channel 40 Assets set forth in
Section 8.8 of the Exchange Agreement.
18.4. CONFIDENTIALITY. Except for QED's notification obligation to
Cornerstone pursuant to Section 9.2 of the Exchange Agreement, Buyer and QED
shall each keep confidential all information obtained by it with respect to the
other in connection with this Agreement, and if the transactions contemplated
hereby are not consummated for any reason, neither shall at any time utilize,
directly or indirectly, or disclose to any person any such information, and
each shall return to the other, without retaining a copy thereof, any
schedules, documents or other written information, including all financial
information, obtained from the other in connection with this Agreement and the
transactions contemplated hereby, except where such information is known or
available through other lawful sources or where such party is advised by
counsel that its disclosure is required in accordance with applicable law.
Except as required by the FCC in connection with the filing of the FCC
Applications, or by any other agency, court, or other authority with
jurisdiction over the transactions proposed herein, or by any statute, law,
rule or regulation applicable to the parties or the transactions proposed
herein, including disclosure requirements under securities laws and regulations
and rules of securities markets, there shall be no public announcement relating
to this Agreement or the transactions proposed herein without the prior consent
of Buyer, QED and Cornerstone.
18.5. ENTIRE AGREEMENT; NO IMPLIED WAIVER. This Agreement and the
Exchange Agreement and the exhibits 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. 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 waiver, amendment, change, extension or discharge is sought.
No waiver of compliance with any provision or condition hereof shall constitute
a waiver of any other provision or condition, or create an obligation to
continue any prior waiver in effect.
<PAGE> 18
18
18.6. 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.
18.7. GOVERNING LAW. The construction and performance of this
Agreement shall be governed by the laws of the Commonwealth of Pennsylvania
without regard to its principles of conflict of law.
18.8. NOTICES. Any notice, demand or request required or permitted
to be given under the provisions of this Agreement shall be in writing,
addressed to the following addresses, or to such other address as any party may
request in writing, with a required copy to Cornerstone at the addresses set
forth in the Exchange Agreement.
If to QED:
George L. Miles, Jr.
Chief Executive Officer
WQED Pittsburgh
4802 Fifth Avenue
Pittsburgh, PA 15213
With a copy, which shall not constitute notice, to:
Leventhal, Senter & Lerman
2000 K Street, N.W.
Suite 600
Washington, D.C. 20006
Attention: Steven A. Lerman, Esq.
If to Buyer:
Lowell W. Paxson
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, FL 33401
<PAGE> 19
19
With a copy, which shall not constitute notice, to:
John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson, PLLC
Suite 800
1200 New Hampshire Avenue, N.W.
Washington, DC 20036
Any such notice, demand or request shall be deemed to have been duly delivered
and received (i) on the date of personal delivery, or (ii) on the date of
receipt, if mailed by registered or certified mail, postage prepaid and return
receipt requested, or (iii) on the date of a signed receipt, if sent by an
overnight delivery service, but only if sent in the same manner to all persons
entitled to receive notice or a copy.
18.9. 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.
18.10. FURTHER ASSURANCES. The parties shall take any actions and
execute any other documents that may be reasonably necessary or desirable to
the implementation and consummation of this Agreement.
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<PAGE> 20
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
<TABLE>
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ATTEST WQED PITTSBURGH
/s/ /s/ George L. Miles, Jr.
By: ____________________________ By: _______________________________
Name: George L. Miles, Jr.
Title: President and Chief
Executive Officer
ATTEST PAXSON COMMUNICATIONS OF
PITTSBURGH-40, INC.
/s/ /s/ Lowell W. Paxson
By: ____________________________ By: _______________________________
Name: Lowell W. Paxson
Title: Chairman
</TABLE>
<PAGE> 1
EXHIBIT 10.164
================================================================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
MIAMI-35, INC.
AND
CHANNEL 35 OF MIAMI, INC.
* * *
APRIL 22, 1997
================================================================================
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS......................................................... 1
"Accounts Receivable".................................................. 1
"Affiliation Agreement"................................................ 1
"Assets"............................................................... 1
"Assumed Contracts".................................................... 2
"Closing".............................................................. 2
"Closing Date"......................................................... 2
"Consents"............................................................. 2
"Contracts"............................................................ 2
"FCC".................................................................. 2
"FCC Consent".......................................................... 2
"FCC Licenses"......................................................... 2
"Final Order".......................................................... 2
"Intangibles".......................................................... 2
"Licenses"............................................................. 3
"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
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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..........................................13
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......................................................16
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
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5.19 Collection of Accounts Receivable.............................17
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS....................................18
6.1 FCC Consent...................................................18
6.2 Control of the Station........................................18
6.3 Risk of Loss..................................................18
6.4 Confidentiality...............................................19
6.5 Environmental 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
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SECTION 11. MISCELLANEOUS......................................................29
11.1 Fees and Expenses.............................................29
11.2 Arbitration...................................................29
11.3 Notices.......................................................29
11.4 Benefit and Binding Effect....................................30
11.5 Further Assurances............................................30
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................31
11.13 Counterparts..................................................32
</TABLE>
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LIST OF SCHEDULES
Exhibit A -- Affiliation Agreement
Schedule 2.2 -- Excluded Assets
Schedule 3.3 -- Onsents
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) -- Estoppel Certificate
Schedule 8.2(g) -- Opinion of Seller's Counsel
Schedule 8.3(d) -- Opinion of Buyer's Counsel
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is dated as of the 22nd day of April,
1997, by and between Paxson Communications of Miami-35, Inc., a Florida
corporation ("Buyer"), and Channel 35 of Miami, Inc., a Florida corporation
("Seller").
R E C I T A L S
A. Seller and Buyer are parties to an Option Agreement dated as of
April 1, 1994 (the "Option Agreement"), pursuant to which Seller granted to
Buyer an option (the "Option") to acquire from Seller substantially all of the
assets used or useful in the business or operations of Television Station
WCTD(TV), Miami, Florida (the "Station").
B. In accordance with the Option Agreement, Buyer has notified Seller
that Buyer intends to exercise the Option.
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.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
<PAGE> 8
"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 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.
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"Licenses" means all licenses, permits, and other authorizations issued
by the FCC, the Federal Aviation Administration, or any other federal, state, or
local governmental authorities 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.
"Note" means the Unsecured Promissory Note dated April 1, 1994, in the
principal amount of $1,100,000, delivered by Seller to New Miami Latino
Broadcasting Corporation.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings and
other improvements thereon, and other real property interests which are used or
useful in the business or operations of the Station, together with any additions
thereto between the date of this Agreement and the Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts, and other tangible personal property which is used or useful in the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Time Brokerage Agreement" means the Time Brokerage Agreement dated as
of April 1, 1994, 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;
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<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 One
Million One Hundred Thousand Dollars ($1,100,000), less the aggregate payments
made by Buyer to Seller (pursuant to the April 1, 1994 Time Brokerage Agreement)
representing reimbursement for payments under the Note, adjusted as provided in
Section 2.3(a) below, payable in cash at the Closing.
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<PAGE> 11
(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 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
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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 and is duly qualified 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 is the authorized legal holder
thereof. The Licenses listed on Schedule 3.4 comprise all of the
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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 Miami, Florida Area of Dominant
Influence as defined by the 1991-1992 Area of Dominant Influence Market Guide
published by The Arbitron Co. and the Miami, 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 the 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
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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 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
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(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,
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 its 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.
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(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 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.
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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 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
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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. 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. P.
73.3555(c)), Buyer knows of no fact that would, under existing law and the
existing
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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.
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.
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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, 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
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experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon Buyer's request, Seller
shall cooperate with Buyer and use it best efforts to obtain from the lessors
under each Real Property lease such estoppel certificates and consents to the
collateral assignment of the lessee's interest under each such lease as Buyer's
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
with 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 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) Note. There shall exist no Event of Default as defined in
the 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.
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 cash portion of the Purchase Price, as
adjusted pursuant to Section 2.3(a), the executed original of the Note marked
"canceled" and such other documents as may be required to release or terminate
any security interests held by Buyer in any of the assets described in Section
2.2;
(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 Buyer contained in this Agreement are true
and complete in all material respects as of the
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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; and
(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.
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
[April 1, 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:
(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.
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(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
[April 1, 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.
9.4 Survival of Option. In the event that the transactions contemplated
by this Agreement are not consummated for any reason whatsoever, the Option
shall nevertheless remain exercisable by Buyer until the expiration of the
Option as provided in the Option Agreement, and Buyer may at any time, and from
time to time, prior to such expiration again exercise the Option as set forth in
the Option Agreement and, upon such exercise, Buyer and Seller shall enter into
an Asset Purchase Agreement that is, subject to the requirement in the following
sentence, substantially identical to this Agreement and thereafter diligently
proceed to perform their obligations thereunder. In the event that the
transactions contemplated by this Agreement are not consummated because a
provision of this Agreement is determined by the FCC to violate any FCC rule or
policy, Buyer and Seller shall negotiate in good faith to revise any such
provision to ensure compliance with such rule or policy while preserving, to the
extent possible, the intent of the parties as embodied in the provision to be
revised.
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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 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) 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
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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 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 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
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claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration provisions
of this Agreement, as applicable.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate in the defense of any third
party claim, it shall be bound by the results obtained by the Claimant with
respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The 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 6.6 and 6.7 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.
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<PAGE> 35
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 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:
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<PAGE> 36
If to Seller: Mr. James L. West
The Christian Network, Inc.
14444 66th Street North
Clearwater, FL 34624
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.
- 30 -
<PAGE> 37
11.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA (WITHOUT REGARD TO
THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless of the
gender and number specifically used, shall be deemed and construed to include
any other gender, masculine, feminine, or neuter, and any other number, singular
or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.10.
11.11 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
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<PAGE> 38
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 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
MIAMI-35, INC.
By: /s/ William L. Watson
-----------------------------------------
Name: William L. Watson
Title: Secretary
CHANNEL 35 OF MIAMI, INC.
By: /s/ James L. West
-----------------------------------------
Name: James L. West
Title: Chairman
<PAGE> 1
EXHIBIT 10.165
================================================================================
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS OF
TAMPA-66, INC.
AND
CHANNEL 66 OF TAMPA, INC.
* * *
APRIL 22, 1997
================================================================================
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TABLE OF CONTENTS
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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
"Note Agreement..........................................................................................3
"CNI 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...........................................................................7
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
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3.9 Intangibles.....................................................................................9
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...........................................................................13
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.......................................................................................16
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
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5.18 Preservation of Business.......................................................................17
5.19 Collection of Accounts Receivable..............................................................17
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS.....................................................................18
6.1 FCC Consent....................................................................................18
6.2 Control of the Station.........................................................................18
6.3 Risk of Loss...................................................................................18
6.4 Confidentiality................................................................................19
6.5 Environmental 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
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10.6 Attorneys' Fees................................................................................29
SECTION 11. MISCELLANEOUS.......................................................................................29
11.1 Fees and Expenses..............................................................................29
11.2 Arbitration....................................................................................29
11.3 Notices........................................................................................29
11.4 Benefit and Binding Effect.....................................................................30
11.5 Further Assurances.............................................................................30
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.................................................31
11.13 Counterparts...................................................................................32
</TABLE>
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<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 22nd day of April, 1997,
by and between Paxson Communications of Tampa-66, Inc., a Florida corporation
("Buyer"), and Channel 66 of Tampa, Inc., a Florida corporation ("Seller").
RECITALS
A. Seller and Buyer are parties to an Option Agreement dated as of
October 31, 1996 (the "Option Agreement"), pursuant to which Seller granted to
Buyer an option (the "Option") to acquire from Seller substantially all of the
assets used or useful in the business or operations of Television Station
WFCT-TV, Bradenton, Florida (the "Station").
B. In accordance with the Option Agreement, Buyer has notified Seller
that Buyer intends to exercise the Option.
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.
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 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.
"Note Agreement" means the Note Purchase and Assignment Agreement dated
as of June 15, 1994, between Buyer and Seller in the principal amount of
$1,400,000.
"CNI Note" means the Promissory Note dated December 17, 1993, in the
principal amount of $3,120,000, as subsequently modified by the Note Agreement
delivered by Seller to Buyer pursuant to that Loan and Option Agreement dated
December 17, 1993 by and between Bradenton Broadcast Television Company, Ltd.
and CNI, as amended by the First Amendment to Loan and Option Agreement dated
June 15, 1994 (the "Loan Agreement").
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings and
other improvements thereon, and other real property interests which are used or
useful in the business or operations of the Station, together with any additions
thereto between the date of this Agreement and the Closing Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, inventory,
spare parts, and other tangible personal property which is used or useful in the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Time Brokerage Agreement" means the Time Brokerage Agreement dated as of
October 31, 1996, between Seller and Buyer.
SECTION 2. PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
forth in this Agreement, Seller hereby agrees to sell, transfer, 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:
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<PAGE> 10
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(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.
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<PAGE> 11
2.3 Purchase Price. The Purchase Price for the Assets shall be (i)
One Hundred Thousand Dollars ($100,000), adjusted as provided in Section 2.3(a)
below, payable in cash at the Closing and (ii) the forgiveness on the Closing
Date of all principal, accrued but unpaid interest, fees, expenses and other
charges owed by Seller to Buyer as of the Closing Date pursuant to the Note
Agreement.
(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
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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 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.
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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 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 Tampa-St. Petersburg, Florida Area of Dominant
Influence as defined by the 1991-1992 Area of Dominant Influence Market Guide
published by The Arbitron Co. and the Tampa-St. Petersburg, 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
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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
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
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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. 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. Since October 31, 1996, no insurance policy of Seller on the Assets or
the Station has been canceled by the insurer and no application of Seller for
insurance has been rejected by any insurer.
3.11 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
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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 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
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to the extent that such taxes have become due, or has set aside on its books
adequate reserves (segregated to the extent required by generally accepted
accounting principles) with respect thereto. There are no governmental
investigations or other legal, administrative, or tax proceedings pursuant to
which Seller is or could be made liable for any taxes, penalties, interest, or
other charges, the liability for which could extend to Buyer as transferee of
the business of the Station, and, 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 its 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.
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(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 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.
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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 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
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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. 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
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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.
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.
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<PAGE> 22
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, 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
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experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon Buyer's request, Seller
shall cooperate with Buyer and use it best efforts to obtain from the lessors
under each Real Property lease such estoppel certificates and consents to the
collateral assignment of the lessee's interest under each such lease as Buyer's
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
tecIhnical 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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<PAGE> 27
(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 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"), and there shall
not have been any modification of any License that could have a material adverse
effect on the Station or the conduct of its business and operations. No
proceeding shall be pending the effect of which could be to revoke, cancel, fail
to renew, suspend, or modify adversely any License.
(f) Deliveries. Seller shall have made or stand willing to make
all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. 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) Note Agreement. There shall exist no Event of Default as
defined in the Note Agreement.
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.
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 cash portion of the Purchase Price, as
adjusted pursuant to Section 2.3(a), the executed original of the Note marked
"canceled" and such other documents as may be required to release or terminate
any security interests held by Buyer in any of the assets described in Section
2.2;
(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 Buyer contained in this Agreement are true
and complete in all material respects as of the
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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; and
(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.
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
April 1, 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:
(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.
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(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
April 1, 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.
9.4 Survival of Option. In the event that the transactions
contemplated by this Agreement are not consummated for any reason whatsoever,
the Option shall nevertheless remain exercisable by Buyer until the expiration
of the Option as provided in the Option Agreement, and Buyer may at any time,
and from time to time, prior to such expiration again exercise the Option as set
forth in the Option Agreement and, upon such exercise, Buyer and Seller shall
enter into an Asset Purchase Agreement that is, subject to the requirement in
the following sentence, substantially identical to this Agreement and thereafter
diligently proceed to perform their obligations thereunder. In the event that
the transactions contemplated by this Agreement are not consummated because a
provision of this Agreement is determined by the FCC to violate any FCC rule or
policy, Buyer and Seller shall negotiate in good faith to revise any such
provision to ensure compliance with such rule or policy while preserving, to the
extent possible, the intent of the parties as embodied in the provision to be
revised.
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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 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) 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
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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 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
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the claim. If the Claimant and the Indemnifying Party agree at or prior to the
expiration of the thirty-day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, the Indemnifying Party shall
immediately pay to the Claimant the full amount of the claim. If the Claimant
and the Indemnifying Party do not agree within the thirty-day period (or any
mutually agreed upon extension thereof), the Claimant may seek appropriate
remedy at law or equity or under the arbitration provisions of this Agreement,
as applicable.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, the Indemnifying
Party shall have the right at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate fully
with the Indemnifying Party, subject to reimbursement for actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate in the defense of any third
party claim, it shall be bound by the results obtained by the Claimant with
respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The 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
Iits 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.
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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 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,
- 29 -
<PAGE> 36
(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
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
- 30 -
<PAGE> 37
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 Iand 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 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
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<PAGE> 38
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 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
TAMPA-66, INC.
By: /s/ WILLIAM L. WATSON
------------------------------------
Name: William L. Watson
Title: Secretary
CHANNEL 66 OF TAMPA, INC.
By: /s/ JAMES L. WEST
------------------------------------
Name: James L. West
Title: Chairman
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<PAGE> 1
EXHIBIT 10.166
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS
OF GREEN BAY-14, INC.
AND
VCY AMERICA, INC.
FOR
TELEVISION STATION WSCO(TV)
SURING, WISCONSIN
* * *
APRIL 30, 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
"Escrow Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Escrow Agreement" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Consent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"FCC Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Final Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Intangibles" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Licenses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Real Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Tangible Personal Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Assumption of Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Organization, Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Authorization and Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Absence of Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Governmental Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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
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3.12 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.19 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.6 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.12 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.14 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.15 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.16 Financing Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.17 Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.18 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.19 Collection of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 FCC Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Control of the Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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6.3 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.6 Engineering Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.8 Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.9 Sales Tax Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.10 Access to Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.11 Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
AT CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Conditions to Obligations of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Conditions to Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8. CLOSING AND CLOSING DELIVERIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2 Deliveries by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.3 Deliveries by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.1 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.2 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.3 Rights on Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION; CERTAIN REMEDIES . . . . . . . . . . . . . 27
10.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.5 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.1 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.2 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.4 Benefit and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.5 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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<PAGE> 5
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
11.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.8 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.9 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11.10 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.11 Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
11.13 PCC Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
INDEX TO SCHEDULES
------------------
<S> <C> <C>
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 - Financial Statements
Schedule 3.11 - Insurance
Schedule 3.13 - Personnel
Schedule 6.12 - Noncompetition Agreement
Schedule 8.2(h) - Seller's Opinion
Schedule 8.3(d) - Buyer's Opinion
Schedule 9.4 - Escrow Agreement
</TABLE>
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<PAGE> 7
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 30th day of April,
1997, by and between Paxson Communications of Green Bay-14, Inc., a Florida
corporation ("Buyer"), and VCY America, Inc., a non-stock, not-for-profit
Wisconsin corporation ("Seller").
R E C I T A L S
A. Seller is the licensee of and owns and operates television
station WSCO(TV), Suring, Wisconsin (the "Station") pursuant to licenses issued
by the Federal Communications Commission ("FCC") and holds a construction
permit issued by the FCC to modify the Station's facilities (FCC File No.
BPCT-960404KT) (the "Construction Permit").
B. Seller is currently operating the Station pursuant to Special
Temporary Authority (the "STA") granted by the FCC on January 24, 1997 and
which expires on July 23, 1997.
B. Seller desires to sell, and Buyer desires to buy,
substantially all the assets that are used or useful in the business or
operations of the Station, for the price and on the terms and conditions set
forth in this Agreement.
A G R E E M E N T S
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Seller, intending to be
bound legally, agree as follows:
SECTION 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"Accounts Receivable" means 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
<PAGE> 8
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Agreement and the Closing Date that Buyer agrees in writing to assume, and
(iii) time sales contracts entered into by Seller in compliance with Section
5.3.
"Closing" means the consummation of the purchase and sale of the
Assets pursuant to this Agreement in accordance with the provisions of Section
8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer
or otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including any amendments and other
modifications thereto) to which Seller is a party or which are binding upon
Seller and which relate to or affect the Assets or the business or operations
of the Station, and (i) which are in effect on the date of this Agreement or
(ii) which are entered into by Seller between the date of this Agreement and
the Closing Date.
"Escrow Agent" means First Union National Bank of Florida.
"Escrow Agreement" means the Escrow Agreement dated as of the date
hereof among Buyer, Seller and the Escrow Agent.
"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
<PAGE> 9
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data, machinery and equipment warranties, and other similar intangible property
rights and interests (and any goodwill associated with any of the foregoing)
applied for, issued to, or owned by Seller or under which Seller is licensed or
franchised and which are used or useful in the business and operations of the
Station, together with any additions thereto between the date of this Agreement
and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local governmental authorities to Seller in connection with the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"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 including all of Seller's
interest in and to the FCC Licenses, 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;
<PAGE> 10
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(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of Seller
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
(f) All of Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station;
(g) The Accounts Receivable as of 11:59 p.m. on the day
prior to the Closing Date ("Seller's Receivables");
(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 all books and records that pertain to Seller's corporate
organization or Seller's properties other than the Station;
(c) Any pension, profit-sharing, or employee benefit
plans, and any collective bargaining agreements;
(d) The Station's existing tower site lease (which shall,
however, be made available for Buyer's use for a period of ninety (90) days
following the Closing); and
(e) All property listed on Schedule 2.2 hereto.
<PAGE> 11
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2.3 Purchase Price. The Purchase Price for the Assets and the
covenants of Seller set forth in the Noncompetition Agreement referred to in
Section 6.13 shall be Four Million Seven Hundred Fifty Thousand Dollars
($4,750,000) 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 and deferred items, shall be prorated between Buyer and Seller
in accordance with the principle that Seller shall be responsible for all
expenses, costs, and liabilities allocable to the period prior to the Closing
Date, and Buyer shall be responsible for all expenses, costs, and obligations
allocable to the period on and after the Closing Date. Notwithstanding the
preceding sentence, there shall be no adjustment for, and Seller shall remain
solely liable with respect to, any Contracts not included in the Assumed
Contracts and any other obligation or liability not being assumed by Buyer in
accordance with Section 2.5.
(b) Manner of Determining Adjustments. Any adjustments
will, insofar as feasible, be determined and paid on the Closing Date, with
final settlement and payment by the appropriate party occurring no later than
ninety (90) days after the Closing Date or such other date as the parties shall
mutually agree upon. Seller shall prepare and deliver to Buyer not later than
five (5) days before the Closing Date a preliminary settlement statement which
shall set forth Seller's good faith estimate of the adjustments to the Purchase
Price under Section 2.3(a). The preliminary settlement statement (i) shall
contain all information reasonably necessary to determine the adjustments to
the Purchase Price under Section 2.3(a), to the extent such adjustments can be
determined or estimated as of the date of the preliminary settlement statement,
and such other information as may be reasonably requested by Buyer, and (ii)
shall be certified by Seller to be true and complete in all material respects
as of the date thereof.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Seller at Closing by confirmed 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
<PAGE> 12
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Contract not included in the Assumed Contracts, (ii) any obligations or
liabilities under the Assumed Contracts relating to the period prior to the
Closing Date, (iii) any claims or pending litigation or proceedings relating to
the operation of the Station prior to the Closing, (iv) any obligations or
liabilities arising under capitalized leases or other financing agreements, (v)
any obligations or liabilities arising under agreements entered into other than
in the ordinary course of business, (vi) any obligations or liabilities of
Seller under any employee pension, retirement, health and welfare or other
benefit plans or collective bargaining agreements, (vii) any obligation to any
employee of the Station for severance benefits, vacation time, or sick leave
accrued prior to the Closing Date, or (viii) any obligations or liabilities
caused by, arising out of, or resulting from any action or omission of Seller
prior to the Closing, and all such obligations and liabilities shall remain and
be the obligations and liabilities solely of Seller.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a non-stock,
not-for-profit corporation duly organized, validly existing, and in good
standing under the laws of the State of Wisconsin. Seller has all requisite
power and authority (i) to own, lease, and use the Assets as now owned, leased,
and used, (ii) to conduct the business and operations of the Station as now
conducted, and (iii) to execute and deliver this Agreement, the Escrow
Agreement and the documents contemplated hereby and thereby, and to perform and
comply with all of the terms, covenants, and conditions to be performed and
complied with by Seller hereunder and thereunder. Seller is not a participant
in any joint venture or partnership with any other person or entity with
respect to any part of the operations of the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement and the Escrow Agreement by Seller
have been duly authorized by all necessary actions on the part of Seller and
its shareholders. This Agreement and the Escrow Agreement have been duly
executed and delivered by Seller and constitute the legal, valid, and binding
obligations of Seller, enforceable against it in accordance with their
respective terms except as the enforceability of this Agreement and the Escrow
Agreement may be affected by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally, and by judicial discretion in the enforcement of
equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the Escrow Agreement and the documents contemplated hereby
and thereby (with or without the giving of notice, the lapse of time, or both):
(i) do not require the consent of any third party; (ii)
<PAGE> 13
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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). To the best of Seller's knowledge, the Licenses have been validly
issued. Seller is the authorized legal holder thereof of the Licenses. 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. Except as set forth in Schedule 3.4, Seller has no reason to
believe that any of the Licenses would not be renewed by the FCC or other
granting authority in the ordinary course. The Station's city of license, as
determined by the FCC, is located within the Green Bay, Wisconsin Area of
Dominant Influence as defined by the 1991-1992 Area of Dominant Influence
Market Guide published by The Arbitron Co. and the Green Bay, Wisconsin
Designated Market Area as defined by the 1994 United States Television
Household Estimates published by Nielsen Media Research. By letters dated
March 14, 1997, Seller made a valid election of must carry with respect to each
cable system located within the Station's Area of Dominant Influence. Except
as set forth in Schedule 3.4, 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 constitutes the Station's transmitter site (leasehold
interest) and does not include any studio facility for the Station. With
respect to each leasehold or subleasehold interest included in the Real
Property being conveyed under this Agreement so long as Seller fulfills its
obligations under the lease therefor, Seller has enforceable rights to
nondisturbance and quiet enjoyment, and no third party holds any
<PAGE> 14
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interest in the leased premises with the right to foreclose upon Seller's
leasehold or subleasehold interest. All towers, guy anchors, and buildings and
other improvements included in the Assets are located entirely on the Real
Property listed in Schedule 3.5. All Real Property (including the improvements
thereon) (i) is in good condition and repair consistent with its present use,
(ii) is available for immediate use in the operation of the Station, and (iii)
complies with all applicable building or zoning codes and the regulations of
any governmental authority having jurisdiction. Seller has full legal and
practical access to the Real Property. All easements, rights-of-way, and real
property licenses have been properly recorded in the appropriate public
recording offices.
3.6 Title to and Condition of Tangible Personal Property.
Schedule 3.6 lists all material items of Tangible Personal Property. 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 set forth in Schedules 2.2 and 3.6
hereof. 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 on an "as-is" basis. All items of transmitting
and studio equipment included in the Excluded Assets in Schedule 2.2 hereof (i)
have been maintained in a manner consistent with generally accepted standards
of good engineering practice, and (ii) will permit the Station to operate in
accordance with the terms of the STA and the rules and regulations of the FCC,
and with all other applicable federal, state, and local statutes, ordinances,
rules, and regulations. The Excluded Assets will be made available to Buyer
for a period of ninety (90) days following the Closing to permit Buyer's
continued operation of the Station pursuant to the STA. Except as provided
above, Seller makes no representations or warranties of any kind regarding the
condition of the Tangible Personal Property.
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
<PAGE> 15
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Contract (i) to terminate such contract or amend the terms thereof, (ii) to
refuse to renew the Assumed Contract upon expiration of its term, or (iii) to
renew the Assumed Contract upon expiration only on terms and conditions which
are more onerous than those now existing. Except for the need to obtain the
Consents listed in Schedule 3.3, Seller has full legal power and authority to
assign its rights under the Assumed Contracts to Buyer in accordance with this
Agreement, and such assignment will not affect the validity, enforceability, or
continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section
6.1 and the other Consents described in Schedule 3.3, including those
designated as material consents, 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. To the best of
Seller's knowledge, Seller is not infringing upon or otherwise acting adversely
to any trademarks, trade names, service marks, service names, copyrights,
patents, patent applications, know-how, methods, or processes owned by any
other person or persons, and there is no claim or action pending, or to the
knowledge of Seller threatened, with respect thereto. The Intangibles listed
on Schedule 3.9 comprise all material intangible property interests necessary
to conduct the business and operations of the Station as now conducted.
3.10 Insurance. Schedule 3.10 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the business
of the Station. All policies of insurance listed in Schedule 3.10 are in full
force and effect. The insurance policies listed in Schedule 3.10 are adequate
in amount with respect to, and for the full value (subject to customary
deductibles) of, the Assets, and insure the Assets and the business of the
Station against all customary and foreseeable risks. During the past three
years, no insurance policy of Seller on the Assets or the Station has been
canceled by the insurer and no application of Seller for insurance has been
rejected by any insurer.
3.11 Reports. All material 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 material reporting requirements of
the FCC and other governmental authorities having jurisdiction over Seller and
the Station have been complied with. All of such returns,
<PAGE> 16
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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 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 3.13, with respect to
each Employee Plan and, to the extent applicable, each Compensation
Arrangement: (i) each Employee Plan that is intended to be tax-qualified, and
each amendment thereto, is the subject of a favorable determination letter, and
no plan amendment that is not the subject of a favorable determination letter
would affect the validity of an Employee Plan's letter; (ii) no prohibited
<PAGE> 17
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transaction, within the definition of section 4975 of the Code or Title 1, Part
4 of ERISA, has occurred which would subject Seller to any liability; and (iii)
all contributions, premiums or payments accrued, in whole or in part, under
each Employee Plan or Compensation Arrangement or with respect thereto as of
the Closing will be paid by the Seller prior to the Closing, including, but not
limited to, contributions thereto with respect to the plan year ending
immediately prior to the Closing.
(f) For purposes of this Agreement, the following terms
shall have the meaning indicated: (i) "Employee Plan" shall mean any pension,
profit-sharing, deferred compensation, vacation, bonus, incentive, medical,
vision, dental, disability, life insurance or any other employee benefit plan
as defined in Section 3(3) of ERISA to which Seller or any entity related to
Seller (under the terms of Section 414(b), (c), (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 in all material respects with all
laws, rules, and regulations relating to the employment of labor, including
those related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payroll related
taxes, and Seller has not received any notice alleging that it has failed to
comply in any material respect with any such laws, rules, or regulations. No
controversies, disputes, or proceedings are pending or, to the best of Seller's
knowledge, threatened, between Seller and any employee (singly or collectively)
of the 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
<PAGE> 18
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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 adequate
reserves (segregated to the extent required by generally accepted accounting
principles) with respect thereto. There are no governmental investigations or
other legal, administrative, or tax proceedings pursuant to which Seller is or
could be made liable for any taxes, penalties, interest, or other charges, the
liability for which could extend to Buyer as transferee of the business of the
Station, and no event has occurred that could impose on Buyer any transferee
liability for any taxes, penalties, or interest due or to become due from
Seller.
3.14 Claims and Legal Actions. Except as disclosed in Schedule 3.4
and except for any FCC rulemaking proceedings generally affecting the
broadcasting industry, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal, administrative, or tax
proceeding, nor any order, decree or judgment, in progress or pending, or to
the knowledge of Seller threatened, against or relating to Seller with respect
to its ownership or operation of the Station or otherwise relating to the
Assets or the business or operations of the Station, nor does Seller know or
have reason to be aware of any basis for the same. In particular, but without
limiting the generality of the foregoing, to the best of its knowledge, and
except as disclosed in Schedule 3.4, there are no applications, 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 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.
<PAGE> 19
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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) To the best of Seller's knowledge, 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 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.
<PAGE> 20
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(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 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 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) 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;
(b) Made any sale, assignment, lease, or other transfer
of any of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(c) Canceled any debts owed to or claims held by Seller
with respect to the Station, except in the normal and usual course of business;
or
(d) Transferred or granted any right under, or entered
into any settlement regarding the breach or infringement of, any license,
patent, copyright, trademark, trade name, franchise, or similar right, or
modified any existing right relating to the Station.
3.18 Broker. Neither Seller nor any person acting on Seller's
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
3.19 Full Disclosure. No representation or warranty made by Seller
in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Seller pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement made herein or therein not
misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
<PAGE> 21
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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 Wisconsin. Buyer has all requisite power
and authority to execute and deliver this Agreement and the Escrow Agreement
and the documents contemplated hereby and thereby, and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement and the Escrow Agreement by Buyer
have been duly authorized by all necessary actions on the part of Buyer. This
Agreement and the Escrow Agreement have been duly executed and delivered by
Buyer and constitute the legal, valid, and binding obligations of Buyer,
enforceable against Buyer in accordance with their respective terms except as
the enforceability of this Agreement and the Escrow Agreement may be affected
by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the Escrow Agreement and the documents contemplated hereby and thereby
(with or without the giving of notice, the lapse of time, or both): (i) do not
require the consent of any third party; (ii) will not conflict with the
Articles of Incorporation or Bylaws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Broker. Neither Buyer nor any person acting on Buyer's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement, except for a
commission payable by Buyer to Patrick Communications Corporation.
4.5 Qualifications. To be the best of Buyer's knowledge,
information and belief, Buyer is legally and financially qualified to be the
assignee of the Licenses hereunder, and it is not engaged in any proceedings
with the FCC which would prevent the assignment of the Licenses hereunder nor
is it aware of any claim which would result in such a proceeding or which would
prevent the sale contemplated herein.
<PAGE> 22
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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 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. Without Buyer's consent, 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. Without Buyer's consent, 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. Without Buyer's consent, 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 intentionally cause or permit, by
any act or failure to act, any of the Licenses to expire or to be revoked,
suspended, or modified, or
<PAGE> 23
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intentionally take any action that could cause the FCC or any other
governmental authority to institute proceedings for the suspension, revocation,
or adverse modification of any of the Licenses. Seller shall not fail to
prosecute with due diligence any applications to any governmental authority in
connection with the operation of the Station including the timely filing with
the FCC of requests to extend the STA and, if necessary, the Construction
Permit.
5.7 Rights. Without Buyer's consent, Seller shall not waive any
material right relating to the Station or any of the Assets. Seller shall use
commercially reasonable efforts to secure carriage on all cable systems located
within the Station's Area of Dominant Influence.
5.8 No Inconsistent Action. Seller shall not intentionally take
any action that is inconsistent with its obligations under this Agreement or
that could hinder or delay the consummation of the transactions contemplated by
this Agreement.
5.9 Access to Information. Seller shall give Buyer and its
counsel, accountants, engineers, and other authorized representatives
reasonable access to the Assets and to all other properties, equipment, books,
records, Contracts, and documents relating to the Station for the purpose of
audit and inspection, including inspections incident to the environmental study
described in Section 6.5 and the engineering study described in Section 6.6,
and will furnish or cause to be furnished to Buyer or its authorized
representatives all information with respect to the affairs and business of the
Station that Buyer may reasonably request (including 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 business records and Seller's employees, counsel, accountants and
other representatives for the purpose of preparing and auditing such financial
statements as Buyer determines, in its sole judgment, are required or advisable
to comply with federal or state securities laws and the rules and regulations
of securities markets as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
5.10 Maintenance of Assets. Seller shall use its commercially
reasonable 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 in all
material respects with the terms of the FCC Licenses, all rules and regulations
of the FCC and generally accepted standards of good engineering practice..
Seller shall maintain inventories of spare parts and expendable supplies at
levels consistent with past practices. If any material 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
<PAGE> 24
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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 use commercially reasonable 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 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 and Seller shall be required to cure any default under any such
contracts including any payment defaults; provided, however, Seller shall not
be obligated to pay any other funds to obtain such Consents. Upon Buyer's
request, Seller shall cooperate with Buyer and use it commercially reasonable
efforts to obtain from the lessors under each Real Property lease such estoppel
certificates and consents to the collateral assignment of the lessee's interest
under each such lease as Buyer's senior lenders may 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. Without Buyer's prior consent, 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.
<PAGE> 25
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5.18 Preservation of Business. Seller shall use commercially
reasonable efforts to preserve the business and organization of the Station and
use commercially reasonable 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.
5.19 Collection of Accounts Receivable. Seller shall collect the
accounts receivable of the Station only in the ordinary course consistent with
its past practices and will not take any action designed or likely to
accelerate the collection of its accounts receivable.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with
the purchase and sale of the Assets pursuant to this Agreement shall be subject
to the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an
appropriate application for the FCC Consent and shall file the application with
the FCC within five (5) business days of the execution of this Agreement. The
parties shall prosecute the application with all reasonable diligence and
otherwise use their best efforts to obtain a grant of the application as
expeditiously as practicable. Each party agrees to comply with any condition
imposed on it by the FCC Consent, except that no party shall be required to
comply with a condition if (1) the condition was imposed on it as the result of
a circumstance the existence of which does not constitute a breach by the party
of any of its representations, warranties, or covenants under this Agreement,
and (2) compliance with the condition would have a material adverse effect upon
it, provided however, that Buyer will accept a condition imposed by the FCC
Consent and/or in connection with the Station's pending 1992 renewal requiring
Buyer to complete construction of the facilities authorized in the Construction
Permit as it may be amended. 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
<PAGE> 26
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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 ten 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 pursuant to the STA is resumed within twenty-one days of the
damage, destruction or other event, Buyer, in its sole discretion, may (x)
terminate this Agreement forthwith without any further obligations hereunder
upon written notice to Seller, in which event all funds held by the Escrow
Agent pursuant to the Escrow Agreement, including all interest and other
proceeds from the investment of such funds, shall be immediately returned to
Buyer, or (y) proceed to consummate the transaction contemplated by this
Agreement and complete the restoration and replacement of the Assets after the
Closing Date, in which event Seller shall deliver to Buyer all insurance
proceeds received in connection with such damage, destruction or other event.
6.4 Confidentiality. Except as necessary for the consummation of
the transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.5 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
<PAGE> 27
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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, neither Seller nor Buyer shall have any
obligation (i) to expend funds to obtain any of the Consents (except as
provided in Section 5.11 hereof) 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 Wisconsin 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 Sales Tax Filings. Seller shall continue to file Wisconsin
sales tax returns with respect to the Station in accordance with Seller's past
practices and shall concurrently deliver copies of all such returns to Buyer.
6.10 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 Noncompetition Agreement. At Closing, Buyer and Seller shall
enter into a Noncompetition Agreement in the form of Schedule 6.12 and $95,000
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
<PAGE> 28
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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 material 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 a material adverse effect on the Station or the conduct
of its business and operations. Except as disclosed in Schedule 3.4, 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) New Tower Site. Buyer's approval of the lease and
Seller's possession of all governmental permits for the tower site specified in
the Construction Permit.
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.
<PAGE> 29
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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.
SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00
a.m. on a date, to be set by Buyer on at least five days' written notice to
Seller, that is (1) not earlier than the first business day after the FCC
Consent is granted, and (2) not later than ten business days following the date
upon which the FCC Consent has become a Final Order, subject to satisfaction or
waiver of all other conditions precedent to the holding of the Closing. If
Buyer fails to specify the date for Closing prior to the fifth business day
after the date upon which the FCC Consent becomes a Final Order, the Closing
shall take place on the tenth business day after the date upon which the FCC
Consent becomes a Final Order.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place that is agreed upon by Buyer and
Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty bills of
sale, deeds, motor vehicle titles, assignments and assumption of FCC Licenses,
and other transfer documents which shall be sufficient to vest good and
marketable title to the Assets in the name of Buyer, free and clear of all
claims, liabilities, security interests, mortgages, liens, pledges, conditions,
charges or encumbrances, except for liens for current taxes not yet due and
payable;
(b) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property and estoppel certificates of
<PAGE> 30
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contracting parties to those Assumed Contracts listed in Schedule 3.7 that are
designated to indicate that estoppel certificates are required under this
paragraph;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Seller by an officer of Seller,
certifying (1) that the representations and warranties of Seller contained in
this Agreement are true and complete in all material respects as of the Closing
Date as though made on and as of that date; and (2) that Seller has in all
material respects performed and complied with all of its obligations,
covenants, and agreements set forth in this Agreement to be performed and
complied with on or prior to the Closing Date;
(e) Tax, Lien, and Judgment Searches. Results of a
search for tax, lien, and judgment filings in the Secretary of State's records
of the State of Wisconsin as well as the records of those counties in Wisconsin
in which any of the Assets are located, such searches having been made no
earlier than fifteen days prior to the Closing Date;
(f) Licenses, Contracts, Business Records, Etc. Copies
of all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by
Seller in connection with its operations;
(g) Accounts Receivable. A complete and accurate list of
the Station's accounts receivable as of a date no more than five business days
prior to the Closing Date, including, with respect to each of the accounts
receivable, the account number, date of issuance, name and address of account
debtor, aggregate amount, and balance due;
(h) Opinion of Counsel. Opinions of Seller's corporate
counsel and FCC counsel dated as of the Closing Date, substantially in the form
of Schedule 8.2(h) hereto;
(i) Noncompetition Agreement. The Noncompetition
Agreement in the form as Schedule 6.12, duly executed on behalf of Seller; and
(j) 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> 31
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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.
(e) Noncompetition Agreement. The Noncompetition
Agreement in the form of Schedule 6.13 duly executed by Buyer and the payment
of $95,000 to Seller thereunder.
SECTION 9. TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Seller
set forth in this Agreement have not been satisfied or waived in writing by
Seller.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
by April 1, 1998.
(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,
<PAGE> 32
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warranties or covenants under this Agreement within fifteen days after Buyer
received written notice of such breach from Seller.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Station abandoned, if Buyer is not then
in material default, upon written notice to Seller, upon the occurrence of any
of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer
set forth in this Agreement have not been satisfied or waived in writing by
Buyer.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
by April 1, 1998.
(d) Interruption of Service. If any event shall have
occurred that prevented signal transmission of the Station as provided for in
Section 6.3(b) hereof.
(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, at least 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, at least 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 the payment to Seller of $475,000 pursuant to Section 9.4 below
shall be liquidated damages and shall constitute full payment and the exclusive
remedy for any
<PAGE> 33
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damages suffered by Seller by reason of Buyer's material breach of this
Agreement. Seller and Buyer agree in advance that actual damages would be
difficult to ascertain and that the amount of $475,000 is a fair and equitable
amount to reimburse Seller for damages sustained due to Buyer's material breach
of this Agreement. If this Agreement is terminated by Buyer due to Seller's
material breach of this Agreement, Buyer shall have all rights and remedies
available at law or equity.
9.4 Escrow Deposit. Buyer has deposited with the Escrow Agent the
sum of $475,000 in accordance with the Escrow Agreement in the form of Schedule
9.4. All such funds deposited with the Escrow Agent shall be held and
disbursed in accordance with the terms of the Escrow Agreement and the
following provisions:
(a) At the Closing, all amounts held by the Escrow Agent
pursuant to the Escrow Agreement, including any interest or other proceeds from
the investment of funds held by the Escrow Agent, shall be disbursed to or at
the direction of Buyer.
(b) If this Agreement is terminated pursuant to Section
9.1 or 9.2 and Buyer is not in material breach of this Agreement, all amounts
held by the Escrow Agent pursuant to the Escrow Agreement, including any
interest or other proceeds from the investment of funds held by the Escrow
Agent, shall be disbursed to or at the direction of Buyer.
(c) If this Agreement is terminated by Seller due to
Buyer's material breach of this Agreement, then $475,000 of the amount held by
the Escrow Agent pursuant to the Escrow Agreement shall be disbursed to or at
the direction of Seller as liquidated damages under Section 9.3 above and any
interest or other proceeds from the investment of funds held by the Escrow
Agent shall be disbursed by the Escrow Agent to or at the direction of Buyer.
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
eighteen months. Any investigations by or on behalf of any party hereto shall
not constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
Seller shall affect Buyer's right to rely on any representation or warranty
made by Seller or relieve Seller of any obligations under this Agreement as the
result of a breach of any of its representations and warranties.
<PAGE> 34
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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) Any loss, liability, obligation, or cost resulting
from the failure of the parties to comply with the provisions of any bulk sales
law applicable to the transfer of the Assets.
(d) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station prior to the Closing, including
any liabilities arising under the Licenses or the Assumed Contracts which
relate to events occurring prior the Closing Date.
(e) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, and expenses, including reasonable
legal fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Seller or
any information Seller may have, Buyer hereby agrees to indemnify and hold
Seller harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, document,
or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station on and after the Closing.
<PAGE> 35
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(d) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give notice to the party from which indemnification is claimed
(the "Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying in reasonable detail the factual basis for the
claim. If the claim relates to an action, suit, or proceeding filed by a third
party against Claimant, such notice shall be given by Claimant within five days
after written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
and/or its authorized representatives the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of the thirty- day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law or equity or under the arbitration
provisions of this Agreement, as applicable.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
<PAGE> 36
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(e) The indemnifications rights provided in Sections 10.2
and 10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other
remedies that may be available, including money damages, to obtain specific
performance of the terms of this Agreement. If any action is brought by Buyer
to enforce this Agreement, Seller shall waive the defense that there is an
adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either party
which results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing party shall be entitled to reimbursement from
the other party of its reasonable legal fees and expenses.
SECTION 11. MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Seller
to Buyer pursuant to this Agreement shall be paid by Seller. Buyer and Seller
shall each pay one-half of any fees payable to the Escrow Agent and all filing
fees required by the FCC in connection with the FCC Consent. Except as
otherwise provided in this Agreement, each party shall pay its own expenses
incurred in connection with the authorization, preparation, execution, and
performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and representatives. Buyer shall pay at the Closing all
brokerage fees and commissions payable to Patrick Communications Corporation,
and each party shall be responsible for all fees or commissions payable to any
other finder, broker, advisor, or similar person retained by or on behalf of
such party.
11.2 Arbitration. Except as otherwise provided to the contrary
below, any dispute arising out of or related to this Agreement that Seller and
Buyer are unable to resolve by themselves shall be settled by arbitration by a
panel of three (3) neutral arbitrators who shall be selected in accordance with
the procedures set forth in the commercial arbitration rules of the American
Arbitration Association. The persons selected as arbitrators shall have prior
experience in the broadcasting industry but need not be professional
arbitrators, and persons such as lawyers, accountants, brokers and bankers
shall be acceptable. Before undertaking to resolve the dispute, each
arbitrator shall be duly sworn faithfully and fairly to hear and examine the
matters in controversy and to make a just award according to the best of his or
her understanding. The arbitration hearing shall be conducted in accordance
with the
<PAGE> 37
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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:
<TABLE>
<S> <C>
If to Seller: Vic Eliason
VCY America, Inc.
3434 West Kilbourn Avenue
Milwaukee, Wisconsin 53208-3313
With a copy to: James Bayes, Esquire
Wiley, Rein & Fielding
1776 K Street, N.W.
Washington, DC 20006
If to Buyer: Lowell Paxson, Chairman
Paxson Communications of Green Bay-14, 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
</TABLE>
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.3.
<PAGE> 38
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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
(although the PCC Guaranty provided for in Section 11.13 hereof shall remain in
effect) 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.
11.8 Gender and Number. Words used in this Agreement, regardless
of the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and
all documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
<PAGE> 39
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11.10 Waiver of Compliance; Consents. Except as otherwise provided
in this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in its judgement be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
11.13 PCC Guaranty. In consideration of the execution and delivery
of this Agreement by Seller and its agreement to perform the transactions
contemplated hereby, Paxson Communications Corporation, a Florida corporation
("PCC"), the parent of the Buyer, hereby guarantees Buyer's full, complete and
timely performance of and compliance with all of its covenants, agreements and
obligations set forth herein and in this Agreement and Time Brokerage
Agreement. PCC agrees that no formal change, amendment, modification or waiver
of any term or condition hereof or thereof, no extension in whole or in part of
the time for the performance by Buyer of any of its obligations hereunder or
thereunder, and no settlement, compromise, release, surrender, modification or
impairment of, or exercise or failure to exercise any claim, right or remedy of
any kind or nature in connection herewith or therewith, shall affect, impair or
discharge, in whole or in part, the liability of PCC for the full and prompt
and unconditional performance of the obligations of Buyer under this Agreement.
The obligations of PCC hereunder are absolute and unconditional, irrespective
of any circumstance which might otherwise constitute a legal or equitable
discharge of a surety or guarantor. The liability of PCC hereunder shall be
direct and not conditional or contingent upon the pursuit of any remedies
against Buyer. Seller may at its option proceed in the first instance against
PCC to collect any obligation hereunder without first proceeding against Buyer.
The guarantee of PCC hereunder shall be deemed a continuing guarantee, and the
above consent and waiver of PCC shall remain in full force and effect until the
obligations of Buyer under this Agreement are fully paid and discharged.
<PAGE> 40
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
GREEN BAY-14, INC.
By: /s/ Lowell W. Parson
-------------------------
Name: Lowell W. Parson
Title: Chairman
VCY AMERICA, INC.
By:
-------------------------
Name:
Title:
PAXSON COMMUNICATIONS
CORPORATION
For purposes of Section 11.13
By: /s/ Lowell W. Parson
-------------------------
Name: Lowell W. Parson
Title: Chairman
<PAGE> 1
================================================================================
EXHIBIT 10.167
ASSET PURCHASE AGREEMENT
Dated as of May 12, 1997
between
ITT-DOW JONES TELEVISION
ITT CORPORATION
DOW JONES & COMPANY, INC.
PAXSON COMMUNICATIONS CORPORATION
and
PAXSON COMMUNICATIONS OF NEW YORK-31, INC.
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I
Purchase and Sale of Station Assets
SECTION 1.01 Purchase and Sale............................................. 1
SECTION 1.02 Excluded Station Assets....................................... 3
SECTION 1.03 Assumption of Liabilities..................................... 4
ARTICLE II
Purchase Price and Prorations
SECTION 2.01 Consideration................................................. 5
SECTION 2.02 Proration of Taxes, Rent, etc................................. 7
ARTICLE III
Inspection by Purchaser
SECTION 3.01 Access to Information......................................... 8
SECTION 3.02 No Representations............................................ 9
ARTICLE IV
Representations and Warranties
SECTION 4.01 Representations and Warranties of Seller...................... 10
SECTION 4.02 Representations and Warranties of Purchaser................... 15
SECTION 4.03 Representations and Warranties of ITT and Dow Jones........... 16
SECTION 4.04 Representations and Warranties of Paxson...................... 18
</TABLE>
<PAGE> 3
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ARTICLE V
Covenants
SECTION 5.01 FCC Consent................................................... 19
SECTION 5.02 Other Consents and Approvals.................................. 20
SECTION 5.03 Operation of Station.......................................... 21
SECTION 5.04 Satisfaction of Conditions.................................... 22
SECTION 5.05 Upgrade Application........................................... 22
SECTION 5.06 Further Action................................................ 22
SECTION 5.07 Certain Equipment............................................. 23
SECTION 5.08 Taxes......................................................... 23
SECTION 5.09 Books and Records............................................. 23
SECTION 5.10 Risk of Loss.................................................. 24
SECTION 5.11 Stock Exchange Listing........................................ 24
SECTION 5.12 Encumbrances.................................................. 25
ARTICLE VI
Closing
SECTION 6.01 Closing Date.................................................. 25
SECTION 6.02 Transactions To Be Effected at the Closing.................... 26
ARTICLE VII
Conditions to Performance
SECTION 7.01 Conditions to the Obligations of Purchaser.................... 26
SECTION 7.02 Conditions to the Obligations of Seller....................... 28
SECTION 7.03 Frustration of Closing Conditions............................. 29
ARTICLE VIII
Termination
SECTION 8.01 Termination................................................... 29
</TABLE>
ii
<PAGE> 4
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SECTION 8.02 Absence of Final Order........................................ 32
SECTION 8.03 Specific Performance.......................................... 33
ARTICLE IX
Indemnification
SECTION 9.01 Indemnity by Purchaser........................................ 33
SECTION 9.02 Indemnity by Seller........................................... 34
SECTION 9.03 Limitations on Obligations.................................... 35
SECTION 9.04 Calculation of Losses......................................... 35
SECTION 9.05 Procedures Relating to Indemnification........................ 36
SECTION 9.06 Other Claims.................................................. 37
SECTION 9.07 Nonexclusive Remedy........................................... 38
ARTICLE X
Miscellaneous
SECTION 10.01 Notices by Parties............................................ 38
SECTION 10.02 Bulk Transfer Laws............................................ 39
SECTION 10.03 Broker's Commission........................................... 39
SECTION 10.04 Interpretation; Schedules; Certain Definitions ............... 40
SECTION 10.05 Assignment.................................................... 40
SECTION 10.06 Attorney's Fees............................................... 40
SECTION 10.07 Severability.................................................. 41
SECTION 10.08 Applicable Law................................................ 41
SECTION 10.09 Consent to Jurisdiction....................................... 41
SECTION 10.10 Counterparts.................................................. 42
SECTION 10.11 Entire Agreement; No Third Party Beneficiaries................ 42
SECTION 10.12 Modifications................................................. 42
SECTION 10.13 Non-Waiver.................................................... 42
SECTION 10.14 Successors.................................................... 42
SECTION 10.15 Survival...................................................... 42
SECTION 10.16 Expenses ..................................................... 43
SECTION 10.17 Guarantees.................................................... 43
</TABLE>
iii
<PAGE> 5
Schedules
Schedule 1.01(a) - Licenses
Schedule 1.01(c) - Equipment
Schedule 1.01(e) - Contracts
Schedule 2.02 - Certain Agreements
Schedule 4.01(c) - Conflicts
Schedule 4.01(d) - Consents
Schedule 4.01(e) - Cable Agreements, etc.
Schedule 4.01(f) - Encumbrances
Schedule 4.01(h) - Reports
Schedule 4.01(i) - Insurance
Schedule 4.01(k) - Pending Applications
Schedule 4.02(c) - Purchaser Conflicts
Schedule 4.02(d) - Purchaser Consents
Schedule 4.02(e) - FCC License
Schedule 4.04(c) - Paxson Conflicts
Schedule 4.04(d) - Paxson Consents
iv
<PAGE> 6
ASSET PURCHASE AGREEMENT (this "Agreement"), dated as
of May 12, 1997, between ITT-DOW JONES TELEVISION, a Delaware
general partnership (the "Seller"), ITT CORPORATION, a Nevada
corporation ("ITT"), DOW JONES & COMPANY, INC., a Delaware
corporation ("Dow Jones"), PAXSON COMMUNICATIONS CORPORATION,
a Delaware corporation ("Paxson") and PAXSON COMMUNICATIONS OF
NEW YORK-31, INC., a Florida corporation (the "Purchaser").
WHEREAS, Seller is the licensee and is engaged in the operation of
television station WBIS-TV, Channel 31, New York, New York (the "Station") under
licenses from the Federal Communications Commission (the "FCC"); and
WHEREAS, Purchaser desires to purchase and Seller desires to transfer
to Purchaser certain rights and assets related to the Station, and Seller
desires to transfer to Purchaser and Purchaser has agreed to assume certain
liabilities associated with such rights and assets, upon the terms and subject
to the conditions hereinafter set forth.
NOW, THEREFORE, it is agreed between the parties hereto as follows:
ARTICLE I
Purchase and Sale of Station Assets
SECTION 1.01. Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date (as hereinafter defined),
Seller shall sell, assign, transfer and convey to Purchaser, and Purchaser shall
purchase, acquire and accept from Seller, all of Seller's right, title and
interest in and to the following assets used in the conduct of the business and
operations of the Station (collectively, the "Station Assets"):
(a) all licenses, permits, authorizations and other approvals issued by
the FCC in connection with the operations of the Station listed on Schedule
1.01(a) (the "FCC Licenses") and all other licenses, permits, authorizations,
approvals and applications listed on Schedule 1.01(a) (collectively with the FCC
Licenses, the "Licenses");
<PAGE> 7
2
(b) all rights of Seller under that certain lease dated as of August
24, 1984, by and between the Port Authority of New York and New Jersey (the
"Port Authority"), as lessor, and The City of New York (the "City"), as lessee,
as assigned to the Seller pursuant to the Assignment of Lease with Assumption
and Consent dated as of June 28, 1996, among Seller, the Port Authority and the
City (collectively, the "WTC Lease"), respecting certain space in the North
Tower Building of the World Trade Center, New York, New York (the "Leased
Premises");
(c) the broadcasting and transmission equipment listed on Schedule
1.01(c), together with any replacements thereof and additions thereto made
between the date of this Agreement and the Closing Date, together with any spare
parts for such equipment or replacements thereof, together with any cabinets,
consoles or other housing (collectively, the "Equipment Housing") located in the
space occupied by the Station on the twelfth floor at 200 Liberty Street, New
York, New York (the "Twelfth Floor") to the extent any such equipment is housed
therein (collectively, the "Personal Property"), in its and their "as is, where
is" condition as of the date of this Agreement subject to ordinary wear and
tear, less any retirements or dispositions thereof made (i) in the ordinary
course of business as to any portion thereof which is no longer used or useful
or (ii) in connection with the acquisition of equivalent replacement property of
equivalent kind and value;
(d) all files, records, and logs in Seller's possession relating
primarily to and reasonably necessary or appropriate to the use of the Station
Assets, including Seller's public inspection file (collectively, the "Records")
provided, however, that Seller may keep copies of same;
(e) (i) the contracts listed on Schedule 1.01(e) and (ii) such
additional written and oral contracts entered into by Seller between the date of
this Agreement and the Closing Date as Purchaser consents to assume pursuant to
Section 1.03(b), but only to the extent the contracts by their terms are
assignable or the parties hereto succeed in obtaining any necessary consent(s)
to such assignment (the "Required Contractual Consents") (the contracts assigned
pursuant to clauses (i) and (ii) hereof, together with the WTC Lease, being
hereinafter collectively referred to as the "Contracts"); and
(f) furniture and furnishings located in (i) the space occupied by the
Station known as Studio E located on the ground floor at 200 Liberty Street, New
York, New York
<PAGE> 8
3
("Studio E"), (ii) the broadcast area and equipment room located on the Twelfth
Floor and (iii) the World Trade Center, New York, New York (collectively, the
"Studio Furnishings").
SECTION 1.02. Excluded Station Assets. It is expressly understood and
agreed that the Station Assets shall not include the following (the "Excluded
Station Assets"):
(a) all accounts receivable of Seller outstanding as of the Closing
Date;
(b) cash, cash equivalents, prepaid amounts, bank deposits,
certificates of deposit, Treasury bills and other marketable securities or
similar investments;
(c) tax or other refunds, all returns, reports, forms, documents or
memoranda relating to taxes and all causes of action or claims of Seller which
accrued prior to the Closing Date;
(d) except to the extent provided in Section 5.07, any right to occupy
or use any space located at 200 Liberty Street and 1155 Avenue of the Americas,
New York, New York, currently occupied or used by Seller in connection with
operating the Station;
(e) all rights of Seller under this Agreement and the agreements,
certificates and instruments delivered in connection with this Agreement;
(f) all records prepared in connection with the sale of the Station
Assets including bids received from third parties and analyses relating to the
Station;
(g) all rights relating to the Excluded Liabilities (as hereinafter
defined);
(h) the call letters "WBIS";
(i) all intellectual property of Seller relating to the Station,
including trademarks, trademark registrations, trade names, servicemarks,
copyrights and licenses with respect to the foregoing relating to the call
letters and names "WBIS+" or "S+";
(j) any leasehold improvements, furniture, furnishings or personal
computers, other than the Equipment Housing and Studio Furnishings;
<PAGE> 9
4
(k) personnel records of Seller;
(l) any assets under the Contracts relating to the period prior to the
Closing; and
(m) any other property, rights or contracts not expressly referred to
in Section 1.01 as the Station Assets.
SECTION 1.03. Assumption of Liabilities. (a) Purchaser hereby agrees
that from and after the Closing (as hereinafter defined) it will assume, perform
and become primarily liable for and pay, satisfy or discharge as and when they
become due, all obligations, liabilities and debts of Seller accruing from and
after the Closing Date in respect of or relating to Seller's interest in the WTC
Lease (including all obligations, liabilities and debts arising as a result of
being the occupant of or the operator of activities at the Leased Premises) and
in respect of or relating to the Station Assets, other than the Excluded
Liabilities.
(b) Purchaser hereby agrees that from and after the Closing it will
assume, perform and become primarily liable for and, pay, satisfy, or discharge,
all obligations, liabilities and debts of Seller accruing from and after the
Closing Date under, such additional contracts entered into by Seller between the
date of this Agreement and the Closing Date in the same manner and to the same
extent as in the case of those contracts listed in Schedule 1.01(e), provided
Purchaser has consented in writing to assume liability under each particular,
additional contract. Purchaser's consent shall be given or withheld in writing
within five business days following Purchaser's receipt from Seller of a copy of
a particular additional contract. Purchaser's failure to consent or withhold
consent within such five business day period shall be deemed to constitute a
withholding of consent by Purchaser.
(c) Except as expressly set forth in this Agreement and as contemplated
by the Time Brokerage Agreement, Purchaser shall not assume or become
responsible for any other obligations or liabilities of Seller, including (i)
any obligations or liabilities of Seller arising out of Excluded Station Assets,
(ii) 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 of the Station or former employees or their
beneficiaries relating to the operation of the Station
<PAGE> 10
5
prior to the Closing or arising from the transactions contemplated by this
Agreement, (iii) any obligations or liabilities of Seller arising under the
Employee Retirement Income Security Act of 1974, as amended, or with respect to
any Excluded Station Assets, (iv) any obligations or liabilities of Seller with
respect to taxes (except as otherwise provided in Sections 2.02, 5.08 and
9.01), (v) any obligations or liabilities under the Contracts relating to the
period prior to the Closing, (vi) any liabilities relating to indebtedness of
Seller for borrowed money or (vii) any liabilities for claims or litigation
involving the Station relating to events occurring prior to the Closing (the
items set forth in this paragraph (c)) being referred to as the "Excluded
Liabilities").
ARTICLE II
Purchase Price and Prorations
SECTION 2.01. Consideration. As consideration for the transfer of the
Station Assets as set forth herein, Purchaser agrees to pay Seller a purchase
price of $257,500,000 (the "Purchase Price") payable as set forth in this
Section 2.01:
(a) Upon the execution and delivery of this Agreement, Purchaser shall
deliver to Seller, as a deposit towards the Purchase Price, immediately
available funds in an amount equal to $25,000,000 (together with interest and
earnings thereon, the "Deposit"). Seller shall deposit an amount equal to 50% of
the Deposit in separate accounts (each a "Deposit Account") which will be
maintained for the benefit of each of Dow Jones Broadcasting (U.S.A.), Inc., and
ITT Broadcasting Corp. (the "General Partners"). Except as otherwise
specifically provided in this Agreement, the Deposit shall be maintained at all
times in the Deposit Accounts. The monies contained in each Deposit Account
shall be invested in (i) direct obligations of, or obligations fully guaranteed
by, the United States of America or any agency thereof having a maturity of not
more than 180 days, (ii) certificates of deposit of any commercial bank in the
United States of America having total capital surplus and undivided profits in
excess of $500,000,000, (iii) commercial paper rated A-1 or higher by Standard &
Poor's Corporation or P-1 or higher by Moody's Investors Service, Inc., or their
respective successors and maturing not more than 180 days from the date of the
acquisition thereof or (iv) securities approved jointly in writing by the
applicable General Partner and Purchaser. The monies contained in each Deposit
Account shall not be
<PAGE> 11
6
commingled with other funds of the applicable General Partner and the applicable
General Partner shall retain exclusive disposition authority with respect
thereto. In the event of a Change of Control (as hereinafter defined), all
amounts in the applicable Deposit Account shall be delivered to a nationally
recognized financial institution reasonably acceptable to Seller and Purchaser,
and shall be held and invested by such institution as escrow agent pursuant to
an escrow agreement in form and substance reasonably acceptable to Purchaser and
Seller. The Deposit shall be delivered to Seller or Purchaser, or credited
against the Purchase Price, as provided herein.
For purposes hereof, "Change of Control" shall mean (i) any event
resulting in any "person" or "group" (within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
becoming the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of more than 35% of the total voting
power of all classes of capital stock of ITT or Dow Jones, as applicable, then
outstanding and entitled to vote generally in elections of directors ("Voting
Stock") and such beneficial ownership was acquired within a period of two years
following a tender offer by such person (or any of its affiliates) for shares of
Voting Stock of ITT or Dow Jones, as applicable, or a solicitation of proxies
with respect to Voting Stock of ITT or Dow Jones, as applicable, by such person,
if, in either case, such tender offer or solicitation of proxies was not
approved by a majority of the Board of Directors of ITT or Dow Jones, as
applicable, in office at the time such tender offer or proxy solicitation was
commenced, or (ii) a majority of the Board of Directors of ITT or Dow Jones
being constituted of individuals who were elected pursuant to a solicitation of
proxies with respect to Voting Stock of ITT or Dow Jones, as applicable, if such
solicitation of proxies was not approved by a majority of the Board of Directors
of ITT or Dow Jones, as applicable, in office at the time such solicitation of
proxies was commenced.
(b) At the Closing (as hereinafter defined), Purchaser shall pay to
Seller or its designees by wire transfer of immediately available funds to bank
accounts designated in writing at least two business days prior to the Closing
by Seller an amount equal to (A) the Purchase Price less (B) the amount of the
Deposit (the "Closing Date Amount"); provided that, in the sole discretion of
Purchaser, up to $7,500,000 of the Closing Date Amount may be paid in the form
of duly authorized, validly issued, fully paid and nonassessable shares of
common stock, $0.001 par value per share, of Paxson registered in the names of
<PAGE> 12
7
Seller, ITT, Dow Jones or wholly owned subsidiaries of ITT or Dow Jones, as
designated by Seller, in denominations designated by Seller (such common stock
being referred to as "Paxson Common Stock"), valued based upon the average of
the closing prices of Paxson Common Stock on the American Stock Exchange (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source) for all trading days beginning on the thirty-fifth trading
day before the Closing Date and ending on and excluding the fifth trading day
before the Closing Date. Upon the Closing, the Deposit shall become the sole
property of Seller.
(c) Allocation of Purchase Price. Within 45 days following the Closing,
Purchaser and Seller shall allocate the Purchase Price among the Station Assets
consistent with Section 1060 of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations thereunder, and an appraisal conducted by an
independent appraisal firm selected by Purchaser and reasonably acceptable to
Seller. The fees and expenses of such appraisal firm shall be paid by Purchaser
exclusively. Neither Purchaser nor Seller (nor any of their respective
affiliates or representatives) shall take any position on any tax return,
including Form 8594, or with any taxing authority or in any judicial proceeding
that is inconsistent with the allocation of the Purchase Price as determined
pursuant to this Section 2.01(c). Purchaser shall deliver to Seller, and Seller
shall deliver to Purchaser, a signed copy of Form 8594 at least 10 days prior to
the filing thereof.
SECTION 2.02. Proration of Taxes, Rent, etc. (a) Subject to the terms
of the Time Brokerage Agreement, any real and personal property taxes assessed
against the Station Assets, fees with respect to any License, rent with respect
to the WTC Lease or any other lease for space utilized by the Station that is
assigned to, and assumed by, Purchaser, amounts paid or payable and other assets
and liabilities under the Contracts and any other expenses or prepaid items
relating to the Station Assets shall be prorated to the Closing Date so that
amounts payable or receivable in respect of the period prior to the Closing Date
shall be allocated to Seller and amounts payable or receivable in respect of the
period from and after the Closing Date shall be allocated to Purchaser and the
appropriate payments made between the parties hereto as a result of such
prorations. Notwithstanding the foregoing, there shall be no adjustment for, and
Seller shall remain solely liable with respect to, any obligations or
liabilities not being assumed by Purchaser pursuant to this Agreement. Purchaser
shall reimburse Seller for deposits,
<PAGE> 13
8
if any, made by Seller as security under the WTC Lease, to the extent that such
deposits are transferable and remain on deposit for the benefit of the
Purchaser, and if such deposits are not so transferable, Purchaser shall use
reasonable efforts to cause such deposits to be returned to Seller as soon as
practicable following the Closing. Any payments required pursuant to this
Section 2.02(a) shall be made by the parties within 30 days following the
Closing upon presentation of invoices therefor.
(b) At the Closing, Seller shall make the payment contemplated by
Schedule 2.02.
ARTICLE III
Inspection by Purchaser
SECTION 3.01. Access to Information. (a) From the date of this
Agreement to the effectiveness of the Time Brokerage Agreement, Seller shall (i)
permit Purchaser and its employees, counsel, accountants, engineers and other
authorized representatives ("Purchaser's Representatives") to meet (away from
the Station premises) with employees of the Station reasonably approved by
Seller for the purpose of obtaining information regarding the Station Assets,
(ii) permit Purchaser's Representatives to have access to Seller's premises
outside of normal business hours for the purpose of obtaining information
regarding fiber optic connections and (iii) provide Purchaser and Purchaser's
Representatives, or cause Purchaser and Purchaser's Representatives to be
provided, all information relating to the Station Assets as they may reasonably
request. Without limiting the generality of the foregoing, Seller shall give
Purchaser and Purchaser's Representatives reasonable access to Seller's
financial records and Seller's employees, counsel, accountants and other
representatives for the purpose of preparing such financial statements as
Purchaser reasonably determines are required to comply with applicable federal
securities laws as a result of the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby. Seller shall
reasonably cooperate with Purchaser and Purchaser's Representatives in the
preparation of such financial statements. From the date of the effectiveness of
the Time Brokerage Agreement to the Closing Date, Seller will give to Purchaser
and Purchaser's Representatives reasonable access to the Station Assets and to
the books and records relating primarily to and reasonably necessary or
appropriate to the use thereof, and will furnish or cause to be furnished to
Purchaser and Purchaser's
<PAGE> 14
9
Representatives all information relating to the Station Assets as they may
reasonably request; provided, however, that Purchaser shall give Seller
reasonable advance notice of any request for such access and such access shall
not unreasonably interfere with the normal business operations of the Station.
(b) Seller shall provide Purchaser and Purchaser's Representatives
access to the Station Assets and the Station's facilities for the purpose of
conducting (i) a Phase I environmental survey thereof (which shall be performed
by environmental consultants reasonably acceptable to Seller and which shall not
include any sampling or laboratory analysis) and (ii) an engineering study of
the performance of the Station Assets. Such activities shall be conducted at the
sole expense of Purchaser, and Purchaser shall indemnify and hold harmless
Seller and the Seller Indemnitees (as hereinafter defined) in accordance with
Article IX from and against all actions, suits, claims, losses, penalties,
damages, liabilities, costs and expenses (including reasonable attorney's fees,
costs and disbursements), as incurred, arising out of or resulting from such
activities. Such access shall be provided at times reasonably agreed to by
Seller and such activities shall not unreasonably interfere with the normal
business operations of the Station. Purchaser acknowledges and agrees that
Purchaser's satisfaction with the results of such Phase I survey and engineering
study shall not be a condition to its obligation to consummate at the Closing
the transactions contemplated by this Agreement, or to any of its other
obligations under this Agreement.
(c) All inspections and access provided for in this Section 3.01, and
all information obtained in the course thereof or pursuant thereto, shall be
subject to the terms of the Confidentiality Agreement dated April 10, 1997,
between Paxson and ITT (the "Confidentiality Agreement").
SECTION 3.02. No Representations. Purchaser agrees that it is relying
solely on its own investigation and inspection of the Station Assets and not on
any oral or written statements or representations made by Seller or any general
partner of Seller or any agent or representative thereof (including, without
limitation, any offering materials prepared on behalf of Seller or any general
partner of Seller), except for the express representations, warranties and
covenants set forth herein. Without limiting the generality of the foregoing and
except to the extent otherwise expressly provided in this Agreement, Purchaser
acknowledges that neither Seller nor any general partner of Seller, nor any of
their respective directors,
<PAGE> 15
10
officers, agents, employees, representatives, or affiliates has made any
warranty or representation, express or implied, or arising by operation of law,
as to: (a) the merchantability or fitness or suitability of the Station Assets
for any and all activities and uses which Purchaser may elect to conduct with
respect thereto; (b) any income to be derived from the Station Assets or
expenses to be incurred with respect thereto, or any obligations or other
matters or things relating to or affecting the same; (c) the past or projected
future performance of, or revenues from, the Station; (d) any information set
forth in the Executive Summary dated April 1997 or any other information
provided to Purchaser pursuant to the Confidentiality Agreement; or (e) any
other matter not expressly set forth in this Agreement.
Purchaser acknowledges that Seller's execution and delivery of the
documents required by Section 6.02(a) hereof, and Purchaser's acceptance
thereof, shall, subject to Section 5.06, fulfill all obligations of Seller
respecting the condition of the Station Assets, whether express or implied.
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of Seller. Seller
represents and warrants to Purchaser as follows:
(a) Organization. (i) Seller is a general partnership duly organized
and validly existing under the laws of the State of Delaware. Seller is
qualified to conduct business and is in good standing in each jurisdiction where
the failure to be so qualified or in good standing would have a material adverse
effect on the business or operations of the Station. Seller has all requisite
power and authority to operate the Station and to own or lease the Station
Assets as presently owned and/or leased by Seller, including the power and
authority to hold the License and lease the Leased Premises. 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 Station
Assets.
(ii) The General Partners are the sole general partners of Seller. Dow
Jones Broadcasting (U.S.A.), Inc. is a wholly owned subsidiary of Dow Jones and
ITT Broadcasting Corp. is a wholly owned subsidiary of ITT. Each General
<PAGE> 16
11
Partner is a corporation, duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. Each General Partner is
qualified to conduct business and in good standing in each jurisdiction where
the nature of its business or the business of the Seller or the ownership of its
properties or the properties of the Seller requires such qualification, except
where the failure to be so qualified or in good standing would not have a
material adverse effect on the business or operations of the Station. Each
General Partner has the requisite corporate power to serve as a general partner
of Seller and to execute and deliver on behalf of Seller this Agreement and the
other documents contemplated hereby to be executed and delivered by Seller (the
"Seller Other Documents").
(b) Authority. Seller has full power and authority to enter into and
perform this Agreement and the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the Seller Other Documents have
been duly and validly authorized by all necessary action on the part of Seller
and the General Partners. This Agreement has been duly executed and delivered by
Seller and constitutes its valid and binding obligation enforceable against
Seller 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.
The execution and delivery of this Agreement and the Seller Other Documents by
each of the General Partners have been duly and validly authorized by all
necessary corporate action on the part of each of the General Partners.
(c) No Conflict. Except as set forth on Schedule 4.01(c), and subject
to obtaining the consents, releases, filings and approvals described herein,
Seller's execution, delivery and performance of this Agreement and the Seller
Other Documents (i) will not violate or conflict with any provisions of its
organizational documents or those of either General Partner, (ii) will not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation, or ruling of any governmental authority affecting Seller which would
prevent Seller from performing its obligations hereunder or otherwise materially
interfere with the ownership or operation of the Station Assets; and (iii) will
not 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
agreement, instrument, license, or permit which would prevent Seller from
performing its obligations hereunder or
<PAGE> 17
12
otherwise materially interfere with the ownership or operation of the Station
Assets and will not create any Encumbrance which is not a Permitted Encumbrance
upon any of the Station Assets.
(d) Consents and Approvals. Except for (i) the FCC Consent and the Port
Authority Consent (each as hereinafter defined), (ii) the Required Contractual
Consents, (iii) the filing of premerger notification reports under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (iv)
compliance with and filings under the Exchange Act, (v) those that may be
required solely by reason of Purchaser's (as opposed to any other third party's)
participation in the transactions contemplated hereby and (vi) consents set
forth on Schedule 4.01(d), no (A) consent, approval, authorization, registration
or filing with any federal, state or local judicial or governmental authority or
administrative agency, or (B) consent, approval, authorization of or notice to
any other party to any agreement or undertaking by which Seller is bound is
required for the consummation by Seller of the transactions contemplated herein.
(e) Licenses. The Licenses listed on Schedule 1.01(a) 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 extent they are now
conducted. Copies of the Licenses listed on Schedule 1.01(a) have been delivered
to Purchaser. Schedule 1.01(a) also includes a complete list of all applications
for FCC Licenses with respect to the business and operations of the Station
pending at the FCC as of the date hereof. Seller is the holder of the Licenses
and holds the Licenses free and clear of all mortgages, claims, charges, liens,
security interests, easements, rights of way, pledges, restrictions (other than
restrictions arising by operation of law) or encumbrances of any nature
whatsoever (collectively, "Encumbrances"), except for (i) mechanics', carriers',
workmen's, repairmen's, and other like Encumbrances arising or incurred in the
ordinary course of business, (ii) Encumbrances for taxes, assessments and other
governmental charges that are not yet due and payable or that may thereafter be
paid without penalty, or that are being contested in good faith by appropriate
proceedings and (iii) imperfections of title and other Encumbrances that,
individually or in the aggregate, do not materially detract from or interfere
with the present use of the Station Assets (the Encumbrances described in
clauses (i), (ii) and (iii) being herein referred to as "Permitted
<PAGE> 18
13
Encumbrances"). The Licenses are in full force and effect and the Seller is in
compliance with the Licenses in all material respects. No license renewal
applications are pending with respect to any of the FCC Licenses. Schedule
4.01(e) is a true and complete list of all (A) cable carriage agreements in
effect as of the date of this Agreement with respect to the Station, (B) all
agreements in effect as of the date of this Agreement with any community group,
governmental authority or other third party restricting programming, employment
practices or other aspects of the business or operations of the Station and (C)
to the knowledge of Seller without inquiry and based solely upon the document
attached to such Schedule 4.01(e), cable systems carrying the Station as of
March 8, 1997.
(f) Title to Properties. Seller has good and valid title to all the
Personal Property free and clear of all Encumbrances, except for Permitted
Encumbrances and Encumbrances disclosed in Schedule 4.01(f) which shall be
removed prior to the Closing. The Personal Property comprises all material
broadcasting and transmission equipment reasonably necessary to broadcast and
transmit programming from the Station's facilities. Seller's interest in the WTC
Lease and the Contracts is free and clear of all Encumbrances other than
Permitted Encumbrances and those contained in such agreements.
(g) Contracts. Seller has delivered to Purchaser true and complete
copies of the WTC Lease and all other Contracts listed on Schedule 1.01(e). All
of the Contracts are in full force and effect and are valid, binding and
enforceable in accordance with their respective terms. There is not under any
Contract any breach or default by Seller or, to the knowledge of Seller, any
other party to any such Contract that would constitute a default under any
Contract, in either case that would materially detract from or interfere with
the present use of the Station Assets. Subject to obtaining any Required
Contractual Consents, the Port Authority Consent or other necessary consents to
assignments as contemplated by this Agreement, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby have resulted or will result in a breach or default under, or permit any
party to modify any obligations under, or cause or permit any termination,
cancelation, or loss of benefits under, any of the Contracts.
(h) Reports. Except as set forth on Schedule 4.01(h), Seller has not
failed to file or make any application, report, or other disclosure required by
the
<PAGE> 19
14
FCC to be filed or made with respect to the Station during this license term and
no deficiencies have been asserted with respect to any such filings such that
the Licenses would be subject to revocation, cancelation or substantial
modification.
(i) Insurance. Set forth on Schedule 4.01(i) is an accurate description
of all insurance policies that insure any part of the Station Assets or the
business of the Station. All such policies of insurance are in full force and
effect.
(j) Compliance with Laws. Seller has complied in all material respects
with the Licenses and all material federal, state and local laws, rules,
regulations and ordinances applicable to the ownership or operation of the
Station Assets, other than instances of noncompliance which, individually or in
the aggregate, would not materially detract from or interfere with the present
use of the Station Assets.
(k) Claims and Legal Actions. Except as set forth on Schedule 4.01(k),
as of the date of this Agreement, except for any FCC rulemaking proceedings
generally affecting the broadcasting industry, there is no claim, legal action,
suit or proceeding pending, or to the knowledge of Seller, threatened, against
or relating to Seller with respect to its ownership or operation of the Station
Assets which if adversely determined would materially detract from or interfere
with the use of the Station Assets in the manner currently used. As of the date
of this Agreement, except as set forth on Schedule 4.01(k), Seller has not
received written notice of any application, complaint or proceeding (i) before
the FCC relating to the Station, other than proceedings which affect the
broadcasting industry generally, (ii) before any federal or state agency
relating to 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 Station involving zoning issues under any
federal, state, or local zoning law, rule or regulation, which if adversely
determined would materially detract from or interfere with the use of the
Station Assets in the manner currently used.
(l) Seller acknowledges that, if any portion of the Closing Date Amount
is paid in the form of Paxson Common Stock pursuant to Section 2.01(b), the
offer and sale of such Paxson Common Stock has not been registered under the
Securities Act of 1933, as amended, or under any state securities laws. Seller
represents and covenants that it
<PAGE> 20
15
and each other entity to which such Paxson Common Stock may be issued pursuant
to Section 2.01(b) shall take such Paxson Common Stock for investment and not
with a view to the distribution thereof and shall only dispose of such Paxson
Common Stock in accordance with applicable securities laws.
SECTION 4.02. Representations and Warranties of Purchaser. Purchaser
hereby represents and warrants to Seller as follows:
(a) Organization. Purchaser is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Florida, and has
all requisite power and authority to own, operate and lease its assets and to
conduct its business as presently conducted. Purchaser is qualified to conduct
business and is in good standing in each jurisdiction where the failure to be
qualified or in good standing would have a material adverse affect on the
business or operations of Purchaser.
(b) Authority. Purchaser has full corporate power and authority to
enter into and perform this Agreement and the transactions contemplated hereby.
The execution, delivery and performance of this Agreement and all other
documents contemplated hereby to be executed, delivered and performed by
Purchaser (the "Other Purchaser Documents") have been fully and validly
authorized by all necessary corporate actions. This Agreement has been duly
executed and delivered by Purchaser and constitutes its valid and binding
obligation enforceable against Purchaser 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.
(c) No Conflict or Breach. Subject to the consents, releases, filings
and approvals described herein and except as set forth in Schedule 4.02(c),
Purchaser's execution, delivery and performance of this Agreement and the Other
Purchaser Documents (i) will not violate or conflict with any provisions of its
organizational documents; (ii) will not violate any applicable law, judgment,
order, injunction, decree, rule, regulation, or ruling of any governmental
authority which would prevent Purchaser from performing its obligations
hereunder and (iii) will not 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 agreement,
<PAGE> 21
16
instrument, license, or permit which would prevent Purchaser from performing its
obligations hereunder.
(d) Consents and Approvals. Except for (i) the FCC Consent and the Port
Authority Consent, (ii) the filing of premerger notification reports under the
HSR Act, (iii) compliance with and filings under the Exchange Act and (iv) those
that may be required solely by reason of Seller's (as opposed to any other third
party's) participation in the transactions contemplated hereunder and (v)
consents set forth in Schedule 4.02(d), no (A) consent, approval, authorization,
registration or filing with any federal, state or local judicial or governmental
authority or administrative agency or (B) consent, approval, authorization of or
notice to any other party to any agreement or undertaking by which Purchaser is
bound is required for the consummation by Purchaser of the transactions
contemplated herein.
(e) FCC License. Except as set forth in Schedule 4.02(e), Purchaser is,
for purposes of obtaining the approval of the FCC under the Communications Act
of 1934, as amended, and the rules and regulations promulgated thereunder (the
"Communications Act"), qualified to acquire the License and there are no facts
or circumstances that would prevent any necessary approval of the FCC of the
transactions contemplated hereby (including granting the Satellite Authorization
described in Section 5.01(a)) or prevent Purchaser from meeting all applicable
FCC qualifications as of the Closing Date.
(f) Availability of Funds. By the time of the Closing, Purchaser will
have available cash or borrowing facilities which together will be sufficient to
enable it to consummate the transactions contemplated by this Agreement.
Purchaser acknowledges that the availability of any financing shall not be a
condition to its obligation to consummate at the Closing the transactions
contemplated by this Agreement, or to any of its other obligations under this
Agreement.
SECTION 4.03. Representations and Warranties of ITT and Dow Jones. Each
of ITT and Dow Jones represents and warrants, as to itself only, to Purchaser as
follows:
(a) Organization. Such entity is a corporation, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all requisite power and authority to own, operate and
lease its assets and to conduct its business as presently conducted. Such entity
is qualified to conduct business and is in good
<PAGE> 22
17
standing in each jurisdiction where the failure to be qualified or in good
standing would have a material adverse affect on its business or operations.
(b) Authority. Such entity has full corporate power and authority to
enter into and perform this Agreement and the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by such entity have
been fully and validly authorized by all necessary corporate actions. This
Agreement has been duly executed and delivered by such entity and constitutes
its valid and binding obligation enforceable against such entity 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.
(c) No Conflict or Breach. Subject to the consents, releases, filings
and approvals described herein, the execution, delivery and performance of this
Agreement (i) will not violate or conflict with any provisions of the
organizational documents of such entity; (ii) will not violate any applicable
law, judgment, order, injunction, decree, rule, regulation, or ruling of any
governmental authority which would prevent such entity from performing its
obligations hereunder and (iii) will not 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 agreement, instrument, license, or permit
which would prevent such entity from performing its obligations hereunder.
(d) Consents and Approvals. Except for (i) the filing of premerger
notification reports by such entity under the HSR Act, (ii) compliance with and
filings under the Exchange Act, (iii) the FCC Consent and (iv) those that may be
required solely by reason of Purchaser's (as opposed to any other third party's)
participation in the transactions contemplated hereunder, no (A) consent,
approval, authorization, registration or filing with any federal, state or local
judicial or governmental authority or administrative agency or (B) consent,
approval, authorization of or notice to any other party to any agreement or
undertaking by which such entity is bound is required for the consummation by
such entity of the transactions contemplated herein.
<PAGE> 23
18
SECTION 4.04. Representations and Warranties of Paxson. Paxson hereby
represents and warrants to Seller as follows:
(a) Organization. Paxson is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite power and authority to own, operate and lease its assets and to
conduct its business as presently conducted. Paxson is qualified to conduct
business and is in good standing in each jurisdiction where the failure to be
qualified or in good standing would have a material adverse affect on its
business or operations.
(b) Authority. Paxson has full corporate power and authority to enter
into and perform this Agreement and the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by Paxson have been fully
and validly authorized by all necessary corporate actions. This Agreement has
been duly executed and delivered by Paxson and constitutes its valid and binding
obligation enforceable against Paxson 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.
(c) No Conflict or Breach. Subject to the consents, releases, filings
and approvals described herein and except as set forth in Schedule 4.04(c),
Paxson's execution, delivery and performance of this Agreement (i) will not
violate or conflict with any provisions of its organizational documents; (ii)
will not violate any applicable law, judgment, order, injunction, decree, rule,
regulation, or ruling of any governmental authority which would prevent Paxson
from performing its obligations hereunder and (iii) will not 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 agreement,
instrument, license, or permit which would prevent Paxson from performing its
obligations hereunder.
(d) Consents and Approvals. Except for (i) the FCC Consent and the Port
Authority Consent, (ii) the filing of premerger notification reports by Paxson
under the HSR Act, (iii) compliance with and filings under the Exchange Act,
(iv) the FCC Consent, (v) those that may be required solely by reason of
Seller's (as opposed to any other third party's) participation in the
transactions contemplated hereunder and (vi) as set forth in Schedule 4.04(d),
no
<PAGE> 24
19
(A) consent, approval, authorization, registration or filing with any federal,
state or local judicial or governmental authority or administrative agency or
(B) consent, approval, authorization of or notice to any other party to any
agreement or undertaking by which Paxson is bound is required for the
consummation by Paxson of the transactions contemplated herein.
(e) Paxson Common Stock. All shares of Paxson Common Stock which may be
issued and delivered to Seller pursuant to this Agreement will be, if and when
issued, duly authorized, validly issued and outstanding, fully paid and
non-assessable and will not have been issued in violation of, and will not be
subject to, any preemptive or subscription rights.
ARTICLE V
Covenants
SECTION 5.01. FCC Consent. (a) Purchaser and Seller shall prepare and
file within five days of the date of this Agreement their respective portions of
the FCC applications and other instruments necessary to obtain all approvals and
consents required under the Communications Act in connection with the
transactions contemplated hereby (collectively, the "FCC Consent"), and,
thereafter, shall use their reasonable efforts to obtain the FCC Consent as
expeditiously as practicable. The parties hereto recognize and acknowledge that
under applicable rules and regulations of the FCC, the ownership of television
station WHAI-TV, Bridgeport, Connecticut (the "Bridgeport Station"), by Paxson
and the Station by Purchaser is not permitted unless appropriate waivers of such
rules and regulations are obtained. Paxson shall request and use its reasonable
efforts to obtain television satellite authorization pursuant to Note 5 of
Section 73.3555 of the FCC's rules with respect to the Bridgeport Station (the
"Satellite Authorization"); provided, however, that in no event shall the
failure to obtain permanent waivers with respect to ownership of the Bridgeport
Station by Paxson excuse Purchaser from the obligation to consummate the
transactions contemplated hereby. Notwithstanding any contrary provision
contained herein, Paxson shall dispose of the Bridgeport Station prior to
consummation of the transactions contemplated hereby if necessary in order to
obtain the FCC Consent.
(b) Purchaser agrees that it shall not request continued use of the
call letters "WBIS" (which are an
<PAGE> 25
20
Excluded Asset) and that Purchaser and its successors shall not be entitled to
use such call letters.
(c) All costs and expenses in connection with obtaining the FCC
Consent, including filing fees, advertising fees and transfer, stamp and other
taxes shall be shared equally by Seller and Purchaser.
SECTION 5.02. Other Consents and Approvals. (a) The parties hereto
shall use their reasonable efforts to obtain all authorizations, consents,
orders and approvals of all governmental authorities and officials that may be
or become necessary for its execution and delivery of, and the performance of
its obligations pursuant to, this Agreement and will cooperate fully with each
other in promptly seeking to obtain all such authorizations, consents, orders
and approvals. Each party hereto agrees to make an appropriate filing, if
necessary, pursuant to the HSR Act with respect to the transactions contemplated
by this Agreement as soon as practicable, but in any event within five days of
the date of this Agreement and to promptly file, after any request by the
Federal Trade Commission (the "FTC") or the U.S. Department of Justice (the
"DOJ") and after appropriate negotiation with the FTC or the DOJ of the scope of
such request, any information or documents requested by the FTC or DOJ. The
filing fee and any other expenses relating to compliance with the HSR Act shall
be shared equally between Purchaser and Seller.
(b) Purchaser acknowledges that certain consents and waivers with
respect to the transactions contemplated by this Agreement may be required from
parties to the Contracts (including the Port Authority under the WTC Lease) and
that such consents and waivers have not been obtained. Purchaser agrees that
Seller shall not have any liability whatsoever to Purchaser arising out of or
relating to the failure to obtain any consents or waivers required under any
Contract in connection with the transactions contemplated by this Agreement, so
long as Seller has complied in all material respects with its obligations
pursuant to this Section 5.02(b). Purchaser further agrees that no
representation, warranty or covenant of Seller contained herein shall be
breached or deemed breached as a result of (i) the failure to obtain any such
consent or waiver, (ii) any termination thereof or (iii) any lawsuit, action,
proceeding or investigation commenced or threatened by or on behalf of any
individual or entity arising out of or relating to the failure to obtain any
such consent, waiver or termination. Prior to the Closing, Seller shall, upon
the request of Purchaser, cooperate with Purchaser, and Purchaser shall, upon
the
<PAGE> 26
21
request of Seller, cooperate with Seller in any reasonable manner in connection
with Purchaser obtaining any such consents and waivers; provided, however, that
such cooperation shall not include any requirement on the part of Seller or any
of its affiliates to expend money or incur any liability, commence or
participate in any litigation or offer or grant any accommodation (financial or
otherwise) to any third party other than as necessary to cure any default by
Seller of its obligations thereunder and customary de minimus processing fees
and expenses.
SECTION 5.03. Operation of Station. (a) From the date of this Agreement
to the Closing:
(i) Seller shall not enter into any contract or commitment relating to
the Station Assets outside of the ordinary course of business, or amend or
terminate any Contract (or waive any material right thereunder), or incur any
obligation, that will be binding on Purchaser after the Closing without the
prior written consent of Purchaser;
(ii) Seller shall not sell, assign, lease or otherwise transfer or
dispose of any of the Station Assets, except in the ordinary course of business
consistent with past practice or in connection with the acquisition of
replacement property of substantially similar kind and value;
(iii) Seller shall not knowingly create or assume or permit to exist
any Encumbrance upon the Station Assets, except for Permitted Encumbrances;
(iv) Seller shall use its reasonable efforts not to commit any act or
omission which could reasonably be expected to cause or permit a material
impairment of the Station Assets. If any material loss, damage, impairment,
confiscation or condemnation of or to any of the Station Assets occurs, Seller
shall use the proceeds of any claim under any insurance policy solely to repair,
replace or restore such Station Assets that are lost, damaged, impaired or
destroyed;
(v) Seller shall maintain the existing property and casualty insurance
policies on the Station Assets or equivalent replacement policies; and
(vi) Seller shall comply in all material respects with all laws, rules,
and regulations applicable to the ownership and operation of the Station Assets,
except for instances of non-compliance which, individually or in the
<PAGE> 27
22
aggregate, would not materially detract from or interfere with the present use
or operation of the Station Assets.
(b) From the effective date of the Time Brokerage Agreement being
executed and delivered by the parties hereto simultaneously with this Agreement
(the "Time Brokerage Agreement") through the Closing, the Station shall be
operated in accordance with the provisions of the Time Brokerage Agreement. No
action or omission of Purchaser or any of Purchaser's Representatives during the
effective period of the Time Brokerage Agreement shall be deemed to constitute
or result in a breach of any representation, warranty or covenant of Seller
contained in this Agreement. Notwithstanding any contrary provision contained
herein or in the Time Brokerage Agreement, prior to the Closing, Purchaser shall
not directly or indirectly control, supervise or direct the operations of the
Station; such operations, including complete control and supervision of the
Station's programs, employees and policies, shall be the sole responsibility of
Seller.
SECTION 5.04. Satisfaction of Conditions. In addition to their other
respective obligations hereunder, Seller and Purchaser shall each use their
reasonable efforts to cause the Closing to occur and shall notify the other if
any event should occur which could reasonably be expected to prevent fulfillment
of the conditions to the obligations of Seller or Purchaser to consummate the
transactions contemplated by this Agreement. Seller and Purchaser will use their
reasonable efforts to cure any such event as expeditiously as possible.
SECTION 5.05. Upgrade Application. Purchaser acknowledges and agrees
that obtaining the approval of the FCC of the application of the Station
currently pending before the FCC relating to the upgrade of the Station's
broadcast power shall not be a condition to the Closing, and the failure by
Seller to obtain, or take any action in order to obtain, such approval shall not
constitute a breach of any representation, warranty or covenant of Seller
hereunder.
SECTION 5.06. Further Action. Subject to the provisions of Sections
5.01, 5.02 and 5.04, Purchaser 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 from time to time, as and when requested by the other party,
shall use their reasonable efforts to take, or cause to be taken, all
appropriate action and execute and deliver, or cause to be
<PAGE> 28
23
executed and delivered, such documents and other papers, as such other party may
reasonably deem to be required to carry out the provisions of this Agreement and
consummate and make effective the transactions contemplated by this Agreement.
SECTION 5.07. Certain Equipment. Purchaser agrees that as soon as
practicable following the Closing, but in any event within 60 days thereafter,
it will arrange, at Purchaser's sole expense and risk, to have the items of
Personal Property listed on Schedule 1.01(c) which are located at 200 Liberty
Street, New York, New York, dismantled and removed from such location. Until
such Personal Property is so dismantled and removed, Purchaser shall reimburse
Seller (a) for all rent owing in respect of Studio E and (b) for a pro-rata
portion of rent owing with respect to the Twelfth Floor based upon the
percentage of square footage on the Twelfth Floor used to house such Personal
Property.
SECTION 5.08. Taxes. At or prior to the Closing Date, Purchaser shall
pay any and all state and local taxes then due and payable, and shall cooperate
in filing with the applicable taxing authorities any tax returns then required
to be filed, in connection with the transactions contemplated by this Agreement.
Purchaser agrees to comply with the requirements of Section 1141(c) of Article
28 of the New York State Sales and Tax Law.
SECTION 5.09. Books and Records. From the date of this Agreement to the
Closing, Seller shall maintain its books, records, files and logs relating to
the Station in accordance with its past practices. For a period of six years
following the Closing Date (a) all books, records, files and logs relating to
the Station or the Station Assets and included in the Station Assets shall be
available for inspection and duplication by Seller or any of Seller's
affiliates, at Seller's expense, upon reasonable notice to Purchaser during
normal business hours, to the extent Seller or any of Seller's affiliates
reasonably deem such inspection necessary or desirable (i) to facilitate any
audit or audits or (ii) in connection with any litigation instituted against
Seller or any of Seller's affiliates with respect to the Station or relating to
Seller's operation thereof; provided, that such inspection and duplication shall
not unreasonably interfere with the normal business operations of the Station
and (b) all books, records, files and logs relating to the Station Assets and
otherwise not included in the Station Assets shall be available for inspection
and duplication by Purchaser or any of Purchaser's affiliates, at Purchaser's
<PAGE> 29
24
expense, upon reasonable notice to Seller during normal business hours.
SECTION 5.10. Risk of Loss. (a) Until the Closing, any loss of or
damage to the Station Assets from fire, casualty, or any other occurrence not
covered by insurance payable to Purchaser (other than any loss, damage or other
occurrence resulting from any act or omission of Purchaser or any of Purchaser's
Representatives) shall be the total responsibility of Seller.
(b) If any damage, destruction or other loss of the Station Assets
occurs (other than any damage or destruction resulting from any act or omission
of Purchaser or any of Purchaser's Representatives) which causes the Station to
cease broadcasting operations, or prevents in any material respect signal
transmission by the Station in the normal and usual manner, Purchaser, in its
sole discretion, may (i) at any time upon written notice thereof to Seller,
postpone the Closing until the earlier of (x) the date which is six months
following the date of such damage, destruction or other loss and (y) ten
business days after such time as the Station Assets have been restored or
replaced such that normal and usual transmission of the Station's signal is
resumed or (ii) if Seller fails to restore or replace the Station Assets such
that normal and usual transmission of the Station's signal is resumed within 60
days of such damage, destruction or other loss, (1) terminate this Agreement
pursuant to Article VIII or (2) proceed to consummate the transaction
contemplated by this Agreement and complete the restoration and replacement of
the Station Assets after the Closing Date, in which event Seller shall deliver
to Purchaser all insurance and other proceeds received in connection with such
damage, destruction or other loss. In the event that Purchaser elects to
postpone the Closing pursuant to clause (i) of this Section 5.10(b), and the
Station Assets have not been restored or replaced such that normal and usual
transmission of the Station's signal is resumed by the date which is six months
following the date of damage, destruction or other loss, then Seller may
terminate the Agreement pursuant to Article VIII. Purchaser's election to take
the actions permitted by clause (i) of this Section 5.10(b) shall not preclude a
subsequent election by Purchaser to take the actions permitted by clause (ii)
hereof.
SECTION 5.11. Stock Exchange Listing. Paxson shall use its reasonable
efforts to cause all shares of Paxson Common Stock which may be issued and
delivered to Seller pursuant to this Agreement to be listed on the American
<PAGE> 30
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Stock Exchange on the Closing Date, subject only to official notice of issuance.
SECTION 5.12. Encumbrances. Seller agrees to take all action necessary
in order to remove any known Encumbrances (other than (a) Encumbrances for
taxes, assessments and other governmental charges that are not yet due and
payable and (b) Encumbrances resulting from any act or omission of Purchaser or
its affiliates, employees, agents or representatives) upon the Station Assets at
or prior to the Closing. In the event that the Station Assets are subject to
such Encumbrances which secure obligations aggregating $25,000 or less at such
time as the parties shall have agreed the Closing shall occur, the Closing shall
occur notwithstanding the existence of such Encumbrances, and Seller shall take
all action necessary to remove all such Encumbrances (or any subsequently
discovered such Encumbrances) as promptly following the Closing as practicable.
In the event that the Station Assets are subject to such Encumbrances which
secure obligations in excess of $25,000 at such time as the parties shall have
agreed that the Closing would otherwise occur, Purchaser, upon written notice
thereof to Seller, shall elect either to (i) postpone the Closing until such
time as the Station Assets shall no longer be subject to such Encumbrances
securing obligations in excess of such amount, in which event Seller shall (x)
take all action necessary in order to remove such Encumbrances as promptly as
practicable and (y) not exercise its right to terminate this Agreement pursuant
to Section 8.01(a)(vii) during any period in which the Closing has been so
postponed or (ii) proceed with the Closing notwithstanding the existence of such
Encumbrances, in which event Seller shall take all action necessary to remove
all such Encumbrances (or any subsequently discovered such Encumbrances) as
promptly following the Closing as practicable.
ARTICLE VI
Closing
SECTION 6.01. Closing Date. Subject to the terms and conditions of this
Agreement, the purchase and sale of the Station Assets and the assignment,
transfer and conveyance thereof (the "Closing") shall take place at the offices
of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York 10019 on a
date that is no later than ten business days after the date on which the
conditions to the Closing set forth in Article VII shall have been satisfied or
<PAGE> 31
26
waived. The date on which the Closing occurs is hereinafter referred to as the
"Closing Date".
SECTION 6.02. Transactions To Be Effected at the Closing. At the
Closing:
(a) Seller shall deliver to Purchaser (i) such appropriately executed
bills of sale, assignments and other instruments of transfer relating to the
Station Assets in form and substance satisfactory to Purchaser and its counsel
and (ii) such other documents as Purchaser or its counsel may reasonably request
to demonstrate satisfaction of the conditions and compliance with the agreements
set forth in this Agreement; and
(b) Purchaser shall deliver to Seller (i) payment of the Purchase Price
in the manner provided in Section 2.01(b) and (ii) such other documents as
Seller or its counsel may reasonably request to demonstrate satisfaction of the
conditions and compliance with the agreements set forth in this Agreement.
ARTICLE VII
Conditions to Performance
SECTION 7.01. Conditions to the Obligation of Purchaser. The obligation
of Purchaser to purchase the Station Assets is subject to the satisfaction (or
waiver by Purchaser) as of the Closing of each of the following conditions:
(a) Seller shall have performed or complied in all material respects
with all obligations and covenants required to be performed by it under this
Agreement at or prior to the Closing and Purchaser shall have received a
certificate signed by Seller to such effect.
(b) The representations and warranties of Seller set forth in this
Agreement qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, on the Closing
Date as though made on the Closing Date (except to the extent any such
representation and warranty expressly relates to an earlier date) and all
covenants and agreements of Seller contained herein which are required to be
performed by the Closing shall have been performed in all material respects, and
Purchaser shall have received a certificate signed by Seller to such effect.
<PAGE> 32
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(c) (i) Seller shall have delivered to Purchaser bills of sale
conveying the Personal Property and (ii) assignment and assumption agreements
conveying and transferring to Purchaser all of Seller's right, title and
interest in, to and under the Licenses and the Contracts and evidencing
Purchaser's assumption of Seller's obligations and liabilities with respect
thereto to the extent provided in Section 1.03;
(d) Except as otherwise contemplated by Section 8.02, the FCC Consent
shall have been granted and become a Final Order and the parties hereto shall
have complied with any conditions set forth therein which are required to be
complied with prior to the Closing. For purposes hereof, "Final Order" shall
mean an action or order of the FCC (i) that has not been reversed, stayed,
enjoined, set aside, annulled or suspended, and (ii) with respect to which (x)
no requests have been filed for administrative or judicial review,
reconsideration, appeal or stay and the FCC has not initiated a review of such
action or order on its own motion and the periods provided by statute or FCC
regulations for filing any such request and for the FCC to set aside the action
on its own motion have expired or (y) in the event of review, reconsideration or
appeal, the period provided by statute or FCC regulations for further review,
reconsideration or appeal has expired.
(e) The waiting period under the HSR Act shall have expired or been
terminated.
(f) The written consent of the Port Authority or its designee to the
assignment of the WTC Lease to Purchaser, on terms no less favorable to
Purchaser than those to which Seller is currently subject and otherwise in form
and substance reasonably acceptable to Purchaser and Seller (the "Port Authority
Consent"), shall have been obtained.
(g) All other material authorizations, consents, orders or approvals
of, or declarations or filings with, or expirations of waiting periods imposed
by, any governmental entity necessary for the consummation of the transactions
contemplated by this Agreement shall have been obtained or filed or shall have
occurred.
(h) There shall be no suit, action, or other proceeding pending in
which it is sought to restrain, prohibit, invalidate or set aside in whole or in
part the consummation of the transactions contemplated by this Agreement. No
temporary restraining order, preliminary or permanent injunction or other legal
restraint or
<PAGE> 33
28
prohibition preventing the consummation of the transactions contemplated by this
Agreement shall be in effect.
(i) Purchaser shall have received an opinion dated the Closing Date of
outside counsel to Seller, in form and substance reasonably satisfactory to
Purchaser and its counsel, and an opinion dated the Closing Date of an officer
responsible for legal affairs of Seller in form and substance reasonably
satisfactory to Purchaser and its counsel.
SECTION 7.02. Conditions to the Obligation of Seller. The obligation of
Seller to sell, assign, transfer and convey the Station Assets to Purchaser is
subject to the satisfaction (or waiver by Seller) as of the Closing each of the
following conditions:
(a) Purchaser shall have performed or complied in all material respects
with all obligations and covenants required to be performed by it under this
Agreement at or prior to the Closing, and Seller shall have received a
certificate signed by Purchaser to such effect.
(b) The representations and warranties of Purchaser set forth in this
Agreement qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, on the Closing
Date as though made on the Closing Date (except to the extent any such
representation and warranty expressly relates to an earlier date) and all
covenants and agreements of Purchaser contained herein which are required to be
performed by the Closing shall have been performed in all material respects, and
Seller shall have received a certificate signed by Purchaser to such effect.
(c) Purchaser shall have delivered to Seller assignment and assumption
agreements accepting the transfer of all of Seller's right title and interest
in, to and under the Licenses and the Contracts and evidencing Purchaser's
assumption of Seller's obligations and liabilities with respect thereto to the
extent provided in Section 1.03.
(d) Except as set forth in Section 8.02, the FCC Consent shall have
been granted and become a Final Order and the parties hereto shall have complied
with any conditions set forth herein which are required to be complied with
prior to the Closing.
(e) The waiting period under the HSR Act shall have expired or been
terminated.
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29
(f) The Port Authority Consent shall have been obtained.
(g) All other material authorizations, consents, orders or approvals
of, or declarations or filings with, or expirations of waiting periods imposed
by, any governmental entity necessary for the consummation of the transactions
contemplated by this Agreement shall have been obtained or filed or shall have
occurred.
(h) There shall be no suit, action, or other proceeding pending in
which it is sought to restrain, prohibit, invalidate or set aside in whole or in
part the consummation of the transactions contemplated by this Agreement. No
temporary restraining order, preliminary or permanent injunction or other legal
restraint or prohibition preventing the consummation of the transactions
contemplated by this Agreement shall be in effect.
(i) Seller shall have received an opinion dated the Closing Date of
Dow, Lohnes & Albertson, PLLC, counsel to Purchaser ("Dow, Lohnes"), in form and
substance reasonably satisfactory to Seller and its counsel.
SECTION 7.03. Frustration of Closing Conditions. Neither Purchaser nor
Seller may rely on the failure of any condition set forth in this Article VII to
be satisfied if such failure was caused by such party's failure to act in good
faith or to use its reasonable efforts to cause the Closing to occur as required
by Section 5.04; provided, that Purchaser may not rely on the failure of the
condition set forth in Section 7.01(d) to the extent that such failure was
caused by Purchaser's failure to take any action necessary in order to obtain
the FCC Consent as required by Section 5.01(a).
ARTICLE VIII
Termination
SECTION 8.01. Termination. (a) Anything contained herein to the
contrary notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(i) by mutual written consent of Seller and Purchaser;
(ii) by Seller, if any of the conditions set forth in
Section 7.02 shall have become incapable of fulfillment, and shall not
have been waived by Seller;
<PAGE> 35
30
(iii) by Seller, if (x) Purchaser fails to make any payment
when due pursuant to (and subject to the terms of) the Time Brokerage
Agreement or (y) during the effective period of the Time Brokerage
Agreement, Purchaser commits any act or omission which could reasonably
be expected to have a material adverse effect upon any License;
(iv) by Purchaser, if Seller fails to make available to
Purchaser the amount of broadcast time required pursuant to (and
subject to the terms of) the Time Brokerage Agreement;
(v) by Purchaser if any of the conditions set forth in
Section 7.01 shall have become incapable of fulfillment, and shall not
have been waived by Purchaser;
(vi) by Purchaser or Seller, pursuant to Section 5.10(b);
(vii) subject to Sections 5.12 and 8.02, by Seller, if the
Closing does not occur on or prior to August 12, 1998; or
(viii) subject to Section 8.02, by Purchaser, if the Closing
does not occur on or prior to August 12, 1998, as a result of (A) any
material breach of any covenant, representation, warranty or agreement
of Seller contained in this Agreement or (B) the failure of the FCC
Consent to have been obtained and to have become a Final Order prior to
August 12, 1998, as a result of (I) any breach set forth in clause (A)
of this Section 8.01(a)(viii) or (II) (x) any action or order by the
FCC or (y) any petition to deny, request for review, reconsideration,
appeal or stay, or any other objection to the granting of the FCC
Consent, in the case of either (x) or (y) based upon the actual or
alleged conduct or character of Seller or any direct or indirect parent
of Seller (as opposed to any such event based upon the effect of the
consummation of the transactions contemplated by this Agreement and the
Time Brokerage Agreement, including cessation of Seller's programming
or the termination of the operations of the Station);
provided, however, that the party seeking termination pursuant to clause (ii),
(iii), (iv), (v), (vi), (vii) or (viii) is not in breach in any material respect
of any of its representations, warranties, covenants or agreements contained in
this Agreement.
<PAGE> 36
31
(b) In the event of termination by any party pursuant to this Article
VIII, written notice thereof shall forthwith be given to the other party and the
transactions contemplated by this Agreement shall be terminated, without further
action by either party. If the transactions contemplated by this Agreement are
terminated as provided herein:
(i) Purchaser and Seller shall return all documents and other
material received from the other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof;
(ii) all confidential information received by Purchaser with respect
to the Station or the Station Assets shall be treated in accordance with
the Confidentiality Agreement, which shall remain in full force and effect
notwithstanding the termination of this Agreement;
(iii) if Seller is the terminating party, such termination shall not
result in any liability to Seller, and, except as provided in clause (iv)
or (v) below, Seller shall, in addition to any other remedy or right
available to Seller at law or equity (including the right to seek damages),
be entitled to retain the Deposit; provided, that Seller shall not be
entitled to any damages or other amounts in connection with such
termination in addition to the Deposit unless, and then only to the extent
that, Seller's actual damages resulting from such termination exceed the
amount of the Deposit;
(iv) if Purchaser is the terminating party, such termination shall not
result in any liability to Purchaser and, if such termination is pursuant
to (A) Section 8.01(a)(v), under such circumstances that any action taken
or omitted to be taken by Seller or any of its affiliates has prevented any
of the conditions set forth in Section 7.01 from being satisfied, (B)
Section 8.01(a)(iv) or (C) Section 8.01(a)(viii)(A) or (B)(I), in addition
to any other remedy or right available to Purchaser at law or equity
(including the right to seek damages or specific performance) the Deposit
shall promptly be returned to Purchaser; and
(v) if such termination is pursuant to Section 8.01(a)(vi), Section
8.01(a)(viii)(B)(II), Sections 8.01(a)(ii) or 8.01(a)(vii) under
circumstances where Purchaser has the right to terminate this Agreement
pursuant to Section 8.01(a)(viii)(B), or Section 8.02, the Deposit shall
promptly be returned to Purchaser.
<PAGE> 37
32
(c) If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Article VIII, this Agreement shall
become void and of no further force or effect, except for the provisions of (i)
Section 3.01 relating to the obligation of Purchaser to keep confidential
certain information and data obtained by it, (ii) Section 8.03 relating to
specific performance, (iii) Section 9.01(d) relating to certain indemnification
obligations, (iv) Section 10.03 relating to broker fees, (v) Section 10.06
relating to attorney fees and expenses, (vi) Section 10.16 relating to certain
expenses, (vii) Section 10.17 relating to guarantees and (viii) this Section
8.01. Nothing in this Section 8.01 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or to impair the right of either party to compel specific performance
by the other party of its obligations under this Agreement.
SECTION 8.02. Absence of Final Order. Notwithstanding any contrary
provision contained in this Agreement, the parties hereby agree as follows:
(a) In the event that at any time after all of the conditions to
Closing set forth in Article VII have been satisfied or waived other than the
conditions contained in Sections 7.01(d) and 7.02(d) (and such other conditions
that are contemplated to be satisfied only at the Closing), and the FCC Consent
shall have been obtained and the conditions set forth therein which are required
to be complied with prior to the Closing have been complied with, Purchaser may
deliver to Seller an opinion of Dow, Lohnes, subject only to customary
assumptions and qualifications, to the effect that no significant risk exists
that the FCC Consent will not become a Final Order ("Purchaser's Opinion"). In
the event that Purchaser delivers Purchaser's Opinion to Seller, Seller shall,
upon written notice delivered to Purchaser within two business days thereafter,
elect to proceed with the Closing (in which case Purchaser and Seller shall be
deemed to have waived the conditions contained in Sections 7.01(d) and 7.02(d),
as applicable) or to postpone the Closing until the earlier of (i) November 12,
1998, or (ii) such time as (x) the FCC Consent shall have become a Final Order
or (y) the FCC Consent shall have been approved by the action of the full FCC
(as opposed to the approval of the FCC through delegated authority) (the earlier
of such dates, the "Approval Date"). Within five business days following the
Approval Date, Seller shall, by written notice to Purchaser, elect to proceed
with the Closing (in which case Purchaser and Seller shall be deemed to have
waived the
<PAGE> 38
33
conditions contained in Section 7.01(d) and 7.02(d), as applicable) or to
terminate this Agreement. Notwithstanding the foregoing, Seller shall proceed
with the Closing as contemplated hereby at such time as (i) Seller shall have
received Purchaser's Opinion and (ii) the FCC Consent shall have been approved
by the action of the full FCC. Neither party shall exercise their rights under
8.01(a)(vii) or (viii), as applicable, during any period during which the
Closing is postponed pursuant to this Section 8.02.
(b) The parties further agree that in the event that the Closing shall
not have occured on or prior to August 12, 1998, under such circumstances that
Purchaser would have the right to terminate this Agreement pursuant to Section
8.01(a)(viii)(B)(II)(y), Seller may deliver to Purchaser an opinion of Verner,
Liipfert, Bernhard, McPherson and Hand, subject only to customary assumptions
and qualifications, to the effect that no significant risk exists that the FCC
Consent will not be obtained or become a Final Order, as appropriate ("Seller's
Opinion"). In the event that Seller delivers Seller's Opinion to Purchaser, the
date after which Purchaser shall be entitled to so terminate this Agreement
pursuant to Section 8.01(a)(viii)(B)(II)(y) shall be deemed to be November 12,
1998.
SECTION 8.03. Specific Performance. The parties recognize that if
Seller breaches its agreement to sell the Station Assets or Purchaser breaches
its agreement to purchase the Station Assets as contemplated by this Agreement,
monetary damages alone would not be adequate to compensate the non-breaching
party for its injury. If any action is brought by Purchaser or Seller to enforce
this Agreement, the other party shall waive the defense that there is an
adequate remedy at law.
ARTICLE IX
Indemnification
SECTION 9.01. Indemnity by Purchaser. Following the Closing (subject to
Section 9.01(d)), Purchaser agrees that it will defend, indemnify and hold
harmless Seller, the general partners of Seller and each of their respective
officers, directors, employees, agents, affiliates and representatives
(collectively, the "Seller Indemnitees") from and against all actions, suits,
claims, losses, penalties, damages, liabilities, costs and expenses
<PAGE> 39
34
including reasonable attorneys' fees, costs and disbursements (collectively,
"Losses"), as incurred, based upon or arising out of each of the following:
(a) any and all matters relating to the operation of the Station or the
use, operation or maintenance of the Station Assets on or after the Closing;
(b) any breach of (i) the representations and warranties set forth in
Sections 4.02, 4.04 or 10.03 or (ii) any covenant or agreement of Purchaser
contained in this Agreement;
(c) any claim asserted against any Seller Indemnitee arising out of or
related to any liability assumed by Purchaser pursuant to this Agreement or
Purchaser's failure to perform or pay or discharge any such assumed liability;
(d) (i) from and after the date of this Agreement, any breach or
alleged breach of the Programming Agreement dated September 18, 1996, by and
between Seller and Liberty/Fox U.S. Sports LLC (the "LFS Contract") based upon
or arising out of the execution and delivery of this Agreement or the Time
Brokerage Agreement and (ii) from and after the effective date of the Time
Brokerage Agreement, any breach or alleged breach of the LFS Contract arising
out of or based upon Purchaser's failure or alleged failure to perform any
obligation thereunder required to be performed by Purchaser pursuant to this
Agreement or the Time Brokerage Agreement.
SECTION 9.02. Indemnity by Seller. Following the Closing, Seller agrees
that it will defend, indemnify, and hold harmless Purchaser and its officers,
directors, employees, agents, affiliates and representatives (collectively, the
"Purchaser Indemnitees") from and against all Losses as incurred, based upon or
arising out of each of the following:
(a) any and all matters relating to operation of Station or the use,
operation, maintenance or ownership of the Station Assets prior to the
Closing (other than Losses relating to items described in Section 9.01(d));
(b) any breach of (i) the representations and warranties set forth in
Sections 4.01, 4.03 or 10.03 (other than Losses relating to items described
in Section 9.01(d)) or (ii) any covenant or agreement of Seller contained
in this Agreement;
<PAGE> 40
35
(c) any claim asserted against any Purchaser Indemnitee arising out of
or related to any Excluded Liability or any Excluded Station Assets or
Seller's failure to perform or pay and discharge any Excluded Liability;
and
(d) the existence of any Encumbrance (other than (i) Encumbrances for
taxes, assessments and other governmental charges that are not yet due and
payable and (ii) Encumbrances resulting from any act or omission of
Purchaser or its affiliates, employees, agents or representatives) on the
Station Assets at the Closing.
SECTION 9.03. Limitations on Obligations. Except as provided in the
third sentence of this Section 9.03, neither Purchaser nor Seller shall have any
liability under Section 9.01(b)(i) or 9.02(b)(i), as applicable, unless the
aggregate of all losses, penalties, damages, liabilities, costs and expenses
relating thereto for which such party would, but for this proviso, be liable
exceeds on a cumulative basis $1,500,000, and then only to the extent of any
such excess. Except as provided in the third sentence of this Section 9.03,
neither Purchaser nor Seller shall have any liability under Section 9.01(b) or
9.02(b), as applicable, for any individual items where the loss, penalty,
damage, liability, cost or expense relating thereto is less than $15,000 and
such items shall not be aggregated for purposes of the first sentence of this
Section 9.03. Notwithstanding any contrary provision of this Agreement, Seller
shall be liable for the full amount of any indemnity obligation pursuant to
Section 9.02(b)(i) resulting from any breach of the representations and
warranties set forth in Section 4.01(e). Notwithstanding any contrary provision
of this Agreement, in no event shall Seller's aggregate liability under Section
9.02(b) exceed the Purchase Price.
SECTION 9.04. Calculation of Losses. The amount of any claim, loss,
penalty, damage, cost or expense (collectively, a "Loss") for which
indemnification is provided under this Article IX shall be (i) increased to take
account of any net tax cost incurred by the indemnified party arising from the
receipt of indemnity payments hereunder (grossed up for such increase) and (ii)
reduced to take account of any net tax benefit realized by the indemnified party
arising from the incurrence or payment of any such Loss. In computing the amount
of any such tax cost or tax benefit, the indemnified party shall be deemed to
recognize all other items of income, gain, loss, deduction or credit before
recognizing any item arising from the receipt of any indemnity payment hereunder
or the
<PAGE> 41
36
incurrence or payment of any indemnified Loss. Any indemnification payment
hereunder shall initially be made without regard to this paragraph and shall be
increased or reduced to reflect any such net tax cost (including gross-up) or
net tax benefit only after the indemnified party has actually realized such cost
or benefit.
SECTION 9.05. Procedures Relating to Indemnification. In order for a
party (the "indemnified party") to be entitled to any indemnification provided
for under this Agreement in respect of, arising out of or involving a claim or
demand made by any person against the indemnified party (a "Third Party Claim"),
such indemnified party must notify the indemnifying party in writing, and in
reasonable detail, of the Third Party Claim within 10 business days after
receipt by such indemnified party of written notice of the Third Party Claim;
provided, however, that failure to give such notification shall not affect the
indemnification provided hereunder except to the extent the indemnifying party
shall have been actually prejudiced as a result of such failure (except that the
indemnifying party shall not be liable for any expenses incurred during the
period in which the indemnified party failed to give such notice).
The indemnifying party shall be entitled to participate in the defense
of any Third Party Claim and, if it so chooses and acknowledges its obligation
to indemnify the indemnified party therefor, to assume the defense thereof with
counsel selected by the indemnifying party and reasonably acceptable to the
indemnified party. Should the indemnifying party so elect to assume the defense
of a Third Party Claim, the indemnifying party shall not be liable to the
indemnified party for legal expenses subsequently incurred by the indemnified
party in connection with the defense thereof. If the indemnifying party assumes
such defense, the indemnified party shall have the right to participate in the
defense thereof and to employ counsel (not reasonably objected to by the
indemnifying party), at its own expense, separate from the counsel employed by
the indemnifying party, it being understood that the indemnifying party shall
control such defense. Notwithstanding the foregoing, in the event that the
indemnified party reasonably determines, based on the advice of outside counsel,
that there is a conflict of interest between the indemnified party and the
indemnifying party in the defense of any Third Party Claim, (i) the indemnifying
party shall not have the right to assume and direct the defense of such Third
Party Claim on the indemnified party's behalf and (ii) the indemnifying party
shall indemnify the indemnified party for all reasonable
<PAGE> 42
37
legal fees and expenses reasonably incurred by the indemnified party in the
defense thereof.
If the indemnifying party so elects to assume the defense of any Third
Party Claim, all of the indemnified parties shall cooperate with the
indemnifying party in the defense or prosecution thereof. Whether or not the
indemnifying party shall have assumed the defense of a Third Party Claim, the
indemnified party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the indemnifying party's
prior written consent (which consent shall not be unreasonably withheld). If the
indemnifying party shall have assumed the defense of a Third Party Claim, the
indemnified party shall agree to any settlement, compromise or discharge of a
Third Party Claim which the indemnifying party may recommend and which by its
terms obligates the indemnifying party to pay the full amount of the liability
in connection with such Third Party Claim, which releases the indemnified party
completely in connection with such Third Party Claim and imposes no nonmonetary
obligation on the indemnified party.
SECTION 9.06. Other Claims. In the event any indemnified party should
have a claim against any indemnifying party under Section 9.01 or 9.02 that does
not involve a Third Party Claim being asserted against or sought to be collected
from such indemnified party, the indemnified party shall deliver notice of such
claim with reasonable promptness to the indemnifying party. The failure by any
indemnified party so to notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to such indemnified
party, except to the extent that the indemnifying party demonstrates that it has
been materially prejudiced by such failure. If the indemnifying party does not
notify the indemnified party within 10 calendar days following its receipt of
such notice that the indemnifying party disputes its liability to the
indemnified party, such claim specified by the indemnified party in such notice
shall be conclusively deemed a liability of the indemnifying party under Section
9.01 or 9.02 and the indemnifying party shall pay the amount of such liability
to the indemnified party on demand or, in the case of any notice in which the
amount of the claim (or any portion thereof) is estimated, on such later date
when the amount of such claim (or such portion thereof) becomes finally
determined. If the indemnifying party has timely disputed its liability with
respect to such claim, as provided above, the indemnifying party and the
indemnified party shall proceed in good faith to negotiate a resolution of such
dispute and, if not resolved
<PAGE> 43
38
through negotiations, such dispute shall be resolved by litigation in an
appropriate court of competent jurisdiction.
SECTION 9.07. Nonexclusive Remedy. The remedies provided pursuant to
this Article IX shall be in addition to, and not exclusive of, any other legal
or equitable remedies available to the parties hereto with respect to the breach
of any representation, warranty or agreement set forth in this Agreement.
ARTICLE X
Miscellaneous
SECTION 10.01. Notices by Parties. Except as otherwise provided in this
Agreement, all notices, demands, and other communications ("Notices") required
or permitted to be given hereunder shall be in writing and shall be (a) hand
delivered and a written receipt obtained, (b) sent by nationally recognized
overnight courier, (c) transmitted by facsimile (with hard copy confirmation by
hand delivery, certified mail, return receipt requested or nationally recognized
overnight courier) or (d) sent by registered or certified mail, postage prepaid,
return receipt requested, addressed to the party to be so notified as follows:
If to Seller:
ITT-Dow Jones Television
200 Liberty Street
New York, NY 10281
Attention of: General Counsel
Telephone: 212-416-3030
Telecopy: 212-732-8356
With copies to:
Dow Jones & Company, Inc.
200 Liberty Street
New York, NY 10281
Attention of: General Counsel
Telephone: 212-416-3030
Telecopy: 212-732-8356
and
ITT Corporation
1330 Avenue of the Americas
New York, NY 10019
<PAGE> 44
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Attention of: General Counsel
Telephone: 212-258-1327
Telecopy: 212-258-1463;
If to ITT or Dow Jones to the address or telecopy number set forth
above;
If to Purchaser or Paxson to:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, FL 33401
Attention of:
Telephone: 561-659-4122
Telecopy: 561-659-4252
With a copy to:
Dow Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
Attention of: John R. Feore, Esq.
Telephone: 202-776-2786
Telecopy: 202-776-2222
A Notice shall be deemed received for purposes hereof (i) on the date
of actual receipt, if sent by hand delivery or facsimile transmission as
described above, (ii) three days after the mailing thereof or (iii) one business
day after being sent by overnight courier, as the case may be. Either party may
at any time change the address for Notices to such party by giving a Notice as
aforesaid.
SECTION 10.02. Bulk Transfer Laws. Notwithstanding any other provision
of this Agreement, Purchaser hereby waives compliance by Seller with the
provisions of any so-called Bulk Transfer Law of any jurisdiction in connection
with the transactions contemplated hereby. Seller shall indemnify and hold
harmless Purchaser against any and all liabilities which may be asserted by
third parties against Purchaser as a result of noncompliance with any such Bulk
Transfer Law, other than liabilities which Purchaser shall have expressly
assumed pursuant to this Agreement.
SECTION 10.03. Broker's Commission. Purchaser represents to Seller that
Purchaser has not dealt with any finder, broker or financial adviser in
connection with the transactions contemplated hereby. Seller represents to
Purchaser that the only finders, brokers or financial
<PAGE> 45
40
advisors which have acted on behalf of Seller or Seller's affiliates are Lazard
Freres & Co. LLC ("Lazard Freres") and Goldman, Sachs & Co. ("Goldman, Sachs"),
which have represented ITT and Evercore Partners ("Evercore"), which have
represented Dow Jones. Each of the general partners of Seller or their
applicable affiliates shall be responsible for any brokerage commission or fee
and any other sums which may be payable to Lazard Freres, Goldman, Sachs or
Evercore, as applicable, in connection with the transactions contemplated
hereby.
SECTION 10.04. Interpretation; Schedules; Certain Definitions. (a) The
headings contained in this Agreement, in any Exhibit or Schedule hereto and in
the table of contents to this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. All
Exhibits and Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise
defined therein shall have the meaning as defined in this Agreement.
(b) For all purposes hereof:
(i) "affiliate" means, with respect to any person, another person
that directly or indirectly through one or more intermediaries controls or
is controlled by or is under common control with such person;
(ii) "including" means "including, without limitation"; and
(iii) "person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, governmental entity or
other entity.
SECTION 10.05. Assignment. Neither party shall, without the other
party's prior written consent, assign (including by operation of law) any of its
right, title or interest in this Agreement to any person or entity; provided,
however that Purchaser may assign its right to purchase the Station Assets
hereunder to any domestic wholly owned subsidiary of Paxson which remains such
through the Closing without the prior written consent of Seller. Any attempted
assignment by either party in violation of the preceding sentence or by
Purchaser to an entity which ceases to be a wholly owned subsidiary of Paxson
prior to the Closing shall be null and void and of no force and effect. No
assignment by either party shall
<PAGE> 46
41
release such party from any of its obligations and liabilities hereunder.
SECTION 10.06. Attorneys' Fees. A party in breach of this Agreement
shall, on demand, indemnify and hold harmless the other party for and against
all reasonable out-of-pocket expenses, including legal fees, incurred by such
other party by reason of the enforcement and protection of its rights under this
Agreement. The payment of such expenses is in addition to any other relief to
which such other party may be entitled.
SECTION 10.07. Severability. The provisions of this Agreement are
severable, and if any provision or part hereof or the application thereof to any
person or circumstance shall be held by any court of competent jurisdiction to
be invalid, unconstitutional or unenforceable for any reason, the remainder of
this Agreement and the application of such provision or part hereof to other
persons or circumstances shall not be affected thereby.
SECTION 10.08. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS EXECUTED IN AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK
STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
SECTION 10.09. Consent to Jurisdiction. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of (a) the Supreme Court of
the State of New York, New York County, and (b) the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of the parties hereto agrees, to the extent permitted under
applicable rules of procedure, to commence any action, suit or proceeding
relating hereto either in the United States District Court for the Southern
District of New York, or if such suit, action or other proceeding may not be
brought in such court for jurisdictional reasons, in the Supreme Court of the
State of New York, New York County. Each of the parties hereto further agrees
that service of any process, summons, notice or document by U.S. registered mail
to such party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction in this Section 10.09. Each of
the parties hereto irrevocably and unconditionally waives
<PAGE> 47
42
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby in (i) the Supreme
Court of the State of New York, New York County, or (ii) the United States
District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
SECTION 10.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original but all of
which, taken together, shall constitute but one and the same instrument.
SECTION 10.11. Entire Agreement; No Third Party Beneficiaries. This
Agreement, together with the exhibits and schedules attached hereto, the
Confidentiality Agreement and the Time Brokerage Agreement constitute the entire
agreement and understanding between the parties hereto concerning the subject
matter hereof and supersede all prior agreements and understandings between and
among the parties hereto relating to such subject matter. Except as provided in
Sections 9.01 and 9.02, this Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any person, other than the parties hereto and
such assigns, any legal or equitable rights hereunder.
SECTION 10.12. Modifications. This Agreement may not be waived,
changed, modified, discharged or terminated orally, but only by an agreement in
writing, signed by each of the parties hereto.
SECTION 10.13. Non-Waiver. No failure on the part of Seller or
Purchaser or any of their respective agents to exercise, and no course of
dealing with respect to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by Seller or Purchaser of any right, power or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy. The remedies herein are cumulative and, except as otherwise stated
herein, not exclusive of any remedies provided by law.
SECTION 10.14. Successors. The terms and provisions of this Agreement
shall be binding upon, and shall inure to the benefit of, the parties hereto and
their respective
<PAGE> 48
43
heirs, legal representatives, successors and permitted assigns.
SECTION 10.15. Survival. The provisions of Sections 2.01(c), 2.02,
3.02, 5.01, 5.05, 5.06, 5.07, 5.08, 5.09, , 5.11, 5.12, Article IX and this
Article X shall survive the Closing. The representations and warranties
contained in Sections 4.01 and 4.02 shall survive the Closing for purpose of
Article IX and shall terminate on the date which is six months following the
Closing Date. Unless Purchaser or Seller shall have been notified of a breach or
alleged breach of such representations and warranties in writing, with
reasonable specificity, on or before the date which is six months following the
Closing Date, no indemnity may be claimed in respect of the breach of any
representation and warranty pursuant to Article IX hereof.
SECTION 10.16. Expenses. Whether or not that transactions contemplated
hereby are consummated, and except as otherwise specifically provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs or expenses.
SECTION 10.17. Guarantees. (a) Each of ITT and Dow Jones (ITT and Dow
Jones being referred to in this Section 10.17 as the "Seller Guarantors")
irrevocably guarantees, severally and not jointly, as a principal and not as a
surety, to Purchaser and its successors and permitted assigns full and prompt
performance by Seller of all of its obligations under or pursuant to this
Agreement and the Time Brokerage Agreement in accordance with the terms thereof;
provided, however, that neither Seller Guarantor shall be obligated pursuant to
this Section 10.17 to pay any amount in excess of 50% of the amount of any such
obligation of Seller.
(b) Paxson irrevocably guarantees, as a principal and not as a surety,
to Seller and its successors and permitted assigns the full and prompt
performance by Purchaser of all of its obligations under or pursuant to this
Agreement and the Time Brokerage Agreement in accordance with the terms thereof
(the obligations of Seller and Purchaser guaranteed pursuant to this Section
10.17, being referred to collectively as the "Guaranteed Obligations").
(c) The guaranties set forth in this Section 10.17 shall survive the
Closing and remain in full force and effect for the period of time during which
indemnification
<PAGE> 49
44
may be sought under Section 9.01 or 9.02, as applicable. Each Seller Guarantor
and Paxson (collectively, the "Guarantors") waives any provision of any statute
or judicial decision otherwise applicable hereto which restricts or in any way
limits the rights of any obligee against a guarantor or surety following a
default or failure of performance by an obligor with respect to whose
obligations the guarantee is provided. To the fullest extent permitted by
applicable law, each Guarantor hereby waives presentment to, demand of payment
from and protest of any Guaranteed Obligation, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. To the fullest
extent permitted by applicable law, the obligations of the Guarantors hereunder
shall not be affected by (a) the failure of the applicable obligee to assert any
claim or demand or to enforce any right or remedy against the applicable
Guarantor pursuant to the provisions of this Agreement or otherwise and (b) any
recision, waiver, amendment or modification of, or any release from any of the
terms or provisions of this
<PAGE> 50
Section 10.17, unless consented to in writing by Seller and Purchaser.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
ITT-DOW JONES TELEVISION
By: Dow Jones Broadcasting
(U.S.A.), Inc.,
General Partner
By: /s/ Peter G. Skinner
-----------------------------------
Name: PETER G. SKINNER
Title: PRESIDENT
By: ITT Broadcasting Corp.,
General Partner
By: /s/
-----------------------------------
Name:
Title:
ITT CORPORATION
By: /s/
-----------------------------------
Name:
Title:
DOW JONES & COMPANY, INC.
By: /s/ Peter G. Skinner
-----------------------------------
Name: PETER G. SKINNER
Title: SENIOR PRESIDENT
PAXSON COMMUNICATIONS
CORPORATION
By: /s/ Lowell W. Paxson
-----------------------------------
Name:
Title:
PAXSON COMMUNICATIONS
OF NEW YORK-31, INC.
By: /s/ Lowell W. Paxson
-----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.167.1
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
ITT-DOW JONES TELEVISION
AND
PAXSON COMMUNICATIONS OF NEW YORK-31, INC.
FOR
TELEVISION STATION WBIS(TV)
NEW YORK, NEW YORK
* * *
May, 1997
<PAGE> 2
i
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1. LEASE OF STATION AIR TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Option to Renew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Licensee Operation of the Station. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Licensee Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 Programmer Representations, Warranties
and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2. STATION OBLIGATION TO ITS COMMUNITY OF LICENSE . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Licensee Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Additional Licensee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Additional Programmer Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Responsibility for Employees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3. STATION PROGRAMMING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Broadcast Station Programming Policy Statement . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Licensee Control of Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Programmer Compliance with Copyright Act. . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Payola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 Staffing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Children's Television Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. INDEMNIFICATION AND EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Programmer's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Licensee's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Procedure for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Time Brokerage Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.6 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.7 Cure Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE . . . . . . . . . . . . . . . . . . . . . 10
5.1 Confidential Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Political Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.2 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.3 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
ii
<TABLE>
<S> <C> <C>
SECTION 7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.2 Call Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.6 Headings; Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.10 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.11 Press Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.12 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 4
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this 12th day of May, 1997, by and
between ITT-DOW JONES TELEVISION, a Delaware partnership (the "Licensee") and
PAXSON COMMUNICATIONS OF NEW YORK-31, INC., a Florida corporation (the
"Programmer").
WHEREAS, Licensee is the owner and operator of Television Station
WBIS(TV), New York, New York (the "Station") pursuant to authorizations issued
by the Federal Communications Commission (the "FCC").
WHEREAS, Programmer is involved in television station ownership and
operation and has entered into an Asset Purchase Agreement dated the date of
this Agreement among Licensee, Programmer and certain of their respective
affiliates relating to the Station (the "Asset Purchase Agreement"), pursuant
to which Licensee has agreed to sell certain assets associated with the Station
to Programmer upon receipt of FCC approval;
WHEREAS, the Licensee wishes to retain Programmer to provide
programming for the Station that is in conformity with the Station's policies
and procedures, FCC policies for time brokerage arrangements, and the
provisions hereof.
WHEREAS, Programmer agrees to use the Station to broadcast such
programming of its selection that is in conformity with all rules, regulations
and policies of the FCC, subject to Licensee's full authority to manage and
control the operation of the Station.
WHEREAS, Programmer and Licensee agree to cooperate to make this
Time Brokerage Agreement work to the benefit of the public and both parties and
as contemplated in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be legally
bound, agree as follows:
SECTION 1. LEASE OF STATION AIR TIME
1.1 Representations. Both Licensee and Programmer represent
that they are legally qualified, empowered and able to enter into this
Agreement.
1.2 Effective Date; Term. The effective date of this Agreement
shall be June 30, 1997, or such later date as the parties may agree in the
event that the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 shall not have expired or been terminated by such date
(the "Effective Date") and it shall continue in force from that date until the
earlier of (a) the Closing of the Asset Purchase Agreement; (b) the
termination of the Asset Purchase Agreement pursuant to Article VIII of the
Asset Purchase Agreement; or (c) the termination of this Agreement pursuant to
Section 6 hereof.
1.3 Scope. Subject to the terms of this Agreement, during the
term of this Agreement and any renewal thereof, Licensee shall make available
to Programmer broadcast
<PAGE> 5
2
time upon the Station as set forth in this Agreement twenty-four (24) hours a
day, seven (7) days a week. Programmer shall deliver programming, at its
expense, to the Station's transmitter facilities or other authorized remote
control points as reasonably designated by Licensee. Programmer shall
broadcast such programming as is required pursuant to Section 1.9 and shall
have the right to broadcast its programming from the Licensee's existing
studio, provided that payment is made by Programmer as provided in Schedule I .
Subject to Licensee's reasonable approval, as set forth in this Agreement,
Programmer shall provide programming of Programmer's selection consisting of
programming that responds to ascertained community issues, needs and interests,
commercial matter, news, public affairs and other non- entertainment programs,
children's educational and informational programs, public service announcements
and other programming suitable to the Licensee and consistent with FCC
requirements.
1.4 Option to Renew. Subject to the termination provisions of
Section 6 hereof, this Agreement may be renewed for an additional term as
mutually agreed upon by the Licensee and the Programmer and consistent with FCC
requirements.
1.5 Consideration. As consideration for the air time made
available hereunder Programmer shall make payments to Licensee as set forth in
Schedule I.
1.6 Licensee Operation of the Station. Licensee will have full
authority, power and control over the management and operations of the Station
during the term of this Agreement and during any renewal of such term.
Licensee will bear all responsibility for the Station's compliance with all
applicable provisions of the Communications Act of 1934, as amended, (the
"Act") the rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for and pay in a timely manner all
customary operating costs of the Station, including but not limited to
maintenance of the studio and transmitting facilities and costs of
electricity, provided, that Licensee shall be entitled to reimbursement
pursuant to Schedule I hereof and Programmer shall be responsible for the costs
of its programming and its personnel as provided in Sections 1.8 and 2.4
hereof. Licensee shall employ at its expense management level and other
employees consisting of an Operations Manager who will direct the day-to-day
operations of the Station and such other personnel as required by the FCC, and
who will report to and be accountable to the Licensee. Licensee shall be
responsible for the salaries, taxes, insurance and related costs for all
personnel employed by the Station and shall maintain insurance reasonably
satisfactory to Programmer covering the Station's transmission facilities (it
being agreed that the insurance currently maintained by Licensee is reasonably
satisfactory to Programmer). During the term of the Agreement and any renewal
hereof, Programmer shall perform, without charge and under the supervision of
Licensee, routine monitoring and maintenance of the Station's studio and
transmission facilities.
1.7 Licensee Representations and Warranties. Licensee
represents and warrants as follows:
(a) Licensee owns and holds or will hold all licenses
and other permits and authorizations necessary for the current operation of the
Station ("Licenses"), and such Licenses are and will be in full force and
effect throughout the term of this Agreement. Licensee is not in material
violation of any statute, ordinance, rule, regulation, policy, order or decree
of
<PAGE> 6
3
any federal, state or local entity, court or authority having jurisdiction over
it or the Station, which would have a material adverse effect upon Licensee,
the Station or Licensee's ability to perform its obligations under this
Agreement. Licensee shall not take any action or omit to take any action which
would have a material adverse effect upon Licensee, the Station or Licensee's
ability to perform its obligations under this Agreement. All reports and
applications required to be filed with the FCC or any other governmental body
have been, and during the course of the term of this Agreement or any renewal
thereof, will be filed in a timely and complete manner. During the term of
this Agreement and any renewal thereof, Licensee shall not dispose of,
transfer, assign or pledge any of Licensee's assets and properties which are,
individually or in the aggregate, necessary for the operation of the Station
without the prior written consent of the Programmer, which consent shall not be
unreasonably withheld.
(b) Licensee shall pay, in a timely fashion, all of
the expenses incurred in operating the Station, including salaries and benefits
of its two (2) employees, lease payments, utilities, taxes, etc., as set forth
in Schedule I (except those for which a good faith dispute has been raised with
the vendor or taxing authority), and shall provide Programmer with a schedule
of such timely payments (including invoices) within thirty (30) days following
the end of each month. Programmer shall reimburse Licensee for such payments
within five (5) days of Programmer's receipt of Licensee's schedule.
1.8 Programmer Representations, Warranties and Covenants.
Programmer represents, warrants and covenants as follows:
(a) Programmer is not in violation of any statute,
ordinance, rule, regulation, policy, order or decree of any federal, state or
local entity, court, or authority having jurisdiction over it (collectively,
"Applicable Laws"), which would have a material adverse effect upon Programmer,
the Station, or Programmer's ability to perform this Agreement. Programmer
shall not take any action or omit to take any action which would have a
material adverse impact upon Programmer, the Station or Programmer's ability to
perform this Agreement. Programmer shall comply in all material respects with
all Applicable Laws during the term of this Agreement.
(b) Programmer shall be solely responsible for any
expenses incurred in the origination and/or delivery of programming from any
remote location and for any publicity or promotional expenses incurred by
Programmer, including ASCAP and BMI music license fees for all programming
provided by Programmer and shall employ and be responsible for the salaries,
commission, taxes, insurance (including without limitation workmen's
compensation) and all other related expenses for all personnel involved in the
production and broadcast of its Programs (including air personalities,
engineering personnel, sales personnel, traffic personnel, board operators and
other programmers and production staff members). Such payments by Programmer
shall be in addition to any other payments to be made by Programmer under this
Agreement.
(c) In the event that the application of the Station
currently pending before the FCC relating to the upgrade of the Station's
broadcast power (the "Upgrade Application") is granted during the term of this
Agreement, Programmer may, at Programmer's
<PAGE> 7
4
sole expense and risk, and under the control and supervision of Licensee,
purchase and install on the Station's premises additional transmission
equipment necessary in order to increase the broadcast power of the Station to
the extent permitted by, and in accordance with, such FCC approval, and to the
extent such equipment has previously been ordered by Seller, Programmer shall
assume all of Licensee's obligations under all contracts relating thereto,
including the obligation to pay for such equipment. Programmer acknowledges
and agrees that the failure by Licensee to obtain, or take any action in order
to obtain, FCC approval of the Upgrade Application shall not constitute a
breach of any representation, warranty or covenant of Licensee hereunder.
1.9 Contracts. Programmer will perform all of Licensee's
non-monetary obligations pursuant to (a) the lease dated as of August 24, 1984,
by and between the Port Authority of New York and New Jersey (the "Port
Authority"), as lessor, and The City of New York (the "City"), as lessee, as
assigned to the Seller pursuant to the Assignment of Lease with Assumption and
Consent dated as of June 28, 1996, among Licensee, the Port Authority and the
City; (b) the Capacity Agreement dated February 7, 1997, between Licensee and
Time Warner Communications; and (c) Licensee's use and occupancy arrangements
with respect to space located at 200 Liberty Street, New York, New York, to the
extent such space is utilized by Programmer pursuant to this Agreement.
Programmer will perform all of Licensee's obligations pursuant to the
Programming Agreement dated September 18, 1996, by and between Licensee and
Liberty/Fox U.S. Sports L.L.C. ("LFS"), as amended on January 23, 1997 (the
"LFS Agreement"), including with respect to the provision of airtime and the
sale of advertising. Programmer's use of the assets of the Station and its use
and occupancy of Licensee's premises shall comply with the terms of any
contract, lease or agreement listed above. Programmer will enter into no
third-party contracts, leases or agreements which will bind Licensee in any way
except with Licensee's prior approval.
SECTION 2. STATION OBLIGATION TO ITS COMMUNITY OF LICENSE
2.1 Licensee Authority. Notwithstanding any other provision of
this Agreement, Programmer recognizes that Licensee has certain obligations to
broadcast programming to meet the needs and interests of viewers in New York,
New York, the Station's community of license. From time to time the Licensee
may air specific programming on issues of importance to the local community.
Nothing in this Agreement shall abrogate the unrestricted authority of
theLicensee to discharge its obligations to the public and to comply with the
Act and the rules and policies of the FCC.
2.2 Additional Licensee Obligations. Although both parties
shall cooperate in the broadcast of emergency information over the Station,
Licensee shall also retain the right to interrupt Programmer's programming in
case of an emergency or for programming which, in the good faith judgment of
Licensee, is of greater local or national public importance. Licensee shall
also coordinate with Programmer the Station's hourly Station identification and
any other announcements required to be aired by FCC rules. Licensee shall
continue to maintain a main studio, as that term is defined by the FCC, within
the Station's principal community contour, shall maintain its local public
inspection file in accordance with FCC rules, regulations and policies, and
shall prepare and place in such inspection file or files in a timely manner all
<PAGE> 8
5
material required by Section 73.3526 of the FCC's Rules, including the
Station's quarterly issues and program lists; information concerning the
broadcast of children's educational and informational programming; and
documentation of compliance with commercial limits applicable to certain
children's television programming. Programmer shall, upon request by Licensee,
provide Licensee with such information concerning Programmer's programs and
advertising as is necessary to assist Licensee in the preparation of such
information. Programmer shall provide Licensee such information as Licensee
may request concerning Programmer's recruitment, hiring or employment practices
in connection with Programmer's provision of programming and the station.
Licensee shall also maintain the Station's logs and control and oversee any
remote control point which may be established for the Station.
2.3 Additional Programmer Obligations. Programmer shall
broadcast on the Station sufficient programming to comply with the minimum
operating requirements specified in Section 73.1740 of the FCC's rules and
regulations.
2.4 Responsibility for Employees and Expenses. Programmer shall
employ and be solely responsible for the salaries, commission, taxes, insurance
and related costs for all personnel used in the production of its programming
(including salespeople, technical staff, traffic personnel, board operators,
programming staff and air personalities). Licensee will provide and be
responsible for the salaries, taxes, benefits, insurance (including without
limitation workmen's compensation) and related costs for all the Licensee's
employees necessary to the Station operation. Whenever on the Station's
premises, all personnel shall be subject to the overall supervision of
Licensee's Operations Manager.
SECTION 3. STATION PROGRAMMING POLICIES
3.1 Broadcast Station Programming Policy Statement. Licensee
has adopted and will enforce a Broadcast Station Programming Policy Statement
(the "Policy Statement"), a copy of which appears as Schedule II hereto and
which may be amended in a reasonable manner from time to time by Licensee upon
notice to Programmer. Programmer agrees and covenants to comply in all
material respects with the Policy Statement, all rules and regulations of the
FCC,and all changes subsequently made by Licensee or the FCC. Programmer shall
furnish or cause to be furnished the artistic personnel and material for the
programs as provided by this Agreement and all programs shall be prepared and
presented in conformity with the rules, regulations and policies of the FCC and
with the Policy Statement set forth in Schedule II hereto. All advertising
spots and promotional material or announcements shall comply with applicable
federal, state and local regulations and policies, the Policy Statement and FCC
requirements, and shall be produced in accordance with quality standards
established by Licensee. If Licensee determines that a program supplied by
Programmer is for any reason, within Licensee's sole discretion, unsatisfactory
or unsuitable or contrary to the public interest, or does not comply with the
Policy Statement, it may, upon prior written notice to Programmer (to the
extent time permits such notice), suspend or cancel such program without
incurring liability to Programmer. Licensee will use reasonable efforts to
provide such written notice to Programmer prior to the suspension or
cancellation of such program.
<PAGE> 9
6
3.2 Licensee Control of Programming. Programmer recognizes that
the Licensee has full authority to control the operation of the Station. The
parties agree that Licensee's authority includes the right to reject or refuse
such portions of the Programmer's programming which Licensee believes to be
unsatisfactory, unsuitable or contrary to the public interest. Programmer
shall have the right to change the programming supplied to Licensee and shall
give Licensee at least twenty-four (24) hours notice of substantial and
material changes in such programming, provided that such programming is
consistent with the Policy Statement and FCC regulations.
3.3 Programmer Compliance with Copyright Act. Programmer
represents and warrants to Licensee that Programmer has full authority to
broadcast its programming on the Station, and that Programmer shall not
broadcast any material in violation of the Copyright Act or any other
applicable law, rule or regulation. All music supplied by Programmer shall be:
(i) licensed by ASCAP, SESAC or BMI; (ii) in the public domain; or (iii)
cleared at the source by Programmer. Licensee will maintain music licenses as
necessary. The right to use the programming and to authorize its use in any
manner shall be and remain vested in Programmer.
3.4 Sales. Programmer shall retain all revenues from the sale
of advertising time within the programming it broadcasts on the Station.
Programmer shall be responsible for payment of all expenses attributable
thereto, including the commissions due to any sales representative engaged by
it for the purpose of selling advertising which is carried during the
programming it broadcasts on the Station. Licensee and Programmer each shall
have the right, at their own expense, to seek copyright royalty payments for
their own programming. Licensee shall remit to Programmer amounts, if any,
received following the Effective Date by Licensee with respect to LFS
programming aired after the Effective Date pursuant to the LFS Agreement,
provided that Programmer performs Licensee's obligations thereunder as required
pursuant to Section 1.9. Programmer shall remit to Licensee amounts received,
if any, following the Effective Date by Programmer with respect to LFS
programming aired prior to the Effective Date pursuant to the LFS Agreement.
3.5 Payola. Programmer agrees that it and its employees will
not accept any consideration, compensation, gift or gratuity of any kind
whatsoever, regardless of its value or form, including, but not limited to, a
commission, discount, bonus, material, supplies or other merchandise, services
or labor (collectively, "Consideration"), whether or not pursuant to written
contracts or agreements between Programmer and merchants or advertisers, unless
the payer is identified in the program for which Consideration was provided as
having paid for or furnished such Consideration, in accordance with the Act and
FCC requirements. Programmer agrees to annually, or more frequently at the
request of the Licensee, execute and provide Licensee with a Payola Affidavit
from each of its employees involved with the Station substantially in the form
attached hereto as Schedule III.
3.6 Cooperation. Programmer and Licensee mutually acknowledge
their interest in ensuring that the Station serve the needs and interests of
viewers in New York and the surrounding service area and agree to cooperate to
provide such service. Licensee shall, on a regular basis, assess the issues of
concern to residents of New York and the surrounding area and address those
issues in its public service programming. Programmer, in cooperation with
<PAGE> 10
7
Licensee, will endeavor to ensure that programming responsive to the needs and
interests of the community of license and surrounding area is broadcast, in
compliance with applicable FCC requirements and will assist Licensee, if
requested, in the production of Licensee-provided programming. Licensee will
describe those issues and the programming that is broadcast in response to
those issues and place issues/programs lists in the Station's public inspection
file as required by FCC rules. Further, Licensee may request, and Programmer
shall provide, information concerning such of Programmer's programs as are
responsive to community issues so as to assist Licensee in the satisfaction of
its public service programming obligations. Programmer shall also provide
Licensee upon request such other information necessary to enable Licensee to
prepare records and reports required by the Commission or other local, state or
federal government entities. Without limiting the generality of the foregoing,
Programmer and Licensee shall cooperate with one another to ensure compliance
with FCC rules and the Communications Act of 1934 and to otherwise fulfill the
purposes of this Agreement. Whenever on the Station's premises, all of
Programmer's personnel shall be subject to the supervision and direction of
Licensee's General Manager.
3.7 Staffing Requirements. Licensee will be in full compliance
with the main studio staff requirements as specified by the FCC.
3.8 Children's Television Advertising. Programmer agrees that
it will not broadcast advertising within programs originally designed for
children aged 12 years and under in excess of the amounts permitted under
applicable FCC rules, and will take all steps necessary to pre-screen
children's programming broadcast during the hours it is providing such
programming, to establish that advertising is not being broadcast in excess of
the applicable FCC rules.
SECTION 4. INDEMNIFICATION AND EVENTS OF DEFAULT
4.1 Programmer's Indemnification. Programmer shall indemnify
and hold harmless Licensee and Licensee's employees, officers, directors,
affiliates and representatives from and against any and all claims, losses,
costs, liabilities, damages, forfeitures and expenses (including reasonable
legal fees and other expenses incidental thereto) of every kind, nature and
description, including damage to the Station's facilities caused by the
negligence or willful misconduct of Programmer (collectively, "Damages"), as
incurred, resulting from (i) Programmer's breach of any representation,
warranty, covenant or agreement contained in this Agreement, (ii) the
provisions of Section 1.6 notwithstanding, any action taken by Programmer or
its employees and agents with respect to the Station or any License relating
thereto, or any failure by Programmer or its employees and agents to take any
action with respect to the Station or any License relating thereto, including,
damages relating to violations of the Act or any rule, regulation or policy of
the FCC, slander, defamation or other claims relating to programming provided
by Programmer and Programmer's broadcast and sale of advertising time on the
Station, or (iii) any breach or alleged breach of the LFS Agreement, whether
arising in connection with the execution and delivery of this Agreement or the
Asset Purchase Agreement or Programmer's failure or alleged failure to perform
Licensee's obligations thereunder.
<PAGE> 11
8
4.2 Licensee's Indemnification. Licensee shall indemnify and
hold harmless Programmer and Programmer's employees, officers, directors,
affiliates and representatives from and against any and all claims, losses,
consents, liabilities, damages, FCC forfeitures and expenses (including
reasonable legal fees and other expenses incidental thereto) of every kind,
nature and description, as incurred, arising out of Licensee's operation of the
Station and the broadcast by Licensee of Licensee's programming (which excludes
any programming broadcast pursuant to the LFS Agreement), if any, to the extent
permitted by law, including damages to the Station's facilities caused by the
negligence or willful misconduct of Licensee, and any action taken by the
Licensee or its employees and agents with respect to the Station, or any
failure by Licensee or its employees and agents to take any action with respect
to the Station.
4.3 Limitation. Neither Licensee nor Programmer shall be
entitled to indemnification pursuant to this section unless such claim for
indemnification is asserted in writing delivered to the other party.
4.4 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant")
shall promptly give written notice to the party from which indemnification is
claimed (the "Indemnifying Party") of any claim, whether between the parties or
brought by a third party, specifying in reasonable detail the factual basis for
the claim. If the claim relates to an action, suit, or proceeding filed by a
third party against Claimant, such notice shall be given by Claimant no later
than ten (10) business days after written notice of such action, suit, or
proceeding was given to Claimant provided that the failure to timely give
notice shall not extinguish the Claimant's right to indemnification except to
the extent the Indemnifying Party shall have been actually prejudiced by such
failure, except that the Indemnifying Party shall not be liable for any
expenses incurred during the period in which the indemnified Party failed to
give such notice.
(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 (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
or its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree in
writing at or prior to the expiration of the thirty (30) day period (or any
mutually agreed upon extension thereof) to the validity and amount of such
claim, the Indemnifying Party shall immediately pay to the Claimant the full
amount of the claim or such amount as agreed to by the parties. If the
Claimant and the Indemnifying Party do not agree within the thirty (30) day
period (or any mutually agreed upon extension thereof), such dispute shall be
resolved by litigation in an appropriate court of competent jurisdiction.
(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. 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
<PAGE> 12
9
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. Whether or not the Indemnifying Party shall have assumed the
defense of a claim by a third party, the Claimant shall not admit any liability
with respect to, or settle, compromise or discharge, such claim without the
Indemnifying Party's prior written consent (which consent shall not be
unreasonably withheld). If the Indemnifying Party shall have assumed the
defense of a third party claim, the Claimant shall agree to any settlement,
compromise or discharge of a third party claim which the Indemnifying Party may
recommend and which by its terms obligates the Indemnifying Party to pay the
full amount of the liability in connection with such third party claim, which
releases the Indemnifying Party completely in connection with such third party
claim and imposes no nonmonetary obligation on the indemnified party.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every reasonable effort
to reach a decision with respect thereto as expeditiously as possible.
(e) The indemnification rights provided herein shall extend
to the shareholders, directors, officers, employees, representatives and
successors and assigns of any Claimant although for the purpose of the
procedures set forth in this Section 4.4, any indemnification claims by such
parties shall be made by and through the Claimant.
4.5 Time Brokerage Challenge. If this Agreement is challenged
at the FCC, whether or not in connection with the Station's license renewal
application, counsel for the Licensee and counsel for the Programmer shall
jointly defend the Agreement and the parties' performance thereunder throughout
all FCC proceedings at the sole expense of the Programmer. If portions of this
Agreement do not receive the approval of the Mass Media Bureau of the FCC (the
"FCC Staff"), then the parties shall reform the Agreement in a mutually
acceptable manner as necessary to satisfy the FCC Staff's concerns or, at
Programmer's option and expense, seek reversal of the Staff's decision and
approval from the full Commission or a court of law.
4.6 Events of Default. The following shall, after the
expiration or the applicable cure periods, constitute Events of Default under
this Agreement:
(i) Non-Payment. Programmer's failure to timely pay
the consideration provided for in Section 1.5 hereof;
(ii) Default in Covenants or Adverse Legal Action. The
default by either party hereto in the material observance or performance of any
covenant, condition or agreement contained herein, or if either party shall (a)
make a general assignment for the benefit of creditors, (b) file or have filed
against it a petition for bankruptcy, for reorganization or any arrangement, or
for the appointment of a receiver, trustee or similar creditors' representative
for the property or assets of such party under any federal or state insolvency
law, which, if filed against such party, has not been dismissed or discharged
within sixty (60) days thereof; or
<PAGE> 13
10
(iii) Breach of Representation. If any representation
or warranty herein made by either party hereto, or in any certificate or
document furnished be either party to the other pursuant to the provisions
hereof, shall prove to have been false or misleading in any material respect as
of the time made or furnished.
4.7 Cure Periods. An Event of Default shall not be deemed to
have occurred until ten (10) business days after the non-defaulting party has
provided the defaulting party with written notice specifying the event or
events that if not cured would constitute an Event of Default and specifying
the actions necessary to cure within such period. This period may be extended
for a reasonable period of time if the defaulting party is acting in good faith
to cure and such delay is not materially adverse to the other party.
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE
5.1 Confidential Review. Prior to the commencement of any
programming by Programmer under this Agreement, Programmer shall acquaint the
Licensee with the nature and type of the programming to be provided. Licensee
shall be entitled to review at its discretion from time to time on a
confidential basis any of Programmer's programming material it may reasonably
request. Programmer shall promptly provide Licensee with copies of all
correspondence and complaints received from the public (including any telephone
logs of complaints called in), and copies of all program logs and promotional
materials. However, nothing in this section shall entitle Licensee to review
the internal corporate or financial records of the Programmer.
5.2 Political Advertising. Programmer shall cooperate with
Licensee to assist Licensee in complying with all rules of the FCC regarding
political broadcasting. Licensee shall promptly supply to Programmer, and
Programmer shall promptly supply to Licensee, such information, including all
inquiries concerning the broadcast of political advertising, as may be
necessary to comply with FCC rules and policies, including the lowest unit
rate, equal opportunities, reasonable access, political file and related
requirements of federal law. Licensee, in consultation with Programmer, shall
develop a statement which discloses its political broadcasting policies to
political candidates, and Programmer shall follow those policies and rates in
the sale of political programming and advertising. In the event that
Programmer fails to satisfy the political broadcasting requirements under the
Act and the rules and regulations of the FCC and such failure inhibits Licensee
in its compliance with the political broadcasting requirements of the FCC, then
to the extent reasonably necessary to assure such compliance, Programmer shall
either provide rebates to political advertisers or release broadcast time
and/or advertising availabilities to Licensee at no cost to Licensee.
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT
6.1 Termination.
A. In addition to other remedies available at law or
equity, this Agreement may be terminated as set forth below by either Licensee
or Programmer, as
<PAGE> 14
11
applicable, by written notice to the other if the party seeking to terminate is
not then in material default or material breach hereof, upon the occurrence of
any of the following:
(a) subject to the provisions of Section 7.9,
this Agreement is declared invalid or illegal in whole or substantial part by
an order or decree of an administrative agency or court of competent
jurisdiction and such order or decree has become final and no longer subject to
further administrative or judicial review;
(b) any Event of Default set forth in Section
4.6 has occurred with respect to the other party and such other party has
failed to cure such breach in accordance with the provisions of Section 4.7;
(c) the mutual consent of both parties; or
(d) there has been a material change in FCC
rules, policies or precedent that would cause this Agreement to be in violation
thereof and such change is in effect and not the subject of an appeal or
further administrative review and this Agreement cannot be reformed, in a
manner acceptable to Programmer and Licensee, to remove and/or eliminate the
violation.
B. Notwithstanding any contrary provision hereof,
this Agreement shall terminate upon the Closing, as defined in the Asset
Purchase Agreement or any termination of the Asset Purchase Agreement pursuant
to Article VIII thereof.
C. During any period prior to the effective date of
any termination of this Agreement, Programmer and Licensee agree to cooperate
in good faith to ensure that Station's operations will continue, to the extent
possible, in accordance with the terms of this Agreement and that the
termination of this Agreement is effected in a manner that will minimize, to
the extent possible, the resulting disruption of the Station's ongoing
operations.
6.2 Force Majeure. Any failure or impairment of the Station's
facilities or any delay or interruption in the broadcast of programs, or
failure at any time to furnish facilities, in whole or in part, for broadcast,
due to Acts of God, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee, or for power reductions necessitated for
maintenance of the Station or for maintenance of another station located on the
tower from which the Station will be broadcasting, shall not constitute a
breach of this Agreement and Licensee will not be liable to Programmer for
reimbursement or reduction of the consideration owed to Licensee.
6.3 Other Agreements. During the term of this Agreement or any
renewal hereof, Licensee will not enter into any other agreement with any third
party that would conflict with or result in a material breach of this Agreement
by Licensee.
<PAGE> 15
12
SECTION 7. MISCELLANEOUS
7.1 Assignment.
(a) This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
(b) Neither this Agreement nor any of the rights,
interests or obligations of either party hereunder shall be assigned,
encumbered, hypothecated or otherwise transferred without the prior written
consent of the other party. Any attempted assignment by either party in
violation of the preceding sentence shall be null and void and of no force and
effect.
7.2 Call Letters. Upon request of Programmer, subject to the
consent of the Licensee, Licensee shall apply to the FCC for authority to
change the call letters of the Station (to be made effective on the Effective
Date of this Agreement with the consent of the FCC) to such call letters that
Programmer shall reasonably designate. Licensee must coordinate with
Programmer any such proposed changes to the call letters of the Station before
taking any action to change such letters.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
7.4 Entire Agreement. This Agreement (including the Schedules
hereto) and the Asset Purchase Agreement embody the entire agreement and
understanding of the parties relating to the operation of the Station. No
amendment, waiver of compliance with any provision or condition hereof, or
consent pursuant to this Agreement will be effective unless evidenced by an
instrument in writing signed by the parties.
7.5 Taxes. Licensee and Programmer shall each pay its own ad
valorem taxes, if any, which may be assessed on such party's respective
personal property for the periods that such items are owned by such party.
Programmer shall pay all taxes, if any, to which the consideration specified in
Section 1.5 herein is subject, provided that Licensee is responsible for
payment of its own income taxes.
7.6 Headings; Schedules. The headings are for convenience only
and will not control or affect the meaning or construction of the provisions of
this Agreement. All Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein.
7.7 Governing Law. The obligations of Licensee and Programmer
are subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Act and the rules and regulations of the
FCC. The construction and performance of the Agreement will be governed by the
laws of the State of New York with the exception of its conflicts of law
provision. Both parties hereby waive their right to a trial by jury. The
parties
<PAGE> 16
13
agree to the exclusive jurisdiction and venue of the state or federal district
court for the district including New York, New York.
7.8 Notices. All notices, demands and other communications
required or permitted to be given under the provisions of this Agreement shall
be in writing and shall be (i) hand delivered and a written receipt obtained,
(ii) sent by nationally recognized overnight courier, (iii) transmitted by
facsimile (with hard copy confirmation by hand delivery, certified mail, return
receipt requested, or nationally recognized overnight courier) or (iv) sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
To Programmer: Paxson Communications of
New York-31, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Mr. Lowell W. Paxson
To Licensee: ITT-Dow Jones Television
200 Liberty Street
New York, New York 10281
Attention: General Counsel
and
ITT Corporation
1330 Avenue of the Americas
New York, New York 10019
Attention: General Counsel
7.9 Severability. The provisions of this Agreement are
severable, and, if any provision or part hereof or the application thereof to
any person or circumstance shall be held by the FCC or any court of competent
jurisdiction to be invalid, unconstitutional or unenforceable for any reason,
the remainder of this Agreement and the application of such provision or part
hereof to the persons or circumstances shall not be affected thereby. In the
event that the FCC alters or modifies its rules or policies in a fashion which
would raise a substantial and material question as to the validity of any
provision of this Agreement, the parties hereto shall negotiate in good faith
to revise any such provision of this Agreement with a view toward assuring
compliance with all then existing FCC rules and policies which may be
applicable, while attempting to preserve, as closely as possible, the intent of
the parties as embodied in the provision of this Agreement which is to be so
modified.
7.10 No Joint Venture. Nothing in this Agreement shall be deemed
to create a joint venture between the Licensee and the Programmer.
7.11 Press Release. Neither party shall publish any press
release, make any other public announcement or otherwise communicate with any
news media concerning this Agreement or the transactions contemplated hereby
without the prior written consent of the other party; provided, however, that
nothing contained herein shall prevent either party from promptly making all
filings with governmental authorities as may, in its judgment, be required or
advisable in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
<PAGE> 17
14
7.12 Interpretation. For all purposes of this Agreement,
"including" shall mean "including without limitation".
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 18
15
IN WITNESS WHEREOF, the parties hereto have executed this Time Brokerage
Agreement the day and year first above written.
LICENSEE: ITT-DOW JONES TELEVISION
By: DOW JONES BROADCASTING (U.S.A.), INC.,
General Partner
By: /s/ Peter G. Skinner
----------------------------------------
Name: Peter G. Skinner
Title: President
By: ITT BROADCASTING CORP.,
General Partner
By: /s/
----------------------------------------
Name:
Title:
PROGRAMMER: PAXSON COMMUNICATIONS OF
NEW YORK-31, INC.
By: /s/
----------------------------------------
Name:
Title:
<PAGE> 19
Schedule 1
----------
Monthly Fee
-----------
In exchange for the air time supplied to Programmer pursuant to this
Agreement, Programmer shall pay Licensee One Million Two Hundred Fifty Thousand
Dollars ($1,250,000.00) per month by wire transfer. The first monthly payment
to Licensee is due and payable on the Effective Date of this Agreement, and each
successive payment is due on the first (1st) day of each month thereafter. The
monthly fee shall be reduced pro rata for any partial month at the beginning or
end of the term of this Agreement.
In addition, Programmer shall receive pro rata credit (and the monthly
fee shall be reduced accordingly) for any part of the weekly one hundred
sixty-eight (168) hours of programming that Licensee uses to broadcast its own
programming or for which Licensee suspends or cancels Programmer's programming.
In no event shall there be a reduction in the monthly amount as a consequence
of the broadcast of programming pursuant to the LFS Agreement.
Notwithstanding any provision of the Agreement, Programmer shall not be
obligated to pay Licensee the pro rata portion of the monthly fee or the pro
rata portion of the reimbursable expenses for any period of time where the
Station is off-the-air.
Station's Expenses
------------------
Programmer shall reimburse Licensee for Licensee's payment of the
Station expenses included in Reimbursable Expenses as defined below.
The reimbursement payments shall be made by delivery of checks to
Licensee at the address specified in Section 7.8 hereof, covering the expenses
included in the following categories and as generally set forth in the budget
provided to Programmer by Licensee.
(1) Payments for the Use and Occupancy of Premises
of Station at World Trade Center and the
Portion of 200 Liberty Street, New York
Utilized by Programmer*
(2) Utility Payments
(3) Employee Salaries and Benefits (2) employees
(4) Real Estate and Personal Property Insurance and
Taxes.
(5) Business, Professional and Regulatory Fees and
Licenses
<PAGE> 20
(6) Fiber Connection and Transmission Facility
Expenses
(7) Music License Fees
(9) Miscellaneous Station Expense
* Programmer will provide notice to Licensee, prior to the
Effective Date of the Agreement, if Programmer wishes to
utilize the ground floor studios of WBIS at 200 Liberty Street.
If Programmer chooses not to use that space, then there will be
no reimbursement for the rent. If Programmer chooses to use
that space, then the rent on that studio will be a reimbursable
item.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 42,914,912
<SECURITIES> 0
<RECEIVABLES> 27,917,636
<ALLOWANCES> 1,418,284
<INVENTORY> 0
<CURRENT-ASSETS> 74,961,957
<PP&E> 193,093,675
<DEPRECIATION> 39,988,550
<TOTAL-ASSETS> 634,338,056
<CURRENT-LIABILITIES> 27,232,367
<BONDS> 227,728,199
190,932,267
0
<COMMON> 48,792
<OTHER-SE> 92,321,890
<TOTAL-LIABILITY-AND-EQUITY> 634,338,056
<SALES> 43,075,895
<TOTAL-REVENUES> 43,075,895
<CGS> 0
<TOTAL-COSTS> 44,346,207
<OTHER-EXPENSES> 1,550,928
<LOSS-PROVISION> 356,485
<INTEREST-EXPENSE> 8,749,416
<INCOME-PRETAX> (8,468,800)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,468,800)
<DISCONTINUED> 9,804
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,730,635)
<EPS-PRIMARY> (0.30)
<EPS-DILUTED> (0.30)
</TABLE>
